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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1997 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-14378
ACME METALS INCORPORATED
(Exact name of registrant as specified in its charter)
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DELAWARE 36-3802419
(State of incorporation) (I.R.S. Employer Identification No.)
13500 SOUTH PERRY AVENUE 60827-1182
(Address of principal executive offices) (Zip Code)
(708) 849-2500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, par value $1.00 New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
12 1/2% Senior Secured Notes due 2002 New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
The aggregate market value as of March 2, 1998 of common stock, par value
$1.00, held by non-affiliates of the Registrant was: $112,175,852.
Number of shares of Common Stock outstanding as of March 2, 1998,
11,680,164.
The following document is partially incorporated into this report by
reference:
(1) Proxy Statement filed in connection with the Annual Meeting of Shareholders
scheduled for April 23, 1998 is partially incorporated by reference into
Part III, Items 11, 12 and 13.
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ACME METALS INCORPORATED
1997 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business.................................................... 3
Item 2. Properties.................................................. 8
Item 3. Legal Proceedings........................................... 9
Item 4. Submission of Matters to a Vote of Security Holders......... 15
PART II
Item 5. Market for the Company's Common Stock and Related
Shareholder Matters......................................... 15
Item 6. Selected Financial Data..................................... 18
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 20
Item 8. Financial Statements and Supplementary Data................. 29
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.................................... 29
PART III
Item 10. Directors and Executive Officers of the Company............. 30
Item 11. Executive Compensation...................................... 31
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 31
Item 13. Certain Relationships and Related Transactions.............. 31
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K......................................................... 31
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PART I
ITEM 1. BUSINESS
(A) GENERAL DESCRIPTION OF BUSINESS
Acme Metals Incorporated, based in Riverdale, Illinois, is the successor to
the original Acme Steel Company which merged with the Interlake Iron Company in
1964 to form Interlake Steel Corporation, subsequently renamed Interlake, Inc.
Acme Steel Company was spun off as a separate public company in 1986.
Acme Steel Company undertook a further reorganization in May, 1992 when
Acme Metals Incorporated ("Company") was formed and became the parent of Acme
Steel Company ("Acme"), and Acme's former subsidiaries, Acme Packaging
Corporation ("Packaging"), Alpha Tube Corporation ("Alpha"), and Universal Tool
& Stamping Company, Inc. ("Universal"). The Company's Common Stock had publicly
traded on NASDAQ since 1986, but began trading on the New York Stock Exchange in
May, 1996. The Company's Common Stock has also traded on the Toronto Stock
Exchange since August 1994.
The principal business activities of the Company consist of two separate
industry segments, namely:
Steel Making Segment
Acme Steel Company -- an integrated iron and steel producer
Steel Fabricating Segment
Acme Packaging Corporation -- steel strapping and strapping products
Alpha Tube Corporation -- welded steel tube products
Universal Tool & Stamping Company, Inc. -- auto and light truck jack
products*
* See "Assets Held for Sale"
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company reports its operations by two industry segments, Steel Making
and Steel Fabricating. Financial information about the Company's industry
segments is contained in the Business Segments section of the Notes to the
Consolidated Financial Statements on pages 59-61.
(C) NARRATIVE DESCRIPTION OF BUSINESS
Steel Making Segment
Acme is a fully integrated producer of steel. Acme's line of products is
concentrated on the manufacture of flat-rolled steels, including sheet and strip
steel. In the flat-rolled steel market, Acme specializes in producing carbon
steels, especially mid- and high-carbon, alloy, and high-strength low-alloy
steels. The principal markets served by Acme include automotive, agricultural,
industrial, fastener, pipe and tube, processor, and tool manufacturing
industries. The Company's Steel Fabricating Segment has historically consumed
approximately 30-40 percent of Acme's steel production. However, with increased
capacity from the New Facility consumption is expected to be approximately 25
percent. Acme's focus on external customers is centered around customers whose
demand levels and metallurgical requirements are for the small production
quantities available from Acme's facilities. Acme's sales represented about 42,
44, and 45 percent of total Company sales in 1997, 1996, and 1995, respectively.
Acme's facilities are located in Riverdale and Chicago, Illinois, and
include the following plant facilities: coke ovens, blast furnaces, pigging
machines, basic oxygen furnaces, ladle metallurgical facility, continuous
caster, hot strip mill, pickle lines, cold mills, annealing furnaces, slitter
lines, and cut-to-length lines.
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Acme is the smallest integrated steel producer in the U.S. with a current
annual hot band shipping capability of approximately 970,000 tons (see
discussion under this section entitled New Facility). This compares with total
U.S. shipments of flat rolled steel products of approximately 68 million tons.
Steel Fabricating Segment
Packaging, which was incorporated as a separate entity in December 1991, is
one of the two major domestic producers of steel strapping and strapping tools
in North America and, by management estimates, shares approximately 80 percent
of the domestic market equally with its primary competitor. Packaging
represented approximately 33 percent of the Company's sales in 1997, 33 percent
in 1996 and 32 percent in 1995. Principal markets served by Packaging include
the agricultural, automotive, brick, construction, fabricated and primary
metals, forest products, paper and wholesale industries. Packaging receives all
of its flat-rolled steel supply from Acme.
Packaging currently manufactures its products in four steel strapping
plants, located in Riverdale, Illinois; New Britain, Connecticut; Leeds, Alabama
and Bay Point (formerly Pittsburg-West), California.
Alpha, which was acquired in May 1989, is a leading producer of high
quality welded carbon steel. Alpha receives a portion of its flat-rolled steel
supply from Acme. Alpha markets its products to the appliance, automotive,
construction, heating and cooling equipment, household and leisure furniture,
material handling, recreational products, service center and truck exhaust
industries. Alpha's sales represented approximately 17 percent of total sales
for the Company in 1997, 16 percent in 1996 and 15 percent in 1995.
Alpha currently operates two tubing facilities in Toledo, Ohio, equipped
with rolling mills for the production of steel tube and pipe. During the fourth
quarter of 1996, Alpha announced it would lease a built-to-specification
manufacturing facility to consolidate both of the existing operations in
Walbridge, Ohio. In addition, the formerly operated Alta Slitting Corporation
which provided slitting capacity for Alpha was shut down at the end of 1996, and
these operations were consolidated in the new facility as well. The new
manufacturing facility is under lease and the consolidation will be completed in
early 1998.
Universal, acquired in May 1987, produces automotive and light truck jacks,
tire wrenches and accessories for the original equipment manufacturer ("OEM")
market in North America. Management estimated that it currently holds a 30
percent share of the OEM market for auto and light truck jacks in North America.
Universal markets its products to domestic and foreign transplant automotive
manufacturers and the automotive after market. Universal's sales were
approximately 8 percent of total Company sales in 1997 and 7 percent in 1996 and
8 percent 1995. Universal's production facilities, located in Butler, Indiana,
include a computer assisted design and manufacturing system, and automated
stamping and assembly lines. (See "Assets Held for Sale")
Assets Held for Sale
In March of 1998, the Company sold its wholly owned subsidiary Universal
Tool & Stamping Company, Inc., ("Universal").
The sale of Universal generated proceeds to the Company of approximately
$18.0 million and an estimated gain of approximately $12.0 million,
(approximately $7.2 million, net of tax). At December 28, 1997, the net assets
of Universal (excluding cash and intercompany accounts) were classified as net
assets held for sale as a current asset of $3.8 million.
Proceeds from the sale of Universal are restricted by the Indentures
covering the Company's Senior Secured Notes issued in 1994, have been deposited
with the Trustee. The Company is permitted to apply the proceeds to related
business investments or to offer to redeem on a pro-rata basis the remaining
1994 Notes. To the extent an offer to redeem is not accepted, the proceeds
become unrestricted.
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Employee Relations
The Company has a work force of 2,471 employees, of which 638 are salaried
and 1,833 are paid hourly. The unionized work force totals 1,679 or 68 percent
of total employment. None of the salaried work force is unionized and the hourly
work force at one site (Alpha) is non-union as well. The Company's relationships
with the unions are good. There have been no strikes or work stoppages at any
location since the Company's purchase of the plants in Connecticut, Alabama,
California and Indiana. The last strike at the Riverdale and Chicago locations
was in 1959 during a major steel industry work stoppage. In addition, the
Company instituted Cooperative Partnership (formerly administrated under the
Labor Management Participation Team and the Total Quality Improvement Program)
in 1996 as a vehicle for problem solving in a team environment to establish
standards to achieve the highest quality product from the existing facilities.
Union members participate extensively in these two programs.
Acme has a contract in place with the United Steelworkers covering
approximately 1,364 employees at the Acme and Packaging operations in Chicago
and Riverdale, Illinois. The contract expires in 1999. The six-year contract
which was ratified on October 1, 1993 provided for a mid-term renegotiation of
specific wage and benefit issues. On October 25, 1996, Acme reached an agreement
with the United Steelworkers on a mid-term wage reopener. The settlement was
essentially consistent with the pattern established within the steel industry.
The New Facility
In September 1996, the Company completed construction of the New Facility,
a new continuous thin slab caster/hot strip mill complex at Acme Steel's
Riverdale, Illinois plant. The New Facility, which cost approximately $400
million (excluding capitalized interest and certain internal costs), allows Acme
Steel to build on its strengths as a low cost producer of high quality liquid
steel by significantly increasing its overall efficiency and reducing its
finished steel production costs. The Company continued to run the old ingot
making operations while the New Facility was being brought on line. In June
1997, the Company completed the decommissioning of its ingot making operations.
The Company anticipates that the New Facility will reduce Acme Steel's cash
manufacturing costs by approximately 19 percent, or $70 per shipped ton. The New
Facility has reduced the average production time transforming raw steel into
flat rolled steel coils from ten days to 90 minutes by eliminating the extra
re-heating and rolling necessary in the old ingot-based process. Currently, the
New Facility is operating at approximately 85 percent of its designed capability
and is ramping up toward optimal production utilization, which is expected
during the second half of 1998. The New Facility, once fully operational, is
expected to increase Acme Steel's shipping capability by 35 percent, to
approximately 970,000 tons per year.
Raw Materials
Acme Steel's principal raw materials are iron ore, coal and scrap, which
are used in the steelmaking process. The Company believes Acme Steel's sources
of iron ore, coal, scrap and other raw materials are adequate to provide for its
foreseeable needs. Under Acme's ingot based operations, Acme was not required to
purchase scrap from external sources; however, the operations of the New
Facility will require Acme to purchase scrap from external sources, and Acme
believes its sources for the purchase of scrap will be adequate to meet its
requirements.
Iron ore requirements are expected to continue to be satisfied through Acme
Steel's 40 percent equity interest (15.1 percent, participation) in an iron ore
mining venture, Wabush Mines ("Wabush") in Eastern Canada, and through term
contracts and purchases on the open market. The managing agent of Wabush is
Cliffs-Mining Company ("Cliffs") a subsidiary of Cleveland-Cliffs Inc.
("Cleveland-Cliffs"). Acme Steel is required to pay its proportionate share of
all fixed operating costs, regardless of the quantity of ore received, plus the
variable operating costs of minimum ore production for the Company's account.
Normally, Acme reimburses the joint venture for these costs through its purchase
of ore. Acme Steel acquired approximately 37 percent of its iron ore needs from
Wabush under this agreement during 1997 (down from approximately 41 percent
during 1996), with the balance of ore requirements purchased on the open market
at a competitive delivered cost.
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Currently there is a world-wide surplus of metallurgical coal. Accordingly,
Acme Steel is able to satisfy its coal requirements at competitive prices
through short-term contracts and purchases on the open market.
Acme Steel's steel making operations require substantial amounts of both
natural gas and electricity. Acme Steel purchased all of its natural gas for the
majority of 1995 through 1997, from MidCon Gas Services Corp. pursuant to a
written agreement, and consumes blast furnace gas and coke over gas. Acme Steel
purchases electricity from Commonwealth Edison Company pursuant to written
agreements approved by the Illinois Commerce Commission.
Environmental Compliance
The operations of the Company and its subsidiary companies are subject to
numerous Federal, state and local laws and regulations providing a comprehensive
program of controlling the discharge of materials into the environment and
remediation of certain waste disposal sites by responsible parties for the
protection of public health and the environment. In addition, various Federal
and state occupational safety and health laws and regulations apply to the work
place environment. See Item 3, Legal Proceedings, (b) Environmental for a
complete discussion of environmental proceedings.
Backlog; Trademarks; Patents
None of the Company's subsidiaries had a significant amount of backlog at
December 28, 1997 and neither the Company nor its subsidiaries hold any patents,
trademarks, licenses or franchises which are deemed material to its overall
business.
(D) COMPETITIVE CONDITIONS FOR THE STEEL MAKING SEGMENT
General Steel Market
U.S. steel producers face intensive competition from integrated steel
producers, mini-mills and foreign producers (often government subsidized).
U.S. Despite significant reductions in raw steel production capacity by
major U.S. producers over the last two decades, the U.S. industry continues to
be adversely affected, from time to time, by excess world capacity. According to
the AISI, annual U.S. raw steel production capacity was reduced from
approximately 154 million tons in 1982 to approximately 121,400 million tons in
1997. This reduction resulted in higher utilization rates. Average utilization
of U.S. industry capacity improved from approximately 61 percent in the 1982 to
1986 period to approximately 83 percent in the 1987 to 1991 period, to
approximately 89 percent in 1993, to 93 percent in 1994 and 1995, and to 91
percent in 1996, and 89 percent in 1997. Recent improved production efficiencies
and new minimill capacity also have begun to increase overall production
capacity in the United States. Excess production capacity exists in certain
product lines in U.S. markets and, to a greater extent, worldwide. Increased
industry overcapacity, coupled with economic recession, would intensify an
already competitive environment.
Over the last decade, extensive downsizings have necessitated costly
restructuring charges that, when combined with highly competitive market
conditions, have resulted at times in substantial losses for some U.S.
integrated steel producers. A number of U.S. integrated steel producers have
gone through bankruptcy reorganization. These reorganizations have resulted in
somewhat reduced capital costs for these producers and may permit them to price
their steel products at levels below those which they could have otherwise
maintained.
Non-U.S. U.S. steel producers face significant competition from certain
non-U.S. steel producers who may have lower labor costs. In addition, U.S. steel
producers may be adversely affected by fluctuations in the relationship between
the U.S. dollar and foreign currencies. Furthermore, some non-U.S. steel
producers have been owned, controlled or subsidized by their governments, and
their decisions with respect to production and sales may be, or may have been in
the past, influenced more by political and economic policy considerations than
by prevailing market conditions. Some non-U.S. producers of steel and steel
products have continued to ship into the U.S. market despite decreasing profit
margins or losses. If certain relevant U.S. trade laws are
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weakened, world demand for steel eases or the U.S. dollar strengthens, an
increase in the market share of imports may occur, which could adversely affect
the pricing of the Company's products. The costs for current and future
environmental compliance may place U.S. steel producers, including the Company,
at a competitive disadvantage with respect to non-U.S. steel producers, which
may not be subject to environmental requirements as stringent as those in the
United States.
Over the long term, steel prices will be set by the lowest cost producers
and the lowest costs will be attained through the implementation of new
technologies. The flat rolled steel market provides strong evidence of this
downward trend in real steel prices due in part to decreasing costs. Recently
developed thin slab casting technologies, such as that utilized in the New
Facility, have allowed some mini-mill producers and other steel producers to
enter certain sectors of the flat rolled market which have traditionally been
supplied by integrated producers. Technological innovation is likely to continue
in the steel industry and producers will be required to achieve significant,
sustainable cost reductions to succeed. The Company's investment of
approximately $400 million (excluding capitalized interest and certain internal
costs) in the New Facility is expected to enable it to remain competitive.
Special Grade Market
This component of the flat-rolled market represents the mid-carbon,
high-carbon, high-strength low-alloy and alloy markets. The total annual market
is approximately 3 million tons, of which Acme's share is estimated to be 6 to 7
percent. Acme's principal customer markets are agricultural, industrial, tools,
conversion, automotive components and construction.
Low Carbon Hot Rolled Market
Low carbon hot rolled products comprise approximately 20 percent to 25
percent of the U.S. Steel market, or approximately 24 million tons per year, of
which the majority is in low-carbon sheet and strip. Acme Steel's share is
estimated by management to be less than 4 percent. The key end users are
automotive OEMs, automotive stampers, can and container manufacturers, the
construction industry, appliance makers, tubing manufacturers and steel service
centers.
Acme's Competitive Position
For commercial sales to unaffiliated customers, Acme currently competes in
the low-, mid- and high-carbon and alloy steel markets. Acme has numerous
competitors composed principally of steel service centers, a substantial portion
of which use imported steel and, to a lesser extent, other small integrated
mills.
Acme Steel faces the same challenges as the rest of the steel industry. The
primary factors which have affected competition include price, quality, delivery
performance and customer service. The Company believes that the New Facility
will significantly enhance its ability to compete in each of these areas. In
addition, the Company believes it is able to differentiate itself from its
competitors by focusing on niche marketing and targeting customers with small
order sizes and special metallurgical requirements such as high carbon, alloy
and HSLA steel.
(E) JOINT VENTURE ("NACME")
On February 27, 1996, Acme and its joint venture partner began construction
of a state-of-the-art steel coil processing plant for a cost of approximately
$30 million. The facility is located in Chicago adjacent to Acme's Riverdale
steel making operations. The facility pickles, oils, slits and packages steel
coils produced by Acme's New Facility. NACME will further enhance Acme's ability
to provide precise customer specifications of superior quality steels with
highly competitive lead times. Acme is a minority equity participant with a 40
percent interest for a total contribution of $3.5 million. NACME began limited
operations during the fourth quarter of 1996. Full utilization is expected
during 1998. Pursuant to the steel processing agreement between Acme and NACME,
Acme has agreed to certain tonnage provision guarantees and cost plus return on
investment payments.
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(F) COMPETITIVE CONDITIONS FOR THE STEEL FABRICATING SEGMENT
Acme Packaging. In the steel strapping market, Acme Packaging's primary
competitor is ITW Signode, a division of Illinois Tool Works, Inc., which
management believes has a U.S. market share approximating that of Acme
Packaging. The Company believes Acme Packaging's strong market position is
attributable to (i) a broad product line, (ii) high quality, low cost strapping
produced in modern facilities, (iii) the location of its production facilities
in close proximity to a broad customer base and (iv) the benefits of a close
relationship with Acme Steel, which supplies all of Acme Packaging's steel. The
steel strapping market, however, is a mature market which is not expected to
grow significantly in future years. Furthermore, competition from plastic
strapping, especially the higher strength polyester products, is intensifying in
the traditional steel strapping markets of lumber, paper, textiles, wood,
synthetic fibers and brick, primarily due to improvements in product strength
characteristics. As a result, Acme Packaging is installing two plastic strapping
manufacturing lines to strengthen its competitive position in the marketplace.
The new strapping lines are expected to be operational in the second half of
1998.
Alpha Tube. Alpha Tube operates in a highly competitive market
characterized by numerous participants with widely varying capabilities. Alpha
Tube's customers are increasingly demanding products with increased formability,
greater gauge control and lighter weight in combination with higher strength and
different steel chemistries. Customers, especially in the automotive market,
also are increasingly demanding just-in-time inventory delivery, which has the
effect of increasing inventory carrying costs at the tubing manufacturer level.
Unlike Alpha Tube, many of its competitors compete only on price and generally
offer little or no technical service. To improve Alpha Tube's competitive
position, they have undertaken a consolidation project (for further discussion
of the consolidation project see section (c) "Narrative description of Business"
of Item 1 which will result in an upgrade of tube mill diameter and increased
capacity and the reduction of various operating costs.
Universal. Universal's primary competitor in the automobile and light truck
jack market is the Canadian based Seeburn Division of Ventra Group, which has a
North American market share slightly larger than that of Universal. Universal
competes in a limited market characterized by large purchasers with significant
buying power. (See discussion of "Assets Held for Sale" in Item 1 section (c).)
ITEM 2. PROPERTIES
The Company, through its subsidiaries, has facilities throughout the United
States.
Acme Steel's principal properties are located in Chicago, Illinois and in
Riverdale, Illinois. The facilities in Chicago include coke ovens, blast
furnaces and pigging machines. The facilities in Riverdale include the basic
oxygen furnaces, the New Facility, pickle lines, cold mills, annealing furnaces,
slitter lines, and cut-to-length lines. In June 1997, the Company completed
decommissioning the operations of the steel ingot producing and narrow steel
rolling mill facilities which had been made redundant by the operations of the
New Facility. Acme Steel also owns an equity interest in an iron ore mining
venture in Eastern Canada. See "Business -- Raw Materials" section(c) of Item 1.
In addition, during 1996 Acme Steel and a joint venture partner constructed the
NACME Facility in Chicago, adjacent to the Riverdale operations, for the
pickling, oiling and slitting of steel products. The NACME Facility began
limited operations during the fourth quarter of 1996 and is expected to achieve
full utilization during 1998. (See discussion of "Joint Venture" in Item 1
section (e).)
Acme Packaging's principle properties consist of four steel strapping
plants, which include slitting and painting equipment, in Riverdale, Illinois;
New Britain, Connecticut; Leeds, Alabama; and Bay Point, California. Two plastic
strapping extrusion lines are currently being installed in an existing facility
in Riverdale, Illinois and are expected to be completed in 1998.
Alpha Tube currently has two leased facilities, with leases expiring in
April 1998 and February 1999, located in the Toledo, Ohio metropolitan area,
which include two manufacturing and office buildings and rolling mills for the
production of welded steel tubing. Alpha Tube has recently consolidated the two
tubing facilities consisting of five tube mills for the production of steel tube
and pipe, and a steel slitting operation,
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into a new larger facility in Walbridge, Ohio where Alpha Tube has entered into
a lease. The consolidation will result in an upgrade of tube mill diameter and
capacity and the reduction of various operating costs. This consolidation is
expected to be completed during the second quarter of 1998.
Universal's facilities are located in Butler, Indiana and include a
manufacturing and office building, a computer assisted design and manufacturing
system, and automated forming and assembly lines. (See discussion of "Assets
Held for Sale" in Item 1 section (c)).
All of these properties are owned in fee simple except for the Alpha Tube
facilities, as discussed above.
In the opinion of management, the manufacturing facilities of the Company's
subsidiaries are properly maintained, and their production capability is
adequate.
ITEM 3. LEGAL PROCEEDINGS
(A) GENERAL
Pursuant to an Agreement and Plan of Reorganization as of March 5, 1986,
the Company (prior to the Company's 1992 reorganization, the Company was Acme
Steel Company, now a subsidiary and formerly called Interlake, Inc. hereinafter
referred to as the "Company") and The Interlake Company ("Interlake"), its
former parent company, entered into a Tax Indemnification Agreement ("TIA"). The
TIA generally provides for Interlake to indemnify the Company for certain tax
matters. Per the TIA, Interlake is solely responsible for any additional income
taxes it is assessed for adjustments relating to all tax years prior to 1982.
With respect to any additional income taxes that are finally determined to be
due with respect to the tax years beginning in 1982 through the date of the
"Spin-Off" (as said term is identified in the Reorganization documents), the
Company is responsible for taxes relating to "Timing Differences" related to the
Company's "Continuing Operations." A "Timing Difference" is defined generally as
an adjustment to income, deductions or credits which is required to be reported
in a tax year beginning subsequent to 1981 through the Spin-Off, but which will
reverse in a subsequent year. "Continuing Operations" is defined generally as
any business and operations conducted by the Company as of the Spin-Off date.
Interlake is principally responsible for any additional income taxes the Company
is assessed relating to all other adjustments prior to the Spin-Off.
On March 17, 1994, the Company received a Statutory Notice of Deficiency
("Notice") in the amount of $16.9 million in tax as a result of the Internal
Revenue Service's examination of the 1982 through 1984 tax years. During 1997,
Interlake and the Internal Revenue Service settled significantly all issues that
created the additional tax, reducing it to $5.1 million. Certain issues for the
tax years beginning 1984 through the Spin-Off remain unresolved. Interlake has
been principally responsible, pursuant to the TIA, for representing the Company
before the Internal Revenue Service for the 1982 through 1984 tax years.
Substantial interest could also be due (potentially in an amount greater than
the tax claimed). The taxes claimed relate principally to adjustments for which
the Company is indemnified by Interlake pursuant to the TIA. The Company has
adequate reserves to cover that portion of the tax for which it believes it may
be responsible per the TIA. The Company is contesting the unresolved issues and
the Notice.
To date, Interlake has met its obligations under the TIA with respect to
all covered matters. In the event Interlake for any reason is unable to fulfill
its obligations under the TIA, the Company could have increased future
obligations.
The Company's subsidiaries also have various litigation matters pending
which arise out of the ordinary course of their businesses. In the opinion of
management, the ultimate resolution of these matters will not have a material
adverse effect on the financial position or results of operations of the
Company.
(B) ENVIRONMENTAL
In addition to the general matters noted above, the operations of the
Company and its subsidiary companies are subject to numerous Federal, state and
local laws and regulations providing a comprehensive program of controlling the
discharge of materials into the environment and remediation of certain waste
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disposal sites by responsible parties for the protection of public health and
the environment. Various Federal and state occupational safety and health laws
and regulations also apply to the work place environment.
These current environmental control requirements are comprehensive and
continue to reflect a long-term trend towards increasing stringency as these
laws and regulations are subject to periodic renewal and revision. The Company
expects these requirements will continue to become even more stringent in future
years. The U.S. EPA's proposal for revision of the National Ambient Air Quality
Standards for particulate matter and ozone are recent examples of this trend.
The Company, principally through its operating subsidiaries, is and, from
time to time in the future, will be involved in administrative proceedings
involving the issuance, or renewal, of environmental permits relating to the
conduct of its business. The final issuance of these permits is generally
resolved on terms satisfactory to the Company. In the future, the Company
expects such permits will be similarly resolved on satisfactory terms; however,
from time to time, the Company is required to pursue administrative and/or
judicial appeals prior to achieving a resolution of the terms of such permits.
The Company, from time to time, may be involved in administrative or
judicial proceedings with various regulatory agencies or private parties in
connection with claims that the Company's operations have violated certain
environmental laws, conditions of existing permits or with respect to the
disposal of materials at waste disposal sites. The resolution of such matters
may involve the payment of civil penalties, damages, remediation expenses and/or
the expenditure of funds to add or modify pollution control equipment.
The Company has made substantial capital investments in environmental
control facilities to achieve compliance with these laws, incurring expenditures
of $6.8 million for environmental projects (exclusive of any such expenditures
related to the New Facility) in the period from 1995 through 1997. The New
Facility was constructed under a lump sum fixed price contract of which it is
estimated that $9.8 million was capitalized in 1996 for environmental compliance
excluding capitalized interest. A nominal amount was expended during 1997 to
maintain environmental compliance. The Company anticipates making further
capital expenditures of approximately $3.9 million for environmental projects
during 1998. In addition, maintenance, depreciation and operating expenses
attributable to installed environmental control facilities are having, and will
continue to have, an adverse effect upon the Company's earnings. Although all of
the Company's operating subsidiary companies are affected by these laws and
regulations, similar to other steel manufacturing operations, they have had, and
are expected to continue to have, a greater impact upon the Company's steel
manufacturing subsidiary than on the Company's other operating subsidiaries.
Waste Remediation Matters
Pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C., Section 9601 et seq. ("Superfund") and
similar state statutes, liability for remediation of property, including waste
disposal sites, contaminated by hazardous materials may be imposed on present
and former owners or operators of such property and generators or transporters
of such materials to a waste disposal site (i.e., Potentially Responsible
Parties, "PRPs"). The Company and its operating subsidiaries have been named as
PRPs with respect to several such sites. In each instance, the Company's
investigation has evidenced either: i) the Company had not disposed of waste
materials at the site and was not properly named as a PRP; or, ii) the Company's
proportion of materials disposed of at such sites is of sufficiently small
volume to qualify the Company as a de minimis contributor of waste material at
such sites. This de minimis status has been confirmed at essentially all of the
applicable sites.
Although no assurances can be given that new information will not be
uncovered which would cause the Company and its subsidiaries to lose their de
minimis status at these sites, or, that the Company, or its subsidiary
companies, would not be named as PRPs at additional sites, the Company presently
believes its total costs for existing sites will not be material.
10
<PAGE> 11
In addition to the foregoing Superfund sites, the following waste
remediation matters relating to the Company's subsidiary companies are currently
pending:
Leeds, Alabama -- Elevated Levels of Lead. In September 1992, Packaging
hired a consulting engineering firm for the purpose of providing soil sampling
and analysis in connection with an application for a storm water permit for its
Leeds, Alabama, plant. Pursuant to an investigation conducted by the consultant,
elevated levels of lead were discovered on the property, including one area of
the property wherein buried drums were discovered containing lead.
In January 1993, Packaging advised the seller of this plant site that the
sampling program was initiated in conjunction with filing a Notice of Intent for
the plant for coverage under the Alabama Department of Environmental
Management's General Storm Water Discharge Permit. The seller was advised that
the results of the sampling program showed runoff from the west parking lot area
contained elevated concentrations of lead in the samples. Pursuant to
Packaging's investigation, Packaging advised the seller that all evidence
indicated these conditions were present on the property at the time the seller
owned the property and were present at the time the Leeds, Alabama, facility was
sold to the Company on March 29, 1989; and, pursuant to the terms of the
purchase and sale agreements relating to this property, the seller is
responsible for remediating any lead or other contaminants located on this
property. Without admitting or denying its liability, the seller has retained a
consultant to conduct a full investigation, sampling and analysis of the
property.
During the first quarter of 1998, Packaging and seller entered into an
agreement to share the costs to remediate the lead contamination at the Leeds
plant site consistent with the Alabama DEM's regulations. The Company presently
believes, based upon contractor estimates, that Packaging's share of the total
costs for this remediation activity will not be material.
Administrative and Litigation Matters
The Company, or its operating subsidiaries are currently involved in the
following matters relating to administrative regulations which affect, or may
affect, the operations, the permits or the issuance of permits; or litigation
relating to the Company:
Acme Steel Company -- NPDES Permit. In 1991, the Illinois Environmental
Protection Agency ("IEPA"), issued Acme a permit, pursuant to the National
Pollution Discharge Elimination System ("NPDES") regulating non-contact water
discharges to the Calumet River from Acme's coke and blast furnace plant
facilities. The NPDES permit contains strict temperature and storm water
discharge limitations. Acme filed an appeal of certain conditions of the permit
with the Illinois Pollution Control Board ("IPCB"); and on July 7, 1995 the IPCB
granted Acme's Petition for an Adjusted Standard and relief from the temperature
limitations. Subsequent to the IPCB's decision, Acme and IEPA engaged in
negotiations to resolve these permit conditions; and, through modification of
certain provisions in the permit and the implementation of best management
practices, Acme anticipated achieving control of Acme's storm water discharge to
an extent that it will achieve compliance with other permit conditions. On
September 13, 1996, Acme received IEPA's new revised draft NPDES permit.
Although this revised draft permit resolved all prior issues, it included for
the first time additional discharge limits and biomonitoring requirements for
certain chemicals used in the plant's water treatment system. On June 10, 1997,
IEPA issued a draft final NPDES permit for Acme's comment. Acme and the IEPA
continued to exchange data and comments regarding the interpretation of certain
of the revised terms and conditions of this final permit; and, in November, 1997
concluded all issues regarding the terms and conditions of the permit to Acme's
satisfaction. The new NPDES permit expires May 31, 2002.
Acme Steel Company -- Revised Construction Permit for New Facility
Acme filed a revised construction permit application with the IEPA to
correct certain operating assumptions underlying the original construction
permit issued by IEPA on March 4, 1994. IEPA issued the revised construction
permit and published notice for public comment and hearing on December 18, 1997
in a form acceptable to Acme. Acme has been advised by IEPA that the U.S. EPA
has raised certain questions with IEPA regarding several of the revised terms of
this revised construction permit. The IEPA and
11
<PAGE> 12
U.S. EPA, with additional information supplied by Acme, continue to discuss
these questions. Acme believes the revised permit will ultimately be issued by
IEPA and approved by U.S. EPA in a form and with revised terms acceptable to
Acme. No assurances can be given however that any changes required by U.S. EPA
to the revised construction permit issued by will be acceptable to Acme, or that
a delay or failure by IEPA to issue the revised construction permit previously
agreed to by Acme would not have a material adverse effect on Acme's operations.
Removal Credits and Pretreatment. The Metropolitan Water Reclamation
District of Greater Chicago ("MWRD") is a publicly owned treatment works
("POTW"). The MWRD applied to the U.S. Environmental Protection Agency ("U.S.
EPA") for authority to revise categorical pretreatment standards to reflect the
actual treatment provided by the MWRD for waste water discharged to the MWRD's
POTW by industrial users ("Removal Credits"). These revised categorical
standards, reflecting Removal Credits are essential for Acme to avoid
expenditures for control of 4AAP phenol found in discharges from its coke
by-products plant and for control of certain other pollutants. In 1987, the
MWRD's application was denied by the U.S. EPA and the denial was upheld by the
United States Court of Appeals for the Seventh Circuit. The U.S. EPA maintained
that under the Clean Water Act and decisions of U.S. District Courts, it could
not approve Removal Credits until it promulgated "sludge criteria."
In 1993, the U.S. EPA promulgated sludge criteria which included the
possibility of granting Removal Credits for phenols in certain circumstances.
Acme petitioned the MWRD for Removal Credits. Following this petition, the MWRD
again applied to the U.S. EPA for authority to grant Removal Credits. While this
application was denied, the U.S. EPA stated that if the Agency amends its
regulations with respect to phenol 4AAP, either as a result of the petition
filed by the MWRD or independently, the MWRD may then resubmit its application.
Acme, together with a similarly situated steel company, filed Comments and
a Request for Reconsideration and Clarification concerning the 4AAP phenol
component of U.S. EPA's Standards for Disposal of Sludges with the U.S. EPA and
filed a Petition for Review of the U.S. EPA's decision with the Court of Appeals
for the DC Circuit. Both the Comments and Request for Reconsideration and the
Petition for Review are pending. The steel companies filed a motion with the DC
Circuit Court to stay the appeal pending U.S. EPA's consideration of the
Comments and Administrative Request for Reconsideration and Clarifications. The
Court granted this Motion on September 14, 1994. On September 10, 1996 Acme
filed, along with the other steel company, with U.S. EPA a phenol risk
assessment document supporting the granting of Removal Credits for 4AAP phenol.
To date, there has been no decision by U.S. EPA. Acme continues to challenge the
U.S. EPA's denial of the Removal Credits application and pursue administrative
and legal remedies. U.S. EPA is currently preparing a proposed administrative
rule intended to address the Removal Credits issue, however, at this time Acme
is unable to determine whether such an administrative rule, if promulgated and
adopted, will adequately address Acme's 4AAP phenol Removal Credits issues. Acme
could be subject to allegations it is in violation of currently applicable
pretreatment standards and could be required to negotiate appropriate
resolutions with the U.S. EPA and the MWRD resulting in the payment of penalties
if its administrative and/or legal challenges are unsuccessful. In the event
Acme is unsuccessful in its challenge of U.S. EPA's actions, capital
expenditures required to bring its discharges to the MWRD into compliance with
the current applicable pretreatment standards were estimated to be approximately
$6 million in 1994.
Although Acme is vigorously pursuing its administrative and judicial
remedies and would vigorously contest any action to assess civil penalties
against Acme, the Company does not have sufficient information to estimate its
potential liability, if any, if Acme's efforts to obtain such relief, or contest
such penalty assessments, are not successful.
Illinois State Implementation Plan for Particulates. Acme, together with
other Illinois steel companies, engaged in extensive discussions with the IEPA
leading to the development of regulations governing the emissions of particulate
matter from various steel manufacturing facilities operated by Acme and others.
These regulations were submitted to the U.S. EPA for approval as part of IEPA's
State Implementation Plan ("SIP").
12
<PAGE> 13
On November 18, 1994, the U.S. EPA conditionally approved these
regulations. The conditions imposed by the U.S. EPA for this SIP approval
required a commitment by the IEPA to adopt more stringent rules for various
sources at Acme and other steel companies. Acme, together with other steel
companies, filed a Petition for Review of U.S. EPA's action in the U.S. Court of
Appeals for the Seventh Circuit on January 4, 1995 (Docket No. 95-1025).
The steel companies, including Acme, are engaged in discussions with the
U.S. EPA and the IEPA regarding the need for these more stringent rules and what
additional particulate emission controls, if any, may be appropriate or required
under Federal law. These discussions and the Petition for Review are pending and
no estimate can be made when U.S. EPA and IEPA will resolve these issues or
whether additional emission controls will be required or the cost of such
controls at this time.
Acme Steel Company-Melt Shop Desulfurization Fugitive and Coke Plant
Pushing Emissions. Following internal reviews of current desulfurization
requirements, Acme determined that existing environmental controls for
desulfurizing molten iron at its Riverdale, Illinois, melt shop were not
satisfactory for the control of fugitive emissions from this process in view of
the higher percentage of molten iron needing desulfurization as a result of
increased market place demands for lower sulfur content in finished steel goods
sold by Acme and future melt shop operations when the New Facility is
operational.
Acme, after completion of its internal review and preliminary engineering
evaluation, requested a meeting and began discussions with the U.S. EPA and IEPA
in August 1994 regarding an improved fugitive emission control program. During
these discussions, concerns were raised regarding fugitive emissions from the
iron transfer station and Acme included this operation in its new emission
control system. The cost of this emission control system, which was completed in
the first quarter of 1996, was approximately $2.8 million.
Although discussions were ongoing with the U.S. EPA and installation of the
new melt shop iron desulfurization, iron transfer and skimming emission control
system was nearing completion, on February 7 and March 1, 1996 U.S. EPA issued
two Notices of Violation ("NOV") seeking penalties for past violations and for
any economic benefit which may have accrued to Acme by reason of a delay in
achieving compliance with fugitive emission regulations for the iron
desulfurization and transfer operations at the melt shop and pushing emissions
at the Coke Plant under U.S. EPA's civil penalties policies. On April 10, 1996,
a civil action was filed by the U.S. Attorney on behalf of U.S. EPA (U.S. vs.
Acme Steel Company, U.S. Dist. C. N.D. Ill. E.D., Case No. 96 C 2076) seeking
recovery of civil penalties with respect to emissions from its Riverdale steel
plant melt shop. During the fourth quarter of 1997 Acme and the U.S. Attorney's
office in Illinois and Region V of U.S. EPA reached agreement upon the terms and
conditions of a settlement of this civil action, subject to review and approval
by the Department of Justice and U.S. EPA headquarters in Washington, D.C. Under
the terms of the settlement agreement, Acme has agreed to pay a civil penalty in
the amount of $410,000 and to construct a supplemental environmental project
("SEP") in the amount of $2.8 million. The settlement agreement has been signed
by U.S. EPA and lodged with the Court. Following the administrative procedures
of public notice for comment, it is anticipated the settlement agreement will be
finalized, without material modification, and entered by the Court during the
first half of 1998.
Bay Point, California -- California Proposition 65 -- Lead. On June 10,
1996, after service of a 60-day notice of intent to file suit, Communities for a
Better Environment ("CBE") filed an action in the Superior Court of Contra Costa
County, California (Communities for a Better Environment vs. Acme Packaging
Corporation, et al., Case No. 96-02505) seeking injunctive and declaratory
relief and civil penalties based on Packaging's alleged failure to warn
residents near the plant of exposure to lead emissions from the Bay Point plant
("Proposition 65").
On February 18, 1998 the Court signed and entered an Order in this case
approving a settlement agreement between Packaging and CBE pursuant to which
Packaging agreed to install air pollution control equipment meeting a specified
lead emission limitation commencing within 120 days following issuance of a
permit to construct, pay CBE the sum of $35,000 for CBE's use in its efforts to
further reduce toxic pollution in California and the sum of $175,000 for CBE's
costs and attorney's fees.
13
<PAGE> 14
Other Matters
1986 Reorganization Matters. Pursuant to an Agreement and Plan of
Reorganization dated as of March 5, 1986, (the "Reorganization") between the
Company and Interlake, both parties entered into a Cross-Indemnification
Agreement, dated May 29, 1986, (the "Agreement") more specifically described in
Exhibit 10.2 to the Company's Annual Report/Form 10-K filed with the U.S.
Securities Exchange Commission for the fiscal year 1992.
Pursuant to the terms of this Agreement, for a period of ten (10) years
following the date of the Spin-Off (as said term is identified in the
Reorganization documents), the Company undertook to defend, indemnify and hold
Interlake and its affiliates harmless from and against any and all Claims, as
that term is defined in the Agreement, occurring either before or after the date
of the Reorganization and which arose out of or are related to the Acme
Business, as that term is defined in the Agreement. The Acme Business is more
specifically defined in the Agreement as the iron and steel and domestic U.S.
steel strapping business as conducted by the Company on or about May 29, 1986.
Similarly, and for the same period of time, Interlake undertook to defend,
indemnify and hold the Company and its affiliates harmless from and against all
Claims, as that term is defined in the Agreement, occurring either before or
after the date of the Reorganization related to the operation of all businesses
and properties currently owned, directly or indirectly, by Interlake or any
subsidiary of Interlake (other than the Company and its affiliates) and relating
to the Transferred Property, as that term is defined in the Reorganization
Agreement (but excluding the Acme Business), and, any business and properties
discontinued or sold by Interlake Inc. prior to May 29, 1986, including any
discontinued or sold businesses or property which, if continued, would be part
of the Acme Business. The indemnification by Interlake with respect to any
Claims incurred in connection with or arising out of or related to the Interlake
Business, as that term is defined more specifically in the Agreement, includes
but is not limited to environmental matters relating to the Interlake Businesses
whether brought by governmental agencies or private entities. These
environmental matters include, without limitation, the lawsuit captioned People
of the State of Illinois v. Waste Management of Illinois, Interlake, Inc. and
First National Bank of Western Springs,Circuit Court of Cook County, Illinois
(No. 85 L 30162); the disposal of materials at the landfill operated by
Conservation Chemical located at Gary, Indiana, to the extent such materials
originated at the plant of Gary Steel Company; and, operation of facilities by
predecessors of Interlake, Inc. at Duluth, Minnesota.
Pursuant to this Agreement, Interlake has provided the defense and paid all
costs in the matter of City of Toledo v. Beazer Materials and Services, Inc.,
Successor-in-interest to Koppers Company, Inc., Toledo Coke Corporation, The
Interlake Corporation, successor-in-interest to Interlake, Inc., The Interlake
Companies, Inc., successor-in-interest to Interlake, Inc., Acme Steel Company,
Successor-in-interest to Interlake, Inc., United States District Court, Northern
District of Ohio, Western Division, Case No. 90 CV 7344, which is an action for
declaratory and injunctive relief by the City of Toledo (the "City") to recover
its past and future costs and damages associated with the presence of and
release of hazardous substances, hazardous wastes, solid waste, industrial waste
and other waste at or about approximately 1.7 acres of property located on Front
Street in Toledo, Ohio which the City acquired from Toledo Coke Corporation for
road widening purposes (the "Site"). On September 30, 1996, the City, Beazer
East, Inc. (successor-in-interest to Beazer Materials and Services, Inc./Koppers
Company, Inc.) and the Toledo-Lucas County Port Authority entered into an
agreement regarding the completion and funding of roadwork and related
environmental work; and, the City, Beazer East, Inc. and the Interlake
Defendants (Acme Steel Company, The Interlake Corporation and The Interlake
Companies, Inc.) entered into a settlement agreement wherein the City released
Beazer East, Inc. and the Interlake Defendants from all claims and agreed to
dismiss the City's action against these defendants. On October 10, 1996, the
Court entered a consent order dismissing with prejudice all of the City's
claims. The Court did not dismiss the cross-claims pending between Beazer East,
Inc. and the Interlake Defendants. In November 1995, the Court granted the
Interlake defendants' motion for summary judgment seeking indemnification by
Beazer East, Inc. for any environmental liabilities owed to the City. Beazer
filed its appeal of this decision. On November 22, 1996, the U.S. Sixth Circuit
Court of Appeals reversed the District Court's summary judgment order in favor
of the Interlake Defendants and remanded the indemnification issue back to the
District Court for trial. During the fourth quarter of 1997, Acme was advised
that Interlake, on behalf of
14
<PAGE> 15
all of the Interlake Defendants, and Beazer East, Inc. entered into a settlement
agreement resolving all of the cross-claims between the parties. The settlement
agreement releases the Interlake Defendants from the cross-claims asserted in
the Beazer East, Inc. Cross-claims with respect to the Site and the Interlake
Defendants agreed to indemnify and hold harmless Beazer East, Inc. for certain
claims regarding materials transported off the Site by any Interlake Defendants
prior to acquisition of the Site by Beazer East, Inc.
Interlake also has and continues to provide indemnification to the Company
for the Duluth, Minnesota, facility which has been designated as a Superfund
Site pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Section 9601, et seq. (the "Duluth
Site"). Interlake's estimate, obtained from publicly filed documents, of the
potential remediation costs of contaminated soils pursuant to a plan approved on
September 25, 1995 by the Minnesota environmental agency ("MPCA"). Interlake
reported the soil remediation was substantially completed in 1997. The MPCA also
requested Interlake to investigate and evaluate remediation alternatives for the
underwater sediments at the Duluth Site. Interlake reports that consultants have
substantially completed an investigation of the sediments; and, based on this
investigation Interlake has commenced reviewing potential remediation
alternatives with MPCA and other parties. Interlake indicates it is unable to
provide meaningful estimates of the potential cost estimates of such
remediation, if any is deemed appropriate, until the investigation is complete
and remediation alternatives are reviewed with the MPCA.
In March 1996, the MPCA named the successors of certain coal tar processors
as additional parties responsible for a portion of the underwater sediments at
the Duluth Site.
To date, Interlake has met its obligations under the Cross-Indemnification
Agreement with respect to all matters covered therein affecting the Company,
including those matters related to litigation and environmental matters. The
Company does not have sufficient information to determine the potential
liability of the Company, if any, for the matters covered by the Agreement in
the event Interlake fails to meet its obligations thereunder in the future. In
the event Interlake, for any reason, was unable to fulfill its obligations under
the Cross-Indemnification Agreement, the Company could have increased future
obligations which could be significant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the last quarter of the last fiscal year.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol AMI and on the Toronto Stock Exchange under the symbol AMK. As of
March 2, 1998 there were 11,680,164 shares of Common Stock outstanding held by
5,100 shareholders of record.
The (i) high and low sales price for the Common Stock as traded since May
21, 1996 on the New York Stock Exchange and (ii) high and low bid information
for the Common Stock as traded until May 20, 1996 on
15
<PAGE> 16
the NASDAQ National Market System under the symbol ACME, on a quarterly basis
for three most recent fiscal years are as follows:
<TABLE>
<CAPTION>
QUARTER 1997 1996 1995
------- ---- ---- ----
<S> <C> <C> <C>
First....................................... 19 5/8-14 7/8 18 3/4-13 3/4 19 1/4-14 1/2
Second...................................... 17 3/4-13 19 -16 3/8 17 1/2-15 1/4
Third....................................... 17 5/8-13 1/2 17 1/2-13 7/8 18 1/4-15 1/4
Fourth...................................... 15 7/8- 8 1/2 21 5/8-17 17 1/4-13 3/4
</TABLE>
No dividends have been declared or paid on the Common Stock since the
Company became a public company in 1986. Special payments in 1992 and 1988
reflected the redemption of preferred stock purchase rights. Certain covenants
in the Company's debt instruments and agreements limit its ability to pay future
dividends (see Notes to Consolidated Financial Statements titled Debt
Refinancing and Long-term Debt on page 52 hereof).
16
<PAGE> 17
(THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.)
17
<PAGE> 18
ITEM 6. SELECTED FINANCIAL DATA
TEN YEARS IN REVIEW (dollars in thousands except for per share data)
Certain amounts have been reclassified to conform with the 1997 presentation.
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C>
INCOME DATA
Net sales $488,030 $498,242
- -------------------------------------------------------------------------------------
Gross profit 4,151 50,465
- -------------------------------------------------------------------------------------
Income (loss) before income taxes, extraordinary loss and
cumulative effect of changes in accounting principle (76,642) 5,093
- -------------------------------------------------------------------------------------
Income tax provision (benefit) (29,124) 2,426
- -------------------------------------------------------------------------------------
Net income (loss) before extraordinary loss and cumulative
effect of changes in accounting principle (47,518) 2,667
- -------------------------------------------------------------------------------------
Extraordinary loss, net of taxes (23,411)
- -------------------------------------------------------------------------------------
Cumulative effect of changes in accounting principle, net
of tax (6,276)
- -------------------------------------------------------------------------------------
Net income (loss) (77,205) 2,667
=====================================================================================
PER SHARE DATA -- BASIC
Net income (loss) $(6.64) $0.23
- -------------------------------------------------------------------------------------
Weighted average shares outstanding (in thousands) 11,628 11,598
=====================================================================================
PER SHARE DATA -- DILUTED
Income (loss) before extraordinary loss and cumulative
effect of changes in accounting principle $(4.09) $0.23
- -------------------------------------------------------------------------------------
Extraordinary loss (2.01)
- -------------------------------------------------------------------------------------
Cumulative effect of changes in accounting principle (0.54)
- -------------------------------------------------------------------------------------
Net income (loss) (6.64) 0.23
- -------------------------------------------------------------------------------------
Shareholders' equity 16.02 22.45
- -------------------------------------------------------------------------------------
Weighted average shares outstanding (in thousands) 11,628 11,663
=====================================================================================
BALANCE SHEET
Current assets $192,443 $182,837
- -------------------------------------------------------------------------------------
Property, plant and equipment, net 550,350 560,725
- -------------------------------------------------------------------------------------
Total assets 829,081 805,749
- -------------------------------------------------------------------------------------
Current liabilities 100,300 115,940
- -------------------------------------------------------------------------------------
Long-term debt (including current maturities) 424,743 310,085
- -------------------------------------------------------------------------------------
Shareholders' equity 186,343 260,701
=====================================================================================
CASH FLOWS
Net cash provided by (used for) operating activities $(60,712) $ 46,034
- -------------------------------------------------------------------------------------
Net cash used for investing activities (28,599) (85,562)
- -------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities 62,541 19,709
- -------------------------------------------------------------------------------------
Net increase (decrease) in cash (26,770) (19,819)
=====================================================================================
RATIO ANALYSIS
Gross profit margin 0.8% 10.1%
- -------------------------------------------------------------------------------------
Pre-tax margin (15.6)% 1.0%
- -------------------------------------------------------------------------------------
Net margin (9.7)% 0.5%
- -------------------------------------------------------------------------------------
Return on shareholders' equity (34.5)% 1.1%(f)
- -------------------------------------------------------------------------------------
Debt as a percentage of total capitalization 69% 54%
=====================================================================================
ADDITIONAL INFORMATION
Depreciation $ 39,410 $ 16,591
- -------------------------------------------------------------------------------------
Capital expenditures 45,929 199,122
- -------------------------------------------------------------------------------------
Working capital 92,143 66,897
=====================================================================================
</TABLE>
(a) Computed before cumulative effect on prior years of changes in accounting
principle.
(b) Includes result of cumulative effect on prior years of changes in accounting
principle and an $8.2 million reduction in shareholder's equity related to a
minimum pension liability adjustment.
(c) Includes a $13.1 million reduction in shareholder's equity related to a
minimum pension liability adjustment.
(d) Includes a $0.7 million increase in shareholder's equity related to a
minimum pension liability adjustment.
(e) Includes a $3.8 million reduction in shareholder's equity related to minimum
pension liability adjustment.
(f) Includes a $9.5 million increase in shareholder's equity related to minimum
pension liability adjustment.
18
<PAGE> 19
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988
==========================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$521,619 $ 522,880 $457,406 $391,562 $376,951 $446,042 $439,412 $412,453
- ------------------------------------------------------------------------------------------
84,448 76,288 45,223 29,546 27,748 36,712 51,886 54,493
- ------------------------------------------------------------------------------------------
44,135 28,693 10,432 (4,522) (3,050) 9,388 26,126 30,982
- ------------------------------------------------------------------------------------------
15,889 9,935 4,173 (1,673) (732) 3,755 9,926 12,393
- ------------------------------------------------------------------------------------------
28,246 18,758 6,259 (2,849) (2,318) 5,633 16,200 18,589
- ------------------------------------------------------------------------------------------
(1,787) 1,010
- ------------------------------------------------------------------------------------------
(50,323)
- ------------------------------------------------------------------------------------------
28,246 16,971 6,259 (53,172) (2,318) 5,633 16,200 19,599
==========================================================================================
$2.44 $2.19 $1.16 $(9.85) $(0.43) $1.05 $3.01 $3.46
- ------------------------------------------------------------------------------------------
11,574 7,751 5,385 5,396 5,373 5,356 5,374 5,667
==========================================================================================
$2.44 $2.38 $1.15 $(0.53) $(0.43) $1.05 $3.00 $3.22
- ------------------------------------------------------------------------------------------
(0.22) 0.17
- ------------------------------------------------------------------------------------------
(9.32)
- ------------------------------------------------------------------------------------------
2.44 2.16 1.15 (9.85) (0.43) 1.05 3.00 3.39
- ------------------------------------------------------------------------------------------
21.42 19.31 15.39 16.55 28.13 28.65 27.63 24.62
- ------------------------------------------------------------------------------------------
11,596 7,873 5,439 5,396 5,373 5,356 5,393 5,776
==========================================================================================
$258,787 $ 273,842 $170,394 $148,860 $134,192 $126,497 $149,199 $102,572
- ------------------------------------------------------------------------------------------
379,178 148,829 115,539 120,689 129,730 133,419 116,552 104,024
- ------------------------------------------------------------------------------------------
754,743 682,330 333,869 300,702 290,736 286,603 285,275 224,070
- ------------------------------------------------------------------------------------------
108,330 81,391 77,197 59,425 50,027 50,026 57,683 66,331
- ------------------------------------------------------------------------------------------
276,831 265,055 49,333 56,000 59,500 59,500 59,500 9,500
- ------------------------------------------------------------------------------------------
248,111 223,278 83,203 89,295 150,664 152,370 147,106 130,390
==========================================================================================
$ 59,541 $ 47,422 $ 16,041 $ 24,018 $ 21,721 $ 24,045 $ 20,805 $ 23,252
- ------------------------------------------------------------------------------------------
(83,547) (334,124) (11,749) (6,562) (10,611) (37,693) (38,804) (16,014)
- ------------------------------------------------------------------------------------------
410 312,897 (3,072) 34 (443) (328) 50,155 (15,410)
- ------------------------------------------------------------------------------------------
(23,596) 26,195 1,220 17,490 10,667 (13,976) 32,156 (8,172)
==========================================================================================
16.2% 14.6% 9.9% 7.5% 7.4% 8.2% 11.8% 13.2%
- ------------------------------------------------------------------------------------------
8.5% 5.5% 2.3% (1.2)%(a) (0.8)% 2.1% 5.9% 7.5%
- ------------------------------------------------------------------------------------------
5.4% 3.3% 1.4% (0.7)%(a) (0.6)% 1.3% 3.7% 4.8%
- ------------------------------------------------------------------------------------------
12.0% 11.1%(d) 7.3%(c) (59.5)%(b) (1.5)% 3.8% 11.6% 15%
- ------------------------------------------------------------------------------------------
53% 54% 40% 40%(b) 28% 28% 29% 7%
==========================================================================================
$ 13,613 $ 15,514 $ 15,234 $ 14,705 $ 14,224 $ 13,031 $ 12,031 $ 10,742
- ------------------------------------------------------------------------------------------
244,374 56,339 11,749 7,557 10,611 28,604 14,960 9,314
- ------------------------------------------------------------------------------------------
150,457 192,451 93,197 89,435 84,165 76,471 91,516 36,241
==========================================================================================
</TABLE>
19
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company's operations are divided into two segments, the Steel Making
Segment and the Steel Fabricating Segment. The Steel Making Segment consists of
Acme Steel and includes all of the facilities used in the manufacturing and
finishing of hot rolled sheet and strip steel. The Steel Fabricating Segment
includes the operations of Acme Packaging, Alpha Tube and Universal, all of
which use flat rolled steel in their respective fabricating processes.
Steel Making Segment. In August 1994, the Company commenced construction of
the New Facility. The New Facility, which cost approximately $400 million
(excluding capitalized interest and certain internal costs), allows Acme Steel
to build on its strengths as a low cost producer of high quality liquid steel by
significantly increasing its overall efficiency and reducing its finished steel
production costs. In addition, the New Facility was substantially completed in
September 1996, and the first coil was produced on October 3, 1996. The New
Facility is the world's first complex to product hot rolled sheet and strip
steel by combining highly efficient mini-mill casting and rolling technology
with the traditional high quality liquid steel produced via the blast
furnace/basic oxygen furnace technology.
In February 1996, Acme Steel and its joint venture partner began
construction of NACME, adjacent to the New Facility. NACME pickles, oils, slits
and packages steel coils produced by the New Facility.
The decommissioning of the Company's old ingot-based steel making facility
was completed in June 1997. Currently, the New Facility was operating at
approximately 85 percent of its designed capacity. As part of ramping up the New
Facility, the Company has successfully tested and cast 99 percent of the steel
grades comprising the Company's traditional product mix. The New Facility is
expected to be operating at full production capability during the second half of
1998. Pickling operations at NACME began in December 1996. Due to a five-month
delay in delivery of the slitting equipment to NACME, slitting operations did
not begin until late in the second quarter of 1997.
The Company's ability to produce hot rolled sheet and strip steel is
currently outpacing steel finishing capability. The delayed start-up of NACME
and the resulting reliance on outside processors have adversely affect on-time
shipping capabilities and results of operations. The Company is working with
NACME and other outside processors to increase slitting productivity and
increase shipping capability.
Commencing in the fourth quarter of 1996, the Company began phasing in the
New Facility and concurrently phasing out the redundant ingot-based operations
which phase out was completed in June 1997. The Company had, and will continue
to have, significant net losses due, among other factors, to ongoing production
cost inefficiencies resulting from the New Facility operating at less than
optimal production levels, increased depreciation and interest expense related
to the New Facility, expenses relating to the phase out of the redundant
ingot-based operations, and delayed start-up and related operational issues at
the NACME Facility which have led to reduced shipments and higher inventory
levels. The production inefficiencies and the inventory buildup significantly
reduced cash flow from operations. The ongoing ramp-ups of the New Facility and
NACME are expected to continue to adversely affect the Company's results of
operations and cash flow through the first half of 1998.
Steel Fabricating Segment. Acme Packaging, Alpha Tube and Universal have
all continued to record strong operating results. The operating income of these
companies continues to partially offset the operating losses of Acme Steel
during the ramp-up at the New Facility and are relatively unaffected by the
transitional issues faced by the Steel Making Segment.
20
<PAGE> 21
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage
relationship that items in the Statements of Operations bear to net sales.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
--------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net sales................................................. 100.0% 100.0% 100.0%
Costs and expenses:
Cost of products sold................................... 91.3 86.7 81.3
Depreciation expense.................................... 7.9 3.2 2.5
----- ----- -----
Gross profit.............................................. 0.8 10.1 16.2
Selling and administrative expense...................... 8.0 7.1 6.8
Training and Pre-start-up -- New Facility............... 2.0
----- ----- -----
Operating income (loss)................................... (7.2) 1.0 9.4
Interest expense, net................................... (8.4) (0.1) (1.3)
Other net............................................... 0.1 0.3
Income tax (benefit) provision............................ (5.9) 0.5 3.0
----- ----- -----
Income (loss) before extraordinary loss and cumulative
effect of a change in accounting principle.............. (9.7) 0.5 5.4
Extraordinary loss, net of tax............................ (4.8)
Cumulative effect of a change in accounting principle, net
of tax.................................................. (1.3)
----- ----- -----
Net income (loss)......................................... (15.8)% 0.5% 5.4%
===== ===== =====
</TABLE>
Fiscal 1997 as compared to fiscal 1996
NET SALES. Consolidated net sales of $488.0 million for the year ended
December 28, 1997 were $10.2 million lower than the prior year. An unfavorable
change in product mix and a decrease in non-flat roll product shipments as
compared to the prior year were partially offset by increased sales volume by
the Steel Fabricating Segment.
Steel Making Segment. In 1997, net sales for the Steel Making Segment were
$299.6 million, a $35.8 million, or 11 percent, decrease over last year. Sales
to unaffiliated customers decreased 9 percent or $20.3 million while
intersegment sales of $97.2 million fell below the prior year level by 14
percent. Decreases in the affiliate shipments, an unfavorable product mix, lower
sales of non-flat roll products and lower selling prices accounted for the
decreased sales in 1997 versus the prior year. Sales of non-flat roll products
totaled $34.1 million, which was $21.0 million lower than the prior year, due to
decreased volume.
Steel Fabricating Segment. The Steel Fabricating Segment net sales of
$286.7 million in 1997 were $9.5 million, or 3 percent, above the comparable
period in the prior year. Sales volume gains for the fabricating businesses
along with slightly higher selling prices accounted for the improvement.
21
<PAGE> 22
COMPARATIVE SALES BY SEGMENT. The table below summarizes the relative sales
contribution of the products comprising the Company's business segments for the
past three years.
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Sheet and strip steel....................................... 35% 33% 33%
Semi-finished steel......................................... 1% 2% 4%
Iron products and other..................................... 6% 9% 8%
-- -- --
TOTAL STEEL MAKING SEGMENT.................................. 42% 44% 45%
== == ==
Steel strapping and strapping tools......................... 33% 33% 32%
Welded steel tube........................................... 17% 16% 15%
Auto and light truck jacks.................................. 8% 7% 8%
-- -- --
TOTAL STEEL FABRICATING SEGMENT............................. 58% 56% 55%
== == ==
</TABLE>
GROSS PROFIT. The gross profit for the year ended December 28, 1997 was
$4.2 million which was $46.3 million lower than the gross profit recorded during
last year's comparable period. The decrease in gross profit was due primarily to
(i) non-recurring expense relating to the phase-out of the redundant ingot-based
operations (completed in June 1997); (ii) continuing product cost inefficiencies
resulting from the New Facility operating at substantially less than optimal
production utilization; (iii) lower revenues and margins associated with an
unfavorable product mix; (iv) lower shipments to affiliates; and (v) delayed
start-up and related operational issues at NACME which have led to reduced
shipments and higher inventory levels. Also, increased depreciation expense
related primarily to the New Facility further reduced gross margin in the year
ended December 28, 1997. The gross profit, as a percentage of sales, was 0.8
percent in 1997 compared to 10.1 percent for the comparable period in 1996.
SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative expense was
$39.2 million in the year ended December 28, 1997, $3.7 million higher than the
prior year. Selling and administrative expenses represented approximately 8
percent of net sales in 1997 compared to 7 percent for the comparable period in
1996. The increased expense was principally due to costs related to the upgrade
of the Company's management information systems.
OPERATING INCOME/LOSS. The operating loss for the Company in 1997 of $35.1
million was $40.1 million lower than the $5.0 million of income recorded during
the same period in 1996.
Steel Making Segment. The Steel Making Segment recorded a $61.9 million
loss from operations in the year ended December 28, 1997, an additional loss of
$47.0 million compared to the loss recorded in the comparable period in 1996.
The significant decline in earnings in the year ended December 28, 1997 was
the result of (i) non-recurring expense relating to the phase-out of the
redundant ingot-based operations (completed in June 1997); (ii) continuing
product cost inefficiencies resulting from the New Facility operating at
substantially less than optimal production utilization; (iii) lower revenues and
margins associated with an unfavorable product mix; (iv) lower shipments to
affiliates; (v) delayed start-up and related operational issues at NACME which
have led to reduced shipments and higher inventory levels; and (vi) depreciation
expense increased $22.9 million over the prior year primarily related to the New
Facility. Sales to external customers were 9 percent lower than last year's
comparable period, and sales to the Steel Fabricating Segment were 14 percent
lower than in the comparable period of 1996. Approximately 66 percent of steel
shipments and 57 percent of gross margin in 1997 was attributable to external
customers while the remainder was generated by sales to the Steel Fabricating
Segment, as compared to 64 percent of steel shipments and 66 percent of gross
margin in the prior year.
Steel Fabricating Segment. The Steel Fabricating Segment's operating income
of $26.8 million for the year ended December 28, 1997 was $6.9 million higher
than in last year's comparable period, due primarily to a slight increase in
selling prices and lower raw material costs.
22
<PAGE> 23
INTEREST INCOME/EXPENSE. Interest income for the year ended December 28,
1997 totaled $0.5 million, falling below the prior year's comparable period by
$5.1 million. The decrease in interest income is the result of reduced cash and
investment balances resulting from payments for the construction of the New
Facility and increased operating requirements. Interest expense of $41.6 million
for the year 1997 was $35.4 million higher compared to the same period of the
prior year. During 1997, all interest costs were being charged against earnings
versus 1996 when a significant amount of these costs were capitalized as part of
the New Facility. In the year ended December 29, 1996, interest costs of $31.3
million were capitalized as part of the New Facility. The Company ceased
capitalization of interest costs relating to the New Facility mid-way through
the fourth quarter of 1996.
INCOME TAXES. Income tax benefits from operations recorded in the year
ended December 28, 1997 totaled $29.1 million based on an effective tax rate of
38 percent as compared to $2.4 million of tax expense in the year ended December
29, 1996, based on a 47.6 percent effective tax rate. In addition, tax benefits
related to extraordinary loss item of $14.3 million and a cumulative effect of a
change in accounting principle of $3.8 million were both based on an effective
tax rate of 38 percent. The Company has net operating losses available through
the year 2012 to reduce the Company's future tax liability by $55.4 million.
NET INCOME (LOSS). The Company recorded a loss of $77.2 million, or $6.64
per share in the year ended December 28, 1997 versus income of $2.7 million, or
$0.23 per share, recorded in the prior year. Per share amounts for 1997 and 1996
are based on the weighted average number of common shares calculated on both the
basic and fully diluted methods, which are equivalent in amount. Net income
includes an extraordinary loss and cumulative effect of an accounting change --
see sections entitled "Refinancing of Debt" and "Recently Issued Accounting
Pronouncements."
Fiscal 1996 as compared to fiscal 1995
NET SALES. Consolidated net sales of $498.2 million for the year ended
December 29, 1996 were less than the prior year by $23.4 million. The lower
sales level was a result of lower selling prices, $13.8 million, with decreased
shipments accounting for the remainder.
Steel Making Segment. In 1996, net sales for the Steel Making Segment of
$335.3 million were $21.5 million, or approximately 6 percent below 1995. Sales
to unaffiliated customers decreased 5 percent to $222.6 million while
inter-segment sales of $112.7 million were 8 percent lower than in 1995. The
decrease in the Steel Making Segment's net sales was the result of a 4 percent
decrease in average selling prices and lower flat-rolled and semi-finished
shipments. Sales of iron products during the period of $39.6 million
approximated the same amount in the prior year, while semi-finished product
sales decreased $5.9 million compared to the prior year.
Steel Fabricating Segment. Steel Fabricating Segment net sales of $277.2
million in 1996 were 4 percent lower than the prior year. Lower shipment volume
accounted for $7.1 million of the sales decline while lower average selling
prices decreased sales by $4.2 million versus last year.
Sales of strapping and strapping tools of $163.5 million in 1996 were $3.4
million lower than sales in the previous year. Lower average selling prices
decreased net sales by $1.0 million, with reduced shipment volume contributing
$2.4 million to the sales decline.
Steel tube sales for 1996 totaled $77.1 million, down 5 percent from the
prior year. The $3.7 million reduction in sales was due almost entirely to lower
average selling prices as shipments approximated the prior year. Average selling
prices fell 4 percent, contributing to a decrease of $3.4 million in sales
versus 1995.
Sales of jacks and lifting tools for cars and light trucks totaled $36.6
million in 1996, a 10 percent decline from the prior year. The decrease was due
almost entirely to lower sales volume, as selling prices remained consistent
with the prior year.
GROSS PROFIT. The gross profit in 1996 of $50.5 million was $34.0 million
lower than 1995, primarily reflecting lower selling prices for the majority of
the Company's products and significant increases in operating
23
<PAGE> 24
costs in the Steel Making Segment. Gross profit, as a percentage of net sales,
was 10.1 percent in 1996 versus 16.2 percent in 1995.
SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative expense
totaled $35.5 million (7.1 percent of net sales) and $35.6 million (6.8 percent
of net sales) for the years ended 1996 and 1995, respectively.
OPERATING INCOME. Operating income in 1996 was $5.0 million compared to
$48.8 million in 1995. The significant decrease of $43.8 million was primarily
due to lower steel selling prices, higher Steel Making Segment operating costs,
and training and pre-start-up costs related to the New Facility.
Steel Making Segment. The Steel Making Segment recorded an operating loss
of $14.9 million in 1996 compared to the $28.5 million of operating income
recorded during 1995. The loss was driven by a 4 percent decrease in selling
prices reducing results by $12.6 million as compared to the prior period.
Flat-rolled and semi-finished shipments to external customers were approximately
11,000 tons or 3 percent lower while shipments to the Steel Fabricating Segment
were 13,000 tons or 5 percent lower than 1995. Also contributing to the Steel
Making Segment's loss for 1996 were higher costs relating to the purchase and
usage of natural gas and utilities and other raw material costs along with
increased maintenance, repair and labor costs. Employee training and
pre-start-up costs of $9.9 million and production inefficiencies related to
start-up of the New Facility of $4.7 million also decreased income from
operations as compared to the prior year. Finally, the Steel Making Segment
began depreciating the new facility midway through the fourth quarter of 1996
which resulted in an additional depreciation expense of $3.0 million. Somewhat
offsetting the decreased shipments and increased costs were increased iron
product sales contributing $4.0 million of operating income in 1996 versus $2.2
million in the prior year. Approximately 64 percent of shipments and 66 percent
of gross profit in 1996 were attributable to external customers while the
remainder was generated by sales to the Steel Fabricating Segment. In 1995, the
Steel Making Segment shipped 61 percent and derived 65 percent of it gross
profit from external customers.
Steel Fabricating Segment. Operating income for the Steel Fabricating
Segment of $20.0 million in 1996 was $0.4 million lower than in 1995. The slight
decrease was due primarily to lower average selling prices and higher operating
costs at Alpha Tube. Operating income for the remaining fabricating businesses
approximated the prior year.
INTEREST EXPENSE. Interest expense decreased $14.6 million in 1996 from the
prior year. The decrease in interest expense resulted from the increased
capitalization of interest costs associated with the New Facility. The Company
ceased capitalization of interest cost midway through the fourth quarter of 1996
coincident with the start-up of commercial production at the New Facility and
charged these interest costs to current operations. Interest costs totaled $37.5
million in 1996, compared to $35.4 million in the previous year. Interest costs
of $31.3 million were capitalized as part of the New Facility in 1996, compared
to $14.6 million in the prior year.
INTEREST INCOME. Interest income was $8.7 million lower than in 1995 due
entirely to reduced cash and investment balances resulting from progress
payments for the construction of the New Facility.
OTHER NON-OPERATING INCOME. Other non-operating income in 1996 was $0.6
million which was $1.2 million lower than 1995 due primarily to a $1.6 million
gain on the sale of the Company's interest in a West Virginia coal producing
property during 1995.
INCOME TAX EXPENSE. Income tax expense in 1996 totaled $2.4 million based
on a 47.6 percent effective tax rate as compared to the $15.9 million expense in
1995, based on a 36 percent effective rate. The higher 1996 tax rate is
attributable to increased state tax expense resulting from the distribution of
1996 earnings among the various states in which the Company conducts business.
The 1995 tax rate was favorably impacted by significant earnings on tax-free
investments.
NET INCOME. The Company recorded earnings of $2.7 million, or $0.23 per
share in 1996 versus the $28.2 million, or $2.44 per share in 1995.
24
<PAGE> 25
Fiscal 1995 as compared to fiscal 1994
NET SALES. Consolidated net sales of $521.6 million in 1995 were
essentially even with the prior year. Increased net sales from higher selling
prices of $19.4 million and an increase in sales of iron products of $27.8
million were completely offset by reduced shipments.
Steel Making Segment. In 1995, the Company continued to enjoy improved
selling prices that benefited the steel industry as a whole. Net sales of the
Steel Making Segment advanced slightly to $356.8 million in 1995, a 2 percent
improvement over 1994. Sales to unaffiliated customers rose 2 percent to $234.9
million, while intersegment sales of $121.9 million were 3 percent higher than
in 1994. The Steel Making Segment's net sales benefited from a 3 percent
increase in average selling prices, resulting principally from a partial
realization of price increases that were announced during 1994.
Steel Fabricating Segment. Steel Fabricating Segment net sales of $288.4
million in 1995 were 2 percent lower than the prior year. Lower shipment volume
accounted for $19.3 million of the sales decline, partially offset by increased
average selling prices that contributed $14.3 million versus 1994.
Sales of strapping and strapping tools of $166.8 million in 1995 matched
sales in the previous year. Higher average selling prices increased net sales by
$8.3 million, which was completely negated by lower shipment volume.
Alpha Tube's sales for 1995 totaled $80.8 million, down 2 percent from the
prior year. The $2.0 million reduction in sales was due entirely to lower
shipments as average selling prices increased over last year. Average selling
prices rose 10 percent, contributing an increase of $6.2 million in sales versus
1994. Higher selling prices were completely offset by a 12 percent decline in
shipments, which was largely due to on going rationalization of the customer
base towards higher margin accounts.
Sales of jacks and lifting tools for cars and light trucks totaled $40.8
million in 1995, a 7 percent decline from the prior year. The decrease versus
1994 was due almost entirely to lower sales volume, as selling prices remained
consistent with the prior year.
GROSS PROFIT. The gross margin for 1995 of $84.4 million was $8.2 million
higher than in 1994, primarily reflecting higher selling prices for the majority
of the Company's products. Gross profit, as a percentage of net sales, was 16.2
percent in 1995 versus 14.6 percent in 1994.
SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative expense
totaled $35.6 million (6.8 percent of net sales) and $33.2 million (6.4 percent
of net sales) in 1995 and 1994, respectively. The increase in expense was
principally the result of higher salaries and increases in other administrative
costs.
OPERATING INCOME. Operating income in 1995 was $48.8 million compared to
$33.6 million in 1994.
Steel Making Segment. Operating income for the Steel Making Segment totaled
$28.5 million in 1995, a $14.0 million improvement over 1994. Operating income
in 1994 was reduced by a pre-tax $9.5 million non-cash, nonrecurring charge
recorded to recognize the impairment of existing steel making facilities and
contractual employee reduction costs related to the decision to proceed with the
New Facility. Exclusive of this charge, 1995's operating income increased $4.5
million due almost entirely to higher average selling prices of 3 percent and
increased sales of iron products of 194 percent. Offsetting a substantial
portion of this benefit was a decline in shipments, increased retiree and active
medical costs, increased pension expense, and higher administrative expenses.
Flat-rolled shipments to external customers decreased 50,000 tons compared to
1994, while shipments to the Steel Fabricating Segment were 6,000 tons lower. In
1995, approximately 61 percent of flat-rolled sales and 65 percent of gross
profit were attributable to external customers. The remaining sales and gross
profit were generated by shipments to the Steel Fabricating Segment. In 1994,
approximately 65 percent of sales and gross profit of the Steel Making Segment
resulted from flat-rolled sales to external customers, while shipments to the
Fabricating Segment accounted for the remaining 35 percent of sales and gross
profit.
Steel Fabricating Segment. Operating income for the Steel Fabricating
Segment of $20.4 million in 1995 was $1.3 million higher than 1994. The segment
was aided by the continued strength of the economy and increased average selling
prices in 1995, somewhat offset by lower shipment volumes. The strapping
business
25
<PAGE> 26
benefited from a 6 percent increase in average selling prices established in
December 1994 which was mostly offset by lower shipment volume. Alpha Tube's
results advanced due to improved mix resulting from a shift away from commodity
markets to specialty value-added tubing products. In addition, Alpha Tube's
business benefited from lower raw material costs for certain of its higher
margin products. Lower demand in 1995 left Universal's operating income lower
than that of 1994.
INTEREST EXPENSE. Interest expense increased $6.8 million over 1994. The
increase in interest expense resulted from the issuance of $255.0 million of
long-term debt in the third quarter of 1994. Interest costs totaled $35.4
million in 1995, compared to $16.0 million in 1994. Interest costs of $14.6
million were capitalized as part of the New Facility in 1995, compared to $2.0
million in the prior year.
INTEREST INCOME. Interest income was $6.6 million higher than in 1994 due
entirely to additional interest income earned on the net proceeds received from
the issuance of debt and equity in the third quarter of 1994, less payments to
the general contractor relating to the New Facility.
OTHER NON-OPERATING INCOME. Other non-operating income in 1995 was $1.8
million due primarily to a $1.6 million gain on the sale of the Company's
interest in a West Virginia coal producing property. The comparable period in
1994 included income of $1.4 million consisting principally of a refund of prior
years' utility costs.
INCOME TAX EXPENSE. Income tax expense in 1995 totaled $15.9 million based
on a 36 percent effective tax rate as compared to the $9.9 million expense in
1994, based on a 34.6 percent effective rate.
NET INCOME. The Company recorded the highest earnings level in its history
posting $28.2 million, or $2.44 per share in 1995 versus the $17.0 million, or
$2.16 per share, recorded in 1994. In 1994, net income per share was reduced by
an extraordinary expense item of $1.8 million, net of tax, or 22 cents per share
related to the early extinguishment of debt in the third quarter.
LIQUIDITY AND CAPITAL RESOURCES
The Company's current liquidity requirements include working capital needs,
cash interest payments and capital investments. The Company intends to finance
its current operating and investing activities with cash from operations and to
the extent necessary by borrowing against its $80 million Working Capital
Facility. Consistent with this strategy the Company has borrowed against its
Working Capital Facility during the year ending December 28, 1997 and will
continue to borrow and repay amounts from time to time as conditions warrant. At
December 28, 1997, the Company had $5.0 million in outstanding borrowings and an
additional $72.0 million available for borrowing under its Working Capital
Facility.
Operating activities used $60.7 million of cash in 1997 primarily due to a
combination of operating losses, cash interest payments, and increased working
capital requirements. Investing activities decreased cash $28.6 million as the
sale of short-term investments (net of purchases) of $11.8 million was more than
offset by $40.4 million of cash payments for capital expenditures.
At the end of 1997, the Company's cash and cash equivalents balance was
$6.5 million, down $26.8 million from the December 29, 1996 balance and the
Company's long-term indebtedness was $424.7 million. Long-term debt increased
$114.7 million as a result of operating losses, working capital requirements and
the cost of refinancing debt (see section entitled "Refinancing of Debt").
Capital expenditures totaled $45.9 million (on an accrual basis) during
1997. Total capital expenditures for the New Facility were $27.1 million. The
remaining $18.8 million of capital expenditures were for the upgrade of the
Company's management information systems, Acme Packaging plastic strapping
lines, and the replacement and rehabilitation of various production facilities.
During 1998, 1999 and 2000 the Company projects capital expenditures of
approximately $35.0 million, $25.0 million and $53.0 million, respectively. The
year 2000 includes a capital expenditure of approximately $34.0 million to
reline and upgrade the blast furnace at Acme Steel's Chicago facility.
Working capital of $92.1 million at the end of 1997 was $25.2 million
higher than the year-end 1996. The Company currently has a Working Capital
Facility through January 2002, which provides each operating
26
<PAGE> 27
subsidiary borrowing availability with an overall limitation of $80 million. The
Company's ratio of debt to total capitalization was .69 to 1.
The Company is currently undergoing an enterprise-wide assessment of its
Year 2000 expenses.
REFINANCING OF DEBT
In December 1997, the Company completed a refinancing to lower its interest
rates, extend maturities and provide financial flexibility. As part of the
refinancing, the Company entered into a new $175 million Senior Secured Credit
Agreement, and issued $200 million of 10.875 percent Senior Unsecured Notes. The
proceeds from these transactions were used to: (i) retire 85.9 percent of the
existing 12.5 percent Senior Secured Notes, and 99.4 percent of the existing
13.5 percent Senior Secured Discount Notes (collectively, the "1994 Notes"),
which were successfully tendered in December 1997; and (ii) retire the existing
$50 million Term Loan; and (iii) repay borrowings under its Working Capital
Facility. The Working Capital Facility was also amended and restated with
modifications to certain compliance covenants and extend the agreement.
In connection with the above repurchase of the 1994 Notes, the Company paid
premiums aggregating $30.0 million. In addition, the Company incurred expense of
approximately $7.8 million primarily relating to the write-off of previously
capitalized debt issuance costs. Such balances are recorded as an Extraordinary
Loss ($23.4 million net of tax) for the year ended December 28, 1997. The
Company incurred $11.6 million of capitalized debt issuance cost related to the
Senior Secured Credit Agreement and the Senior Unsecured Notes.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
SFAS No. 130, "Reporting Comprehensive Income," issued in June 1997, will
require the Company to disclose, in financial statement format, all non-owner
changes in equity. Such disclosures include, for example, cumulative foreign
currency translation adjustments, certain minimum pension liabilities and
unrealized gains and losses on available-for-sale securities. This Statement is
effective for fiscal years beginning after December 15, 1997 and requires
presentation of prior period financial statements for comparability purposes.
The Company expects to adopt this Statement beginning with its 1998 financial
statements.
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," issued in June 1997, established standards for reporting
information about operating segments in annual financial statements and interim
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. Operating segments
are components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. Generally,
financial information is required to be reported on the basis that is used
internally for evaluating segment performance and deciding how to allocate
resources to segments. The Company is currently evaluating its options for
disclosure and will adopt the Statement in its financial statements for the year
ending December 27, 1998.
On November 20, 1997, the Emerging Issues Task Force ("EITF") of the
Financial Accounting Standards Board issued EITF No. 97-13 "Accounting for Costs
Incurred in Connection with a Consulting Contract for an Internal Project that
Combines Business Process Reengineering and Information Technology
Transformation". EITF 97-13 requires that certain costs related to reengineering
be expensed as incurred. Under the Company's previous accounting policy, a
portion of such costs related to ongoing expenditures to upgrade the Company's
management information system were capitalized during 1996 and 1995.
In accordance with EITF No. 97-13, the Company recorded a cumulative effect
adjustment in the fourth quarter of 1997. As such, the Company expensed the
unamortized capitalized portion of related costs as required by the EITF No.
97-13, recording a cumulative effect of a change in accounting principle of
$10.1 million, $6.2 million after tax.
27
<PAGE> 28
OUTLOOK
The Company expects to continue to improve performance of the New Facility
and refine operating practices. The Company expects to continue to recognize
losses in the first half of 1998 excluding the sale of Universal (see section
entitled "Assets Held for Sale"). Acme Steel's operations will continue to be
adversely impacted by a lower margin product mix and production cost
inefficiencies relating primarily to unfavorable material yields as the New
Facility approaches a steady state. The Company expects to increase shipments,
improve customer delivery performance and achieve most of the projected cost
benefits during 1998. The Company also expects to continue to improve the
product mix to better serve its niche product customers while increasing profit
margins.
Beyond this transition period, the Company remains confident that it will
achieve most of the projected benefits of the New Facility. When the New
Facility reaches a steady state it is expected to reduce cash manufacturing
costs by approximately $70 per ton. The additional depreciation associated with
the New Facility is approximately $24 per ton. Additionally, it will increase
shipping capability and broaden the range of products while improving the
quality of all commercial steel products providing the Company access to a
larger portion of the marketplace. As of the fourth quarter of 1997, the Company
had achieved cash cost savings related to the New Facility of approximately $25
per ton.
For 1998, the Steel Fabricating Segment earnings are expected to remain
relatively steady excluding the gain on the sale of Universal (see section
entitled "Assets Held for Sale"). The Alpha Tube subsidiary expects the
relocation and consolidation of its tube mills to reach full completion in mid
1998. The consolidation project will improve material handling capability,
provide increased capacity of large diameter tubing and lower operating costs.
The Company is currently undergoing an enterprise-wide assessment of its
Year 2000 expenses.
FORWARD LOOKING STATEMENTS
Actual events might materially differ from those projected in the above
forward looking statements. The timely and successful ramp-up of the New
Facility and successful installation of new computer systems are important
assumptions in the Company's projection of a fully operational facility and the
related earnings benefits. If there are substantial unexpected production
interruptions or other start-up difficulties; if the New Facility fails to
achieve certain production utilization and material yields, if quality levels or
performance objectives represented and guaranteed by the equipment suppliers and
turnkey general contractor (although mitigated by liquidated damages of up to
20% of the contract which was reduced from 30% as the general contractor has
fulfilled some of the construction and completion obligations, as well as
certain performance obligations) are not achieved, the competitive and financial
position of the Company could be materially adversely affected. In addition to
uncertainties with respect to the New Facility, forward looking statements
regarding all of the Company's businesses, but particularly the Steel Making
Segment, are based on various economic assumptions. These assumptions include
projections regarding: selling prices for the Company's products; costs for
labor, energy, raw material, supplies, pensions and active and retiree medical
care; volume or units of product sales; competitive developments in the
marketplace by domestic and foreign competitors and the competitive impact of
the facilities which are expected to compete with the Company's products;
general economic developments in the United States or abroad affecting the
business of the Company's customers, including the strength of the U.S. dollar
against other currencies and similar events which may affect the costs, price or
volume of products sold by the Company.
There can be no assurances the results of these factors will conform with
the Company's assumptions and projections. If one or more of these factors fails
to meet the Company's projections, the adverse impact on the Company's business
and financial results could be significant. Similarly, in the event the
Company's assumptions and projections are too conservative, the Company's
performance may exceed these forecasts.
28
<PAGE> 29
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to Item 8 is submitted in a separate section of this Annual
Report on Form 10-K. See the audited Consolidated Financial Statements and
Financial Statement Schedule of Acme Metals Incorporated attached hereto and
listed in the index on page 37 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
29
<PAGE> 30
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information with respect to directors of the Company is incorporated herein
by reference to the proxy statement for the Annual Meeting of Shareholders of
the Company to be held on April 23, 1998 under the caption Election of
Directors.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth, as of March 2, 1998, with respect to each
executive officer of the Company, his name and all positions held during the
last five years. Executive officers are elected annually by the Board of
Directors of the Company to serve for a term of office of one year and until
their successors are elected.
As a result of a Reorganization effected May 25, 1992, Acme Steel Company
became and continues to be a subsidiary of the Company. Prior to the
Reorganization some of the executive officers listed below were executive
officers of Acme Steel Company and, at the time of the reorganization, were
elected to similar positions within the Company.
<TABLE>
<CAPTION>
NAME AND AGE POSITIONS DURING LAST 5 YEARS
------------ -----------------------------
<S> <C>
Brian W. H. Marsden (66).................. Chairman of the Company since April 15, 1996; Chairman
and Chief Executive Officer of the Company January 1,
1993 to April 15, 1996; Chairman, President and Chief
Executive Officer of the Company May 1992 to December
1992; President and Chief Executive Officer of Acme
Steel Company (integrated steel producer) June 1986 to
May 1992.
Stephen D. Bennett (49)................... President and Chief Executive Officer of the Company
since April 15, 1996; President and Chief Operating
Officer of the Company January 1, 1993 to April 15,
1996; Group Vice President of the Company May 1992 to
December 1992; Group Vice President of Acme Steel
Company January 1992 to May 1992; Vice President --
Operations of Acme Steel Company June 1990 to December
1991; General Manager of Fairfield Works, USS Division
of USX Corporation (integrated steel producer) December
1987 to May 1990. Director of the Company since January
1, 1993.
Derrick T. Bay (50)....................... Controller of the Company since January 19, 1998; Vice
President -- Finance of Acme Steel Company January 1992
to January 19, 1998; Director of Operational Accounting
of Acme Steel Company September 1989 to January 1992.
Robert W. Dyke (50)....................... Senior Vice President -- Fabricating of the Company
since February 1, 1998; Group Vice President of the
Company September 1, 1997 to January 31, 1998; President
of Acme Packaging Corporation since 1992.
James W. Hoekwater (51)................... Treasurer of the Company since July 1, 1994; Corporate
Controller of ITT Rayonier (producer of pulp and wood
products) December 1989 to March 1994.
</TABLE>
30
<PAGE> 31
<TABLE>
<CAPTION>
NAME AND AGE POSITIONS DURING LAST 5 YEARS
------------ -----------------------------
<S> <C>
James N. Howell (56)...................... Senior Vice President -- Steel of the Company and
President of Acme Steel Company since February 1, 1998;
Executive Vice President of Acme Steel Company September
1, 1997 to January 31, 1998; Senior Vice President and
Chief Operating Officer of National Steel Company 1993
to 1994; Vice President of National Steel Company 1975
to 1993.
Gerald J. Shope (54)...................... Vice President -- Human Resources of the Company since
April 1, 1995; Vice President -- Human Resources of Acme
Steel Company January 1, 1992 to March 31, 1995;
Director -- Human Resources of Acme Steel Company June
1986 to December 1991.
Edward P. Weber, Jr. (60)................. Vice President, General Counsel and Secretary of the
Company since May 25, 1992; Vice President, General
Counsel and Secretary of Acme Steel Company June 1986 to
May 25, 1992.
Jerry F. Williams (58).................... Vice President, Finance and Administration and Chief
Financial Officer of the Company since May 25, 1992;
Vice President -- Finance and Administration and Chief
Financial Officer of Acme Steel Company May 1986 to May
25, 1992.
</TABLE>
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is incorporated herein by
reference to the proxy statement for the Annual Meeting of Shareholders of the
Company to be held on April 23, 1998 under the caption Executive Compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to security ownership of certain beneficial owners and
management is incorporated herein by reference to the proxy statement for the
Annual Meeting of Shareholders of the Company to be held on April 23, 1998 under
the caption Security Ownership of Certain Beneficial Owners and Management.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to certain relationships and related transactions is
incorporated herein by reference to the proxy statement for the Annual Meeting
of Shareholders of the Company to be held on April 23, 1998 under the caption
Certain Relationships and Related Transactions.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements:
The response to this portion of Item 14 is submitted in a separate
section of this report. See the audited Consolidated Financial
Statements and Financial Statement Schedule of Acme Metals Incorporated
attached hereto and listed on the index on page 37 of this report.
(2) Financial Statement Schedule:
The response to this portion of Item 14 is submitted in a separate
section of this report. See the audited Consolidated Financial
Statements and Financial Statement Schedule of Acme Metals Incorporated
attached hereto and listed on the index on page 37 of this report.
31
<PAGE> 32
(3) Exhibits
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S> <C>
3. Articles of Incorporation and By-Laws
3(i) Restated Certificate of Incorporation of the Registrant, as
amended by the Certificate of Designation of Junior
Participating Preferred Stock, Series A. Filed as Exhibit
3(i) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 (the "1995 10-K") and
incorporated by reference herein.
3(ii) Amended and Restated By-Laws of the Registrant as adopted
February 27, 1997. Filed as Exhibit 3(ii) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 29, 1996 (the "1996 10-K") and incorporated
by reference herein.
4. Instruments Defining the Rights of Security Holders, Including
Indentures
4.1 Rights Agreement dated as of July 15, 1994 between the
Registrant and First Chicago Trust Company of New York,
Rights Agent. Filed as Exhibit 1 to the Form 8-A dated
August 8, 1994 and Form 8-A/A dated August 12, 1994 and
incorporated by reference herein.
4.2 Indenture dated as of August 11, 1994 among the Registrant
and Guarantors and Shawmut Bank Connecticut, National
Association as trustee, relating to the 12 1/2% Senior
Secured Notes due 2002. Filed as Exhibit 4.2 to Amendment
No. 2 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 25, 1994 (Amendment No. 2 to the
"1994 10-K") and incorporated by reference herein.
4.3 Form of 12 1/2% Senior Secured Note due 2002 (included as
Exhibit A to Exhibit 4.2). Filed as Exhibit 4.3 to Amendment
No. 2 to the 1994 10-K and incorporated by reference herein.
*4.4 First Supplemental Indenture dated as of December 3, 1997
among the Registrant and Guarantors and State Street Bank
and Trust Company, as Trustee, relating to the 12 1/2%
Senior Secured Notes due 2002.
4.5 Indenture dated as of August 11, 1994 among the Registrant
and Guarantors and Shawmut Bank, Connecticut, National
Association as trustee, relating to the 13 1/2% Senior
Secured Discount Notes due 2004. Filed as Exhibit 4.4 to
Amendment No. 2 to the 1994 10-K and incorporated by
reference herein.
4.6 Form of 13 1/2% Senior Secured Discount Note due 2004
(included as Exhibit A to Exhibit 4.4). Filed as Exhibit 4.5
to Amendment No. 2 to the 1994 10-K and incorporated by
reference herein.
*4.7 First Supplemental Indenture dated as of December 3, 1997
among the Registrant and Guarantors and State Street Bank
and Trust Company, as Trustee, relating to the 13 1/2%
Senior Secured Discount Notes due 2004.
4.8 Collateral Agency Agreement dated as of August 11, 1994
among the Registrant, Acme Steel Company ("Acme Steel"),
Acme Packaging Corporation ("Acme Packaging"), the Trustees,
the Term Loan Agent and the Collateral Agent. Filed as
Exhibit 4.6 to Amendment No. 2 to the 1994 10-K and
incorporated by reference herein.
*4.9 Amended and Restated Collateral Agency Agreement dated as of
December 18, 1997 by and among the Registrant, Acme Steel,
Acme Packaging, Bankers Trust Company and State Street Bank
and Trust Company, as Collateral Agents.
4.10 Company Stock Pledge Agreement dated as of August 11, 1994
between the Registrant and the Collateral Agent. Filed as
Exhibit 4.7 to Amendment No. 2 to the 1994 10-K and
incorporated by reference herein.
4.11 Subsidiary Stock Pledge Agreement dated as of August 11,
1994 among Acme Steel, Acme Packaging and the Collateral
Agent. Filed as Exhibit 4.8 to Amendment No. 2 to the 1994
10-K and incorporated by reference herein.
4.12 Security Agreement dated as of August 11, 1994 between Acme
Steel and the Collateral Agent. Filed as Exhibit 4.9 to
Amendment No. 2 to the 1994 10-K and incorporated by
reference herein.
</TABLE>
32
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S> <C>
4.13 Mortgage dated as of August 11, 1994 from Acme Steel to the
Collateral Agent. Filed as Exhibit 4.10 to Amendment No. 2
to the 1994 10-K and incorporated by reference herein.
4.14 Intercreditor Agreement dated as of August 11, 1994 among
the Registrant, Acme Steel, Harris Trust and Savings Bank
and the Collateral Agent. Filed as Exhibit 4.11 to Amendment
No. 2 to the 1994 10-K and incorporated by reference herein.
4.15 Disbursement Agreement dated as of August 11, 1994 between
the Registrant and the Collateral Agent. Filed as Exhibit
4.12 to Amendment No. 2 to the 1994 10-K and incorporated by
reference herein.
4.16 Form of Registration Rights Agreement dated March 28, 1994
among the Registrant and The Substituted Purchasers. Filed
as Exhibit 4.13 to the Registrant's Annual Report on Form
10K for the fiscal year ended December 25, 1994 (the "1994
10-K") and incorporated by reference herein.
*4.17 Indenture dated as of December 18, 1997 between the
Registrant, as Issuer, Acme Steel, as Guarantor, and Harris
Trust and Savings Bank, as Trustee, relating to the 10 7/8%
Senior Notes due 2007.
*4.18 Registration Rights Agreement dated December 18, 1997
between the Registrant, Morgan Stanley & Co. Incorporated,
Salomon Brothers, Inc., First Chicago Capital Markets, Inc.,
and Nesbitt Burns Securities Inc., as placement agent.
10. Material contracts
10.1 Tax Indemnification Agreement between Acme Steel and The
Interlake Corporation ("Interlake") dated May 30, 1986.
Filed as Exhibit 10.1 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 27, 1992, SEC
File# 0-14727 (the "1992 Form 10-K") and incorporated by
reference herein.
10.2 Cross-Indemnification Agreement between Acme Steel and
Interlake dated May 29,1986. Filed as Exhibit 10.2 to the
1992 Form 10-K and incorporated by reference herein.
10.3 $80,000,000 Credit Agreement by and among Acme Group and
Harris Trust and Savings Bank individually and as Agent and
the Lenders which are or become parties hereto dated as of
August 11, 1994 (the "Credit Agreement"). Filed as Exhibit
10.3 to the 1994 10-K and incorporated by reference herein.
10.4 First Amendment to the Credit Agreement dated as of May 21,
1995. Filed as Exhibit 10.4 to the 1995 10-K and
incorporated by reference herein.
10.5 Second Amendment to the Credit Agreement dated August, 1995.
Filed as Exhibit 10.5 to the 1995 10-K and incorporated by
reference herein.
10.6 Third Amendment to the Credit Agreement dated April 5, 1996.
Filed as Exhibit 10.6 to the 1996 10-K and incorporated by
reference herein.
*10.7 Fourth Amendment to the Credit Agreement dated April 1,
1997.
*10.8 Fifth Amendment to the Credit Agreement dated September 27,
1997.
10.9 Assignment and Acceptance dated August 24, 1994 relating to
the Credit Agreement (National City Bank, Assignee). Filed
as Exhibit 10.4 to the 1994 10-K and incorporated by
reference herein.
10.10 Assignment and Acceptance dated August 24, 1994 relating to
the Credit Agreement (NBD Bank, N.A., Assignee). Filed as
Exhibit 10.5 to the 1994 10-K and incorporated by reference
herein.
10.11 Assignment and Acceptance dated August 24, 1994 relating to
the Credit Agreement (Mercantile Bank of St. Louis National
Association, Assignee). Filed as Exhibit 10.6 to the 1994
10-K and incorporated by reference herein.
10.12 Assignment and Acceptance dated September 1, 1994 relating
to the Credit Agreement (General Electric Capital
Corporation, Assignee). Filed as Exhibit 10.7 to the 1994
10-K and incorporated by reference herein.
</TABLE>
33
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S> <C>
*10.13 Amended and Restated $80,000,000 Credit Agreement dated as
of December 18, 1997 by and among Acme Group and Harris
Trust and Savings Bank and The First National Bank of
Chicago, as Co-Agents (the "Working Capital Facility").
*10.14 First Amendment to the Working Capital Facility effective as
of December 18, 1997.
10.15 Term Loan Agreement dated August 4, 1994 among the
Registrant, the Lenders and Lehman Commercial Paper Inc.
(the "Term Loan"). Filed as Exhibit 10.8 to Amendment No. 2
to the 1994 10-K and incorporated by reference herein.
10.16 Amendment to the Term Loan dated as of December 15, 1994.
Filed as Exhibit 10.9 to the 1994 10-K and incorporated by
reference herein.
*10.17 $175,000,000 Credit Agreement dated as of December 18, 1997
among the Registrant, Various Lenders, Bankers Trust
Company, as Administrative Agent, and Morgan Stanley Senior
Funding, Inc., as Syndication Agent and Arranger, and
ancillary documents.
10.18 Form of Engineering, Procurement and Construction Contract
dated July 28, 1994 between Acme Steel and Raytheon
Engineers & Constructors, Inc. Filed as Exhibit 10.41 to
Amendment No. 3 to Form S-1 Registration Statement, No.
33-54101, and incorporated by reference herein.
10.19 Amendment 1 to Engineering, Procurement and Construction
Contract between Acme Steel and Raytheon Engineers &
Constructors, Inc. dated as of July 28, 1994. Filed as
Exhibit 10.11 to the 1994 10-K and incorporated by reference
herein.
10.20 Amendment 2 to Engineering, Procurement and Construction
Contract between Acme Steel and Raytheon Engineers &
Constructors, Inc. dated as of March 21, 1995. Filed as
Exhibit 10.12 to the 1994 10-K and incorporated by reference
herein.
10.21 Joint Development Program Agreement dated July 28, 1994
between Acme Steel and SMS Schloemann-Siemag, AG. Filed as
Exhibit 10.13 to the 1994 10-K and incorporated by reference
herein.
10.22 Agreement between the Registrant and Reynold C. MacDonald
dated June 1, 1992.(1) Filed as Exhibit 10.3 to the 1992
10-K and incorporated by reference herein.
10.23 Amendment to the Agreement between Registrant and Reynold C.
MacDonald dated June 1, 1995. Filed as Exhibit 10.17 to the
1995 10-K and incorporated by reference herein.
10.24 Retainer Agreement between Registrant and Brian W. H.
Marsden dated March 1, 1997. Filed as Exhibit 10.19 to the
1996 10-K and incorporated by reference herein.
10.25 Non-Employee Directors Retirement Plan dated February 22,
1990 as adopted May 25, 1992.(1) Filed as Exhibit 10.4 to
the 1992 10-K and incorporated as reference herein.
10.26 Form of Indemnification Agreement for directors and certain
officers of the Registrant. Filed as Exhibit 10.20 to the
1995 10-K and incorporated as reference herein.
10.27 Amendment and Restatement of the 1994 Executive Incentive
Compensation Plan of Acme Metals Incorporated as adopted
April 24, 1997.(1) Filed as Appendix B to the Proxy
Statement for the Annual Meeting of Shareholders held on
April 24, 1997 (the "1997 Proxy Statement") and incorporated
by reference herein.
10.28 Deferred Compensation Agreement dated May 24, 1986 between
the Registrant and Brian W. H. Marsden as adopted May 25,
1992.(1) Filed as Exhibit 10.15 to the 1992 10-K and
incorporated by reference herein.
10.29 Acme Metals Incorporated Deferred Compensation Plan as
Amended and Restated effective January 1, 1994 and adopted
November 21, 1994.(1) Filed as Exhibit 10.23 to the 1994
10-K and incorporated by reference herein.
*10.30 Key Executive Severance Pay Plan dated January 22, 1987, as
adopted May 25, 1992.(1) Filed as Exhibit 10.24 to the 1995
10-K and incorporated by reference herein. Exhibit 1 amended
through January 29, 1998.(1)
</TABLE>
34
<PAGE> 35
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S> <C>
10.31 Acme Metals Incorporated 1994 Stock Incentive Program as
adopted April 28, 1994.(1) Filed as Exhibit 10.25 to the
1994 10-K and incorporated by reference herein.
10.32 Acme Metals Incorporated 1997 Non-Employee Directors' Stock
Option Plan.(1) Filed as Appendix A to the 1997 Proxy
Statement and incorporated by reference herein.
10.33 Acme Metals Incorporated Employee Stock Ownership Plan
Restated effective September 1, 1995. Filed as Exhibit 10.27
to the 1996 10-K and incorporated by reference herein.
10.34 Acme Metals Incorporated Salaried Employees' Retirement
Savings Plan Restated effective September 1, 1995. Filed as
Exhibit 10.28 to the 1996 10-K and incorporated by reference
herein.
10.35 Consolidated Pension Plan for Acme Salaried and Hourly
Employees as Amended and Restated effective November 1, 1994
("Consolidated Pension Plan") with Appendix A to the
Consolidated Pension Plan as Amended and Restated effective
July 31, 1994.(1) Filed as Exhibit 10.44 to the 1994 10-K
and incorporated by reference herein.
10.36 Appendix B to the Consolidated Pension Plan as Amended and
Restated effective September 1, 1993.(1) Filed as Exhibit
10.30 to the 1995 10-K and incorporated by reference herein.
10.37 Appendix C to the Consolidated Pension Plan effective
December 31, 1993.(1) Filed as Exhibit 10.31 to the 1995
10-K and incorporated by reference herein.
10.38 First Amendment to the Consolidated Pension Plan dated
September 19, 1995.(1) Filed as Exhibit 10.32 to the 1995
10-K and incorporated by reference herein.
10.39 Acme Metals Incorporated Supplemental Benefits Plan
effective January 1, 1994.(1) Filed as Exhibit 10.45 to the
1994 10-K and incorporated by reference herein.
10.40 Acme Metals Incorporated Salaried Employees; Past Service
Pension Plan ("Past Service Pension Plan") dated June 1,
1992.(1) Filed as Exhibit 10.37 to the 1992 10-K and
incorporated by reference herein.
10.41 Amendment No. 1 to the Past Service Pension Plan.(1) Filed
as Exhibit 10.38 to the 1993 10-K and incorporated by
reference herein.
10.42 Amendment No. 2 to the Past Service Pension Plan.(1) Filed
as Exhibit 10.48 to the 1994 10-K and incorporated by
reference herein.
*21 Subsidiaries of the registrant
23 Consent of experts and counsel
*23.1 Consent of Price Waterhouse LLP
*27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
The following reports Form 8-K were filed in the fourth quarter of 1997:
Form 8-K dated November 13, 1997 reported commencement of tender
offer from Company 12 1/2% and 13 1/2% Notes.
Form 8-K dated November 26, 1997 announced proposed offering of
Senior Notes.
Form 8-K dated December 18, 1997 announced successful completion of
refinancing.
- -------------------------
* Filed herewith
(1) Filed pursuant to Item 14 of Form 10-K
35
<PAGE> 36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ACME METALS INCORPORATED
<TABLE>
<S> <C> <C>
/s/ BRIAN W. H. MARSDEN Chairman March 17, 1998
---------------------------------------------
Brian W. H. Marsden
/s/ STEPHEN D. BENNETT Director, President, and Chief March 17, 1998
--------------------------------------------- Executive Officer
Stephen D. Bennett
/s/ JERRY F. WILLIAMS Vice President-Finance and March 17, 1998
--------------------------------------------- Administration and Chief
Jerry F. Williams Financial Officer (Principal
Financial Officer)
/s/ DERRICK T. BAY Controller (Principal March 17, 1998
--------------------------------------------- Accounting Officer)
Derrick T. Bay
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ BUDDY W. DAVIS Director March 17, 1998
---------------------------------------------
Buddy W. Davis
/s/ EDWARD G. JORDAN Director March 17, 1998
---------------------------------------------
Edward G. Jordan
/s/ ANDREW R. LAIDLAW Director March 17, 1998
---------------------------------------------
Andrew R. Laidlaw
/s/ JOHN T. LANE Director March 17, 1998
---------------------------------------------
John T. Lane
/s/ FRANK A. LEPAGE Director March 17, 1998
---------------------------------------------
Frank A. LePage
/s/ REYNOLD C. MACDONALD Director March 17, 1998
---------------------------------------------
Reynold C. MacDonald
/s/ ALLAN L. RAYFIELD Director March 17, 1998
---------------------------------------------
Allan L. Rayfield
/s/ WILLIAM P. SOVEY Director March 17, 1998
---------------------------------------------
William P. Sovey
/s/ L. FREDERICK SUTHERLAND Director March 17, 1998
---------------------------------------------
L. Frederick Sutherland
/s/ WILLIAM R. WILSON Director March 17, 1998
---------------------------------------------
William R. Wilson
</TABLE>
36
<PAGE> 37
ACME METALS INCORPORATED
FORM 10-K -- ITEM 8 AND ITEMS 14(A)(1) AND 14(A)(2)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
The following Consolidated Financial Statements of Acme Metals Incorporated
and the related Report of Independent Accountants are included in Item 8 and
Item 14(a)(1):
<TABLE>
<CAPTION>
PAGE IN THIS
FORM 10-K
------------
<S> <C>
Report of Independent Accountants........................... 38
Report of Management........................................ 39
Consolidated Statements of Operations for the fiscal years
ended December 28, 1997, December 29, 1996 and December
31, 1995.................................................. 40
Consolidated Balance Sheets at December 28, 1997 and
December 29, 1996......................................... 41
Consolidated Statements of Cash Flows for the fiscal years
ended December 28, 1997, December 29, 1996 and December
31, 1995.................................................. 42
Consolidated Statements of Changes in Shareholders' Equity
for the fiscal years ended December 28, 1997, December 29,
1996 and December 31, 1995................................ 43
Notes to Consolidated Financial Statements.................. 44
</TABLE>
The following Consolidated Financial Statement Schedule of Acme Metals
Incorporated is included in Item 14(a)(2):
<TABLE>
<S> <C>
Quarterly Results (Unaudited)............................... 70
Schedule VIII -- Valuation and Qualifying Accounts and
Reserves.................................................. 71
</TABLE>
All other schedules have been omitted because they are not applicable, or
not required, or because the required information is shown in the Consolidated
Financial Statements or notes thereto.
37
<PAGE> 38
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Acme Metals Incorporated
In our opinion, the accompanying consolidated financial statements listed
in the accompanying index present fairly, in all material respects, the
financial position of Acme Metals Incorporated and its subsidiaries at December
28, 1997 and December 29, 1996 and the results of their operations and their
cash flows for each of the three years in the period ended December 28, 1997, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in the Note entitled "Cumulative Effect of a Change in
Accounting Principle" to the consolidated financial statements, the Company
changed its method of accounting for expenditures associated with the upgrade of
its management information systems.
/s/ PRICE WATERHOUSE LLP
- ------------------------------------------------------------
Price Waterhouse LLP
January 23, 1998, except as to the Note entitled "Assets Held for Sale", which
is as of March 10, 1998
Chicago, Illinois
38
<PAGE> 39
REPORT OF MANAGEMENT
The management of Acme Metals Incorporated has prepared and is responsible
for the consolidated financial statements and other financial information
included in this Form 10-K Annual Report. The consolidated financial statements
have been prepared in conformity with generally accepted accounting principles
and include amounts that are based upon informed judgments and estimates by
management. The other financial information in this annual report is consistent
with the consolidated financial statements.
The Company maintains a system of internal accounting controls. Management
believes the internal accounting controls provide reasonable assurance that
transactions are executed and recorded in accordance with Company policy and
procedures and that the accounting records may be relied on as a basis for
preparation of the consolidated financial statements and other financial
information.
The financial statements have been audited by Price Waterhouse LLP, the
Company's independent accountants, whose report is included herein. In addition,
the Company has a professional staff of internal auditors who coordinate their
financial audits with the procedures performed by the independent accountants
and conduct operational and special audits.
The Audit Review Committee of the Board of Directors, composed of directors
who are not employees of the Company, meets periodically with management, the
internal auditors and the independent accountants to discuss the adequacy of
internal accounting controls and the quality of financial reporting. Both the
independent accountants and internal auditors have full and free access to the
Audit Review Committee.
<TABLE>
<S> <C>
/s/ S. D. BENNETT /s/ J. F. WILLIAMS
- --------------------------------------------------- ---------------------------------------------------
Stephen D. Bennett Jerry F. Williams
President and Chief Executive Officer Vice President Finance and Administration and Chief
Financial Officer
</TABLE>
39
<PAGE> 40
ACME METALS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
--------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES............................................. $ 488,030 $ 498,242 $ 521,619
COSTS AND EXPENSES:
Cost of products sold............................... 445,256 431,957 424,158
Depreciation........................................ 38,623 15,820 13,013
----------- ----------- -----------
Gross profit.......................................... 4,151 50,465 84,448
Selling and administrative.......................... 39,208 35,496 35,636
Training and Pre-Start-up -- New Facility........... 9,933
----------- ----------- -----------
Operating income (loss)............................... (35,057) 5,036 48,812
NON-OPERATING INCOME (EXPENSE):
Interest expense.................................... (41,632) (6,193) (20,801)
Interest income..................................... 508 5,620 14,278
Other -- net........................................ (461) 630 1,846
----------- ----------- -----------
Income (loss) before income taxes, extraordinary loss
and cumulative effect of a change in accounting
principle........................................... (76,642) 5,093 44,135
Income tax provision (benefit)........................ (29,124) 2,426 15,889
----------- ----------- -----------
(47,518) 2,667 28,246
Extraordinary loss, net of tax........................ (23,411)
Cumulative effect of a change in accounting principle,
net of tax.......................................... (6,276)
----------- ----------- -----------
Net income (loss)..................................... $ (77,205) $ 2,667 $ 28,246
=========== =========== ===========
EARNINGS (LOSS) PER SHARE:
BASIC:
Income (loss) before extraordinary loss and
cumulative effect of a change in accounting
principle........................................ $ (4.09) $ 0.23 $ 2.44
Extraordinary loss, net of tax...................... (2.01)
Cumulative effect of a change in accounting
principle, net of tax............................ (0.54)
----------- ----------- -----------
Net income (loss)................................... $ (6.64) $ 0.23 $ 2.44
----------- ----------- -----------
Weighted average shares outstanding................... 11,628,497 11,597,675 11,573,642
=========== =========== ===========
DILUTED:
Income (loss) before extraordinary loss and
cumulative effect of a change in accounting
principle........................................ $ (4.09) $ 0.23 $ 2.44
Extraordinary loss, net of tax...................... (2.01)
Cumulative effect of a change in accounting
principle, net of tax............................ (0.54)
----------- ----------- -----------
Net income (loss)................................... $ (6.64) $ 0.23 $ 2.44
----------- ----------- -----------
Weighted average shares outstanding................... 11,628,497 11,662,643 11,595,886
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
40
<PAGE> 41
ACME METALS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 29,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 6,454 $ 33,224
Short-term investments.................................... 11,817
Accounts receivable trade, less allowances of $1,296, and
$1,320, respectively................................... 59,646 52,502
Inventories............................................... 81,630 68,884
Income tax receivable..................................... 24,936
Net assets held for sale.................................. 3,808
Deferred income taxes..................................... 14,082 14,957
Other current assets...................................... 1,887 1,453
--------- ---------
Total current assets................................. 192,443 182,837
--------- ---------
INVESTMENTS AND OTHER ASSETS:
Investments in associated companies....................... 17,395 17,862
Other assets.............................................. 20,357 19,028
Deferred income taxes..................................... 48,536 25,297
--------- ---------
Total investments and other assets................... 86,288 62,187
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment............................. 854,445 841,034
Construction in progress.................................. 9,747 6,319
Accumulated depreciation.................................. (313,842) (286,628)
--------- ---------
Total property, plant and equipment.................. 550,350 560,725
--------- ---------
$ 829,081 $ 805,749
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 64,691 $ 73,796
Accrued expenses.......................................... 34,109 39,966
Current installments of long-term debt.................... 1,500
Income taxes payable...................................... 2,178
--------- ---------
Total current liabilities............................ 100,300 115,940
--------- ---------
LONG-TERM LIABILITIES:
Long-term debt............................................ 423,243 310,085
Other long-term liabilities............................... 17,791 13,026
Postretirement benefits other than pensions............... 95,814 93,247
Retirement benefit plans.................................. 5,590 12,750
--------- ---------
Total long-term liabilities.......................... 542,438 429,108
--------- ---------
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 2,000,000 shares
authorized, no shares issued Common stock, $1 par value,
20,000,000 shares authorized, 11,627,380 and 11,610,723
shares issued and outstanding, respectively............... 11,627 11,611
Additional paid-in capital................................ 165,608 165,342
Retained earnings......................................... 21,427 98,632
Minimum pension liability adjustment...................... (12,319) (14,884)
--------- ---------
Total shareholders' equity........................... 186,343 260,701
--------- ---------
$ 829,081 $ 805,749
========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
41
<PAGE> 42
ACME METALS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
--------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................ $ (77,205) $ 2,667 $ 28,246
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation....................................... 39,410 16,591 13,613
Accretion of senior discount notes................. 8,803 13,324 11,776
Loss on early extinguishment of debt............... 37,759
Cumulative effect of a change in accounting
principle, net of tax............................ 6,276
Deferred income taxes.............................. (19,506) (2,073) (7,100)
Pension contribution............................... (3,691) (1,988)
CHANGE IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable.............................. (10,880) 2,842 5,534
Income tax receivable............................ (24,936)
Inventories...................................... (14,050) (16,952) (6,950)
Accounts payable................................. (8,478) 18,345 6,761
Other current accounts........................... (7,051) (3,429) 1,066
Other, net......................................... 12,837 14,719 8,583
--------- --------- ---------
Net cash (used for) provided by operating
activities......................................... (60,712) 46,034 59,541
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments.............................. (331) (26,929) (459,749)
Sales and/or maturities of investments................ 12,148 149,173 603,469
Investments in associated companies................... (1,750) (1,754)
Capital expenditures.................................. (16,852) (27,909) (27,664)
Capital expenditures -- New Facility.................. (23,564) (178,147) (197,849)
--------- --------- ---------
Net cash used for investing activities................ (28,599) (85,562) (83,547)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from 10.875 percent Unsecured Senior Notes,
net of discount.................................... 198,502
Proceeds from Senior Secured Credit Agreement......... 175,000
Redemption of 13.5 percent Senior Secured Discount
Notes.............................................. (117,289)
Redemption of 12.5 percent Senior Secured Notes....... (107,377)
Debt redemption costs................................. (29,947)
Payment of Term Loan.................................. (50,000)
Borrowings under revolving credit line agreement...... 269,000
Repayments of revolving credit line agreement......... (264,000)
Issuance of Environmental Improvement Bonds, net of
discount........................................... 19,873
Debt issuance costs and fees.......................... (11,630) (550)
Exercise of stock options and other................... 282 386 410
--------- --------- ---------
Net cash provided by financing activities............. 62,541 19,709 410
--------- --------- ---------
Net decrease in cash and cash equivalents............. (26,770) (19,819) (23,596)
Cash and cash equivalents at beginning of period...... 33,224 53,043 76,639
--------- --------- ---------
Cash and cash equivalents at end of period............ $ 6,454 $ 33,224 $ 53,043
========= ========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
42
<PAGE> 43
ACME METALS INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADDITIONAL MINIMUM
COMMON STOCK, PAID-IN RETAINED PENSION
$1 PAR VALUE CAPITAL EARNINGS LIABILITY
------------- ---------- -------- ---------
<S> <C> <C> <C> <C>
BALANCE -- DECEMBER 25, 1994.................. $11,558 $164,599 $67,719 $(20,598)
------- -------- ------- --------
Net income.................................. 28,246
Stock plans -- issuance of shares........... 22 382
Tax benefit arising from stock plan
transactions............................. 6
Minimum pension liability................... (3,823)
------- -------- ------- --------
BALANCE -- DECEMBER 31, 1995.................. 11,580 164,987 95,965 (24,421)
------- -------- ------- --------
Net income.................................. 2,667
Stock plans -- issuance of shares........... 31 325
Tax benefit arising from stock plan
transactions............................. 30
Minimum pension liability................... 9,537
------- -------- ------- --------
BALANCE -- DECEMBER 29, 1996.................. 11,611 165,342 98,632 (14,884)
------- -------- ------- --------
Net loss.................................... (77,205)
Stock plans -- issuance of shares........... 16 266
Minimum pension liability................... 2,565
------- -------- ------- --------
BALANCE -- DECEMBER 28, 1997.................. $11,627 $165,608 $21,427 $(12,319)
======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of this statement.
43
<PAGE> 44
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of Acme Metals
Incorporated and its wholly-owned subsidiaries (the "Company" or "Acme").
Investments in associated companies are accounted for by the equity method. All
intercompany transactions have been eliminated.
The Company's fiscal year ends on the last Sunday in December. Fiscal year
1995 contained 53 weeks as compared to 52 weeks for fiscal years 1997 and 1996.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Accounts receivable from sales to customers are unsecured. The Company
recognizes revenue upon shipment of products.
Cash and Cash Equivalents
Cash and cash equivalents include cash balances and highly liquid
investments with an original maturity of three months or less. The funds are
invested in compliance with the Company's debt instruments which restrict the
type, quality and maturity of investments.
Short-Term Investments
Short-term investments have an original maturity of more than three months
and a remaining maturity of less than one year. These investments are stated at
cost as it is the intent of the Company to hold these securities until maturity.
The funds are invested in compliance with the Company's debt instruments which
restrict the type, quality and maturity of investments.
Inventories
Inventories are stated at the lower of cost or market using the last-in,
first-out ("LIFO") method to determine inventory costs.
Property, Plant, and Equipment
Property, plant and equipment are stated at cost. Depreciation of plant and
equipment is computed principally on a straight-line basis over the estimated
useful lives of the assets. Estimated useful lives of plant and equipment range
from 3 to 50 years with the majority of assets having 18 year lives.
Expenditures for maintenance, repairs and minor renewals and betterments are
charged to expense as incurred. Furnace relines and major renewals and
betterments are capitalized.
Upon disposition of property, plant and equipment, the cost and related
accumulated depreciation are removed from the accounts, and the resulting gain
or loss is recognized.
44
<PAGE> 45
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Construction in Progress
Construction in progress includes all costs related to capital projects
which were not completed at the end of the reporting period.
Training and Pre-Start-up -- New Facility
During the fourth quarter of 1996, the Company's continuous caster and hot
strip mill facility ("New Facility") was completed. Prior thereto, training and
ramp-up related costs were expensed as incurred within the Consolidated
Statements of Operations as "Training and Pre-Start-up -- New Facility."
Retirement Benefit Plans
Pension costs include service cost, interest cost, return on plan assets
and amortization of unrecognized gains and losses. The Company's policy is to
fund not less than the minimum funding required under ERISA.
The Company has unfunded postretirement health care and life insurance
plans. Provisions for postretirement costs are determined pursuant to the
provisions of Financial Accounting Standard ("FAS") No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions."
Income Taxes
Income taxes are determined pursuant to the provisions of FAS No. 109,
"Accounting for Income Taxes." Under this standard, the benefit for deferred
income taxes represents the tax effect of temporary differences between the
financial reporting basis and the tax basis of the Company's assets and
liabilities.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE:
On November 20, 1997 the Emerging Issues Task Force ("EITF") of the
Financial Accounting Standards Board issued EITF No. 97-13 "Accounting for Costs
Incurred in Connection with a Consulting Contract for an Internal Project that
Combines Business Process Reengineering and Information Technology
Transformation." EITF No. 97-13 requires that certain costs related to
reengineering, as defined, be expensed as incurred. Under the Company's previous
accounting policy, a portion of such costs related to ongoing expenditures to
upgrade the Company's management information systems were capitalized during
1996 and 1995 and amortized over the estimated life of the systems.
In accordance with EITF No. 97-13, the Company changed its policy on
October 1, 1997 and recorded a cumulative effect adjustment in the fourth
quarter of 1997 of $10.1 million, $6.2 million after tax.
Pro forma amounts assuming the new accounting method is applied
retroactively are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Income (loss) before extraordinary loss......... $(53,106) $(1,008) $24,957
Earnings (loss) per share..................... $ (4.57) $ (.09) $ 2.16
Net Income (loss)............................... $(76,517) $(1,008) $24,957
Earnings (loss) per share..................... $ (6.58) $ (.09) $ 2.16
</TABLE>
45
<PAGE> 46
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
EARNINGS PER SHARE:
During 1997, the Company adopted FAS No. 128, "Earnings per share," which
requires the presentation of basic and diluted earnings per share. Basic
earnings (loss) per share excludes dilution and is computed by dividing income
(loss) by the weighted average number of common shares outstanding during each
period. Diluted earnings (loss) per share reflects the potential dilution that
could occur if common stock options are exercised and is computed by dividing
income (loss) by the weighted average number of common shares outstanding,
including common stock equivalent shares, issuable upon exercise of outstanding
stock options, to the extent that they would have a dilutive effect on the per
share amounts. During the periods presented, the Company's common stock
equivalents did not have a dilutive effect on the earnings (loss) per share
amounts.
INVENTORIES:
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Raw materials.............................................. $13,510 $15,642
Semi-finished and finished products........................ 62,126 46,493
Supplies................................................... 5,994 6,749
------- -------
$81,630 $68,884
======= =======
</TABLE>
On December 28, 1997 and December 29, 1996, inventories valued on the LIFO
method were less than the current costs of such inventories by $52.7 million and
$57.6 million, respectively.
ASSETS HELD FOR SALE:
In March 1998, the Company completed the sale of Universal Tool & Stamping
Company, Inc., through a stock sale generating proceeds to the Company of
approximately $18.0 million and an estimated gain of approximately $12.0
million, (approximately $7.2 million net of tax). At December 28, 1997, the net
assets of Universal (excluding cash and intercompany accounts) were $3.8 million
and were classified as a current asset.
Proceeds from the sale of Universal are restricted by the Indentures
covering the Company's Senior Secured Notes issued in 1994 and have been
deposited with the Trustee. The Company is permitted to apply the proceeds to
related business investments or to offer to redeem on a pro rata basis the
remaining 1994 Notes. To the extent an offer to redeem is not accepted, the
proceeds become unrestricted.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Land................................................... $ 4,140 $ 4,250
Buildings.............................................. 104,532 106,334
Equipment.............................................. 745,773 730,450
Construction in progress............................... 9,747 6,319
--------- ---------
864,192 847,353
Less accumulated depreciation.......................... (313,842) (286,628)
--------- ---------
$ 550,350 $ 560,725
========= =========
</TABLE>
46
<PAGE> 47
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The difference between depreciation expense presented in the Consolidated
Statements of Cash Flows and the Consolidated Statements of Operations
represents the portion of depreciation expense classified in selling and
administrative expense on the Consolidated Statements of Operations.
Cumulative capitalized expenditures related to the New Facility totaled
$459.5 million at December 28, 1997, including $48.0 million of capitalized
interest. The New Facility commenced depreciation at a rate of approximately
$2.0 million per month beginning in mid-November 1996. Although the New Facility
has been placed in service, a limited amount of additional expenditures are
expected before the entire project is completed.
Accounts payable at December 28, 1997 includes an accrual of $15.5 million
for services rendered in 1997 in relation to the New Facility which due to its
non-cash nature has been excluded from the Statement of Cash Flows. At December
29, 1996, accounts payable included a similar accrual of $12.0 million.
At December 28, 1997, construction in progress primarily included
expenditures for Acme Packaging's plastic strapping lines and expenditures to
upgrade the Company's management information system.
INVESTMENTS IN ASSOCIATED COMPANIES:
The Company has a 39.9 percent equity interest (15.1 percent participation)
as a member of an iron ore mining venture. The Company's carrying value is $14.3
million at December 28, 1997 and December 29, 1996, respectively. In 1997, 1996
and 1995, the Company made iron ore purchases of $27.3 million, $23.8 million,
and $21.8 million, respectively, from the venture. At December 28, 1997, $6.3
million was owed to the venture for iron ore purchases, ($4.0 million at
December 29, 1996).
The Company has a 37 percent interest in Olga Coal Company. In 1987, Olga
Coal Company filed for protection under Chapter 11 of the U.S. Bankruptcy Act
and the coal mining operation was idled. During the first quarter of 1998, the
Bankruptcy Court approved the Chapter 11 Plan of Liquidation for Olga, including
a direction for the dissolution of Olga under the West Virginia corporation
laws. Olga's Trustee is currently implementing Olga's Plan of Liquidation. The
coal mining investment is carried at no value in the Consolidated Balance
Sheets.
During 1996 and 1995, the Company invested capital of $1.7 million and $1.8
million, respectively, in a joint venture which performs processing of certain
of the Company's steel products. The Company's cumulative invested capital of
$3.5 million represents a total interest of 40 percent. The investment is
accounted for by the equity method of accounting and has a carrying value of
$3.1 million at December 28, 1997.
RETIREMENT BENEFIT PLANS:
The Company has various retirement benefit plans covering substantially all
salaried and hourly employees. Certain salaried employees with one full calendar
quarter of service are eligible to participate in the Company's defined
contribution plan and employee stock ownership plan ("ESOP"). Company
contributions to the defined contribution plan and the ESOP are based upon 7.5
percent and 3.5 percent, respectively, of eligible compensation. Contributions
were suspended during the last four months of 1997 and were restored early in
1998. Amounts charged to operations under these plans were $2.5 million in 1997,
$3.7 million and $3.5 million in 1996 and 1995, respectively.
Salaried employees who joined the Company prior to December 31, 1981 and
certain hourly employees participate in defined benefit retirement plans which
provide benefits based upon either years of service and final average pay or
fixed amounts for each year of service.
47
<PAGE> 48
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The net periodic defined benefit pension cost, as determined pursuant to
the provisions of FAS No. 87, "Employer's Accounting for Pensions," included the
following components:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost................................. $ 2,347 $ 2,830 $ 2,492
Interest cost on projected benefit
obligation................................. 15,955 15,489 15,924
Actual return on plan assets................. (38,544) (26,232) (34,304)
Net amortization and deferral................ 22,441 11,161 18,120
-------- -------- --------
Net periodic defined benefit pension cost.... $ 2,199 $ 3,248 $ 2,232
======== ======== ========
</TABLE>
Actuarial assumptions used for the Company's pension plan valuations were
as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate:
For defined benefit pension cost................... 7.75% 7.5% 8.5%
For projected benefit obligation................... 7.25% 7.75% 7.5%
Expected rate of increase in future compensation
levels............................................. 5.0% 5.0% 5.0%
Expected long-term rate of return on plan assets..... 9.75% 9.75% 9.75%
</TABLE>
The following table sets forth the funded status of the Company's defined
benefit retirement plans and amounts recognized in the balance sheets. Plan
assets are invested primarily in the publicly traded companies and U.S.
government bonds and notes.
<TABLE>
<CAPTION>
1997 1996
----------- -----------
UNDERFUNDED UNDERFUNDED
PLANS PLANS
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $204,918 and $186,489, respectively................. $ 221,788 $ 207,817
Effect of increase in compensation levels................. 3,160 3,564
--------- ---------
Projected benefit obligation for service rendered to
date................................................... 224,948 211,381
Plan assets at fair value................................... (216,244) (195,042)
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions........ (28,624) (36,058)
Unrecognized prior service cost............................. (3,742) (4,232)
Unrecognized net asset at December 30, 1985 being recognized
over 15 years............................................. 5,776 7,702
Minimum pension liability adjustment........................ 23,476 28,999
--------- ---------
Accrued pension cost........................................ $ 5,590 $ 12,750
========= =========
</TABLE>
In accordance with FAS No. 87, the Company has recorded an adjustment, as
shown in the table above, to recognize a minimum pension liability relating to
certain underfunded pension plans. This liability is offset by an intangible
asset in the amounts of $3.6 million and $4.2 million for the years ended
December 28, 1997 and December 29, 1996, respectively, included in the
Consolidated Balance Sheets caption "Other assets", with the remainder reflected
as a net-of-tax reduction of equity.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
The Company and its subsidiaries sponsor several unfunded defined benefit
postretirement plans that provide medical, dental, and life insurance for
retirees and eligible dependents.
48
<PAGE> 49
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The net periodic postretirement benefit cost for 1997, 1996, and 1995, net
of retiree contributions of approximately 10 percent of costs, included the
following components:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost......................................... $2,040 $ 2,230 $1,696
Interest cost........................................ 7,800 8,248 8,131
Net amortization and deferral........................ (192) 679 (144)
------ ------- ------
Net periodic postretirement benefit cost............. $9,648 $11,157 $9,683
====== ======= ======
</TABLE>
The following table sets forth the plans' combined unfunded status at
December 28, 1997 and December 29, 1996:
<TABLE>
<CAPTION>
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees............................................... $ 77,926 $ 63,710
Fully eligible active plan participants................ 14,431 26,180
Other active plan participants......................... 24,036 24,141
-------- --------
116,393 114,031
Unrecognized net loss and prior service cost............. (13,514) (14,646)
-------- --------
Accrued postretirement benefit cost...................... $102,879 $ 99,385
======== ========
</TABLE>
The accumulated postretirement benefit obligation was determined by
application of the terms of medical, dental, and life insurance plans, together
with relevant actuarial assumptions and health care cost trend rates projected
at annual rates ranging ratably from 8 percent in 1996 to 5 percent through 1999
and beyond. The effect of a 1 percent annual increase in these assumed cost
trend rates would increase the accumulated postretirement benefit obligation by
approximately $13.7 million and the net periodic postretirement benefit cost by
approximately $1.6 million. The obligation for postretirement benefits as of
December 28, 1997 was determined using a 7.25 percent discount rate, as compared
to the 7.75 percent discount rate used at December 29, 1996. The decrease in the
discount rate resulted in an increase in the obligation of approximately $6.1
million.
ACCRUED EXPENSES:
Accrued expenses include the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Accrued salaries and wages................................. $12,075 $13,941
Accrued postretirement benefits other than pensions........ 7,067 6,138
Accrued taxes other than income taxes...................... 4,837 5,834
Accrued worker's compensation.............................. 2,446 2,222
Accrued interest........................................... 2,466 7,357
Other current liabilities.................................. 5,218 4,474
------- -------
$34,109 $39,966
======= =======
</TABLE>
49
<PAGE> 50
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INCOME TAXES:
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Taxes on income:
Current provision (benefit):
Federal...................................... $ (9,215) $ 4,018 $18,510
State........................................ (403) 481 4,479
-------- ------- -------
(9,618) 4,499 22,989
Deferred benefit............................... (19,506) (2,073) (7,100)
-------- ------- -------
$(29,124) $ 2,426 $15,889
======== ======= =======
</TABLE>
The 38 percent effective income tax rate for 1997 is used to compute the
income tax benefit on the Company's loss from operations, extraordinary item and
cumulative effect of a change in accounting principle.
The effective income tax rates for the years ended 1997, 1996 and 1995 are
reconciled to the Federal statutory tax rate in the following table:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal statutory income tax rate...................... 35.0% 35.0% 35.0%
Change in tax rate due to:
Federal audit adjustment............................. 2.5
State income taxes -- net of Federal tax effect...... 3.6 9.6 5.0
Municipal bond interest.............................. (1.0) (7.8)
Disallowed meals and entertainment................... (0.1) 1.9 0.2
Penalties............................................ (0.1)
Employee life insurance premiums..................... (0.1) 2.0 0.2
Other -- net......................................... (0.3) 0.1 0.9
---- ---- ----
38.0% 47.6% 36.0%
==== ==== ====
</TABLE>
50
<PAGE> 51
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Significant components of the Company's deferred tax liabilities and assets
at December 28, 1997 and December 29, 1996 are summarized below:
<TABLE>
<CAPTION>
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
DEFERRED TAX LIABILITIES
Property, plant and equipment............................. $ 53,897 $28,077
Other assets.............................................. 432
-------- -------
Gross deferred tax liabilities.......................... 53,897 28,509
-------- -------
DEFERRED TAX ASSETS
Postretirement benefits other than pensions............... 39,988 38,442
Pensions.................................................. 2,517 3,752
Other employee benefits................................... 1,025 3,176
Inventories............................................... 8,111 5,224
Interest expense.......................................... 11,249
Other assets.............................................. 922
Other liabilities......................................... 1,771 2,832
Net operating loss carryforward........................... 55,414
Alternative minimum tax credits........................... 6,767 4,088
-------- -------
Gross deferred tax assets............................... 116,515 68,763
-------- -------
Net deferred tax asset............................... $ 62,618 $40,254
======== =======
</TABLE>
The change in deferred tax asset primarily represents the effect of the
Company's inability to currently utilize net operating losses as well as changes
in the amounts of temporary differences from the prior year. Significant changes
in such temporary differences related to: (i) the use of accelerated
depreciation methods in relation to the New Facility resulting in a larger
deferred tax liability; (ii) a reduction in the deferred tax asset for pensions
associated with a lower minimum pension liability; (iii) an increase in the
deferred tax asset for inventories due to additional capitalization of indirect
costs required by Internal Revenue Code Section 263A; and (iv) the elimination
of the deferred tax asset for interest related to the deduction of previously
nondeductible interest on the Company's Senior Secured Discount Notes.
The Company had available, at December 28, 1997, a net operating loss
carryforward for regular federal income tax purposes of $138.7 million which
will expire in the year 2012. Additionally, in conjunction with the Alternative
Minimum Tax ("AMT") rules, the Company had available AMT credit carryforwards at
December 28, 1997 and December 29, 1996, of $6.8 million and $4.1 million,
respectively. AMT credits may be used indefinitely to reduce regular federal
income taxes.
The Company believes it is more likely than not that it will realize the
net deferred tax asset and accordingly no valuation allowance has been provided.
This conclusion is based on: (i) reversing deductible temporary differences
(excluding postretirement benefit amounts) being offset by reversing taxable
temporary differences; (ii) the extremely long period that is available to
realize the future tax benefits associated with the postretirement related
deductible temporary differences; and (iii) the achievement of the benefits
associated with the New Facility and return to profitable operations.
51
<PAGE> 52
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DEBT REFINANCING AND LONG-TERM DEBT:
The Company's long-term debt at December 28, 1997 and December 29, 1996 is
summarized as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
10.875 percent Senior Unsecured Notes, net of
discount(A)............................................ $198,506 $
Senior Secured Credit Agreement(B)....................... 175,000
12.5 percent Senior Secured Notes(C)..................... 17,623 125,000
13.5 percent Senior Secured Discount Notes(D)............ 669 109,155
Term Loan(E)............................................. 50,000
Note Payable(F).......................................... 6,000 6,000
Environmental Improvement Bonds 7.95 percent(G).......... 11,345 11,345
Environmental Improvement Bonds 7.90 percent(G).......... 8,585 8,585
Working Capital Facility(H).............................. 5,000
Other long-term debt..................................... 2,015
-------- --------
$424,743 $310,085
======== ========
</TABLE>
In December 1997, the Company completed a refinancing to lower its interest
rates, extend maturities and provide financial flexibility. As part of the
refinancing, the Company entered into a new $175 million Senior Secured Credit
Agreement, and issued $200 million of Senior Unsecured Notes. The proceeds from
these transactions were used to: (i) retire 85.9 percent of the existing 12.5
percent Senior Secured Notes, and 99.4 percent of the existing 13.5 percent
Senior Secured Discount Notes (collectively, the "1994 Notes"), which were
successfully tendered; (ii) retire the existing $50 million Term Loan; and (iii)
pay borrowings under its Working Capital Facility.
In connection with the repurchase of the 1994 Notes, the Company paid
premiums aggregating $30.0 million and incurred expense of $7.8 million relating
primarily to the write-off of previously capitalized debt issuance costs. These
amounts are recorded as an Extraordinary Loss ($23.4 million net of tax) for the
year ended December 28, 1997.
The Company capitalized $11.6 million of debt issuance costs related to the
refinancing which will be amortized over the lives of the applicable debt
instruments. The Company amortized deferred debt issuance costs of $2.1 million
in 1997, and $1.9 million in 1996 and 1995, a portion of which in 1996 and 1995
was capitalized.
A. 10.875 Percent Senior Unsecured Notes -- In December 1997, the Company
issued $200 million of 10.875 percent Senior Unsecured Notes at a discount
(0.749 percent) to yield 11 percent, due December 15, 2007. The Senior Unsecured
Notes are redeemable at the option of the Company, in whole or in part, on or
after December 15, 2002 at fixed redemption prices equivalent to or in excess of
par, plus accrued interest to the date of redemption. In addition, at any time
prior to December 15, 2000 the Company may redeem up to 35 percent of the
principal amount of the Senior Unsecured Notes with the proceeds from one or
more public equity offerings at 110 percent of the principal amount of the
Senior Unsecured Notes, plus accrued interest, provided that $125 million
aggregate principal amount of the Senior Unsecured Notes remains outstanding
after any such redemption. The Senior Unsecured Notes are guaranteed on a
senior, unsecured basis by the Company's subsidiary, Acme Steel Company (see
footnote entitled "Guarantor's Financial Statements").
B. Senior Secured Credit Agreement -- In December 1997, the Company entered
into a $175 million Senior Secured Credit Agreement, which matures in December,
2005. At the option of the Company, the Senior Secured Credit Agreement provides
for interest at prime plus a margin ranging from 1.25 percent to 2.25 percent,
or LIBOR plus a margin ranging from 2.25 percent to 3.25 percent determined by
the leverage ratio of debt to earnings before interest, taxes and depreciation.
The effective interest rate under the Senior
52
<PAGE> 53
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Secured Credit Agreement was 8.7 percent at December 28, 1997. The Senior
Secured Credit Agreement requires annual payments of $1.0 million from 1998
through 2003; the remaining principal balance is due in equal quarterly
installments over the final two years. In addition to customary mandatory
repayment provisions, beginning in 2000 based on the prior year, 75 percent of
excess cash flow as defined in the Senior Secured Credit Agreement is required
to be repaid. In 1998, the Company entered into an extendable (at the option of
the bank) interest rate swap agreement through September, 1999 effectively
fixing the base rate at 5.8 percent. The Senior Secured Credit Agreement
contains certain restrictive financial covenants. The Agreement ranks pari passu
with the 1994 Notes and is secured by a senior security interest in certain real
and personal property of Acme Steel Company and the stock of the Company's
subsidiaries. Each of the Company's subsidiaries is a guarantor under the
Agreement.
C. 12.5 Percent Senior Secured Notes -- The Company issued $125 million of
12.5 percent Senior Secured Notes in 1994. 85.9 percent of the existing Senior
Secured Notes were retired in connection with the refinancing in December 1997.
The Company has the option to redeem the remaining Senior Secured Discount
Notes, in whole or in part, on or after August 1, 1998, at fixed redemption
prices equivalent to or in excess of par, plus accrued interest to the date of
redemption. The Senior Secured Discount Notes rank pari passu and share
collateral and guarantees with the Senior Secured Credit Agreement.
D. 13.5 Percent Senior Secured Discount Notes -- The Company issued $117.9
million of 13.5 percent Senior Secured Discount Notes in 1994. 99.4 percent of
the existing Senior Secured Discount Notes were retired in connection with the
refinancing in December 1997. The Company has the option to redeem the remaining
Senior Secured Discount Notes, in whole or in part, on or after August 1, 1999,
at fixed redemption prices equivalent to or in excess of par, plus accrued
interest to the date of redemption. The Senior Secured Discount Notes rank pari
passu and share collateral and guarantees with the Senior Secured Credit
Agreement.
E. Term Loan -- The Company retired the Term Loan issued in 1994 in
connection with the refinancing.
F. Note Payable -- The Note Payable of $6.0 million is an unsecured
obligation assumed by the Acme Steel Company on May 29, 1986 as a result of the
reorganization of The Interlake Corporation. The assumed debt was incurred in
connection with the financing of certain facilities which were retained by the
Company in the Spin-Off. The Note Payable bears an interest rate of 6.5 percent
to 6.75 percent and principal payments are due in varying installments from
1998-2008.
G. Environmental Improvement Bonds -- The Environmental Improvement Bonds
were issued in April and September of 1996, with the Company receiving gross
proceeds of $11.3 million and $8.6 million at interest rates of 7.95 percent and
7.90 percent, respectively. The gross proceeds of the Environmental Improvement
Bonds were reduced by debt issuance costs of $0.6 million which are being
amortized over the lives of the respective notes. The Environmental Improvement
Bonds are due April 1, 2025 and April 1, 2024, respectively. The Environmental
Improvement Bonds may be redeemed at the option of the Company in whole or in
part, on or after April 1, 2006, at fixed redemption prices equivalent to or in
excess of par, together with accrued and unpaid interest to the redemption date.
The Environmental Improvement Bonds are secured by a lien on certain personal
property and fixtures of Acme Steel Company.
H. Working Capital Facility -- The Company's subsidiaries have a Working
Capital Facility agreement through January, 2002 with a group of banks which
provides aggregate commitments of $80.0 million secured by the inventories and
accounts receivable of the Company's subsidiaries of which approximately $72.0
million was available for borrowing at December 28, 1997 as calculated under the
borrowing base calculation. The Company pays an annual commitment fee of
one-half of one percent on the unused portion of the Working Capital Facility.
Interest on borrowings under the facility are subject at the option of the
Company to either LIBOR plus a margin ranging from 1.5 percent to 2.25 percent
or prime plus a margin ranging from
53
<PAGE> 54
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
0.50 percent to 1.25 percent determined by the Company's consolidated leverage
ratio. The Working Capital Facility contains certain restrictive financial
covenants. The Company and each of its subsidiaries are guarantors of amounts
outstanding under the Working Capital Facility.
The debt instruments contain certain restrictive covenants that limit the
Company's ability to incur additional indebtedness, lease property, create
liens, pay dividends, repurchase capital stock, engage in transactions with
affiliates, purchase or sell assets, make capital expenditures, engage in sale
or leaseback transactions and engage in mergers or consolidations.
The maturities, excluding excess cash flow payments required under the
Senior Secured Credit Agreement, during the five years ending December 2002 are
as follows: $1.5 million in 1998; $1.2 million in 1999; $1.2 million in 2000;
$1.3 million in 2001; and $18.9 million in 2002. Cash flows from operating
activities were reduced by cash paid for interest on debt of $35.5 million in
1997, $21.8 million in 1996 and $21.6 million in 1995. Increased cash payments
during 1997 for interest were primarily due to $11.9 million of accrued interest
paid in connection with the refinancing for the 1994 Notes, the Term Loan and
the Working Capital Facility.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
Cash and Cash Equivalents, Short-term Investments and Restricted Cash and
Investments
The carrying value of cash and cash equivalents and short-term investments
approximates fair value.
Long-term Debt
The fair value of the Company's Senior Unsecured Notes, Senior Secured
Notes and Senior Secured Discount Notes is determined by using the quoted market
price at the end of the reporting period.
The fair value of the Senior Secured Credit Agreement, the Term Loan
Facility, the Term Loan, the Environmental Improvement Bonds and the Note
Payable is estimated by calculating the present value of the remaining interest
and principal payments on the debt to maturity. The present value of the Term
Loan and the Note Payable in 1996 was calculated based upon a discount rate
equal to the three month LIBOR rate plus 400 basis points at the end of each
reporting period. The present value of the Senior Secured Credit Agreement and
the Note Payable in 1997 is calculated based upon a discount rate equal to the
base rate plus the current margin. The Environmental Improvement Bonds present
value computation uses a discount rate equal to the 30 year U.S. Treasury Bond
rate at the end of the reporting period plus or minus the spread between the
U.S. Treasury bond rate and the rate negotiated at the inception of the loans.
54
<PAGE> 55
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table presents information on the Company's financial
instruments:
<TABLE>
<CAPTION>
1997 1996
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ----- -------- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash and cash equivalents....................... $ 6,454 $ 6,454 $ 33,224 $ 33,224
Short-term investments.......................... 11,817 11,817
Long-term debt
- Senior Secured Notes........................ 17,623 19,209 125,000 135,312
- Senior Secured Discount Notes............... 669 746 109,155 112,429
- Term Loan................................... 50,000 50,000
- Note Payable................................ 6,000 5,194 6,000 4,958
- Environmental Improvement Bonds............. 19,930 22,166 19,930 20,389
- Senior Unsecured Notes...................... 198,506 197,000
- Senior Secured Credit Agreement............. 175,000 175,000
- Other long-term debt........................ 2,015 2,015
</TABLE>
STOCK COMPENSATION PLANS:
The Company has a Fixed Stock Incentive Program which, among other
benefits, allows for the granting of stock options and stock awards to its
officers and key employees.
The Company has a 1986 and a 1994 Stock Incentive Program which reserves
shares of common stock for issuance to officers and employees of the Company and
its subsidiaries. Both Programs provide for the issuance of stock options, stock
appreciation rights, stock awards and restricted stock to officers and employees
of the Company and its subsidiaries; since inception of the Programs, only stock
options and stock awards have been granted. The 1986 Stock Incentive Program,
which reserved 1,080,000 shares for issuance, granted 805,700 stock options and
249,925 stock awards, was frozen in 1994. Some of the stock options and stock
awards granted under this Program prior to April 1994 are still outstanding. No
stock options or stock awards have been granted from this Program since April
1994. The 1994 Stock Incentive Program provided for the reservation of 550,000
shares for issuance; to date, 402,000 stock options and 57,800 stock awards have
been granted under this Program in the form of stock options and awards. Through
December 28, 1997, a total of 42,100 stock options and stock awards have been
canceled and returned to the 1994 Stock Incentive Program for future issuance,
leaving a total of 132,300 shares available for issuance. In addition, the
Company has a Non-Employee Directors' Stock Option Plan which reserves shares
for issuance to non-employee directors of the Company. Each non-employee
director is granted 2,000 options at the Annual Meeting of the Board of
Directors, commencing April 24, 1997. Under this plan 150,000 shares were
reserved for issuance and through December 27, 1997, 22,000 stock options have
been granted.
Under all three plans, the exercise price of stock options is fixed and
equals the market value of the stock on the date of grant. Vesting of options
granted prior to April 1997 occurs in two equal installments on the first and
second anniversaries of the date of grant; vesting of options granted during or
after April 1997 occurs in four equal installments on the first four
anniversaries of the date of grant. Stock options expire ten years after the
date of grant.
The Company has adopted the disclosure-only provisions of FAS No. 123
"Accounting for Stock-Based Compensation." No compensation cost has been
recognized under the provisions of FAS No. 123 for the fixed stock options
granted under its Fixed Stock Incentive Program. Had compensation cost for
options granted under the program been determined based on the fair value at the
grant date for awards in 1997, 1996 and
55
<PAGE> 56
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1995 consistent with the provisions of FAS No. 123, the Company's net income
(loss) and net income (loss) per share would have been as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net income (loss) -- pro-forma..................... $(77,699) $2,040 $27,758
Net income (loss) per share -- pro-forma........... $ (6.68) $ 0.18 $ 2.39
</TABLE>
The fair value of options at the date of grant were estimated using the
Black-Scholes option pricing model with the following weighted average
assumptions used for option grants in each year:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Expected life of options............................ 7 years 7 years 7 years
Risk-free interest rate............................. 5.75% 6.00% 6.00%
Expected stock price volatility..................... 42.0% 37.6% 37.6%
Expected dividend yield............................. -- -- --
Forfeiture rate..................................... 14% 11% 11%
</TABLE>
The assumption regarding the vesting of stock options relating to
executive's compensation in 1997, 1996 and 1995 is calculated on a pro-rata
basis determined by specific issuance dates. Options granted during the years
1997, 1996, 1995, 1994 and 1993 were considered in the appropriate period, using
a two-year vesting schedule.
Option groups outstanding and option life information at December 28, 1997
is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------- ------------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
RANGE OF OPTIONS CONTRACTUAL EXERCISE OPTIONS EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
--------------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$13.65 to $14.50...................... 201,300 5.3 years $13.95 162,300 $13.99
$16.625 to $17.875.................... 347,950 4.3 years $16.67 228,950 $17.24
$18.75 to $24.25...................... 186,100 4.7 years $22.35 179,100 $22.50
------- -------
735,350 570,350
------- -------
</TABLE>
56
<PAGE> 57
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Information regarding stock options outstanding and changes in option
activity for the three years ended December 28, 1997 is summarized below:
<TABLE>
<CAPTION>
1997 1996 1995
-------------------- -------------------- --------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
OPTION EXERCISE OPTION EXERCISE OPTION EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Stock options outstanding at
beginning of year................. 685,150 $17.86 606,950 $17.71 520,700 $17.79
Options granted..................... 127,000 $14.66 105,000 $16.90 108,500 $17.28
Options exercised................... (10,500) $13.92 (22,150) $ 8.37 (7,600) $14.18
Options canceled.................... (66,300) $17.84 (4,650) $21.32 (14,650) $19.40
------- ------ ------- ------ ------- ------
Stock options outstanding at end of
year.............................. 735,350 $17.36 685,150 $17.86 606,950 $17.71
------- ------ ------- ------ ------- ------
Options exercisable at end of
year.............................. 570,350 $17.97 528,650 $18.11 466,450 $17.31
------- ------ ------- ------ ------- ------
Weighted-average fair value of
options granted during the year... $ 7.58 $ 8.52 $ 8.84
------- ------- -------
</TABLE>
Compensation cost related to stock awards was $0.2 million in 1997, 1996
and 1995. Stock awards granted in 1997 totaled 15,100 shares at a value of
$12.81, $13.88 or $18.125 per share depending on the date of grant. Stock awards
granted in 1996 totaled 20,000 shares at a value of $17.25. Stock awards granted
in 1995 totaled 22,700 shares at a value of either $17.25 or $18.375 per share,
depending on the grant date. The compensation expense for the value of stock
awards granted is generally recognized ratably over the vesting period of 5
years except in the case of 4,200 awards granted in 1995 for which the
compensation expense for the value of the stock awards is recognized ratably
over a vesting period of 3 years.
SHAREHOLDER RIGHTS PLAN:
On July 15, 1994, the Company adopted a shareholders' rights plan ("Rights
Plan") to protect shareholders against unsolicited attempts to acquire control
of the Company that do not offer what the Company believes to be an adequate
price to all shareholders. Preferred Share Purchase Rights ("Rights") were
issued to holders of record of the Company's Common Stock on August 5, 1994, and
will expire on August 5, 2004.
The Rights Plan provides for the issuance of one Right for each outstanding
share of the Company's Common Stock on and after August 5, 1994, until
expiration. The Rights will become exercisable after the tenth day following the
earlier to occur of (i) the date on which public disclosure is made that a
person or affiliated persons are the beneficial owner of 15 percent or more of
the Company's Common Stock or (ii) the commencement or disclosure of intention
to commence a tender or exchange offer by a person or affiliated persons which
could result in the acquisition by such person or persons of 30 percent or more
of the Company's Common Stock. Each Right entitles the holder to purchase from
the Company one one-hundredth of a share of the Company's Series A Preferred
Share Stock at an exercise price of $80 per one one-hundredth of a share. The
purchase price is subject to adjustment, to prevent dilution, in the event of
certain merger/business combination situations involving the Company and in the
event of other circumstances more specifically described in the Rights Agreement
dated as of July 15, 1994 between the Company and First Chicago Trust Company of
New York, which was filed in its entirety as Exhibit 1 to the Company's Form 8-A
dated August 8, 1994, and to the Company's Form 8-A/A dated August 12, 1994.
57
<PAGE> 58
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
COMMITMENTS AND CONTINGENCIES:
The Company's interest in an iron ore mining joint venture requires payment
of its proportionate share of all fixed operating costs, regardless of the
quantity of ore received, plus the variable operating costs of minimum ore
production for the Company's account. Normally, the Company reimburses the joint
venture for these costs through its purchase of ore. During 1997, the Company
obtained approximately 37 percent of its iron ore needs from the joint venture.
The Company's interest in NACME requires Acme to comply with certain
tonnage provision guarantees and cost plus return on investment payments. Due to
a delay in reaching full operating levels, NACME was not in compliance with
certain financial covenants and obtained a waiver and negotiated modification of
those covenants under its financing arrangements with its lending institution.
The Company expects NACME will meet the requirements of the financial covenants.
However, there are no assurances NACME will achieve such compliance, or, if it
fails to do so, that it will be able to negotiate further waivers or amendments
of its covenants. Currently, the Company is unable to determine whether such
failure would have an adverse effect on Acme's operations.
During 1994, the Company entered into a turnkey contract with Raytheon
Engineers & Constructors, Inc. ("Raytheon") to build the New Facility at its
steel making facilities located in Riverdale, Illinois. Based on the turnkey
contract without taking into account financing costs, internally generated costs
directly related to the New Facility or additional changes that may be requested
by Acme during construction, management estimates the cost of the New Facility,
including ancillary facilities, construction, general contractor fees and
certain other project costs that will be paid by the Company will approximate
$400 million.
The Company has long term operating lease commitments, principally for
building space for its Alpha Tube Subsidiary and for various computer hardware
and software. A current lease agreement relating to building space for the Alpha
Tube subsidiary contains provisions for the Company to guarantee the lessor a
recovery of a fixed percentage of its interest in the property upon termination
of the lease. In the event the Company does not maintain compliance with
financial covenants which are consistent with those of the Working Capital
Facility, the Company could be required to purchase the lessors' interest in the
property. Lease terms cover periods from 3 to 6 years. Rental expense under
operating lease agreements amounted to $3.0 million in 1997, $1.4 million in
1996, and $1.2 million in 1995. The approximate minimum rental commitments under
noncancelable leases at December 28, 1997 were as follows: 1998 $3.2 million;
1999 $2.8 million; 2000 $1.5 million; 2001 $1.1 million; and 2002 $12.5 million.
The Company is subject to various Federal, state and local environmental
statutes and regulations which provide a comprehensive program for controlling
the release of materials into the environment and require responsible parties to
remediate certain waste disposal sites. In addition, various health and safety
statutes and regulations apply to the work-place environment. Administrative,
civil and criminal penalties may be applicable for failure to comply with these
laws. These environmental laws and regulations are subject to periodic revision
and modification. The United States Environmental Protection Agency, for
example, is currently evaluating changes to the National Air Quality Standards
for particulate matter and ozone.
From time to time, the Company is also involved in administrative
proceedings involving the issuance, or renewal, of environmental permits
relating to the conduct of its business. The final issuance of these permits
have been resolved on terms satisfactory to the Company; and, in the future, the
Company expects such permits will similarly be resolved on satisfactory terms.
Although management believes it will be required to make further
expenditures for pollution abatement facilities in future years, because of the
continuous revision of these regulatory and statutory requirements, the Company
is not able to reasonably estimate the specific pollution abatement
requirements, the amount or timing of such expenditures to maintain compliance
with these environmental laws. While such expenditures
58
<PAGE> 59
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
in future years may be substantial, management does not presently expect they
will have a material adverse effect on the Company's future ability to compete
within its markets.
In those cases where the Company has been identified as a Potentially
Responsible Party ("PRP") or is otherwise made aware of a possible exposure to
incur costs associated with an environmental matter, management determines (i)
whether, in fact, the Company has been properly named or is otherwise obligated,
(ii) the extent to which the Company may be responsible for costs associated
with the site in question, (iii) an assessment as to whether another party may
be responsible under various indemnification agreements or insurance policies
the Company is a party to, and (iv) an estimate, if one can be made, of the
costs associated with the clean-up efforts or settlement costs. It is the
Company's policy to make provisions for environmental clean-up costs at the time
that a reasonable estimate can be made. In December 1997 and 1996, the Company
had recorded reserves of $1.0 million and $0.2 million, respectively, for
environmental clean-up matters. While it is not possible to predict the ultimate
costs of resolving environmental related issues facing the Company, based upon
information currently available, they are not expected to have a material effect
on the consolidated financial condition or results of operations of the Company.
In connection with the Company's Spin-Off from Interlake on May 29, 1986,
Acme entered into certain indemnification agreements with Interlake. Pursuant to
the terms of the indemnification agreements, Interlake undertook to defend,
indemnify and hold Acme harmless from any claims, as defined, relating to Acme
operations or predecessor operations occurring before May 29, 1986, the
inception of Acme. The indemnification agreements cover certain environmental
matters including certain litigation and Superfund sites in Duluth, Minnesota
and Gary, Indiana for which either Interlake or Acme's predecessor operations
have been named as defendants or PRP's, as applicable. To date, Interlake has
met its obligations under the indemnification agreements and has provided the
defense and paid all costs related to these environmental matters. The Company
does not have sufficient information to determine the potential liability, if
any, for the matters covered by the indemnification agreements in the event
Interlake fails to meet its obligations thereunder in the future. In the event
that Interlake, for any reason, was unable to fulfill its obligations under the
indemnification agreements, the Company could have increased future obligations
which could be significant.
Also in connection with the Spin-Off from Interlake, Acme entered into a
Tax Indemnification Agreement ("TIA") which generally provides for Interlake to
indemnify Acme for certain tax matters. While certain issues have been
negotiated and settled between the Company, Interlake and the Internal Revenue
Service, certain significant issues for the tax years beginning in 1982 through
1986 remain unresolved.
On March 17, 1994, Acme received a Statutory Notice of Deficiency
("Notice") in the amount of $16.9 million in tax as a result of the Internal
Revenue Service's examination of the 1982-1984 tax years. During 1997 Interlake
and the Internal Revenue Service settled significantly all issues that created
the additional tax, reducing the additional tax to $5.1 million. Substantial
interest could also be due (potentially in an amount greater than the tax
claimed). The taxes claimed relate principally to adjustments for which Acme is
indemnified by Interlake pursuant to the TIA. The Company has adequate reserves
to cover that portion for which it believes it may be responsible per the TIA.
To date, Interlake has met its obligations under the TIA with respect to all
covered matters. In the event that Interlake, for any reason, were unable to
fulfill its obligations under the TIA, the Company could have increased future
obligations.
The Company's subsidiaries also have various litigation matters pending
which arise out of the ordinary course of their businesses. In the opinion of
management, the ultimate resolution of these matters will not have a material
adverse effect on the financial position of the Company.
BUSINESS SEGMENTS:
The Company presents its operations in two segments, Steel Making and Steel
Fabricating.
59
<PAGE> 60
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Steel Making operations include the manufacture of sheet, strip and
semifinished steel in low-, mid-, and high-carbon alloy and specialty grades.
Principal markets include agricultural, automotive, industrial equipment,
industrial fasteners, welded steel tubing, processor and tool manufacturing
industries.
The Steel Fabricating segment processes and distributes steel strapping,
strapping tools and industrial packaging (Acme Packaging Corporation), welded
steel tubing (Alpha Tube Corporation) and auto and light truck jacks (Universal
Tool & Stamping Company, Inc.). The Steel Fabricating segment sells to a number
of markets.
All sales between segments are recorded at current market prices. Income
from operations consists of total sales less operating expenses. Operating
expenses include an allocation of expenses incurred at the Corporate Office that
are considered by the Company to be operating expenses of the segments rather
than general corporate expenses. Income from operations does not include other
non-operating income or expense, interest income or expense, income taxes,
extraordinary items, or a cumulative effect of a change in accounting principle.
Identifiable assets are those that are associated with each business segment.
Corporate assets are principally cash and cash equivalents, short-term
investments and restricted cash, other investments and income tax assets.
The products and services of the Steel Making and Steel Fabricating
segments are distributed through their own respective sales organizations which
have sales offices at various locations in the United States. Export sales are
insignificant for the years presented.
60
<PAGE> 61
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEGMENT INFORMATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
-------- --------- ---------
<S> <C> <C> <C>
Net Sales:
Steel Making
Sales to unaffiliated customers...................... $202,331 $ 222,642 $ 234,903
Intersegment sales................................... 97,233 112,700 121,929
-------- --------- ---------
299,564 335,342 356,832
Steel Fabricating
Sales to unaffiliated customers...................... 285,699 275,600 286,716
Intersegment sales................................... 984 1,553 1,703
-------- --------- ---------
286,683 277,153 288,419
Eliminations......................................... (98,217) (114,253) (123,632)
-------- --------- ---------
Total.............................................. $488,030 $ 498,242 $ 521,619
======== ========= =========
Income (loss) from Operations:
Steel Making......................................... $(61,897) $ (14,921) $ 28,461
Steel Fabricating.................................... 26,840 19,957 20,351
-------- --------- ---------
Total.............................................. $(35,057) $ 5,036 $ 48,812
======== ========= =========
Identifiable Assets:
Steel Making............................................ $685,712 $ 660,672 $ 495,338
Steel Fabricating....................................... 95,100 107,652 115,332
Corporate............................................... 48,269 37,425 144,073
-------- --------- ---------
Total.............................................. $829,081 $ 805,749 $ 754,743
======== ========= =========
Depreciation:
Steel Making............................................ $ 35,511 $ 12,572 $ 9,749
Steel Fabricating....................................... 3,883 3,696 3,747
Corporate............................................... 16 323 117
-------- --------- ---------
Total.............................................. $ 39,410 $ 16,591 $ 13,613
======== ========= =========
Capital Expenditures:
Steel Making............................................ $ 34,861 $ 195,297 $ 238,177
Steel Fabricating....................................... 11,053 3,778 6,078
Corporate............................................... 15 47 119
-------- --------- ---------
Total.............................................. $ 45,929 $ 199,122 $ 244,374
======== ========= =========
Operating Data (in tons)
Steel production (hot band)............................. 749,526 685,595 672,610
Steel shipments (flat roll)............................. 629,212 611,882 619,052
</TABLE>
61
<PAGE> 62
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
GUARANTOR'S FINANCIAL STATEMENTS:
In December 1997, Acme Metals Incorporated, as issuer, and Acme Steel
Company, a wholly owned subsidiary of the Company, as guarantor, entered into an
offering pursuant to which $200 million of 10.875 percent Senior Unsecured Notes
due 2007 were offered pursuant to Rule 144A under the Securities Act of 1933, as
amended (the "Act"). The Company intends to register the Senior Unsecured Notes
under the Act.
Following is consolidating condensed financial information pertaining to
the Company and its subsidiary guarantor and its subsidiary nonguarantors.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 28, 1997
-------------------------------------------------------------------
SUBSIDIARY SUBSIDIARY TOTAL
PARENT GUARANTOR NONGUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET SALES............................. $ $ 299,564 $286,683 $(98,217) $488,030
COST AND EXPENSES..................... 342,684 239,412 (98,217) 483,879
-------- --------- -------- -------- --------
Gross Profit.......................... (43,120) 47,271 4,151
Selling and administrative............ 18,777 20,431 39,208
-------- --------- -------- -------- --------
Operating income (loss)............... (61,897) 26,840 (35,057)
Net interest income (expense) and
other............................... 16,860 (54,493) (3,952) (41,585)
-------- --------- -------- -------- --------
Income (loss) before income taxes,
extraordinary loss and cumulative
effect of a change in accounting
principle........................... 16,860 (116,390) 22,888 (76,642)
Income tax provision (benefit)........ 6,415 (44,235) 8,696 (29,124)
-------- --------- -------- -------- --------
10,445 (72,155) 14,192 (47,518)
Extraordinary loss, net of tax........ (23,411) (23,411)
Cumulative effect of a change in
accounting principle, net of tax.... (4,821) (1,455) (6,276)
-------- --------- -------- -------- --------
Net income (loss) before equity
adjustment.......................... (12,966) (76,976) 12,737 (77,205)
Equity loss in subsidiaries........... (64,239) 64,239
-------- --------- -------- -------- --------
Net income (loss)..................... $(77,205) $ (76,976) $ 12,737 $ 64,239 $(77,205)
======== ========= ======== ======== ========
</TABLE>
62
<PAGE> 63
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 29, 1996
---------------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET SALES............................ $335,342 $277,153 $(114,253) $498,242
COST AND EXPENSES.................... 325,326 236,704 (114,253) 447,777
------ -------- -------- --------- --------
Gross profit......................... 10,016 40,449 50,465
Training and Pre-Start-up -- New
Facility........................... 9,933 9,933
Selling and administrative........... 15,004 20,492 35,496
------ -------- -------- --------- --------
Operating income (loss).............. (14,921) 19,957 5,036
Net interest income (expense) and
other.............................. 9,903 (7,461) (2,385) 57
------ -------- -------- --------- --------
Income (loss) before income taxes.... 9,903 (22,382) 17,572 5,093
Income tax provision (benefit)....... 4,106 (8,850) 7,170 2,426
------ -------- -------- --------- --------
Net income (loss) before equity
adjustment......................... 5,797 (13,532) 10,402 2,667
Equity loss in subsidiaries.......... (3,130) 3,130
------ -------- -------- --------- --------
Net income (loss).................... $2,667 $(13,532) $ 10,402 $ 3,130 $ 2,667
====== ======== ======== ========= ========
</TABLE>
63
<PAGE> 64
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET SALES........................... $ $356,832 $288,419 $(123,632) $521,619
COST AND EXPENSES................... 314,517 246,286 (123,632) 437,171
------- -------- -------- --------- --------
Gross profit........................ 42,315 42,133 84,448
Selling and administrative.......... 13,854 21,782 35,636
------- -------- -------- --------- --------
Operating income.................... 28,461 20,351 48,812
Net interest income (expense) and
other............................. (1,571) (818) (2,288) (4,677)
------- -------- -------- --------- --------
Income (loss) before income taxes... (1,571) 27,643 18,063 44,135
Income tax provision (benefit)...... (1,415) 10,599 6,705 15,889
------- -------- -------- --------- --------
Net income (loss) before equity
adjustment........................ (156) 17,044 11,358 28,246
Equity income in subsidiaries....... 28,402 (28,402)
------- -------- -------- --------- --------
Net income.......................... $28,246 $ 17,044 $ 11,358 $ (28,402) $ 28,246
======= ======== ======== ========= ========
</TABLE>
64
<PAGE> 65
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 28, 1997
----------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
-------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......... $ $ 3,016 $ 3,438 $ $ 6,454
Accounts receivable, net.......... 33,154 26,492 59,646
Income tax receivable............. 24,936 24,936
Inventories....................... 58,657 23,990 (1,017) 81,630
Net assets held for sale.......... 3,808 3,808
Deferred income taxes............. 14,082 14,082
Other current assets.............. 614 1,145 128 1,887
Due to (from) affiliates.......... 460,541 (434,649) (26,909) 1,017
-------- --------- -------- -------- --------
Total current assets...... 500,173 (338,677) 30,947 192,443
-------- --------- -------- -------- --------
INVESTMENTS AND OTHER ASSETS:
Investments in associated
companies...................... 60,882 17,395 (60,882) 17,395
Other assets...................... 14,629 4,391 1,337 20,357
Deferred income taxes............. 48,536 48,536
-------- --------- -------- -------- --------
Total investments and
other assets............ 124,047 21,786 1,337 (60,882) 86,288
-------- --------- -------- -------- --------
PROPERTY, PLANT AND EQUIPMENT....... 217 522,096 28,037 550,350
-------- --------- -------- -------- --------
$624,437 $ 205,205 $ 60,321 $(60,882) $829,081
======== ========= ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
EQUITY CURRENT LIABILITIES:
Accounts payable and accrued
expenses....................... $ 5,157 $ 79,310 $ 14,333 $ $ 98,800
Current installments of long-term
debt........................... 1,000 500 1,500
-------- --------- -------- -------- --------
Total current
liabilities............. 6,157 79,810 14,333 100,300
-------- --------- -------- -------- --------
LONG-TERM LIABILITIES:
Long-term debt.................... 412,743 10,500 423,243
Other long-term liabilities....... 14,939 2,852 17,791
Postretirement benefits other than
pensions....................... 1,731 79,803 14,280 95,814
Retirement benefit plans.......... 2,524 4,186 (1,120) 5,590
-------- --------- -------- -------- --------
Total long-term
liabilities............. 431,937 97,341 13,160 542,438
-------- --------- -------- -------- --------
SHAREHOLDERS' EQUITY:............... 186,343 28,054 32,828 (60,882) 186,343
-------- --------- -------- -------- --------
$624,437 $ 205,205 $ 60,321 $(60,882) $829,081
======== ========= ======== ======== ========
</TABLE>
65
<PAGE> 66
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 29, 1996
----------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............... $ 24,306 $ 6,307 $ 2,611 $ $ 33,224
Short-term investments.................. 11,817 11,817
Accounts receivable, net................ 439 22,162 29,901 52,502
Inventories............................. 47,394 22,396 (906) 68,884
Deferred income taxes................... 14,957 14,957
Other current assets.................... 609 662 182 1,453
Due to (from) affiliates................ 436,651 (419,369) (18,188) 906 0
-------- -------- ------- --------- --------
Total current assets............ 488,779 (342,844) 36,902 182,837
======== ======== ======= ========= ========
INVESTMENTS AND OTHER ASSETS:
Investments in associated companies..... 66,025 17,862 (66,025) 17,862
Other assets............................ 12,589 5,278 1,161 19,028
Deferred income taxes................... 25,297 25,297
-------- -------- ------- --------- --------
Total investments and other
assets........................ 103,911 23,140 1,161 (66,025) 62,187
-------- -------- ------- --------- --------
PROPERTY, PLANT AND EQUIPMENT............. 218 531,549 28,958 560,725
-------- -------- ------- --------- --------
$592,908 $211,845 $67,021 $ (66,025) $805,749
======== ======== ======= ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses... $ 10,500 $ 87,820 $15,442 $ $113,762
Income taxes payable.................... 2,178 2,178
-------- -------- ------- --------- --------
Total current liabilities....... 12,678 87,820 15,442 115,940
-------- -------- ------- --------- --------
LONG-TERM LIABILITIES:
Long-term debt.......................... 304,085 6,000 310,085
Other long-term liabilities............. 2,614 10,641 (229) 13,026
Postretirement benefits other than
pensions............................. 1,655 78,009 13,583 93,247
Retirement benefit plans................ 11,175 1,575 12,750
-------- -------- ------- --------- --------
Total long-term liabilities..... 319,529 96,225 13,354 429,108
-------- -------- ------- --------- --------
SHAREHOLDERS' EQUITY:..................... 260,701 27,800 38,225 (66,025) 260,701
-------- -------- ------- --------- --------
$592,908 $211,845 $67,021 $ (66,025) $805,749
======== ======== ======= ========= ========
</TABLE>
66
<PAGE> 67
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 28, 1997
---------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET CASH FLOWS (USED FOR) PROVIDED BY
OPERATING ACTIVITIES................... $ 521 $ (79,760) $ 18,527 $ $ (60,712)
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales and/or maturities of investments,
net of purchases..................... 11,817 11,817
Capital expenditures................... (16) (31,362) (9,038) (40,416)
--------- --------- --------- --------- ---------
Net cash (used for) provided by
investing activities................. 11,801 (31,362) (9,038) (28,599)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from 10.875 percent Senior
Unsecured Notes, net of discount..... 198,502 198,502
Proceeds from Senior Secured Credit
Agreement............................ 175,000 175,000
Redemption of 13.5 percent Senior
Secured Discount Notes............... (117,289) (117,289)
Redemption of 12.5 percent Senior
Secured Notes........................ (107,377) (107,377)
Debt redemption costs.................. (29,947) (29,947)
Payment of Term Loan................... (50,000) (50,000)
Borrowings under revolving credit
agreement............................ 134,250 134,750 269,000
Repayments of revolving credit
agreement............................ (129,250) (134,750) (264,000)
Intercompany cash transactions......... (112,469) 102,831 9,638 --
Debt issuance costs and fees........... (11,630) (11,630)
Payment of intercompany dividend....... 18,300 (18,300)
Exercise of stock options and other.... 282 282
--------- --------- --------- --------- ---------
Net cash (used for) provided by
financing activities................. (36,628) 107,831 (8,662) 62,541
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and
cash equivalents..................... (24,306) (3,291) 827 (26,770)
Cash and cash equivalents at beginning
of period............................ 24,306 6,307 2,611 33,224
--------- --------- --------- --------- ---------
Cash and cash equivalents at end of
period............................... $ $ 3,016 $ 3,438 $ $ 6,454
========= ========= ========= ========= =========
</TABLE>
67
<PAGE> 68
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 29, 1996
---------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET CASH FLOWS PROVIDED BY (USED FOR)
OPERATING ACTIVITIES................ $ 26,130 $ 6,208 $ 13,696 $ $ 46,034
--------- --------- -------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales and/or maturities of
investments, net of purchases.... 122,244 122,244
Investment in associated
companies........................ (1,750) (1,750)
Capital expenditures................ (47) (202,231) (3,778) (206,056)
--------- --------- -------- --------- ---------
Net cash (used for) provided by
investing activities............. 122,197 (203,981) (3,778) (85,562)
--------- --------- -------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Environmental
Improvement Bonds, net of
discount......................... 19,873 19,873
Intercompany cash transactions...... (237,630) 229,925 7,705 --
Debt issuance costs and fees........ (550) (550)
Exercise of stock options and
other............................ 386 386
Intercompany dividend payment....... 49,000 (33,000) (16,000)
--------- --------- -------- --------- ---------
Net cash (used for) provided by
financing activities............. (168,921) 196,925 (8,295) 19,709
--------- --------- -------- --------- ---------
Net increase (decrease) in cash and
cash equivalents................. (20,594) (848) 1,623 (19,819)
Cash and cash equivalents at
beginning of period.............. 44,900 7,155 988 53,043
--------- --------- -------- --------- ---------
Cash and cash equivalents at end of
period........................... $ 24,306 $ 6,307 $ 2,611 $ $ 33,224
========= ========= ======== ========= =========
</TABLE>
68
<PAGE> 69
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET CASH FLOWS PROVIDED BY (USED FOR)
OPERATING ACTIVITIES................ $ 9,513 $ 31,846 $18,182 $ $ 59,541
--------- --------- ------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales and/or maturities of
investments, net of purchases.... 143,720 143,720
Investment in associated
companies........................ (1,754) (1,754)
Capital expenditures................ (119) (219,316) (6,078) (225,513)
--------- --------- ------- --------- ---------
Net cash (used for) provided by
investing activities............. 143,601 (221,070) (6,078) (83,547)
--------- --------- ------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany cash transactions...... (146,983) 169,072 (22,089) --
Exercise of stock options and
other............................ 410 410
--------- --------- ------- --------- ---------
Net cash provided by (used for)
financing activities............. (146,573) 169,072 (22,089) 410
--------- --------- ------- --------- ---------
Net increase (decrease) in cash and
cash equivalents................. 6,541 (20,152) (9,985) (23,596)
Cash and cash equivalents at
beginning of period.............. 38,359 27,307 10,973 76,639
--------- --------- ------- --------- ---------
Cash and cash equivalents at end of
period........................... $ 44,900 $ 7,155 $ 988 $ $ 53,043
========= ========= ======= ========= =========
</TABLE>
69
<PAGE> 70
QUARTERLY RESULTS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
Net Sales......................................... $125,331 $123,471 $115,250 $123,978
Gross margin...................................... (4,317) 846 286 7,336
Net loss.......................................... (15,867) (12,753) (10,540) (38,045)
Net loss per share................................ (1.36) (1.10) (0.91) (3.27)
Net loss before extraordinary loss and accounting
change......................................... (15,867) (12,753) (10,540) (8,358)
Net loss per share before extraordinary loss and
accounting change.............................. $ (1.36) $ (1.10) $ (0.91) $ (0.72)
- ----------------------------------------------------------------------------------------------------
1996
Net Sales......................................... $125,865 $127,268 $125,174 $119,935
Gross profit...................................... 14,445 14,257 16,345 5,418
Net income (loss)................................. 3,436 3,190 2,859 (6,818)
Net income (loss) per share....................... $ 0.30 $ 0.27 $ 0.25 $ (0.59)
- ----------------------------------------------------------------------------------------------------
1995
Net Sales......................................... $131,548 $136,171 $122,211 $131,689
Gross profit...................................... 23,132 25,140 17,911 18,265
Net income........................................ 8,046 8,781 5,256 6,163
Net income per share.............................. $ 0.69 $ 0.75 $ 0.45 $ 0.53
- ----------------------------------------------------------------------------------------------------
</TABLE>
The first quarter of 1995 includes a $1.6 million gain on the sale of the
Company's interest in Virginia coal properties.
70
<PAGE> 71
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END
FISCAL YEAR OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
----------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
1997
Allowance for doubtful accounts
receivable.......................... $1,320 $ 61 $100(a) $(185)(b) $1,296
====== ==== ==== ===== ======
1996
Allowance for doubtful accounts
receivable.......................... $1,335 $144 $ 12(a) $(171)(b) $1,320
====== ==== ==== ===== ======
1995
Allowance for doubtful accounts
receivable.......................... $1,301 $123 $ 60(a) $(149)(b) $1,335
====== ==== ==== ===== ======
</TABLE>
- -------------------------
(a) Consists principally of recoveries of accounts charged off in prior years.
(b) Uncollectible accounts charged off.
71
<PAGE> 72
BOARD OF DIRECTORS
BRIAN W. H. MARSDEN 1, 3, 5
Chairman of the Board of Acme Metals Incorporated
STEPHEN D. BENNETT 3, 4
President and Chief Executive Officer of Acme Metals Incorporated
BUDDY W. DAVIS 1, 5
Retired District 34 Director United Steelworkers of America -- AFL-CIO-CLC
EDWARD G. JORDAN 1, 4, 5
Retired Chairman of Consolidated Rail Corporation (Conrail)
ANDREW R. LAIDLAW 1, 3, 5
Chairman of the Executive Committee of the law firm Seyfarth, Shaw, Fairweather
& Geraldson
JOHN T. LANE 2, 4, 5
Former Managing Director and Head of U.S. Private Banking, of J. P. Morgan & Co.
FRANK A. LEPAGE 1, 2, 5
Retired Director and Executive Vice President of The Firestone Tire and Rubber
Company
REYNOLD C. MACDONALD 3, 4, 5
Retired Chairman of the Board of Acme Steel Company
ALLAN L. RAYFIELD 2, 4, 5
Former President and Chief Executive Officer of M/A-Com, Inc., and retired
Senior Vice President of GTE Corporation
WILLIAM P. SOVEY 2, 3, 5
Chairman of the Board of Newell Co.
L. FREDERICK SUTHERLAND 2, 4, 5 Executive Vice President and Chief Financial
Officer of ARAMARK Corporation
WILLIAM R. WILSON 1, 2, 5
Retired Chairman of the Board and Chief Executive Officer of Lukens, Inc.
<TABLE>
<S> <C>
PRINCIPAL OFFICERS OF PRINCIPAL OFFICERS OF
ACME METALS INCORPORATED SUBSIDIARY COMPANIES
STEPHEN D. BENNETT, President and Chief Executive Officer ACME STEEL COMPANY
James N. Howell, President
DERRICK T. BAY, Controller
ACME PACKAGING CORPORATION
ROBERT W. DYKE, Senior Vice President -- Fabricating Robert W. Dyke, President
JAMES W. HOEKWATER, Treasurer ALPHA TUBE CORPORATION
Edward J. Urbaniak, Jr., President
JAMES N. HOWELL, Senior Vice President -- Steel
GERALD J. SHOPE, Vice President -- Human Resources
EDWARD P. WEBER, JR., Vice President General Counsel
and Secretary
JERRY F. WILLIAMS, Vice President -- Finance and
Administration, and Chief Financial Officer
</TABLE>
BOARD COMMITTEES
1 Audit Review
2 Compensation
3 Executive
4 Finance
5 Nominating
<PAGE> 1
EXHIBIT 4.4
FIRST SUPPLEMENTAL INDENTURE, dated as of December 3, 1997 (this "First
Supplemental Indenture"), among ACME METALS INCORPORATED, a Delaware
corporation (the "Company"), ACME PACKAGING CORPORATION, ACME STEEL COMPANY,
ALPHA TUBE CORPORATION, ALTA SLITTING CORPORATION, each a Delaware corporation,
ACME STEEL COMPANY INTERNATIONAL, INC., a Barbados corporation, ALABAMA
METALLURGICAL CORPORATION, a Washington corporation, UNIVERSAL TOOL AND
STAMPING CO. INC., an Indiana corporation (collectively, the "Guarantors") and
State Street Bank and Trust Company (as successor to Shawmut Bank Connecticut)
as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Company, the Guarantors and the Trustee are parties to that
certain Indenture dated as of August 11, 1994 (the "Original Indenture"),
pursuant to which the Company issued its 12 1/2% Senior Secured Notes due 2002
(the "Securities"); and
WHEREAS, Section 9.02 of the Original Indenture provides that the Company,
the Guarantors and the Trustee may, with the written consent of the Holders of
at least a majority in principal amount of the outstanding Securities, amend or
supplement the Original Indenture; and
WHEREAS, the Company has requested the Trustee and the Guarantors to enter
into this First Supplemental Indenture for the purpose of amending the Original
Indenture; and
WHEREAS, the Trustee has received consents to such amendments from the
Holders of not less than a majority in principal amount of the outstanding
Securities; and
WHEREAS, all other acts and things necessary to constitute these presents
a valid and binding supplemental indenture according to its terms have been
done and performed, and the execution of this First Supplemental Indenture (the
Original Indenture, as amended by this First Supplemental Indenture, being
hereinafter called the "Indenture") has in all respects been duly authorized,
and the Company and the Guarantors, in the exercise of the legal rights and
powers vested in them, each executes this First Supplemental Indenture.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That, for and in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree, for the equal and proportionate
benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Definitions.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings assigned thereto in the Original Indenture.
ARTICLE TWO
AMENDMENT OF THE INDENTURE
SECTION 2.01 Deletion of Certain Provisions.
Each of the following provisions of the Original Indenture is hereby
deleted and eliminated in its entirety, without any redesignation of any other
provision of the Original Indenture:
<PAGE> 2
EXHIBIT 4.4
Section 1.01. Definitions of the following terms:
"Consolidated Cash Flow Available for Fixed Charges"
"Consolidated Fixed Charges"
"Consolidated Net Income"
"Consolidated Tangible Net Worth"
"Permitted Indebtedness"
"Restricted Investment"
"Restricted Payment"
"Special Stock Purchase Warrants"
Section 4.03
Section 4.04
Section 4.07
Section 4.14
Section 4.16
Section 4.17
Section 4.20
Section 4.21
All references in the Original Indenture, as amended by Section 2.01, to
any of the provisions deleted and eliminated as provided above shall also be
deemed deleted and eliminated.
SECTION 2.02. Amendment of Section 1.01.
(a) The definition of the term "Applicable Portion" in Section 1.01
of the Original Indenture is hereby amended to read in its entirety as follows:
"Applicable Portion" with respect to any Available Proceeds Amount shall
mean such Available Proceeds Amount times a fraction the numerator of
which shall be the aggregate principal amount of Securities then
outstanding plus all accrued and unpaid interest thereon to the Unapplied
Proceeds Offer Payment Date and the denominator of which shall be the sum
of (a) such amount and (b) either (y) if the Unapplied Proceeds Offer
Payment Date is prior to August 1, 1997, the Accreted Value of the then
outstanding Senior Secured Discount Notes through such payment date or
(z) if the Unapplied Offer Payment Date is on and after August 1, 1997
the aggregate principal amount of the then outstanding Senior Secured
Discount Notes plus all accrued and unpaid interest thereon to the
Unapplied Proceeds Offer Payment Date and (c) the aggregate principal
amount of Loans (as such term is defined in the Term Loan Agreement), and
all other Indebtedness ranking pari passu with the Securities permitted
under clause (xi) of the definition of "Permitted Liens," then
outstanding plus all accrued and unpaid interest on such Loans and other
Indebtedness to the Unapplied Proceeds Offer Payment Date.
(b) The definition of the term "Permitted Liens" in Section 1.01 of
the Original Indenture is hereby amended to read in its entirety as follows:
"Permitted Liens" means (i) Liens existing on the Issue Date to the
extent specifically permitted in the appropriate Security Document, (ii)
Liens securing Indebtedness collateralized by Property of, or any shares
of stock of or debt of, any corporation existing at the time such
corporation becomes a Subsidiary of the Company or at the time such
corporation is merged into the Company or any of its Subsidiaries;
provided that such Liens are not incurred in connection with, or in
contemplation of, such corporation becoming a Subsidiary of the Company
or merging into the Company or any of its Subsidiaries, (iii) Liens
securing Refinancing Indebtedness used to refund, refinance or extend
Indebtedness referred to in the preceding clause (ii); provided that any
such Lien does not extend to or cover any Property, shares or debt other
than the Property, shares or debt securing the Indebtedness so refunded,
refinanced or extended, (iv) Liens on Collateral of the Company or any of
its Subsidiaries acquired after the Issue Date securing industrial
revenue or pollution control or other tax exempt bonds issued in
connection with the acquisition or refinancing of such Property, (v)
Liens to secure certain Indebtedness that is otherwise permitted under
<PAGE> 3
EXHIBIT 4.4
this Indenture and that is used to finance the cost of Property of the
Company or any of its Subsidiaries acquired after the Issue Date;
provided that (a) any such Lien is created solely for the purpose of
securing Indebtedness representing, or incurred to finance, refinance or
refund, the cost (including sales and excise taxes, installation and
delivery charges and other direct costs of, and other direct expenses
paid or charged in connection with, such purchase or construction) of
such Property, (b) the principal amount of the Indebtedness secured by
such Lien does not exceed 100% of such costs, (c) the Indebtedness
secured by such Lien is incurred by the Company or its Subsidiary within
90 days of the acquisition of such Property by the Company or its
Subsidiary, as the case may be, (d) such Lien does not extend to or cover
any Property other than such item of Property and any improvements on
such item, (e) no Net Cash Proceeds derived from Collateral are used to
fund all or any portion of the cost of acquisition of such Property, and
(f) except as otherwise permitted herein, no Liens at any time may
encumber assets which comprise the Modernization Project, (vi) statutory
liens or landlords', carriers', warehousemen's, mechanics', suppliers',
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business and with respect to amounts not yet delinquent or
being contested in good faith by appropriate proceedings, if a reserve or
other appropriate provision, if any, as shall be required in conformity
with GAAP shall have been made therefor but only to the extent
specifically permitted under the provisions of the appropriate Security
Document, (vii) Liens on the Collateral for the benefit of (a) holders of
the Senior Secured Discount Notes or (b) holders of Indebtedness arising
at any time after retirement of the Senior Secured Discount Notes;
provided that the principal amount of such Indebtedness does not exceed
the original principal amount of such Senior Secured Discount Notes and
the holders of such replacement Indebtedness (acting through a designated
representative) enter into a supplement to the Collateral Agency
Agreement in substantially the form annexed thereto and the Company and
such holders otherwise comply with the applicable provisions thereof,
(viii) Liens on the Collateral for the benefit of the holders of the
Securities, (ix) easements, restrictions, reservations or rights of
others for right-of-way, sewers, electric lines, telegraph and telephone
lines and other similar purposes and other similar charges or
encumbrances not interfering in any material respect with the conduct of
the business of the Company or any of its Subsidiaries or to the extent
permitted by the provisions of the Mortgage, (x) Liens on Collateral that
are subordinated to the security interests created by the Indenture, and
(xi) Liens on Collateral securing Indebtedness ranking pari passu with
the Securities and the Senior Secured Discount Notes; provided that (a)
after giving effect to the incurrence of such Indebtedness, the aggregate
outstanding principal amount of (1) such Indebtedness, (2) the Securities
and the Senior Secured Discount Notes and (3) any other Indebtedness
ranking pari passu with the Securities and the Senior Secured Discount
Notes is not greater than the aggregate principal amount of the
Indebtedness referred to in (a)(2) and (a)(3) of this clause (xi) as of
the date of the First Supplemental Indenture; (b) the weighted average
effective interest rate on any such Indebtedness is no greater than the
weighted average effective interest rate on any Indebtedness referred to
in (a)(2) and (a)(3) of this clause (xi); and (c) such Indebtedness does
not have a weighted average maturity earlier than the latest maturity
date of the Indebtedness referred to in (a)(2) and (a)(3) of this clause
(xi).
SECTION 2.03 Amendment of Section 4.05.
Section 4.05 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 4.05. Limitations on Liens.
The Company will not, and will not permit any Subsidiary of the Company
to, issue, assume, guarantee or suffer to exist any Indebtedness secured
by a Lien (other than a Permitted Lien) of or upon any Collateral."
SECTION 2.04 Amendment of Section 4.10.
Section 4.10 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 4.10. Notice of Defaults.
<PAGE> 4
EXHIBIT 4.4
Upon becoming aware of any Default or Event of Default, the Company shall
promptly deliver an Officers' Certificate to the Trustee specifying the
Default or Event of Default."
SECTION 2.05 Amendment of Section 4.13.
Section 4.13 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 4.13. Reports.
The Company shall comply with the provisions of TIA Section 314(a)."
SECTION 2.06 Amendment of Section 5.01.
Section 5.01 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 5.01. Restriction on Mergers and Consolidations and Sales of
Assets.
The Company shall not consolidate or merge with or into any Person,
and the Company will not, and will not permit any of its Subsidiaries to,
sell, lease, convey or otherwise dispose of all or substantially all of
the Company's consolidated assets (as an entirety or substantially an
entirety in one transaction or a series of related transactions,
including by way of liquidation or dissolution) to, any Person unless, in
each such case:
(i) the entity formed by or surviving any such consolidation or
merger (if other than the Company), or to which sale, lease, conveyance
or other disposition shall have been made (the "Surviving Entity"), is a
corporation organized and existing under the laws of the United States,
any state thereof or the District of Columbia;
(ii) the Surviving Entity assumes by supplemental indenture all of
the obligations of the Company on the Securities and under this Indenture
and the Security Documents; and
(iii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing."
SECTION 2.07 Amendment of Section 6.01.
Section 6.01 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(i) the Company fails to pay interest on any Securities when the same
becomes due and payable and such failure continues for a period of 30
days;
(ii) the Company fails to pay the principal of or premium on any
Securities when the same becomes due and payable whether at maturity,
upon acceleration, redemption or otherwise;
(iii) any Guarantee ceases to be in full force and effect or is declared
to be null and void and unenforceable or is found to be invalid or any
Guarantor denies its liability under its Guarantee (other than by reason
of release of a Guarantor in accordance with the terms hereof);
(iv) the Company or any Guarantor fails to observe or perform any other
covenant in this Indenture or in any of the Security Documents for 60
days after notice from the Trustee, the Collateral Agent or the
<PAGE> 5
EXHIBIT 4.4
holders of 25% in principal amount of the Securities outstanding
(except in the case of a default with respect to Section 4.15 and Section
5.01, which will constitute Events of Default with such notice but
without passage of time);
(v) [Intentionally deleted]
(vi) [Intentionally deleted]
(vii) [Intentionally deleted]
(viii) any Person, after the occurrence of an event of default under any
instrument evidencing Indebtedness secured by Collateral, shall commence
judicial proceedings to foreclose any material portion of the Collateral
or shall exercise any legal or contractual right to the ownership of any
material portion of the Collateral in lieu of foreclosure;
(ix) the Company or any Guarantor pursuant to or within the meaning of
any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against it in an
involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors; or
(x) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Guarantor in an
involuntary case or proceeding,
(B) appoints a Custodian of the Company or any Guarantor or for all
or substantially all of its property, or
(C) orders the liquidation of the Company or any Guarantor,
and in each case the order or decree remains unstayed and in effect for
30 days; provided that if the entry of such order or decree is appealed
and dismissed on appeal then the Event of Default hereunder by reason of
the entry of such order or decree shall be deemed to have been cured.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
The Trustee shall, within 90 days after the occurrence of any Default
known to it, give to the holders of Securities notice of such Default;
provided that, except in the case of a Default in the payment of
principal of or interest on any of the Securities, the Trustee shall be
protected in withholding such notice if it in good faith determines that
the withholding of such notice is in the interest of the Holders of
Securities."
SECTION 2.08 Amendment of Section 9.04.
Section 9.04 of the Original Indenture is hereby amended to read in its
entirety as follows:
<PAGE> 6
EXHIBIT 4.4
"SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent
Holder of that Security or portion of that Security that evidences the
same debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. However, except as provided in the
succeeding paragraph, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of a Security. Such revocation
shall be effective only if the Trustee receives written notice of such
revocation before the date the amendment, supplement or waiver becomes
effective.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding
the last two sentences of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to consent to such
amendment, supplement or waiver or to revoke by written notice received
by the Trustee any consent previously given, whether or not such persons
continue to be Holders after such record date. No such consent shall be
valid or effective for more than 90 days after such record date, unless
the relevant amendment, supplement or waiver to which such consent
relates has become effective, in which event such persons who were
Holders at such record date shall no longer be entitled to revoke any
consent previously given and such consent shall continue to be valid and
effective. Notwithstanding anything to the contrary in this Section
9.04, no consent to any amendment, supplement or waiver delivered by a
Holder of a Security in connection with the Offer to Purchase and Consent
Solicitation of the Company, dated November 13, 1997, and the
Solicitation (as defined therein) may be revoked by such Holder.
After an amendment, supplement or waiver becomes effective, it shall form
a part of this Indenture for all purposes and bind every Securityholder,
unless it makes a change described in any of clauses (i) through (viii)
of Section 9.02. In that case, the amendment, supplement or waiver shall
form a part of this Indenture for all purposes and bind each Holder of a
Security who has consented to it and every subsequent Holder of a
Security or portion of a Security that evidences the same debt as the
consenting Holder's Security."
SECTION 2.09 Amendment of Section 10.01.
Section 10.01 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 10.01. Collateral and Security Documents.
(a) In order to secure the due and punctual payment of the principal
of and interest on the Securities, the Senior Secured Discount Notes and,
under certain circumstances, Permitted Replacement Financing when and as
the same shall be due and payable, whether on an Interest Payment Date,
at maturity, by acceleration, purchase, repurchase, redemption or
otherwise, and interest on the overdue principal of and interest (to the
extent permitted by law), if any, on the Securities, the Senior Secured
Discount Notes and, under certain circumstances, Permitted Replacement
Financing and the performance of all other obligations of the Company and
the Guarantors to the Holders or the Trustee under this Indenture and the
Securities, the holders of the Senior Secured Discount Notes or the
Discount Note Trustee under the Discount Note Indenture and the Senior
Secured Discount Notes or, under certain circumstances, the Permitted
Additional Lenders under the documents governing the Permitted
Replacement Financing, the Company, Acme Steel, Acme Packaging, the
Collateral Agent, the Trustee and the Discount Note Trustee have
simultaneously with the execution of this Indenture entered into the
Collateral Agency Agreement and the Collateral Agent, the Company, Acme
Steel and/or Acme Packaging have entered into the other Security
Documents to which they are a party pursuant to which the Company, Acme
Steel and Acme Packaging have granted to the Collateral Agent for the
benefit of the Secured Parties a first priority Lien on and security
interest in the Collateral. The Trustee and the Company hereby agree
that the Collateral Agent holds the Collateral in trust for the benefit
of the Secured Parties pursuant to the terms of the Security Documents.
<PAGE> 7
EXHIBIT 4.4
(b) The Trustee is authorized and directed to enter into the Collateral
Agency Agreement and the Collateral Agent is authorized and directed to
enter into the Security Documents. In the event that pursuant to clause
(vii)(b), (x) or (xi) of the definition of "Permitted Liens" the Company
shall elect to grant additional Liens on assets that comprise Collateral,
the Trustee and the Collateral Agent are authorized and directed to
execute and deliver a supplement or amendment to the Collateral Agency
Agreement and any other Security Documents as may be required to give
effect to the grant and reflect the priority of the additional Liens,
including, without limitation, amendments to the Collateral Agency
Agreement relating to the application of Unapplied Cash Proceeds pro rata
to the redemption of the Securities, the Senior Secured Discount Notes
and other Indebtedness ranking pari passu with respect thereto, and to
any other changes to the Indenture effected by the First Supplemental
Indenture. In addition, in the event of any Permitted Bank Refinancing
(as defined in the Intercreditor Agreement) the Collateral Agent is
authorized to execute and deliver a supplement to the Intercreditor
Agreement as contemplated therein. Each Securityholder, by accepting a
Security, agrees to all of the terms and provisions of the Security
Documents, as the same may be amended from time to time pursuant to the
provisions of the Security Documents and this Indenture."
SECTION 2.10 Amendment of Section 11.05.
Section 11.05 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 11.05. Guarantors May Consolidate, etc., on Certain Terms.
(a) Nothing contained in this Indenture or in any of the Securities 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 or another Guarantor, which consolidation,
merger, sale or conveyance is otherwise in accordance with the terms of
this Indenture and the Security Documents. Upon any such consolidation,
merger, sale or conveyance, the Guarantee given by such Guarantor shall
no longer have any force or effect.
(b) Other than as set forth in Sections 11.03 and 11.05(a) above, each
Guarantor will not, and the Company will not cause or permit any
Guarantor to, consolidate with or merge with or into any Person unless:
(i) the entity formed by or surviving any such consolidation or merger
(if other than the Guarantor), or to which sale, lease, conveyance or
other disposition shall have been made, is a corporation organized and
existing under the laws of the United States, any state thereof or the
District of Columbia; (ii) such entity assumes by supplemental indenture
all of the obligations of the Guarantor on the Guarantee and under this
Indenture and the Security Documents; and (iii) immediately after giving
effect to such transaction, no Default or Event of Default shall have
occurred and be continuing."
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of the Company and the Guarantors.
The Company and the Guarantors, jointly and severally, hereby represent
and warrant that:
(a) This First Supplemental Indenture has been duly authorized by each of
the Company and the Guarantors, and, when executed and delivered by the Company
and the Guarantors and, assuming due authorization, execution and delivery by
the Trustee, will be a legal, valid and binding agreement of the Company and
the Guarantors (provided that the amendments provided for in Article II hereof
shall become operative only in accordance with Section 5.01 hereof),
enforceable against the Company and the Guarantors in accordance with its
terms, except as (i) the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting creditors' rights generally, (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability (regardless of whether in a
<PAGE> 8
EXHIBIT 4.4
proceeding in equity or at law) and as may be limited by the discretion of
the court before which any proceeding therefor may be brought and (iii) rights
to indemnity and contribution may be limited by state or Federal laws relating
to securities or by policies underlying such laws; and
(b) The execution, delivery and performance by the Company and the
Guarantors of this First Supplemental Indenture and the consummation of the
transactions contemplated hereby will not (1) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, bank loan or credit
agreement, lease or other agreement or instrument to which the Company or any
of the Guarantors is a party or by which the Company or any of the Guarantors
is bound or to which any of the property or assets of the Company or any of the
Guarantors is subject, (2) result in any violation of the provisions of the
Certificate of Incorporation or the By-laws, in each case as amended, of the
Company or any Guarantor or any statute, order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any of
the Guarantors or any of their properties , (3) result in or require the
creation or imposition of any Lien upon or with respect to any of the
properties of the Company or any of the Guarantors, except pursuant to or as
contemplated by the terms of the Indenture, or (4) constitute a default under
any ordinance, license or permit, except, in the case of the events specified
in clauses (1), (3) and (4) above, for such conflicts, breaches, violations,
defaults or Liens which would not have a material adverse effect upon the
business, assets, condition (financial or otherwise), results of operations or
prospects of the Company and the Guarantors, taken as a whole, or on the
ability of the Company and the Guarantors to perform their respective
obligations under the Indenture.
SECTION 3.02 Representations of the Trustee.
The Trustee hereby represents and warrants that it is duly authorized to
execute and deliver this First Supplemental Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements made
by it in a Statement of Eligibility on Form T-1, if any, supplied to the
Company are true and accurate subject to the qualifications set forth therein.
ARTICLE IV
CONDITIONS PRECEDENT
This First Supplemental Indenture shall become effective as of the date
hereof upon satisfaction of the following conditions precedent (provided that
the amendments provided for in Article II hereof shall become operative only in
accordance with Section 5.01 hereof):
(a) The Trustee shall have received a true and complete original,
except where stated otherwise, of:
(i) this First Supplemental Indenture, duly executed and delivered
by the Company and the Guarantors;
(ii) an opinion of Ungaretti & Harris, counsel to the Company, with
respect to the due authorization, execution and delivery of this First
Supplemental Indenture and such other matters as the Trustee and its
counsel shall reasonably require and meeting the requirements of Section
9.06 of the Indenture; and
(iii) such other approvals, consents, opinions or documents as the
Trustee or its counsel may reasonably request.
(b) On the date hereof, each of the Company and the Guarantors shall be
in compliance with all the terms and provisions on its respective part
to be observed or performed as set forth in the Indenture; any representations
and warranties of the Company and the Guarantors or the Trustee set forth in
this First Supplemental Indenture shall be true and correct in all material
respects on and as of the date hereof; and no Event of Default shall
<PAGE> 9
EXHIBIT 4.4
have occurred and be continuing on such date, and no event shall have
occurred which, with notice or lapse of time, or both, would constitute an
Event of Default under the Indenture.
ARTICLE V
MISCELLANEOUS
SECTION 5.01 Effectiveness and Effect.
This First Supplemental Indenture, including, without limitation, the
amendments provided for in Section 2.08 of Article II hereof, shall take effect
on the date hereof; provided, however, that the amendments provided for in
Article II hereof, with the exception of the amendments provided for in Section
2.08 of said Article II, shall become operative only upon, and simultaneously
with, the delivery to the Trustee of an Officers' Certificate to the effect
that all Securities tendered and accepted for payment by the Company
pursuant to the Company's Offer to Purchase and Consent Solicitation Statement,
dated November 13, 1997 (as the same may have been amended, extended or
otherwise modified) (the "Offer"), have been purchased, and such amendments
provided for in Article II hereof, with the exception of the amendments
provided for in Section 2.08 of said Article II, shall have no force and effect
prior to the operative time specified in this Section. Such operative time
shall be prior to the consummation of the Refinancing Transactions (as such
term is defined in the Offer). Subject to the foregoing, the provisions set
forth in this First Supplemental Indenture shall be deemed to be, and shall be
construed as part of, the Indenture. All references to the Indenture in the
Indenture or in any other agreement, document or instrument delivered in
connection therewith or pursuant thereto shall be deemed to refer to the
Original Indenture as amended by this First Supplemental Indenture. Except as
amended hereby, the Indenture shall remain in full force and effect.
SECTION 5.02 Concerning the Trustee.
The recitals contained herein and in the Securities, except with respect
to the Trustee's certificates of authentication, shall be taken as the
statements of the Company and the Guarantors, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no
representations as to the validity or sufficiency of this First Supplemental
Indenture or of the Securities.
SECTION 5.03. Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 5.04 Governing Law.
This First Supplemental Indenture shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this First Supplemental
Indenture to be duly executed by their respective officers thereunto duly
authorized as of the date first above written.
ACME METALS INCORPORATED
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
<PAGE> 10
EXHIBIT 4.4
ACME PACKAGING CORPORATION
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
ACME STEEL COMPANY
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
ACME STEEL COMPANY INTERNATIONAL INC.
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
ALABAMA METALLURGICAL CORPORATION
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
ALPHA TUBE CORPORATION
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
ALTA SLITTING CORPORATION
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
<PAGE> 11
EXHIBIT 4.4
UNIVERSAL TOOL AND STAMPING
COMPANY, INC.
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
STATE STREET BANK AND TRUST COMPANY.
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
<PAGE> 1
EXHIBIT 4.7
FIRST SUPPLEMENTAL INDENTURE, dated as of December 3, 1997 (this "First
Supplemental Indenture"), among ACME METALS INCORPORATED, a Delaware corporation
(the "Company"), ACME PACKAGING CORPORATION, ACME STEEL COMPANY, ALPHA TUBE
CORPORATION, ALTA SLITTING CORPORATION, each a Delaware corporation, ACME STEEL
COMPANY INTERNATIONAL, INC., a Barbados corporation, ALABAMA METALLURGICAL
CORPORATION, a Washington corporation, UNIVERSAL TOOL AND STAMPING CO. INC., an
Indiana corporation (collectively, the "Guarantors") and State Street Bank and
Trust Company (as successor to Shawmut Bank Connecticut) as trustee (the
"Trustee").
W I T N E S S E T H:
WHEREAS, the Company, the Guarantors and the Trustee are parties to
that certain Indenture dated as of August 11, 1994 (the "Original Indenture"),
pursuant to which the Company issued its 13 1/2% Senior Secured Discount Notes
due 2004 (the "Securities"); and
WHEREAS, Section 9.02 of the Original Indenture provides that the
Company, the Guarantors and the Trustee may, with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities, amend or supplement the Original Indenture; and
WHEREAS, the Company has requested the Trustee and the Guarantors to
enter into this First Supplemental Indenture for the purpose of amending the
Original Indenture; and
WHEREAS, the Trustee has received consents to such amendments from the
Holders of not less than a majority in principal amount of the outstanding
Securities; and
WHEREAS, all other acts and things necessary to constitute these
presents a valid and binding supplemental indenture according to its terms have
been done and performed, and the execution of this First Supplemental Indenture
(the Original Indenture, as amended by this First Supplemental Indenture, being
hereinafter called the "Indenture") has in all respects been duly authorized,
and the Company and the Guarantors, in the exercise of the legal rights and
powers vested in them, each executes this First Supplemental Indenture.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That, for and in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree, for the equal and proportionate
benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Definitions.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings assigned thereto in the Original Indenture.
ARTICLE TWO
AMENDMENT OF THE INDENTURE
SECTION 2.01 Deletion of Certain Provisions.
Each of the following provisions of the Original Indenture is hereby
deleted and eliminated in its entirety, without any redesignation of any other
provision of the Original Indenture:
<PAGE> 2
EXHIBIT 4.7
Section 1.01. Definitions of the following terms:
"Consolidated Cash Flow Available for Fixed Charges"
"Consolidated Fixed Charges"
"Consolidated Net Income"
"Consolidated Tangible Net Worth"
"Permitted Indebtedness"
"Restricted Investment"
"Restricted Payment"
"Special Stock Purchase Warrants"
Section 4.03
Section 4.04
Section 4.07
Section 4.14
Section 4.16
Section 4.17
Section 4.20
Section 4.21
All references in the Original Indenture, as amended by Section 2.01,
to any of the provisions deleted and eliminated as provided above shall also be
deemed deleted and eliminated.
SECTION 2.02. Amendment of Section 1.01.
(a) The definition of the term "Applicable Portion" in Section
1.01 of the Original Indenture is hereby amended to read in its entirety as
follows:
"Applicable Portion" with respect to any Available Proceeds Amount shall
mean such Available Proceeds Amount times a fraction the numerator of
which shall be (a) if the Unapplied Proceeds Offer Payment Date is prior
to August 1, 1997, the Accreted Value of the then outstanding Securities
through such payment date or (b) if the Unapplied Proceeds Offer Payment
Date is on and after August 1, 1997 the aggregate principal amount of
Securities then outstanding plus all accrued and unpaid interest thereon
to the Unapplied Proceeds Offer Payment Date and the denominator of which
shall be the sum of (x) such amount in either (a) or (b) as applicable
and (y) the aggregate principal amount of the then outstanding Senior
Secured Notes plus all accrued and unpaid interest thereon to the
Unapplied Proceeds Offer Payment Date and (z) the aggregate principal
amount of Loans (as such term is defined in the Term Loan Agreement), and
all other Indebtedness ranking pari passu with the Securities permitted
under clause (xi) of the definition of "Permitted Liens," then
outstanding plus all accrued and unpaid interest on such Loans and other
Indebtedness to the Unapplied Proceeds Offer Payment Date.
(b) The definition of the term "Permitted Liens" in Section 1.01
of the Original Indenture is hereby amended to read in its entirety as follows:
"Permitted Liens" means (i) Liens existing on the Issue Date to the
extent specifically permitted in the appropriate Security Document, (ii)
Liens securing Indebtedness collateralized by Property of, or any shares
of stock of or debt of, any corporation existing at the time such
corporation becomes a Subsidiary of the Company or at the time such
corporation is merged into the Company or any of its Subsidiaries;
provided that such Liens are not incurred in connection with, or in
contemplation of, such corporation becoming a Subsidiary of the Company
or merging into the Company or any of its Subsidiaries, (iii) Liens
securing Refinancing Indebtedness used to refund, refinance or extend
Indebtedness referred to in the preceding clause (ii); provided that any
such Lien does not extend to or cover any Property, shares or debt other
than the Property, shares or debt securing the Indebtedness so refunded,
refinanced or extended, (iv) Liens on Collateral of the Company or any of
its Subsidiaries acquired after the Issue Date securing industrial
revenue or pollution control or other tax exempt bonds issued in
connection with the acquisition or refinancing of such Property, (v)
Liens to secure certain Indebtedness that is otherwise permitted under
<PAGE> 3
EXHIBIT 4.7
this Indenture and that is used to finance the cost of Property of the
Company or any of its Subsidiaries acquired after the Issue Date;
provided that (a) any such Lien is created solely for the purpose of
securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including sales and excise taxes,
installation and delivery charges and other direct costs of, and other
direct expenses paid or charged in connection with, such purchase or
construction) of such Property, (b) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such costs, (c)
the Indebtedness secured by such Lien is incurred by the Company or its
Subsidiary within 90 days of the acquisition of such Property by the
Company or its Subsidiary, as the case may be, (d) such Lien does not
extend to or cover any Property other than such item of Property and any
improvements on such item, (e) no Net Cash Proceeds derived from
Collateral are used to fund all or any portion of the cost of acquisition
of such Property, and (f) except as otherwise permitted herein, no Liens
at any time may encumber assets which comprise the Modernization Project,
(vi) statutory liens or landlords', carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business and with respect to amounts
not yet delinquent or being contested in good faith by appropriate
proceedings, if a reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made therefor
but only to the extent specifically permitted under the provisions of the
appropriate Security Document, (vii) Liens on the Collateral for the
benefit of (a) holders of the Senior Secured Notes or (b) holders of
Indebtedness arising at any time after retirement of the Senior Secured
Notes; provided that the principal amount of such Indebtedness does not
exceed the original principal amount of such Senior Secured Notes and
the holders of such replacement Indebtedness (acting through a
designated representative) enter into a supplement to the Collateral
Agency Agreement in substantially the form annexed thereto and the
Company and such holders otherwise comply with the applicable provisions
thereof, (viii) Liens on the Collateral for the benefit of the holders
of the Securities, (ix) easements, restrictions, reservations or rights
of others for right-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes and other similar charges or
encumbrances not interfering in any material respect with the conduct of
the business of the Company or any of its Subsidiaries or to the extent
permitted by the provisions of the Mortgage, (x) Liens on Collateral
that are subordinated to the security interests created by the
Indenture, and (xi) Liens on Collateral securing Indebtedness ranking
pari passu with the Securities and the Senior Secured Notes; provided
that (a) after giving effect to the incurrence of such Indebtedness, the
aggregate outstanding principal amount of (1) such Indebtedness, (2) the
Securities and the Senior Secured Notes and (3) any other Indebtedness
ranking pari passu with the Securities and the Senior Secured Notes is
not greater than the aggregate principal amount of the Indebtedness
referred to in (a)(2) and (a)(3) of this clause (xi) as of the date of
the First Supplemental Indenture; (b) the weighted average effective
interest rate on any such Indebtedness is no greater than the weighted
average effective interest rate on any Indebtedness referred to in
(a)(2) and (a)(3) of this clause (xi); and (c) such Indebtedness does
not have a weighted average maturity earlier than the latest maturity
date of the Indebtedness referred to in (a)(2) and (a)(3) of this clause
(xi).
SECTION 2.03 Amendment of Section 4.05.
Section 4.05 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 4.05. Limitations on Liens.
The Company will not, and will not permit any Subsidiary of the Company
to, issue, assume, guarantee or suffer to exist any Indebtedness
secured by a Lien (other than a Permitted Lien) of or upon any
Collateral."
SECTION 2.04 Amendment of Section 4.10.
Section 4.10 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 4.10. Notice of Defaults.
<PAGE> 4
EXHIBIT 4.7
Upon becoming aware of any Default or Event of Default, the Company
shall promptly deliver an Officers' Certificate to the Trustee
specifying the Default or Event of Default."
SECTION 2.05 Amendment of Section 4.13.
Section 4.13 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 4.13. Reports.
The Company shall comply with the provisions of TIA Section 314(a)."
SECTION 2.06 Amendment of Section 5.01.
Section 5.01 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 5.01. Restriction on Mergers and Consolidations and Sales of
Assets.
The Company shall not consolidate or merge with or into any Person, and
the Company will not, and will not permit any of its Subsidiaries to,
sell, lease, convey or otherwise dispose of all or substantially all of
the Company's consolidated assets (as an entirety or substantially an
entirety in one transaction or a series of related transactions,
including by way of liquidation or dissolution) to, any Person unless,
in each such case:
(i) the entity formed by or surviving any such consolidation
or merger (if other than the Company), or to which sale, lease,
conveyance or other disposition shall have been made (the "Surviving
Entity"), is a corporation organized and existing under the laws of the
United States, any state thereof or the District of Columbia;
(ii) the Surviving Entity assumes by supplemental indenture
all of the obligations of the Company on the Securities and under this
Indenture and the Security Documents; and
(iii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing."
SECTION 2.07 Amendment of Section 6.01.
Section 6.01 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(i) the Company fails to pay interest on any Securities when the same
becomes due and payable and such failure continues for a period of 30
days;
(ii) the Company fails to pay the principal of or premium on any
Securities when the same becomes due and payable whether at maturity,
upon acceleration, redemption or otherwise;
(iii) any Guarantee ceases to be in full force and effect or is
declared to be null and void and unenforceable or is found to be
invalid or any Guarantor denies its liability under its Guarantee
(other than by reason of release of a Guarantor in accordance with the
terms hereof);
(iv) the Company or any Guarantor fails to observe or perform any
other covenant in this Indenture or in any of the Security
Documents for 60 days after notice from the Trustee, the
Collateral Agent or the
<PAGE> 5
EXHIBIT 4.7
holders of 25% in principal amount of the Securities outstanding
(except in the case of a default with respect to Section 4.15 and
Section 5.01, which will constitute Events of Default with such notice
but without passage of time);
(v) [Intentionally deleted]
(vi) [Intentionally deleted]
(vii) [Intentionally deleted]
(viii) any Person, after the occurrence of an event of default under
any instrument evidencing Indebtedness secured by Collateral, shall
commence judicial proceedings to foreclose any material portion of the
Collateral or shall exercise any legal or contractual right to the
ownership of any material portion of the Collateral in lieu of
foreclosure;
(ix) the Company or any Guarantor pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against it in
an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors; or
(x) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Guarantor in an
involuntary case or proceeding,
(B) appoints a Custodian of the Company or any Guarantor or for
all or substantially all of its property, or
(C) orders the liquidation of the Company or any Guarantor,
and in each case the order or decree remains unstayed and in
effect for 30 days; provided that if the entry of such order or decree
is appealed and dismissed on appeal then the Event of Default hereunder
by reason of the entry of such order or decree shall be deemed to have
been cured.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
The Trustee shall, within 90 days after the occurrence of any
Default known to it, give to the holders of Securities notice of such
Default; provided that, except in the case of a Default in the payment
of principal of or interest on any of the Securities, the Trustee shall
be protected in withholding such notice if it in good faith determines
that the withholding of such notice is in the interest of the Holders of
Securities."
SECTION 2.08 Amendment of Section 9.04.
Section 9.04 of the Original Indenture is hereby amended to read in its
entirety as follows:
<PAGE> 6
EXHIBIT 4.7
"SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every
subsequent Holder of that Security or portion of that Security that
evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security. However, except as
provided in the succeeding paragraph, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of a
Security. Such revocation shall be effective only if the Trustee
receives written notice of such revocation before the date the
amendment, supplement or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last two sentences of the immediately preceding
paragraph, those Persons who were Holders at such record date (or their
duly designated proxies), and only those Persons, shall be entitled to
consent to such amendment, supplement or waiver or to revoke by written
notice received by the Trustee any consent previously given, whether or
not such persons continue to be Holders after such record date. No such
consent shall be valid or effective for more than 90 days after such
record date, unless the relevant amendment, supplement or waiver to
which such consent relates has become effective, in which event such
persons who were Holders at such record date shall no longer be entitled
to revoke any consent previously given and such consent shall continue
to be valid and effective. Notwithstanding anything to the contrary in
this Section 9.04, no consent to any amendment, supplement or waiver
delivered by a Holder of a Security in connection with the Offer to
Purchase and Consent Solicitation of the Company, dated November 13,
1997, and the Solicitation (as defined therein) may be revoked by such
Holder.
After an amendment, supplement or waiver becomes effective, it shall
form a part of this Indenture for all purposes and bind every
Securityholder, unless it makes a change described in any of clauses (i)
through (viii) of Section 9.02. In that case, the amendment, supplement
or waiver shall form a part of this Indenture for all purposes and bind
each Holder of a Security who has consented to it and every subsequent
Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security."
SECTION 2.09 Amendment of Section 10.01.
Section 10.01 of the Original Indenture is hereby amended to read in its
entirety as follows:
"SECTION 10.01. Collateral and Security Documents.
(a) In order to secure the due and punctual payment of the principal of
and interest on the Securities, the Senior Secured Notes and, under
certain circumstances, Permitted Replacement Financing when and as the
same shall be due and payable, whether on an Interest Payment Date, at
maturity, by acceleration, purchase, repurchase, redemption or
otherwise, and interest on the overdue principal of and interest (to the
extent permitted by law), if any, on the Securities, the Senior Secured
Notes and, under certain circumstances, Permitted Replacement Financing
and the performance of all other obligations of the Company and the
Guarantors to the Holders or the Trustee under this Indenture and the
Securities, the holders of the Senior Secured Notes or the Note Trustee
under the Note Indenture and the Senior Secured Notes or, under certain
circumstances, the Permitted Additional Lenders under the documents
governing the Permitted Replacement Financing, the Company, Acme Steel,
Acme Packaging, the Collateral Agent, the Trustee and the Note Trustee
have simultaneously with the execution of this Indenture entered into
the Collateral Agency Agreement and the Collateral Agent, the Company,
Acme Steel and/or Acme Packaging have entered into the other Security
Documents to which they are a party pursuant to which the Company, Acme
Steel and Acme Packaging have granted to the Collateral Agent for the
benefit of the Secured Parties a first priority Lien on and security
interest in the Collateral. The Trustee and the Company hereby agree
that the Collateral Agent holds the Collateral in trust for the benefit
of the Secured Parties pursuant to the terms of the Security Documents.
<PAGE> 7
EXHIBIT 4.7
(b) The Trustee is authorized and directed to enter into the
Collateral Agency Agreement and the Collateral Agent is
authorized and directed to enter into the Security Documents. In the
event that pursuant to clause (vii)(b), (x) or (xi) of the definition
of "Permitted Liens" the Company shall elect to grant additional Liens
on assets that comprise Collateral, the Trustee and the Collateral
Agent are authorized and directed to execute and deliver a supplement
or amendment to the Collateral Agency Agreement and any other Security
Documents as may be required to give effect to the grant and reflect
the priority of the additional Liens, including, without limitation,
amendments to the Collateral Agency Agreement relating to the
application of Unapplied Cash Proceeds pro rata to the redemption of
the Securities, the Senior Secured Notes and other Indebtedness
ranking pari passu with respect thereto, and to any other changes to
the Indenture effected by the First Supplemental Indenture. In
addition, in the event of any Permitted Bank Refinancing (as defined
in the Intercreditor Agreement) the Collateral Agent is authorized to
execute and deliver a supplement to the Intercreditor Agreement as
contemplated therein. Each Securityholder, by accepting a Security,
agrees to all of the terms and provisions of the Security Documents,
as the same may be amended from time to time pursuant to the
provisions of the Security Documents and this Indenture."
SECTION 2.10 Amendment of Section 11.05.
Section 11.05 of the Original Indenture is hereby amended to read in
its entirety as follows:
"SECTION 11.05. Guarantors May Consolidate, etc., on Certain Terms.
(a) Nothing contained in this Indenture or in any of the Securities
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 or another Guarantor, which
consolidation, merger, sale or conveyance is otherwise in accordance
with the terms of this Indenture and the Security Documents. Upon any
such consolidation, merger, sale or conveyance, the Guarantee given by
such Guarantor shall no longer have any force or effect.
(b) Other than as set forth in Sections 11.03 and 11.05(a) above,
each Guarantor will not, and the Company will not cause or permit any
Guarantor to, consolidate with or merge with or into any Person unless:
(i) the entity formed by or surviving any such consolidation or merger
(if other than the Guarantor), or to which sale, lease, conveyance or
other disposition shall have been made, is a corporation organized and
existing under the laws of the United States, any state thereof or the
District of Columbia; (ii) such entity assumes by supplemental
indenture all of the obligations of the Guarantor on the Guarantee and
under this Indenture and the Security Documents; and (iii) immediately
after giving effect to such transaction, no Default or Event of Default
shall have occurred and be continuing."
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of the Company and the
Guarantors.
The Company and the Guarantors, jointly and severally, hereby represent
and warrant that:
(a) This First Supplemental Indenture has been duly authorized by
each of the Company and the Guarantors, and, when executed and delivered by the
Company and the Guarantors and, assuming due authorization, execution and
delivery by the Trustee, will be a legal, valid and binding agreement of the
Company and the Guarantors (provided that the amendments provided for in
Article II hereof shall become operative only in accordance with Section 5.01
hereof), enforceable against the Company and the Guarantors in accordance with
its terms, except as (i) the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting creditors' rights generally, (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability (regardless of whether in a
<PAGE> 8
EXHIBIT 4.7
proceeding in equity or at law) and as may be limited by the discretion of the
court before which any proceeding therefor may be brought and (iii) rights to
indemnity and contribution may be limited by state or Federal laws relating to
securities or by policies underlying such laws; and
(b) The execution, delivery and performance by the Company and the
Guarantors of this First Supplemental Indenture and the consummation of the
transactions contemplated hereby will not (1) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, bank loan or credit
agreement, lease or other agreement or instrument to which the Company or any of
the Guarantors is a party or by which the Company or any of the Guarantors is
bound or to which any of the property or assets of the Company or any of the
Guarantors is subject, (2) result in any violation of the provisions of the
Certificate of Incorporation or the By-laws, in each case as amended, of the
Company or any Guarantor or any statute, order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any of
the Guarantors or any of their properties, (3) result in or require the
creation or imposition of any Lien upon or with respect to any of the properties
of the Company or any of the Guarantors, except pursuant to or as contemplated
by the terms of the Indenture, or (4) constitute a default under any ordinance,
license or permit, except, in the case of the events specified in clauses (1),
(3) and (4) above, for such conflicts, breaches, violations, defaults or Liens
which would not have a material adverse effect upon the business, assets,
condition (financial or otherwise), results of operations or prospects of the
Company and the Guarantors, taken as a whole, or on the ability of the Company
and the Guarantors to perform their respective obligations under the Indenture.
SECTION 3.02 Representations of the Trustee.
The Trustee hereby represents and warrants that it is duly authorized
to execute and deliver this First Supplemental Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements made by
it in a Statement of Eligibility on Form T-1, if any, supplied to the Company
are true and accurate subject to the qualifications set forth therein.
ARTICLE IV
CONDITIONS PRECEDENT
This First Supplemental Indenture shall become effective as of the date
hereof upon satisfaction of the following conditions precedent (provided that
the amendments provided for in Article II hereof shall become operative only in
accordance with Section 5.01 hereof):
(a) The Trustee shall have received a true and complete
original, except where stated otherwise, of:
(i) this First Supplemental Indenture, duly executed and
delivered by the Company and the Guarantors;
(ii) an opinion of Ungaretti & Harris, counsel to the Company,
with respect to the due authorization, execution and delivery of
this First Supplemental Indenture and such other matters as the Trustee
and its counsel shall reasonably require and meeting the requirements of
Section 9.06 of the Indenture; and
(iii) such other approvals, consents, opinions or documents as
the Trustee or its counsel may reasonably request.
(b) On the date hereof, each of the Company and the Guarantors shall
be in compliance with all the terms and provisions on its respective part to be
observed or performed as set forth in the Indenture; any representations and
warranties of the Company and the Guarantors or the Trustee set forth in this
First Supplemental Indenture shall be true and correct in all material respects
on and as of the date hereof; and no Event of Default shall
<PAGE> 9
EXHIBIT 4.7
have occurred and be continuing on such date, and no event shall have occurred
which, with notice or lapse of time, or both, would constitute an Event of
Default under the Indenture.
ARTICLE V
MISCELLANEOUS
SECTION 5.01 Effectiveness and Effect.
This First Supplemental Indenture, including, without limitation, the
amendments provided for in Section 2.08 of Article II hereof, shall take effect
on the date hereof; provided, however, that the amendments provided for in
Article II hereof, with the exception of the amendments provided for in Section
2.08 of said Article II, shall become operative only upon, and simultaneously
with, the delivery to the Trustee of an Officers' Certificate to the effect that
all Securities tendered and accepted for payment by the Company pursuant to the
Company's Offer to Purchase and Consent Solicitation Statement, dated November
13, 1997 (as the same may have been amended, extended or otherwise modified)
(the "Offer"), have been purchased, and such amendments provided for in Article
II hereof, with the exception of the amendments provided for in Section 2.08 of
said Article II, shall have no force and effect prior to the operative time
specified in this Section. Such operative time shall be prior to the
consummation of the Refinancing Transactions (as such term is defined in the
Offer). Subject to the foregoing, the provisions set forth in this First
Supplemental Indenture shall be deemed to be, and shall be construed as part of,
the Indenture. All references to the Indenture in the Indenture or in any other
agreement, document or instrument delivered in connection therewith or pursuant
thereto shall be deemed to refer to the Original Indenture as amended by this
First Supplemental Indenture. Except as amended hereby, the Indenture shall
remain in full force and effect.
SECTION 5.02 Concerning the Trustee.
The recitals contained herein and in the Securities, except with
respect to the Trustee's certificates of authentication, shall be taken as the
statements of the Company and the Guarantors, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no representations
as to the validity or sufficiency of this First Supplemental Indenture or of the
Securities.
SECTION 5.03. Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 5.04 Governing Law.
This First Supplemental Indenture shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this First Supplemental
Indenture to be duly executed by their respective officers thereunto duly
authorized as of the date first above written.
ACME METALS INCORPORATED
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
<PAGE> 10
EXHIBIT 4.7
ACME PACKAGING CORPORATION
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
ACME STEEL COMPANY
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
ACME STEEL COMPANY INTERNATIONAL INC.
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
ALABAMA METALLURGICAL CORPORATION
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
ALPHA TUBE CORPORATION
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
ALTA SLITTING CORPORATION
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
<PAGE> 11
EXHIBIT 4.7
UNIVERSAL TOOL AND STAMPING
COMPANY, INC.
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
STATE STREET BANK AND TRUST COMPANY.
Attest:_________________ By:____________________________
Name: Name:
Title: Title:
<PAGE> 1
EXHIBIT 4.9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS 4
ARTICLE 2 DECLARATION OF TRUST; REMEDIES 9
2.1 Declaration and Acceptance of Trust 9
2.2 Remedies 10
2.3 Determinations Relating to Collateral 10
2.4 Right to Make Advances 11
2.5 Nature of Secured Parties' Rights 11
2.6 Voting 11
ARTICLE 3 COLLATERAL ACCOUNT; COLLATERAL PROCEEDS ACCOUNTS; WITHDRAWALS FROM COLLATERAL ACCOUNT 12
3.1 Collateral Account 12
3.2 Collateral Proceeds Accounts 12
3.3 "Trust Moneys" Defined 12
3.4 Withdrawal of Certain Net Cash Proceeds Aggregating Less Than $5 Million 13
3.5 Withdrawal of Trust Moneys Following an Unapplied Proceeds Offer 13
3.6 Withdrawal of Trust Moneys for Reinvestment 14
3.7 Withdrawal of Trust Moneys on Basis of Retirement of Securities 17
3.8 Withdrawal of Net Proceeds and Net Awards For Restoration 17
3.9 Investment of Trust Moneys 20
ARTICLE 4 APPLICATION OF CERTAIN AMOUNTS 20
4.1 Application of Proceeds 20
4.2 Release of Amounts in Collateral Proceeds Accounts 20
4.3 Payment Provisions 20
ARTICLE 5 AGREEMENTS WITH COLLATERAL AGENT 21
5.1 Delivery of Debt Instruments 21
5.2 Information as to Holders 21
5.3 Compensation and Expenses 21
5.4 Stamp and Other Similar Taxes 21
5.5 Filing Fees, Excise Taxes, etc. 22
5.6 Indemnification 22
5.7 Recording and Opinions, Further Assurance 22
ARTICLE 6 COLLATERAL AGENT 23
6.1 Acceptance of Trust 23
6.2 Exculpatory Provisions 23
6.3 Delegation of Duties 24
6.4 Reliance by the Collateral Agent 24
6.5 Resignation or Removal of the Collateral Agent 25
6.6 Status of Successors to the Collateral Agent 25
6.7 Merger of the Collateral Agent 25
</TABLE>
<PAGE> 2
EXHIBIT 4.9
<TABLE>
<S> <C>
6.8 Appointment of Additional and Separate Collateral Agent 26
ARTICLE 7 TERMINATION; RELEASES OF COLLATERAL; EXPIRATION OF CERTAIN RIGHTS 27
7.1 Termination 27
7.2 Releases of Collateral 27
7.3 Form and Sufficiency of Release 29
7.4 Purchaser Protected 30
7.5 Amendment of Collateral Documents 30
ARTICLE 8 MISCELLANEOUS 31
8.1 Amendments, Supplements and Waivers 31
8.2 Notices, Distributions and Payments 31
8.3 Headings 32
8.4 Severability 32
8.5 Dealings with the Company 32
8.6 Binding Effect 33
8.7 GOVERNING LAW 33
8.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS 33
8.9 Counterparts 33
8.10 Certain References 33
8.11 Powers Exercisable by Receiver or Trustee 34
8.12 Possession and Use of Collateral 34
8.13 No Waiver, Discontinuance of Proceeding 34
8.14 Obligations Absolute 35
</TABLE>
<PAGE> 3
EXHIBIT 4.9
THIS INSTRUMENT PREPARED BY:
James T. Easterling of
Ungaretti & Harris
3500 Three First National Plaza
Chicago, Illinois 60602
AFTER RECORDING, RETURN TO:
James T. Easterling of
Ungaretti & Harris
3500 Three First National Plaza
Chicago, Illinois 60602
AMENDED AND RESTATED COLLATERAL AGENCY AGREEMENT
AMENDED AND RESTATED COLLATERAL AGENCY AGREEMENT ("Agreement"), dated as of
December 18, 1997, by and among ACME METALS INCORPORATED, a Delaware
corporation, having its principal place of business at 13500 South Perry Avenue,
Riverdale, Illinois 60827 (together with its successors and assigns, the
"Company"), ACME STEEL COMPANY, a Delaware corporation, having its principal
place of business at 13500 South Perry Avenue, Riverdale, Illinois 60827
(together with its successors and assigns, "Acme Steel"), ACME PACKAGING
CORPORATION, a Delaware corporation, having its principal place of business at
13500 South Perry Avenue, Riverdale, Illinois 60827 (together with its
successors and assigns, "Acme Packaging," together with the Company and Acme
Steel, the "Obligors"), Bankers Trust Company, having an address at 130 Liberty
Street, One Bankers Trust Plaza, New York, New York 10006, as collateral agent
for the New Secured Parties (as hereinafter defined) (in such capacity and
together with its successors and assigns in such capacity, the "New Collateral
Agent"'), and State Street Bank and Trust Company (as successor to Shawmut Bank
Connecticut), a national banking association, having an address at Goodwin
Square, 225 Asylum Street, 23rd Floor, Hartford, Connecticut, 06103, as
collateral agent (in such capacity and together with its successors and assigns
in such capacity, the "Collateral Agent") for the Secured Parties (as
hereinafter defined).
RECITALS:
A. Pursuant to that certain indenture (as amended by the First
Supplemental Indenture dated as of December 3, 1997 (the "First Supplemental
Note Indenture") and as otherwise amended and restated, supplemented or
otherwise modified from time to time, the "Note Indenture"), dated as of August
11, 1994, by and among the Company, the subsidiaries of the Company, as
guarantors (the "Guarantors"), and State Street Bank and Trust Company (as
successor to Shawmut Bank Connecticut), as trustee (in such capacity and
together with its successors and assigns in such capacity, the "Note Trustee")
for the holders of the Senior Secured Notes (as hereinafter defined), the
Company issued its 12 1/2% senior secured notes due 2002 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the "Senior
Secured Notes") in the aggregate principal amount of $125,000,000.
B. Pursuant to that certain indenture (as amended by the First
Supplemental Indenture dated as of December 3, 1997 (the "First Supplemental
Discount Note Indenture" and, together with the First Supplemental Note
Indenture, the "First Supplemental Indentures") and as otherwise amended and
restated, supplemented or otherwise modified from
1
<PAGE> 4
EXHIBIT 4.9
time to time, the "Discount Note Indenture"; together with the Note Indenture,
the "Indentures"), dated as of August 11, 1994, by and among the Company, the
Guarantors and State Street Bank and Trust Company (as successor to Shawmut Bank
Connecticut), as trustee (in such capacity and together with its successors and
assigns in such capacity, the "Discount Note Trustee"; together with the Note
Trustee, the "Trustees") for the holders of the Senior Secured Discount Notes
(as hereinafter defined), the Company issued its 13 1/2% senior secured discount
notes due 2004 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Senior Secured Discount Notes"; together with
the Senior Secured Notes, the "Notes") in the aggregate principal amount of
$117,958,000.
C. Pursuant to that certain term loan agreement (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
"Existing Term Loan Agreement"), dated as of August 4, 1994, by and among the
Company, Lehman Commercial Paper Inc., as agent (the "Former Agent"), and the
lenders party thereto (the "Former Lenders") the Company borrowed $50,000,000.
D. The Company has purchased, pursuant to a Tender Offer and Consent
Solicitation Statement dated November 13, 1997, a portion of the Senior Secured
Notes and a portion of the Senior Secured Discount Notes and, as of the date
hereof, the outstanding principal amount of Senior Secured Notes is $17,623,000
and the outstanding principal amount of Senior Secured Discount Notes is
$669,000.
E. The Existing Term Loan Agreement and all related instruments and
agreements have been indefeasibly paid in full and the Company has been
discharged of all its obligations thereunder in accordance with the terms
thereof
F. Pursuant to the First Supplemental Indentures, the Company is
permitted to grant liens securing indebtedness ranking pari passu with the Notes
and, in accordance therewith, the Company entered into that certain credit
agreement (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"), dated as of December 18, 1997, by
and among the Company, the lenders from time to time party thereto (the "New
Lenders"), Bankers Trust Company, as Administrative Agent (the "Administrative
Agent"), and Morgan Stanley Senior Funding, Inc., as Syndication Agent and
Arranger (together with the Administrative Agent, the New Collateral Agent and
the New Lenders, the "New Secured Parties"), under which the Company is
borrowing $175,000,000.
G. To secure the payment and performance by the Company of its
obligations under the Debt Instruments (as hereinafter defined), it has executed
and delivered to the Collateral Agent, for the benefit of the Original Secured
Parties (as hereinafter defined), a certain company stock pledge agreement (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Company Stock Pledge"), dated as of August 11, 1994, pursuant to
which the Company granted to the Collateral Agent, for the benefit of the
Original Secured Parties, a first priority lien on and security interest in the
Pledged Collateral (as defined in the Company Stock Pledge).
H. To secure the payment and performance by Acme Steel of its
obligations under the Debt Instruments it has executed and delivered to the
Collateral Agent, for the benefit of the Original Secured Parties, (a) a certain
mortgage (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Mortgage"), dated as of August 11, 1994, and recorded
with the Recorder of Deeds of Cook County, Illinois, on August 12, 1994 as
Document No. 94719172, pursuant to which Acme Steel granted to the Collateral
2
<PAGE> 5
EXHIBIT 4.9
Agent, for the benefit of the Original Secured Parties, a first priority
mortgage lien on and security interest in certain of the Acme Steel Real Estate
(as defined below) and the other Mortgaged Property (as defined in the
Mortgage), (b) a certain security agreement (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Security Agreement"),
dated as of August 11, 1994, pursuant to which Acme Steel granted to the
Collateral Agent, for the benefit of the Original Secured Parties, a first
priority lien on and security interest in the Pledged Collateral (as defined in
the Security Agreement) and (c) a certain subsidiary stock pledge agreement (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Subsidiary Stock Pledge"), dated as of August 11, 1994, pursuant to
which Acme Steel granted to the Collateral Agent, for the benefit of the
Original Secured Parties, a first priority lien on and security interest in the
Pledged Collateral (as defined in the Subsidiary Stock Pledge) purported to be
owned or held by it under the Subsidiary Stock Pledge.
I. To secure the payment and performance by Acme Packaging of its
obligations under the Debt Instruments it has executed and delivered to the
Collateral Agent, for the benefit of the Original Secured Parties, the
Subsidiary Stock Pledge pursuant to which Acme Packaging granted to the
Collateral Agent, for the benefit of the Original Secured Parties, a first
priority lien on and security interest in the Pledged Collateral (as defined in
the Subsidiary Stock Pledge) purported to be owned or held by it under the
Subsidiary Stock Pledge.
J. To secure the payment and performance by the Company and the
Guarantors of their obligations under the Credit Agreement and any Interest Rate
Protection Agreement (as defined in the Credit Agreement) entered into with one
or more New Lenders or any affiliate thereof (each such Lender or affiliate, a
"Lender Interest Rate Protection Creditor," and each such Interest Rate
Protection Agreement, a "Lender Interest Rate Protection Agreement"), the
Company and each of the Guarantors has executed and delivered to the New
Collateral Agent, for the benefit of the New Secured Parties and the Lender
Interest Rate Protection Creditors, a certain pledge agreement (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"New Stock Pledge"), dated as of the date hereof, pursuant to which the Company
and each of the Guarantors granted to the New Collateral Agent, for the benefit
of the New Secured Parties and the Lender Interest Rate Protection Creditors, a
first priority lien on and security interest in the Collateral (as defined in
the New Stock Pledge).
K. To secure the payment and performance of Acme Steel of its
obligations as one of the Guarantors under the Credit Agreement and any Lender
Interest Rate Protection Agreements, Acme Steel has executed and delivered to
the New Collateral Agent, for the benefit of the New Secured Parties and the
Lender Interest Rate Protection Creditors, (a) a certain mortgage (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"New Mortgage"), dated as of the date hereof, pursuant to which Acme Steel
grated to the New Collateral Agent, for the benefit of the New Secured Parties
and the Lender Interest Rate Protection Creditors, a first priority mortgage
lien on and security interest in the real estate legally described on Exhibit A
attached hereto (the "Acme Steel Real Estate") and the other Mortgaged Property
(as defined in the New Mortgage) and (b) a certain security agreement (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "New Security Agreement"), dated as of the date hereof, pursuant to
which Acme Steel granted to the New Collateral Agent, for the benefit of the New
3
<PAGE> 6
EXHIBIT 4.9
Secured Parties and the Lender Interest Rate Protection Creditors, a first
priority lien on and security interest in the Collateral (as defined in the New
Security Agreement).
L. Certain other parties which may from time to time become additional
senior debt creditors to the Obligors (each such creditor, an "Additional
Secured Party" and collectively, the "Additional Secured Parties") may, in
accordance with the provisions of the Credit Agreement, take a lien on and
security interest in the Collateral to secure the Additional Senior Debt (as
defined in the New Security Documents) and other obligations due such Additional
Secured Parties.
M. The Obligors, the Collateral Agent, the Trustees, the Former Agent
and certain additional parties executed and delivered a certain collateral
agency agreement (the "Existing Collateral Agency Agreement"), dated August 11,
1994, to evidence their agreement in respect of the Collateral (as hereinafter
defined).
N. The parties hereto are executing and delivering this Amended and
Restated Collateral Agency Agreement to amend and restate the terms and
conditions of the Collateral Agency Agreement to reflect (i) the termination of
the Existing Term Loan Agreement, (ii) the execution and delivery of the Credit
Agreement and the instruments and agreements related thereto and (iii) that,
notwithstanding anything to the contrary contained in the Security Documents (as
hereinafter defined), the agreement of the parties hereto that the Collateral
subject to this Agreement shall be held by the Collateral Agent, from and after
the date hereof, for the equal and ratable benefit of the Secured Parties (as
hereinafter defined), which shall include the New Secured Parties and the Lender
Interest Rate Protection Creditors but shall not include the Former Lenders.
AGREEMENT:
The parties agree as follows:
ARTICLE 1
DEFINITIONS
1. Definitions. (a) Capitalized terms that are not otherwise defined
herein are used herein with the meanings given thereto in the Indentures, as in
effect on the date of execution of this Agreement.
(b) The following terms shall have the respective meanings set forth below:
"Accredited Amount" means, with respect to the Senior Secured Discount
Notes, the Accreted Value.
"Acme Packaging" has the meaning set forth in the introductory paragraph
hereto.
"Acme Steel" has the meaning set forth in the introductory paragraph
hereto.
"Additional Secured Parties" has the meaning set forth in recital L hereto.
"Additional Senior Debt" has the meaning set forth in recital L hereto.
"Additional Undertaking" has the meaning set forth in Section 3.8.
"Administrative Agent" has the meaning set forth in recital F hereto.
"Agreement" has the meaning set forth in the introductory paragraph hereto.
"Architect's Certificate" has the meaning set forth in Section 3.8.
"CAA Supplement" has the meaning set forth in Section 8.1 1.
"Collateral" means the Shared Collateral.
"Collateral Account" has the meaning set forth in Section 3. 1 (a).
"Collateral Agent" has the meaning set forth in the introductory paragraph
hereto.
4
<PAGE> 7
EXHIBIT 4.9
"Collateral Agent's Fees" means all fees, costs and expenses of the
Collateral Agent of the type described in Sections 5.3, 5.4, 5.5 and 5.6.
"Collateral Proceeds Accounts" has the meaning set forth in Section 3.2.
"Company" has the meaning set forth in the introductory paragraph hereto.
"Company Stock Pledge" has the meaning set forth in recital G hereto.
"Credit Agreement" has the meaning set forth in recital F hereto.
"Debt Instrument" means each of (i) the Note Indenture and the Senior
Secured Notes and any related instruments or agreements, (ii) the Discount Note
Indenture and the Senior Secured Discount Notes and any related instruments or
agreements, (iii) the Credit Agreement and any related instruments or
agreements, (iv) the notes, agreements and/or instruments which, at any time,
collectively evidence or comprise any Additional Senior Debt and (v) any Lender
Interest Rate Protection Agreements.
"Directing Holders" means, at any time, the holders of Notes which
constitute at least (i) 50%, or such greater amount as may be required under the
applicable circumstances by the Note Indenture, in principal amount of Senior
Secured Notes and (ii) 50%, or such greater amount as may be required under the
applicable circumstances by the Discount Note Indenture, in principal amount of
Senior Secured Discount Notes and (iii) Required Secured Creditors; provided,
however, that for purposes of calculating the percentages set forth in this
definition there shall not be counted the principal amount of any Notes (A) for
which (and to the extent that) there are at such time on deposit with the
Collateral Agent amounts to be applied to the payment of principal of or
interest or premium on or with respect thereto, (B) which are owned or held by
or on behalf of the Company or any of its Affiliates, or (C) which have been
defeased or in respect of which the Company's and each of its subsidiaries' (if
applicable) obligations have been terminated in each case pursuant to the
provisions of Article Eight of each Indenture. The Trustees acknowledge, on
their own behalf and on behalf of the Noteholders, that as a result of this
definition, the Collateral Agent may refuse to act unless the requisite
percentage of Noteholders of both the Senior Secured Notes and the Senior
Secured Discount Notes and the Required Secured Creditors vote consistently.
"Discount Note Indenture" has the meaning set forth in recital B hereto.
"Discount Note Trustee" has the meaning set forth in recital B hereto.
"Distribution Date" means the date on which any funds are distributed by
the Collateral Agent in accordance with the provisions of Section 4. 1.
"Enforcement Notice" has the meaning set forth in Section 2.2.
"Estimate" has the meaning set forth in Section 3.8.
"Event of Default" means an Event of Default under the Note Indenture, the
Discount Note Indenture or the Credit Agreement or any event, act or
circumstance which would permit or result in the acceleration of any Additional
Senior Debt or Lender Interest Rate Protection Agreement or the institution in
respect thereof of any remedy by the Secured Party thereunder.
"Existing Collateral Agency Agreement" has the meaning set forth in recital
M hereto.
"Existing Term Loan Agreement" has the meaning set forth in recital C
hereto.
"First Supplemental Discount Note Indenture" has the meaning set forth in
recital B hereto.
"First Supplemental Indentures" has the meaning set forth in recital B
hereto.
"First Supplemental Note Indenture" has the meaning set forth in recital A
hereto.
"Former Agent" has the meaning set forth in recital C hereto.
"Former Lenders" has the meaning set forth in recital C hereto.
5
<PAGE> 8
EXHIBIT 4.9
"Guarantors" has the meaning set forth in recital A hereto.
"Indentures" has the meaning set forth in recital B hereto.
"Lender Interest Rate Protection Agreements" has the meaning set forth in
recital J hereto.
"Loan" or "Loans" shall have the meaning given such terms in the Credit
Agreement as in effect on the date hereof
"Majority Holders of an Applicable Class" means, at any time, the holders
of the Senior Secured Notes or the Senior Secured Discount Notes or the New
Secured Parties or Additional Secured Parties or the Lender Interest Rate
Protection Creditors who hold indebtedness which in principal amount constitutes
more than 50% of the Total Amount of Secured Obligations of an Applicable Class;
deed, however, that for purposes of calculating the percentage set forth in this
definition there shall not be counted the principal amount of any Notes (A) for
which (and to the extent that) there are at such time on deposit with the
Collateral Agent amounts to be applied to the payment of principal of or
interest or premium on or with respect thereto, (B) which are owned or held by
or on behalf of the Company or any of its Affiliates or (C) which have been
defeased or in respect of which the Company's and each of its subsidiaries' (if
applicable) obligations have been terminated in each case pursuant to the
provisions of Article Eight of each Indenture.
"Mortgage" has the meaning set forth in recital H hereto and any other
mortgage, deed of trust or other instrument substantially in the form of the
Mortgage described in recital H hereto executed and delivered pursuant to the
provisions of this Agreement.
"Mortgaged Property" has the meaning set forth in recital H hereto and any
other "Mortgaged Property" as defined in any other Mortgage.
"New Collateral Agent" has the meaning set forth in the introductory
paragraph hereto.
"New Lenders" has the meaning set forth in recital F hereto.
"New Mortgage" has the meaning set forth in recital K hereto.
"New Secured Parties" has the meaning set forth in recital F hereto.
"New Security Agreement" has the meaning set forth in recital K hereto.
"New Security Documents" means the New Mortgage, the New Security Agreement
and the New Stock Pledge.
"New Stock Pledge" has the meaning set forth in recital J hereto.
"Note Indenture" has the meaning set forth in recital A hereto.
"Note Trustee" has the meaning set forth in recital A hereto.
"Noteholders" means the Senior Secured Noteholders and the Senior Secured
Discount Noteholders, collectively.
"Notes' has the meaning set forth in recital B hereto.
"Obligors" has the meaning set forth in the introductory paragraph hereto.
"Original Secured Parties" means (i) the Note Trustee, in respect of the
applicable Debt Instruments including the Senior Secured Notes and the Note
Indenture, (ii) the Discount Note Trustee, in respect of the applicable Debt
Instruments including the Senior Secured Discount Notes and the Discount Note
Indenture, (iii) the Former Agent, in respect of the applicable Debt Instruments
including the Term Loan Agreement and (iv) the Collateral Agent, in respect of
the Security Documents.
"Pro Rata Share" with respect to any Secured Party means, at any date of
determination thereof, the percentage derived by dividing (i) the total, without
duplication, of all amounts owed to such Secured Party (whether by virtue of
acceleration or otherwise) under or in respect of the Debt Instrument held or
administered by such Secured Party (it being expressly understood that in the
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<PAGE> 9
EXHIBIT 4.9
case of any Debt Instrument issued at a discount, the principal amount thereof
at any time shall be limited to the Accreted Amount thereof), less the amount on
deposit in the relevant Collateral Proceeds Account with respect thereto, by
(ii) the Total Amount of Secured Obligations; provided, however, that, for
purposes of clause (i) of this definition, there shall not be counted any Notes
which (A) have been defeased or in respect of which the Company's and each of
its subsidiaries' (if applicable) obligations have been terminated pursuant to
the provisions of Article Eight of each Indenture and (B) are owned or held by
or on behalf of the Company or any of the Company's Affiliates.
"Required Secured Creditors" has the meaning given such term in the New
Security Agreement as in effect on the date hereof.
"Secured Obligations" means, at any time, the obligations of the Company
and/or its subsidiaries from time to time under or in respect of the Debt
Instruments (calculated, in the case of any Debt Instrument issued at a
discount, as the Accreted Amount thereof).
"Secured Party" means (i) the Note Trustee, in respect of the applicable
Debt Instruments including the Senior Secured Notes and the Note Indenture, (ii)
the Discount Note Trustee, in respect of the applicable Debt Instruments
including the Senior Secured Discount Notes and the Discount Note Indenture,
(iii) the New Secured Parties, in respect of the applicable Debt Instruments
including the Credit Agreement, (iv) the Collateral Agent, in respect of the
Security Documents and (v) with respect to Secured Obligations under or in
respect of any Debt Instrument constituting Additional Senior Debt or a Lender
Interest Rate Protection Agreement, the trustee, agent or fiduciary in respect
thereof and, if no such trustee, agent or fiduciary exists in respect thereof,
the holders thereof collectively whose identities and addresses are actually
known to the Collateral Agent.
"Security Agreement" has the meaning set forth in recital H hereto.
"Security Documents" means the Intercreditor Agreement, the Company Stock
Pledge, the Mortgage, the Security Agreement, the Subsidiary Stock Pledge, the
Indentures (to the extent the Indentures constitute security agreements under
the UCC), the Credit Agreement (to the extent the Credit Agreement constitutes a
security agreement under the UCC) and all other instruments or documents
delivered by the Obligors evidencing or creating any Lien in favor of the
Collateral Agent in all or any portion of the Collateral (including, without
limitation, any additional security documents executed and delivered in
connection with any Additional Senior Debt), in each case, as amended, amended
and restated, supplemented or otherwise modified from time to time, but not
including the New Security Documents.
"Senior Secured Discount Noteholders" means holders of the Senior Secured
Discount Notes.
"Senior Secured Discount Notes" has the meaning set forth in recital B
hereto.
"Senior Secured Noteholders" means holders of the Senior Secured Notes.
"Senior Secured Notes" has the meaning set forth in recital A hereto.
"Shared Collateral" means the Pledged Collateral (as defined in each of the
Company Stock Pledge, the Subsidiary Stock Pledge and the Security Agreement),
the Mortgaged Property (as defined in the Mortgage) and the Collateral Account
hereunder and any other property which may from time to time be subject to one
or more of the Liens evidenced or created by any of the Security Documents.
"Subsidiary Stock Pledge" has the meaning set forth in recital H hereto.
"Survey" means a survey of any parcel of real property (and all
improvements thereon): (i) prepared by a surveyor or engineer licensed to
perform surveys in
7
<PAGE> 10
EXHIBIT 4.9
the state in which such property is located, (ii) dated (or redated) not earlier
than six months prior to the date of delivery thereof (unless there shall have
occurred within six months prior to such date of delivery any exterior
construction on the site of such property, in which event such survey shall be
dated (or redated) to a date after the completion of such construction, (iii)
certified by the surveyor (in a manner reasonably acceptable to the title
company providing title insurance in respect of the Liens of the Security
Documents) and (iv) complying in all respects with the minimum detail
requirements of the American Land Title Association, or local equivalent, as
such requirements are in effect on the date of preparation of such survey.
"Title Policies" means any mortgagee policies of title insurance delivered
to the Collateral Agent in connection with the issuance of the Notes and any
other mortgagee policies of title insurance delivered to the Collateral Agent
under the applicable Debt Instrument in connection with any Additional Senior
Debt.
"Total Amount of Secured Obligations" means, at any time, the total,
without duplication, of all amounts then outstanding under or in respect of each
of the Debt Instruments (calculated, in the case of Debt Instruments issued at a
discount, as the Accredited Amount thereof), less, in each case, (A) the amount
of cash collateral on deposit in the Collateral Proceeds Accounts with respect
thereto and (B) the principal amount of any Notes which (I) have been defeased
or in respect of which the Company's and each of its subsidiaries' (if
applicable) obligations have been terminated pursuant to the provisions of
Article Eight of each Indenture and (II) are owned or held by or on behalf of
the Company or any of the Company's Affiliates.
"Total Amount of Secured Obligations of an Applicable Class" means, at any
time, the total, without duplication, of all amounts then outstanding under or
in respect of the Senior Secured Notes, the Senior Secured Discount Notes, the
Credit Agreement, any issue of Additional Senior Debt or any Lender Interest
Rate Protection Agreement, less, in each case (A) the amount of cash collateral
on deposit in the Collateral Proceeds Account with respect thereto and (B) the
principal amount of any Notes which (I) have been defeased or in respect of
which the Company's and each of its subsidiaries' (if applicable) obligations
have been terminated pursuant to the provisions of Article Eight of each
Indenture and (II) are owned or held by or on behalf of the Company or any of
the Company's Affiliates.
"Trustees" has the meaning set forth in recital B hereto.
Trust Estate" means (i) the right, title and interest of the Collateral
Agent in, to and under each of the Security Documents, (ii) the right, title and
interest of the Collateral Agent in, to and under each of the Title Policies and
(iii) the amounts from time to time held in the Collateral Proceeds Accounts.
"Trust Moneys" has the meaning set forth in Section 3.3 hereof.
"Valuation Date" has the meaning set forth in Section 7.2(b) hereof.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section references are to
this Agreement unless otherwise specified.
8
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EXHIBIT 4.9
ARTICLE 2
DECLARATION OF TRUST; REMEDIES
2.1 Declaration and Acceptance of Trust. Each of the Collateral Agent and
the New Collateral Agent hereby declares, and the Obligors and the Secured
Parties (by their acceptance of the benefits of this Agreement) agree that,
notwithstanding the date, manner or order of perfection of the security interest
and liens granted to the Collateral Agent or the New Collateral Agent, and
notwithstanding any provisions of any applicable law or decision or the Debt
Instruments, or whether the Collateral Agent or the New Collateral Agent holds
possession of all or any part of the Collateral, or the granting provisions of
any Mortgage or New Mortgage or security instrument or the provisions of any
financing statement, the Collateral Agent holds the Collateral constituting the
Trust Estate as trustee in trust under this Agreement for the equal and ratable
benefit of the Secured Parties (and the Persons for whom the Secured Parties act
as trustee, agent or fiduciary, as applicable) as provided herein and the
security interest of the Collateral Agent and the New Collateral Agent in and to
the Collateral, including the lien of the Mortgage and the lien of the New
Mortgage, is pari passu. By acceptance of the benefits of this Agreement and the
Security Documents each Secured Party and each Person for whom such Secured
Party acts as trustee, agent or fiduciary, as applicable, (i) consents to the
appointment of the Collateral Agent as agent hereunder and grants the Collateral
Agent all rights and powers necessary for the Collateral Agent to perform its
obligations hereunder, (ii) confirms that the Collateral Agent shall have the
authority to act as the exclusive agent of such Secured Party (or Person, as
applicable) to make claims under and otherwise act in all respects as the
beneficiary of the Title Policies and for enforcement of any remedies under or
with respect to any Security Document (including, without limitation, the
Intercreditor Agreement) and the giving or withholding of any consent or
approval relating to any Collateral or the Security Documents (including,
without limitation, the Intercreditor Agreement) or any obligations with respect
thereto or otherwise take any action on behalf of the Secured Parties
contemplated in the Security Documents (including, without limitation, to
receive opinions, maintain collateral accounts and exercise remedies), (iii)
agrees that, except as provided in this Agreement, such Secured Party (or
Person, as applicable) shall not take any action to enforce any of such remedies
or give any such consents or approvals relating to any Collateral or the
Security Documents or itself make any claim under the Title Policies (except
that, subject to clause (iv) below, such Secured Party may bring any suit,
action or proceeding to enforce such Secured Party's Debt Instrument or any
interest therein), and (iv) agrees that such Secured Party (or Person, as
applicable) shall not bring any suit, action, or proceeding to enforce such
Secured Party's Debt Instrument or any interest therein (including any
individual bond, note or similar instrument comprising a portion of a Debt
Instrument) if doing so could, under the laws of any applicable jurisdiction,
cause to be applicable any "one action rule" or other law or defense which could
adversely affect any Secured Party's rights and remedies in respect of any
Collateral.
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EXHIBIT 4.9
2.2 Remedies. Upon the occurrence and during the continuance of an Event of
Default in respect of any Debt Instrument, the Majority Holders of an Applicable
Class in respect of such Debt Instrument (or, if the Secured Party in respect of
such Debt Instrument is a trustee, agent or fiduciary, such Secured Party) shall
in one or more writings addressed to the Collateral Agent specify that an Event
of Default has occurred and is continuing and shall state the nature thereof
(each such writing, an "Enforcement Notice"). Such Enforcement Notice may also
indicate what rights or remedies available to the Collateral Agent or the
Secured Parties with respect to the Collateral the Secured Party requests be
exercised by the Collateral Agent on behalf of all Secured Parties. Each
Enforcement Notice shall generally describe the nature of and relevant facts
relating to such Event of Default and that such notice is being delivered by the
Majority Holders of an Applicable Class of a Debt Instrument or by the Secured
Party in respect of a Debt Instrument who is a trustee, agent or fiduciary and
is authorized by and entitled to bind such holders. Upon the receipt of an
Enforcement Notice by the Collateral Agent, the Collateral Agent shall, within
three Business Days thereafter, notify each Secured Party and the Company in
writing that the Collateral Agent has received such Enforcement Notice,
enclosing a copy of such Enforcement Notice. An Enforcement Notice shall be
deemed to be in effect hereunder only if such notice shall have been given and
not rescinded, annulled or withdrawn in writing by the applicable Secured Party.
In the event an Enforcement Notice is inconsistent with any previously delivered
Enforcement Notice, the Collateral Agent shall, as soon as practicable, but in
any event within three Business Days of obtaining knowledge of such
inconsistency, give notice thereof to all Secured Parties. Thereafter, subject
to the provisions hereof relating to indemnification of the Collateral Agent,
the Collateral Agent shall exercise the right or remedy directed by the
Directing Holders as reported to the Collateral Agent in writing by the
Directing Holders as contemplated in Section 2.6 of this Agreement and any other
actions not inconsistent with such direction.
2.3 Determinations Relating to Collateral. Prior to the occurrence and
continuance of an Event of Default and receipt of an Enforcement Notice from the
Majority Holders of an Applicable Class or a Secured Party, in the event (i) the
Collateral Agent shall receive any written request from any Obligor under any
Security Document (other than the Indentures or the Credit Agreement) for
consent or approval with respect to any matter or thing relating to any
Collateral or such Obligor's obligations with respect thereto (including,
without limitation, consent to amendment of the documents relating to the
Modernization Project as required by Section 6(i) of the Security Agreement) and
which matter or thing is, under the terms of any applicable Security Document,
of a nature such that the Collateral Agent shall not be entitled to respond
thereto or determines not to respond thereto or (ii) there shall be due to or
from the Collateral Agent under the provisions of any Security Document (other
than the Indentures or the Credit Agreement) any material performance or the
delivery of any material instrument or (iii) the Collateral Agent shall become
aware of any nonperformance by any Obligor of any covenant or any breach of any
representation or warranty of such Obligor set forth in any Security Document
(other than the Indentures or the Credit Agreement), then, in each such event,
the Collateral Agent shall, within three Business Days, advise all Secured
Parties in writing of the matter or thing as to which consent has been requested
or the performance or instrument required to be delivered or the nonperformance
or breach of which the Collateral Agent has become aware. The Directing Holders
shall have the exclusive authority to direct the
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EXHIBIT 4.9
Collateral Agent's response to any of the circumstances contemplated in clauses
(i), (ii) and (iii) above. In the event the Collateral Agent shall be required
to respond to any of the circumstances contemplated in this Section 2.3, the
Collateral Agent shall be entitled, at the sole cost and expense of the Company,
to hire experts, consultants, agents and attorneys to advise the Collateral
Agent on the manner in which the Collateral Agent shall respond thereto. The
Collateral Agent 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 the Directing Holders.
2.4 Right to Make Advances. If an advance of funds shall at any time be
required for the preservation or maintenance of any Collateral, subject to
Section 6.4(c), the Collateral Agent, any Secured Party or any Person for whom a
Secured Party acts as trustee, agent or fiduciary shall be entitled to make, but
not be obligated to make, such advance. Each such advance shall be reimbursed,
with interest accrued from the date such advance was made at the rate borne by
the Senior Secured Discount Notes, by the Obligors upon demand by the Collateral
Agent or such Secured Party or Person, as the case may be, and if the Obligors
fail to comply with any such demand, out of the proceeds of any sale of or other
realization upon any Collateral distributed pursuant to clause FIRST of Section
4.1. In the event any Secured Party shall receive any funds which, under this
Section 2.4, belong to the Collateral Agent or any other Secured Party (or
Person for whom a Secured Party acts as trustee, agent or fiduciary), such
Secured Party shall remit such funds promptly to the Collateral Agent for
distribution to the Collateral Agent or such other Secured Party (or Person), as
the case may be, and prior to such remittance shall hold such funds in trust for
the Collateral Agent or such other Secured Party (or Person), as the case may
be.
2.5 Nature of Secured Parties' Rights. All of the Secured Parties (and each
Person for whom a Secured Party acts as trustee, agent or fiduciary) shall be
bound by any instruction or direction given by the Directing Holders pursuant to
this Agreement to the extent any such instruction or direction is within the
powers or rights granted to such group under this Agreement.
2.6 Voting. In each case where any vote or consent of the Directing Holders
is required or desired to be made or determined hereunder or under the
Intercreditor Agreement, each Secured Party shall, in accordance with the
provisions of its Debt Instrument, advise in reasonable detail in writing the
Persons for whom it acts as trustee, agent or fiduciary of the matters or things
to which such vote or consent pertain and afford such Persons an opportunity to
indicate (which may be accomplished by affirmative act or failure to act within
a reasonably prescribed time period) a response to the matters or things set
forth in such writing. The results of such voting or consent solicitation shall
be promptly reported in writing to the Collateral Agent and shall be certified
as correct to the best knowledge of such Secured Party. Any determination as to
whether a vote or consent of the Directing Holders has been obtained shall be
made by the Collateral Agent on the basis of such written information, which
information may be conclusively relied upon by the Collateral Agent. The
Collateral Agent shall not be liable for errors in such determinations unless
the Collateral Agent shall have been grossly negligent or shall have acted in
bad faith in connection therewith.
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<PAGE> 14
EXHIBIT 4.9
ARTICLE 3
COLLATERAL ACCOUNT; COLLATERAL PROCEEDS ACCOUNTS;
WITHDRAWALS FROM COLLATERAL ACCOUNT
3.1 Collateral Account. (a) At all times hereafter until this Agreement
shall have terminated, there shall be maintained with the Collateral Agent, the
single collateral account which was established on August 11, 1994 and entitled
the "Collateral Account" (the "Collateral Account"). The Collateral Account
shall be maintained by the Collateral Agent at its corporate trust offices. All
Trust Moneys which are received by the Collateral Agent shall be deposited in
the Collateral Account and thereafter shall be held, applied and/or disbursed by
the Collateral Agent as part of the Trust Estate in accordance with the
provisions of this Agreement.
(b) Each of the Note Trustee, the Discount Note Trustee and the New
Collateral Agent hereby appoints and constitutes the Collateral Agent as its
agent for the administration of the Collateral Account.
(c) The Collateral Agent shall take such actions with respect to the
Collateral Account as shall be directed in writing by the Directing Holders and
shall hold, apply and release funds held in the Collateral Account in accordance
with the provisions hereof as directed by the Directing Holders to the extent
not inconsistent with this Agreement and the Debt Instruments; provided,
however, that notwithstanding the foregoing, so long as no Event of Default is
continuing and no Enforcement Notice is in effect, application of Trust Moneys
held in the Collateral Account by the Collateral Agent pursuant to the direction
of the Company shall not require the consent of any Secured Party, holder of
Notes or holder of Additional Senior Debt if and to the extent such direction is
made by the Company in compliance with all of the terms and provisions hereof
and each Debt Instrument and if all of the conditions precedent herein and
therein for the effectiveness of such direction have been satisfied in full all
of which shall be certified to the Collateral Agent as required herein and
therein.
3.2 Collateral Proceeds Accounts. The Collateral Agent has established and
shall maintain, at the office of its corporate trust division, a separate
collateral trust account (each, a "Collateral Proceeds Account"), which may be
sub accounts or notional accounts of one account, for each of the Secured
Parties in respect of its Debt Instrument until the earlier of (i) the
termination of this Agreement or (ii) the indefeasible payment in full, in cash,
to all Secured Parties of all Obligations owing to such Secured Parties. All
funds on deposit in the Collateral Proceeds Accounts shall be held, applied and
disbursed by the Collateral Agent as part of the Trust Estate in accordance with
the terms of this Agreement.
3.3 "Trust Moneys" Defined. All cash or Cash Equivalents received by the
Collateral Agent:
(i) upon the release of Property from the Lien of the Security
Documents; or
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EXHIBIT 4.9
(ii) as proceeds of insurance upon any, all or part of the Collateral
(other than any liability insurance proceeds payable to the Collateral
Agent for any loss, liability or expense incurred by it) including, without
limitation, proceeds of any insurance received pursuant to Section 1.13 of
any Mortgage; or
(iii) as proceeds of any other sale or other disposition of all or any
part of the Collateral by or on behalf of the Collateral Agent (including
any proceeds received pursuant to Section 1.13 of any Mortgage in respect
of the sale or other disposition of all or any part of the Collateral taken
by eminent domain or purchased by, or sold pursuant to any order of a
governmental authority) 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
(iv) for application hereunder, in the Indentures, in the Credit
Agreement, in the Debt Instruments constituting Additional Senior Debt, in
the Lender Interest Rate Protection Agreements or in the Security
Documents, or whose disposition is not elsewhere otherwise specifically
provided for herein or therein;
(all such moneys being herein sometimes called "Trust Moneys"); shall be held by
the Collateral Agent for the equal and ratable benefit of the Secured Parties as
a part of the Trust Estate and, upon any entry upon or sale or other disposition
of the Collateral or any part thereof pursuant to enforcement of the Security
Documents, said Trust Moneys shall be applied in accordance with Section 4.1
hereof, but, prior to any such entry, sale or other disposition, all or any part
of the Trust Moneys may be withdrawn, and shall be released, paid or applied by
the Collateral Agent, from time to time as provided herein.
3.4 Withdrawal of Certain Net Cash Proceeds Aggregating Less Than $5
Million. In accordance with Section 4.06(b)(A) of each of the Indentures,
Section 3.02(d) of the Credit Agreement and any analogous provisions of any Debt
Instrument evidencing Additional Senior Debt, to the extent that any Trust
Moneys consist of Available Proceeds Amounts and the aggregate amount of all
Available Proceeds Amounts (whether derived from one or more Asset Sales,
insurance or eminent domain or similar proceedings) received by the Company or
the Collateral Agent to date is less than $5 million, such Trust Moneys may be
withdrawn by the Company (but only to the extent that such withdrawal is
otherwise permitted by the respective Debt Instruments) and shall be paid by the
Collateral Agent upon a request by a Company Order and upon receipt by the
Secured Parties of (i) an Officers' Certificate certifying that such Trust
Moneys constitute Available Proceeds Amounts described above and that all such
amounts received to date are less than $5 million and (ii) all opinions,
certificates and other documentation required by the TIA, if any, as certified
to the Collateral Agent by the Company.
Upon compliance with the foregoing provisions of this Section 3.4, the
Collateral Agent shall apply the Trust Moneys as directed and specified in such
Company Order.
3.5 Withdrawal of Trust Moneys Following an Unapplied Proceeds Offer. To
the extent that any Trust Moneys consist of Net Cash Proceeds received by the
Collateral Agent as a result of an Asset Sale and an Unapplied Proceeds Offer or
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EXHIBIT 4.9
any mandatory payment, as the case may be, has been made in accordance with
Section 4.06 of each of the Indentures, Section 3.02(d) of the Credit Agreement
and the analogous provisions of any Debt Instrument evidencing Additional Senior
Debt, such Trust Moneys shall be used to make a repayment to the extent required
by the Credit Agreement, and the remaining amount (if any) of such Trust Monies
may be withdrawn by the Company and shall be paid by the Collateral Agent to the
Company (or as otherwise directed by the Company) upon a Company Order to the
Collateral Agent and upon receipt by the Secured Parties of the following:
(a) An Officers' Certificate, dated not more than five days prior to the
Unapplied Proceeds Offer Payment Date certifying:
(i) that no Default or Event of Default exists and that the release of
the Trust Moneys will not result in a Default or Event of Default;
(ii) (A) that such Trust Moneys constitute Net Cash Proceeds, (B) that
pursuant to and in accordance with Section 4.06 of each of the Indentures,
Section 3.02(d) of the Credit Agreement and the analogous provisions of any
Debt Instrument evidencing Additional Senior Debt, the Company has made an
Unapplied Proceeds Offer or mandatory payment, as the case may be, (C) the
amount of Trust Moneys to be applied to the repurchase of the Notes and any
Debt Instruments evidencing Additional Senior Debt pursuant to the
Unapplied Proceeds Offer or any mandatory payment, as the case may be, (D)
the amount of Trust Moneys to be released to the Company, and (E) the
Unapplied Proceeds Offer Payment Date, if any; and
(iii) that all conditions precedent and covenants provided for in the
Debt Instruments and this Agreement relating to such application of Trust
Moneys have been complied with; and
(b) All opinions, certificates and other documentation required under the
TIA, if any, as certified to the Collateral Agent by the Company.
Upon compliance with the foregoing provisions of this Section 3.5, the
Collateral Agent shall apply the Trust Moneys as directed and specified by such
Company Order.
3.6 Withdrawal of Trust Moneys for Reinvestment. To the extent that any
Trust Moneys consist of Net Cash Proceeds received by the Collateral Agent as
the result of an Asset Sale and the Company intends to invest such Net Cash
Proceeds in a Related Business Investment (the "Released Trust Moneys"), such
Trust Moneys may be withdrawn by the Company and shall be paid by the Collateral
Agent to the Company (or as otherwise directed by the Company) upon a Company
Order to the Collateral Agent and upon receipt by the Secured Parties of the
following:
(a) An Officers' Certificate certifying that (i) the release of the
Released Trust Moneys complies with the terms and conditions of Section 4.06 of
each of the Indentures, Section 3.02(d) of the Credit Agreement and the
analogous provisions of any Debt Instrument evidencing Additional Senior Debt,
(ii) there is no Default or Event of Default in effect or continuing on the date
thereof, (iii) the release of the Released Trust Moneys
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EXHIBIT 4.9
will not result in a Default or Event of Default hereunder, (iv) the parties
executing any and all documents required under the provisions of this Section
were duly authorized to do so, and (v) all conditions precedent and covenants
provided for in the Debt Instruments and this Agreement relating to such release
have been complied with;
(b) If the Related Business Investment to be made is an investment in real
property:
(i) a Mortgage or other instrument or instruments in recordable form
sufficient to grant to the Collateral Agent for the equal and ratable
benefit of the Secured Parties (A) substantially the same rights and
remedies in respect of such real property as granted thereto under the
Mortgage executed and delivered on the Issue Date and (B) a valid first
priority mortgage Lien on such real property subject to no Liens other than
Prior Liens of the types permitted under the Mortgage delivered on the
Issue Date and, if the real property is a leasehold or easement interest,
such Mortgage or other instrument or instruments shall include normal and
customary provisions with respect thereto, in each case together with
evidence of the filing of all such financing statements and other
instruments as may be necessary to perfect such Lien;
(ii) a Title Policy (or a commitment to issue title insurance)
insuring that the Lien of the instruments delivered pursuant to clause (i)
above constitutes a valid and perfected first priority mortgage Lien on
such real property in an aggregate amount equal to the fair market value of
the real property, together with an Officers' Certificate stating that any
specific exceptions to such title insurance are Permitted Liens, together
with such endorsements and other opinions of the type included in the Title
Policy or otherwise delivered to the Collateral Agent on the Issue Date
with respect to the Mortgaged Property;
(iii) in the event such real property has a fair value in excess of
$250,000, a Survey with respect thereto;
(iv) evidence of payment or a closing statement indicating payments to
be made by the Company of all title premiums, recording charges, transfer
taxes and other costs and expenses, including reasonable legal fees and
disbursements of counsel for the Collateral Agent (and any local counsel),
that may be incurred to validly and effectively subject the real property
to the Lien of any applicable Security Document and to perfect such Lien;
(v) an Officers' Certificate stating that the Company has caused there
to be conducted by a reputable expert a review and analysis of the
environmental conditions relating to such real property and that, in the
reasonable and good faith judgment of the issuer thereof such real property
does not contain any conditions which would cause a prudent institutional
lender to decline to fund loans secured by such real property, together
with a copy of the written report of such expert,; and
(vi) such further documents, opinions, certificates or instruments
(including, without limitation (A) policies or certificates of insurance,
(B) UCC, judgment and tax lien searches, (C) consents, approvals, estoppels
and tenant subordination agreements and (D)
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<PAGE> 18
EXHIBIT 4.9
Officers' Certificates in respect of compliance with local codes or
ordinances relating to building or fire safety or structural soundness and
the adequacy of utility services) as are customarily provided to
institutional mortgage lenders;
(c) If the Related Business Investment is not an investment in real
property:
(i) an instrument sufficient to grant to the Collateral Agent, for the
equal and ratable benefit of the Secured Parties (A) substantially the same
rights and remedies in respect of such personal property interest as
granted thereto under the Security Agreement, the Company Stock Pledge or
the Subsidiary Stock Pledge, as the case may be, executed and delivered on
the Issue Date and (B) a valid first priority Lien on such personal
property interest subject to no Liens other than Liens permitted under such
instrument, together with evidence of the filing of such financing
statements and other instruments as may be necessary to perfect such Liens;
and
(ii) evidence of payment or a closing statement indicating payments to
be made by the Company of all filing fees, recording charges, transfer
taxes and other costs and expenses, including reasonable legal fees and
disbursements of counsel for the Collateral Agent (and any local counsel),
that may be incurred to validly and effectively subject the Related
Business Investment to the Lien of any Security Document;
(d) An Opinion of Counsel substantially stating:
(i) that the instruments that have been or are therewith delivered to
the Collateral Agent conform to the requirements of this Agreement and the
Security Documents, and that, upon the basis of such request of the Company
and the accompanying documents specified in this Section 3.6, all
conditions precedent herein provided for relating to such withdrawal and
payment have been complied with, and the Trust Moneys whose withdrawal is
then requested may be lawfully paid over under this Section 3.6;
(ii) that the Collateral Agent, for the benefit of the Secured
Parties, has a valid and perfected lien on such Related Business
Investments, that the same and every part thereof are subject to no Liens
prior to the Lien of the Security Documents, except Liens permitted under
the Security Documents; and
(iii) that all of such Obligor's right, title and interest in and to
said Related Business Investments, are then subject to the Lien of the
Security Documents;
(e) All certificates, opinions and other documentation required under the
TIA, if any, as certified to the Collateral Agent by the Company.
Upon compliance with the foregoing provisions of this Section 3.6, the
Collateral Agent shall apply the Released Trust Moneys as directed and specified
by such Company Order.
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EXHIBIT 4.9
3.7 Withdrawal of Trust Moneys on Basis of Retirement of Securities. Trust
Moneys may be withdrawn by the Company to be applied to the redemption and
retirement of the Notes or the repayment of any Loans and shall be paid by the
Collateral Agent to the Company (or as otherwise directed by the Company) upon a
Company Order to the Collateral Agent and upon receipt by the Secured Parties of
the following:
(a) A Board Resolution requesting the withdrawal and payment of a specified
amount of Trust Moneys; and
(b) An Officers' Certificate, dated not more than 30 days prior to the date
of the application for the withdrawal and payment of such Trust Moneys,
certifying that (i) there is no Default or Event of Default in effect or
continuing on the date thereof and (ii) all conditions precedent and covenants
provided for in the Debt Instruments and this Agreement relating to such
withdrawal and application have been complied with.
Upon compliance with the foregoing provisions of this Section 3.7, the
Collateral Agent shall apply the Trust Moneys as directed and specified by such
Company Order.
3.8 Withdrawal of Net Proceeds and Net Awards For Restoration. To the
extent that any Trust Moneys consist of either Net Proceeds or Net Awards
received by the Collateral Agent pursuant to Section 1.13 of any Mortgage and
such Net Proceeds or Net Awards are required to be applied or may be applied by
the Obligor thereunder to effect a Restoration of the affected Collateral, such
Trust Moneys may be withdrawn by the Company (to the extent permitted by the
respective Debt Instruments) and shall be paid by the Collateral Agent upon a
request by a Company Order to reimburse such Obligor for expenditures made, or
to pay costs incurred, by such Obligor to repair, rebuild or replace the
property destroyed, damaged or taken, upon receipt by the Secured Parties of the
following:
(a) An Officers' Certificate of the Company, dated not more than 30 days
prior to the date of the application for the withdrawal and payment of such
Trust Moneys stating:
(i) that expenditures have been made, or costs incurred, by such
Obligor in a specified amount for the purpose of making certain repairs,
rebuildings and replacements of the Collateral, which shall be briefly
described, and stating the fair market value thereof at the date of the
expenditure or incurrence thereof by such Obligor;
(ii) that no part of such expenditures or costs has been or is being
made the basis for the withdrawal of any Trust Moneys in any previous or
then pending application pursuant to this Section 3.8;
(iii) that there is no outstanding Indebtedness, other than costs for
which payment is being requested, for the purchase price or construction of
such repairs, rebuildings or replacements, or for labor, wages, materials
or supplies in connection with the making thereof, which, if unpaid, might
become the basis of a vendor's, mechanic's, laborer's, materialman's,
statutory or other similar Lien upon any Collateral;
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EXHIBIT 4.9
(iv) that the property to be repaired, rebuilt or replaced is
necessary or desirable in the conduct of such Obligor's business;
(v) whether any part of such repairs, rebuildings or replacements
within six months before the date of acquisition thereof by such Obligor
has been used or operated by any Person other than such Obligor in a
business similar to that in which such property has been or is to be used
or operated by such Obligor, and whether the fair value to such Obligor, at
the date of such acquisition, of such part of such repairs, rebuildings or
replacement is at least $25,000, or at least 1% of the aggregate principal
amount of the outstanding Notes and Loans, collectively;
(vi) that no Default or Event of Default under any Debt Instrument
shall have occurred and be continuing; and
(vii) that all conditions precedent herein and in the Debt Instruments
relating to such withdrawal and payment have been complied with;
(b) An Opinion of Counsel substantially stating:
(i) that the instruments that have been or are therewith delivered to
the Collateral Agent conform in all material respects to the requirements
of this Agreement and the Security Documents, and that, upon the basis of
such request of the Company and the accompanying documents specified in
this Section 3.8 (and without any investigation as to any factual matter
discussed within those instruments), all conditions precedent herein
provided for relating to such withdrawal and payment have been complied
with, and the Trust Moneys whose withdrawal is then requested may be
lawfully paid over under this Section 3.8; and
(ii) upon the payment therefor during the performance and at
completion of the Restoration work and the construction or installation
thereof upon the Mortgaged Property, the buildings, fixtures, and
personalty (other than non-UCC Property) comprising the Restoration work
shall become subject to the lien of the Mortgage and other Security
Documents pertinent thereto. The foregoing opinion does not address the
priority of the lien of the Mortgage or other Security Documents with
respect to competing Liens (if any) on the Restoration work.
(c) A certificate of an independent, reputable architect, engineer or
appraiser acceptable to Collateral Agent and licensed in the state where the
Premises (as defined in the applicable Mortgage) are located, stating:
(i) that, based upon the observations of the architect at the site of
the Restoration work and its review of the contractor's application for
payment, the Restoration work to which the payment request relates has
progressed to the point indicated therein and, to the best of the
Architect's knowledge, information and belief, is in accordance with the
Plans and Specifications (as defined in the applicable Mortgage) and the
other documents forming the contract for construction of the Restoration
work (collectively, the "Contract Documents")
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EXHIBIT 4.9
subject (with respect to certifications relating to all payments other than
the final payment upon completion of the Restoration work) to an evaluation
of the Restoration work for conformance with the Contract Documents on
substantial completion, results of subsequent tests and inspections and
minor deviations from the Contract Documents correctable prior to
completion;
(ii) the sums requested are required to reimburse such Obligor for
payments by such Obligor to, or are due to, the contractors,
subcontractors, materialmen, laborers, engineers, architects or other
persons rendering services or materials for the Restoration pursuant to the
Contract Documents, and that, when added to the sums, if any, previously
paid out by Collateral Agent, such sums do not exceed the amount due under
the Contract Documents to the date of such Architect's Certificate (as
defined in the applicable Mortgage);
(iii) whether or not the Estimate (as defined in the applicable
Mortgage) continues to be accurate, and if not, what the entire cost of
such Restoration under the Contract Documents is then estimated to be; and
(iv) that the amount of the Net Proceeds or Net Awards, as the case
may be, plus any amount received by Collateral Agent under an Additional
Undertaking (as defined in the applicable Mortgage) remaining after giving
effect to such payment, based upon the Contract Documents in effect as of
the date of the certification and the contractors most recent sworn
statement setting forth the amounts yet to become due the contractor and
its subcontractors, a copy of which is attached will be sufficient on
completion of the Restoration to pay for the same in full (including, in
detail, an estimate by trade of the remaining costs of completion);
(d) an endorsement (or the title insurers commitment to issue an
endorsement upon receipt of advice that the funds requested have been disbursed)
to the mortgage title policy for the property affected by the Restoration work
(i) extending the effective date of the insurance thereunder to the date of the
disbursement of funds requested, (ii) insuring that no mechanics liens arising
from the Restoration work have been filed of record to such date, (iii) insuring
against mechanics liens arising with respect to that portion of the Restoration
work for which the request for disbursement is made thereunder, and (iv)
reflecting no other liens or additional Schedule B exceptions to such title
policy. Said commitment and endorsement shall be in form substantially the same
as that attached to the Disbursement Agreement as Attachment 1.
(e) If such request is the final request for any payment, in addition to
the documentation required by (a), (b), (c) and (d) above, such request shall be
accompanied by: an Officers' Certificate stating that all occupancy
certificates, operating and other permits, licenses, waivers, other documents,
or any combination of the foregoing required by law in connection with or as a
result of such Restoration have been obtained; and
(f) All other documentation required under TIA ss. 314(d), if any.
Upon compliance with the foregoing provisions of this Section 3.8, the
Collateral Agent shall pay on the written request of the Company an amount of
Trust Moneys of the character aforesaid
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EXHIBIT 4.9
equal to the amount of the expenditures or costs stated in the Officers'
Certificate required by clause (i) of subsection (a) of this Section 3.8, or the
fair value to such Obligor of such repairs, rebuildings and replacements, as
stated in such Officers' Certificate, whichever is less.
3.9 Investment of Trust Moneys. (a) All or any part of any Trust Moneys
held by the Collateral Agent shall from time to time be invested or reinvested
by or on behalf of the Collateral Agent 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. Unless an Event of Default occurs and
is continuing, any interest on such Cash Equivalents (in excess of any accrued
interest paid at the time of purchase) that may be received by the Collateral
Agent shall be forthwith paid to the Company. Such Cash Equivalents shall be
held by the Collateral Agent as a part of the Trust Estate, subject to the same
provisions hereof as the cash used by it to purchase such Cash Equivalents.
(b) The Collateral Agent shall not be liable or responsible for any loss
resulting from such investments or sales except only for its own negligent
action, its own negligent failure to act or its own willful misconduct in
complying with this Section 3.9.
ARTICLE 4
APPLICATION OF CERTAIN AMOUNTS
4.1 Application of Proceeds. In the event that there shall have occurred an
Event of Default, and by virtue of the exercise of remedies in respect thereof
or in connection therewith, the Collateral Agent receives any amount or proceeds
from the sale or disposition of or realization upon any Collateral (including,
without limitation, proceeds of any claim under the Title Policies), the
Collateral Agent shall apply such amount or proceeds as soon as practicable
after receipt as follows:
FIRST: To the Collateral Agent in an amount equal to the Collateral Agent's
fees and expenses, including reasonable attorney's fees and expenses which are
unpaid as of the applicable Distribution Date and to any Secured Party or other
Person which has theretofore advanced or paid any such Collateral Agent's Fees
in an amount equal to the amount thereof so advanced or paid by such Secured
Party or Person and to reimburse to the Collateral Agent and any Secured Party
or other Person the amount of any advance made pursuant to Section 2.4 (with
interest thereon at a rate per annum equal to two percent (2%) in excess of the
highest rate payable under the Notes);
SECOND: To each Secured Party in an amount equal to the product of (i) the
total amount available for distribution on such Distribution Date under this
clause SECOND attributable to such Shared Collateral and (ii) such Secured
Party's Pro Rata Share; and
THIRD: After payment in full of all Secured Obligations in accordance with
the provisions of clause SECOND above, to the Company or the successors or
assigns of the Company as their interests may appear, or to such Person who may
be lawfully entitled to receive the same.
4.2 Release of Amounts in Collateral Proceeds Accounts. Amounts on deposit
in a Collateral Proceeds Account with respect to Secured Obligations shall be
paid to the applicable Secured Party as contemplated in Section 4.1 hereof upon
receipt by the Collateral Agent of a certificate from such Secured Party setting
forth the name of the Person to whom payment should be made and the amount owing
to such Secured Party and stating that such amount will be applied to the
payment of Secured Obligations.
4.3 Payment Provisions. For the purposes of Section 4.1, all interest to be
paid on any of the Secured Obligations pursuant to the terms of any Debt
Instrument shall, as
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EXHIBIT 4.9
among the Secured Parties and irrespective of whether recognized or allowed by
any bankruptcy proceeding, be treated as due and owing on the Secured
Obligations; provided, however, that no default rate of interest in excess of 2%
per annum in excess of the rate borne by such Secured Obligations in the event
there would have been no default shall be taken into account for purposes of
Section 4.1.
ARTICLE 5
AGREEMENTS WITH COLLATERAL AGENT
5.1 Delivery of Debt Instruments. On the date hereof, the Company shall
deliver to the Collateral Agent a true and complete copy of each of the Debt
Instruments to which it and/or any other Obligor is a party and which the
Collateral Agent has not received prior to the date hereof as in effect on the
date hereof. Promptly upon the execution thereof, the Company shall deliver to
the Collateral Agent a true and complete copy of any and all amendments,
modifications or supplements of or to any Debt Instrument to which it and/or any
other Obligor is a party and copies of any Debt Instrument it and/or any other
Obligor hereafter delivers.
5.2 Information as to Holders. The Company shall deliver to the Collateral
Agent by January 15 in each year, and from time to time upon request of the
Collateral Agent, a list setting forth, by each Debt Instrument, (i) the
aggregate principal amount outstanding thereunder, (ii) the interest rate or
rates then in effect thereunder, and (iii) to the extent known to the Company
and/or the other Obligors, the names of the Secured Parties and the unpaid
principal amount thereof owing to each Secured Party (or the Persons for whom
such Secured Party acts as trustee, agent or fiduciary). The Company shall
furnish to the Collateral Agent within thirty days after the date hereof a fist
setting forth the name and address of each party to whom notices must be sent
under the Debt Instruments to which it and/or any other Obligor is a party and
which have not been delivered to the Collateral Agent prior to the date hereof
and the Company shall furnish promptly to the Collateral Agent any changes or
additions to such list.
5.3 Compensation and Expenses. The Obligors shall pay to the Collateral
Agent, from time to time upon demand, (i) compensation (which shall be
reasonable and not in excess of the Collateral Agent's customary compensation
for similar services and shall not be limited by any provision of law in regard
to compensation of a trustee of an express trust) for its services hereunder and
for administering the Trust Estate and (ii) all of the fees, costs and expenses
of the Collateral Agent (including, without limitation, the fees and
disbursements of its counsel and such financial or investment advisor and
special counsel as the Collateral Agent elects to retain) (a) arising in
connection with the preparation, execution, delivery, modification and
termination of this Agreement, and the enforcement of any provisions hereof, or
(b) incurred or required to be advanced in connection with the administration of
the Trust Estate, the investment of the Trust Moneys, and the preservation,
protection or defense of the Collateral Agent's rights under this Agreement and
in and to the Collateral and the Trust Estate. The obligations of the Obligors
under this Section 5.3 shall survive the termination of the other provisions of
this Agreement.
5.4 Stamp and Other Similar Taxes. The Obligors shall indemnify and hold
harmless the Collateral Agent and each Secured Party (and each Person for whom
any Secured Party acts as trustee, agent or fiduciary) from any present or
future claim for liability for any mortgage, stamp, recording, intangibles or
other similar tax and any penalties or interest with
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EXHIBIT 4.9
respect thereto, which may be assessed, levied or collected by any jurisdiction
in connection with this Agreement, any Security Document or any Secured
Obligation. The obligations of the Obligors under this Section 5.4 shall survive
the termination of the other provisions of this Agreement.
5.5 Filing Fees, Excise Taxes, etc. The Obligors shall pay or reimburse the
Collateral Agent for any and all amounts in respect of all search, filing,
intangible, transfer, recording and registration fees, taxes, excise taxes and
other similar imposts which may be payable or determined to be payable in
respect of the execution, delivery, performance and enforcement of this
Agreement, any Security Document or any Secured Obligation to the extent the
same may be paid or reimbursed by the Obligors without subjecting the Collateral
Agent or any Secured Party to any civil or criminal liability. The obligations
of the Obligors under this Section 5.5 shall survive the termination of the
other provisions of this Agreement.
5.6 Indemnification. (a) Each Obligor agrees to, jointly and severally,
pay, indemnify, and hold the Collateral Agent harmless from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement and the Security Documents unless arising from the gross
negligence or willful misconduct of the Collateral Agent. Without limiting the
foregoing sentence in any way, the Obligors shall also indemnify the Collateral
Agent for, and hold it harmless against, any loss or liability incurred by the
Collateral Agent (including reasonable attorneys' and consultants' fees and
court costs) arising from or relating to any Environmental Laws or Hazardous
Materials (as such terms are defined in the Mortgage) concerning the Mortgaged
Property (as such term is defined in the Mortgage) or any breach or alleged
breach by the Obligors of any representation, warranty or covenant in the
Mortgage, provided such is not due to the Collateral Agent's willful violation
of any Environmental Laws.
(b) In any suit, proceeding or action brought by the Collateral Agent with
respect to the Collateral or for any sum owing in respect of Secured
Obligations, or to enforce the provisions of any Security Document, the Obligors
shall, jointly and severally, save, indemnify and keep the Collateral Agent and
each of the Secured Parties (and each Person for whom any Secured Party acts as
trustee, agent or fiduciary) harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction of liability whatsoever incurred or suffered by the Collateral Agent
or such Secured Party (or Person), as the case may be, arising out of a breach
by the Obligors of any obligation set forth in this Agreement, and all such
obligations of the Obligors shall be and remain enforceable against and only
against the Obligors. The provisions of this Section 5.6 shall survive the
termination of the other provisions of this Agreement.
5.7 Recording and Opinions, Further Assurance. (a) Each Obligor shall take
or cause to be taken all action required to perfect, maintain, preserve and
protect the Lien on and security interest in the Collateral granted by the
Security Documents, including, without limitation, the filing of financing
statements, continuation statements and any instruments of further assurance,
in such manner and in such places as may be required by law fully to preserve
and protect the rights of the Secured Parties and the Collateral Agent under
this Agreement and the other Security Documents to all property comprising the
Collateral. The Obligors shall from time to time promptly pay all financing and
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EXHIBIT 4.9
continuation statement recording and/or filing fees, charges and taxes relating
to this Agreement and the other Security Documents, any amendments thereto and
any other instruments of further assurance required pursuant to the Security
Documents.
(b) The Company shall furnish to the Collateral Agent yearly, simultaneous
with its delivery to the Trustees, the Opinion of Counsel called for in Section
10.02 of the Indentures.
(c) At any time and from time to time, upon the written request of the
Collateral Agent, and at the expense of the Obligors, the Obligors shall
promptly execute and deliver any and all such further instruments and documents
and take such further action as the Collateral Agent reasonably deems necessary
or desirable in obtaining the full benefits intended to be provided by this
Agreement.
ARTICLE 6
COLLATERAL AGENT
6.1 Acceptance of Trust. The Collateral Agent, for itself and its
successors, hereby accepts the trust created by this Agreement upon the terms
and conditions hereof, including those contained in Article 5 and in this
Article 6. The Collateral Agent's duties in respect of the Trust Estate shall
include, without limitation, the review of applications of the Obligors or
others for consents, waivers, releases or other matters relating to the Trust
Estate or the Collateral and the prosecution following any Event of Default of
any action or proceeding or the taking of any nonjudicial remedial action as
shall be determined to be required pursuant to the provisions of Sections 2.2
and 2.3.
6.2 Exculpatory Provisions. (a) The Collateral Agent shall not be
responsible in any manner whatsoever for the correctness of any recitals,
statements, representations or warranties herein contained, all of which are
made solely by the Obligors. The Collateral Agent makes no representations as to
the value or condition of the Trust Estate or any part thereof, or as to the
title of the Obligors thereto or as to the security afforded by the Security
Documents or this Agreement or as to the validity, execution (except its own
execution thereof), enforceability, legality or sufficiency of the Security
Documents or this Agreement or of the Secured Obligations, and the Collateral
Agent shall incur no liability or responsibility in respect of any such matters.
The Collateral Agent shall not be responsible for insuring the Trust Estate or
for the payment of taxes, charges, assessments or Liens upon the Trust Estate,
except that, subject to the provisions of Section 6.4(c), in the event the
Collateral Agent enters into possession of a part or all of the Collateral, the
Collateral Agent shall use reasonable efforts to preserve the part in its
possession.
(b) The Collateral Agent shall not be required to ascertain or inquire as
to the performance by the Obligors of any of the covenants or agreements
contained herein, in any Security Document or in any Debt Instrument. Whenever
it is necessary, or in the opinion of the Collateral Agent advisable, for the
Collateral Agent to ascertain the amount of Secured Obligations then held by a
Secured Party (or any Person for whom a Secured Party acts as trustee, agent or
fiduciary), the Collateral Agent may rely on a certificate as to such amount
from any trustee, agent or fiduciary constituting or representing such Secured
Party and if any such Secured Party shall not provide such information to the
Collateral Agent, such Secured Party shall not be entitled to receive payments
hereunder (in which case the amounts otherwise payable to such Secured Party
shall be held in trust for such Secured Party in the applicable Collateral
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EXHIBIT 4.9
Proceeds Account) until such Secured Party has provided such information to the
Collateral Agent.
(c) The Collateral Agent shall not be personally liable for any action
taken or omitted to be taken by it in accordance with this Agreement or any
Security Document or any Debt Instrument except for its own gross negligence or
willful misconduct.
(d) Notwithstanding anything to the contrary contained in this Agreement,
the Indentures, the Credit Agreement or any of the Security Documents, in the
event the Collateral Agent is entitled or required to commence an action to
foreclose the Mortgage or otherwise exercise its remedies to acquire control or
possession of the Mortgaged Property, the Collateral Agent shall not be required
to commence any such action or exercise any such remedy if the Collateral Agent
has determined in good faith that the Collateral Agent may incur liability under
the Environment Laws as the result of the presence at, or release on or from,
the Mortgaged Property of any Hazardous Materials unless the Collateral Agent
has received security or indemnity, from a Secured Party or holders of
Indebtedness benefiting from this Agreement, in an amount and in a form all
satisfactory to the Collateral Agent in its sole discretion, protecting the
Collateral Agent from all such liability.
6.3 Delegation of Duties. The Collateral Agent may execute any of the
trusts or powers hereof and perform any duty hereunder either directly or by or
through agents or attorneys-in-fact. The Collateral Agent shall be entitled to
advice of counsel concerning all matters pertaining to such trusts, powers and
duties. The Collateral Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it without gross
negligence or willful misconduct in the employment of such agents or
attorneys-in-fact.
6.4 Reliance by the Collateral Agent. (a) The Collateral Agent may consult
with counsel, and any opinion of such counsel (who shall not be employees of the
Obligors) shall be full and complete authorization and protection in respect of
any action taken or suffered by it hereunder in accordance therewith. The
Collateral Agent shall have the right at any time to seek instructions
concerning the administration of the Trust Estate from any court of competent
jurisdiction.
(b) The Collateral Agent may rely, and shall be fully protected in acting,
upon any Enforcement Notice, resolution, statement, certificate, instrument,
opinion, direction, instruction, report, notice, request, consent, order, bond
or other paper or document as to which it has no reason to believe to be other
than genuine and to have been signed or presented by the proper party or parties
or, in the case of cables, telecopies and telexes, to have been sent by the
proper party or parties. In the absence of its gross negligence or willful
misconduct, the Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Collateral Agent and conforming to the
requirements of this Agreement or any Security Document.
(c) The Collateral Agent shall not be under any obligation to exercise any
of the rights or powers vested in the Collateral Agent by this Agreement unless
the Collateral Agent shall have been provided adequate security and indemnity
against the costs, expenses and liabilities that may be incurred by it in
compliance with such request or direction, including, without limitation, such
reasonable advances as may be requested by the Collateral Agent, and liability
relating in any way to Environmental Law and/or Hazardous Materials.
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EXHIBIT 4.9
(d) The Collateral Agent shall not be responsible in any way for, nor shall
it have a duty or obligation to, monitor, manage or perform the Company's
policies, practices or compliance with Environmental Laws or Hazardous Materials
relating to Mortgaged Property.
6.5 Resignation or Removal of the Collateral Agent. (a) The Collateral
Agent may at any time, (i) by giving written notice to the Secured Parties,
resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon the appointment of a successor collateral
agent or collateral agents pursuant to the terms of paragraph (b) hereof or (ii)
be removed from its capacity as the Collateral Agent by the Directing Holders.
If no successor collateral agent or collateral agents shall be appointed and
approved within sixty days from the date of the giving of the aforesaid notice
of resignation or within sixty days from the date of such removal, the
Collateral Agent (notwithstanding the termination of all of its other duties and
obligations hereunder by reason of such resignation or such removal) shall, or
any Secured Party may, apply to any court of competent jurisdiction to appoint a
successor collateral agent or collateral agents (which may be an individual or
individuals) to act hereunder. Any successor collateral agent or collateral
agents so appointed by such court shall immediately and without further act be
superseded by any successor collateral agent or collateral agents appointed
pursuant to the terms of paragraph (b) hereof
(b) If at any time the Collateral Agent shall resign or otherwise become
incapable of acting, or if at any time a vacancy shall occur in the office of
the Collateral Agent by virtue of the removal of the Collateral Agent or for any
other cause, a successor collateral agent or collateral agents may be appointed
(i) automatically under the circumstances provided by Section 7.08(b) of each of
the Indentures or (ii) in all other cases, by the Directing Holders, and in each
of the cases described in clauses (i) and (ii) of this paragraph (b), the
powers, duties, authority and title of the predecessor collateral agent or
collateral agents shall be terminated and cancelled without procuring the
resignation of such predecessor collateral agent or collateral agents, and
without any other formality (except as may be required by applicable law).
(c) The appointment and designation referred to in subsection 6.5(b) shall,
after any required filing, be full evidence of the right and authority to make
the same and of all the facts therein recited, and this Agreement shall vest in
such successor collateral agent or collateral agents, without any further act,
deed or conveyance, all of the estate and title of its predecessor or their
predecessors, and upon such filing for record the successor collateral agent or
collateral agents shall become fully vested with all the estates, properties,
rights, powers, trusts, duties, authority and title of its predecessor or their
predecessors, but such predecessor or predecessors shall, nevertheless, on the
written request of the Directing Holders, the Obligors or its or their successor
collateral agent or collateral agents, execute and deliver an instrument
transferring to such successor or successors all the estates, properties,
rights, powers, trusts, duties, authority and title of such predecessor or
predecessors hereunder. Each such predecessor or predecessors shall deliver all
securities and moneys held by it or them to such successor collateral agent or
collateral agents.
(d) Any required filing for record of the instrument appointing a successor
collateral agent or collateral agents as hereinabove provided shall be at the
expense of the Obligors. The resignation of any collateral agent or collateral
agents and the instrument or
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EXHIBIT 4.9
instruments removing any collateral agent or collateral agents, together with
all other instruments, deeds and conveyances provided for in this Article 6
shall, if required by law, be forthwith recorded, registered and filed by and at
the expense of the Obligors, wherever this Agreement is recorded, registered and
filed.
6.6 Status of Successors to the Collateral Agent. Except as permitted by
Section 6.5, every successor to the Collateral Agent appointed pursuant to
Section 6.5 shall be a bank or trust company in good standing and having power
so to act, incorporated under the laws of the United States or any State thereof
or the District of Columbia, and having its principal corporate trust office
within the forty-eight contiguous States, and shall also have capital, surplus
and undivided profits of not less than $100,000,000, if there be such an
institution with such capital, surplus and undivided profits willing, qualified
and able to accept the trust upon reasonable or customary terms.
6.7 Merger of the Collateral Agent. Any corporation into which the
Collateral Agent may be merged, or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Collateral
Agent shall be a party, shall be the Collateral Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
the parties hereto.
6.8 Appointment of Additional and Separate Collateral Agent. Whenever (i)
the Collateral Agent shall deem it necessary or prudent (in accordance with the
advice or opinion of its counsel) in order to conform to any law of any
jurisdiction in which all or any part of the Collateral shall be situated or to
make any claim or bring any suit with respect to or in connection with the
Collateral, or (ii) the Collateral Agent shall be advised by counsel
satisfactory to it that it is so necessary or prudent in the interest of the
Secured Parties, then in any such case' the Collateral Agent shall execute and
deliver from time to time all instruments and agreements necessary or proper to
constitute another bank or trust company or one or more persons approved by the
Collateral Agent either to act as additional trustee or trustees of all or any
part of the Trust Estate, jointly with the Collateral Agent, or to act as
separate trustee or trustees of all or any part of the Trust Estate, in any such
case with such powers as may be provided in such instruments or agreements, and
to vest in such bank, trust company or person as such additional trustee or
separate trustee, as the case may be, any property, title, right or power of the
Collateral Agent deemed necessary or advisable by the Collateral Agent. The
Obligors and the Secured Parties hereby consent to all actions taken by the
Collateral Agent under the foregoing provisions of this Section 6.8.
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EXHIBIT 4.9
ARTICLE 7
TERMINATION;
RELEASES OF COLLATERAL;
EXPIRATION OF CERTAIN RIGHTS
7.1 Termination. This Agreement shall terminate when all amounts
owing in respect of the Secured Obligations under or in respect of (i) the Note
Indenture and the Senior Secured Notes and any related instruments and
agreements and (ii) the Discount Note Indenture and the Senior Secured Discount
Notes and any related instruments and agreements shall have been indefeasibly
paid in full in cash or at such time as such Secured Obligations otherwise have
been defeased in accordance with the applicable Debt Instrument and the
Obligors and its subsidiaries are discharged of their obligations under each
such Debt Instrument in accordance with its terms; provided, however, that if
such Debt Instrument is subject to reinstatement as provided in Section 8.05 of
the Indentures, this Agreement shall likewise be reinstated.
7.2 Releases of Collateral. (a) Immediately following the
termination of this Agreement, the Company shall be entitled to obtain a full
release of all of the Collateral from the Liens of the Security Documents upon
compliance with the conditions precedent set forth in Section 8.01 of each of
the Indentures for satisfaction and discharge of the Indentures or for
defeasance pursuant to Section 8.02(b) of each of the Indentures. Upon
delivery by the Company to the Secured Parties of an Officers' Certificate and
an Opinion of Counsel, each to the effect that such conditions precedent have
been complied with (and which may be the same Officers' Certificate and Opinion
of Counsel required by Article Eight of each of the Indentures), the Collateral
Agent shall forthwith take all necessary action (at the request of and the
expense of the Obligors) to release and reconvey to the New Collateral Agent
all of the Collateral, and shall deliver such Collateral in its possession to
the New Collateral Agent including, without limitation, the execution and
delivery of releases and satisfactions wherever required.
Upon compliance with the foregoing provisions of this Section 7.2(a), all
rights and obligations of the Collateral Agent under this Agreement shall
terminate.
(b) The Company shall be entitled to obtain a release of, and the
Collateral Agent shall release, items of Collateral (other than Trust Moneys)
(the "Released Interests") subject to an Asset Sale upon compliance with the
condition precedent that the Company shall have delivered to the Secured
Parties the following:
(i) A Company Order requesting release of Released
Interests, such Company Order (A) specifically describing the proposed
Released Interests, (B) specifying the value of such Released
Interests on a date within 60 days of the Company Order (the
"Valuation Date"), (C) stating that the purchase price to be received
is at least equal to the fair market value of the Released Interests,
(D) stating that the release of such Released Interests will not
interfere with or impede the Collateral Agent's ability to realize the
value of the remaining Collateral and will not impair the maintenance
and operation of the remaining Collateral, (E) confirming the sale of,
or an agreement to sell, such Released Interests is a bona fide sale
to a Person that is not an Affiliate of the Company or, in the event
that such sale is to a Person that is such an Affiliate, confirming
that such sale is being made in accordance with Section 4.03 of each
of the Indentures, Sections 7.02 and 7.06 of the Credit Agreement and
the analogous provisions of the Debt Instruments evidencing any
Additional Senior Debt, (F) certifying that such Asset Sale complies
with the terms and conditions of Section 4.06 of each of the
Indentures, Sections
27
<PAGE> 30
EXHIBIT 4.9
3.02(d) and 7.02 of the Credit Agreement and the analogous provisions
of the Debt Instruments evidencing any Additional Senior Debt, (G) in
the event that there is to be a substitution of Property for the
Collateral subject to the Asset Sale, specifying the Property intended
to be substituted for the Collateral to be disposed of and (H) shall
be accompanied by a counterpart of the instruments proposed to give
effect to the release fully executed and acknowledged (if applicable)
by all parties thereto other than the Collateral Agent;
(ii) An Officers' Certificate certifying that (A) such
Asset Sale covers only the Released Interests and complies with the
terms and conditions of an Asset Sale pursuant to Section 4.06 of each
of the Indentures, Sections 3.02(d) and 7.02 of the Credit Agreement
and the analogous provisions of the Debt Instruments evidencing any
Additional Senior Debt, (B) all Net Cash Proceeds from the sale of any
of the Released Interests will be applied pursuant to Section 4.06 of
each of the Indentures, Section 3.02(d) of the Credit Agreement and
the analogous provisions of the Debt Instruments evidencing any
Additional Senior Debt, (C) there is no Default or Event of Default in
effect or continuing on the date thereof, the Valuation Date or the
date of such Asset Sale, (D) the release of the Released Interest will
not result in a Default or Event of Default hereunder and (E) all
conditions precedent to such release have been complied with;
(iii) The Net Cash Proceeds and other non-cash
consideration received from the Asset Sale required to be delivered to
the Collateral Agent pursuant to Section 4.06 of each of the
Indentures, Sections 3.02(d) and 7.02 of the Credit Agreement and the
analogous provisions of the Debt Instruments evidencing any Additional
Senior Debt and, if any property other than cash or cash equivalents
is included in such consideration, such instruments of conveyance,
assignment and transfer, if any, as may be necessary, in the opinion
of counsel reasonably satisfactory to the Collateral Agent (which may
include counsel to the Company), to subject to the Lien of the
Security Documents all the right, title and interest of the Company or
its Subsidiary, as the case may be, in and to such property;
(iv) If any Released Interest is only a portion of a
discrete parcel of real property, evidence that a title company shall
have committed to issue an endorsement to the Title Policy relating to
the affected Mortgaged Property confirming that after such release,
the Lien of the applicable Mortgage continues unimpaired as a first
priority perfected Lien upon the remaining Mortgaged Property subject
only to Prior Liens (as defined in the applicable Mortgage); and
(v) All certificates, opinions and other documentation
required by the TIA, if any, as certified to the Collateral Agent by
the Company.
Upon compliance with the foregoing provisions of this Section 7.2(b), the
Collateral Agent shall cause to be released and reconvened to the appropriate
Obligor, the Released Interests.
(c) The Company shall be entitled to obtain a release of, and the
Collateral Agent shall release, items of Collateral taken by eminent domain or
sold pursuant to the exercise by the United States of America or any State,
municipality or other governmental authority of any right which it may then
have to purchase, or to designate a purchaser or to order a sale of, all of any
part of the Collateral, upon compliance with the condition precedent that the
Company shall have delivered to the Secured Parties the following:
(i) An Officers' Certificate certifying that (A) such
Property has been taken by eminent domain and the amount of the award
therefor, or that such Property has been sold pursuant to a right
vested in the United States of America, or a State, municipality or
other
28
<PAGE> 31
EXHIBIT 4.9
governmental authority to purchase, or to designate a purchaser, or
order a sale of such Property and the amount of the proceeds of such
sale, and (B) all conditions precedent to such release have been
complied with;
(ii) Subject to the requirements of any Prior Lien (as
defined in the applicable Mortgage) on the Collateral so taken, cash
equal to the amount of the award for such property or the proceeds of
such sale, to be held as Trust Moneys subject to the disposition
thereof pursuant to Article Three hereof, and
(iii) All opinions, certificates and other documentation
required by the TIA, if any, as certified to the Collateral Agent by
the Company.
Upon compliance with the foregoing provisions of this Section 7.2(c), the
Collateral Agent shall cause to be released and reconvened to the appropriate
Obligor, the aforementioned items of Collateral.
(d) Subject to paragraphs (a), (b) and (c) above, so long as no
Event of Default is continuing and no Enforcement Notice is in effect, in each
case where any Security Document or Debt Instrument specifically permits the
Company to obtain a release of Collateral upon compliance with the provisions
set forth therein (it being expressly understood that if there shall not exist
any Event of Default and no Enforcement Notice is in effect, then no consent
from any party to this Agreement is necessary for such compliance), the
Collateral Agent shall, upon receipt of evidence from the Company of such
compliance, and subject to the next sentence, release from the Lien of such
Security Document such Collateral (it being expressly understood that this
sentence of this Section 7.2 shall not be construed as in any way limiting,
amending, supplementing or waiving any of the procedures to be followed under
such Security Document or Debt Instrument or any of the conditions precedent
(including, without limitation, delivery of instruments, Officers' Certificates
and Opinions of Counsel) to be satisfied thereunder). In each case where any
Debt Instrument specifically permits the Company to obtain a release of
Collateral upon compliance with the provisions set forth therein, the
Collateral Agent shall, upon receipt of a written direction from all Secured
Parties confirming that such proposed release complies with the provisions of
the Debt Instruments, release such Collateral from the Lien of the Security
Documents. In the event that neither the Debt Instruments nor any Security
Document specifically contemplates the Company's right to obtain a particular
release of Collateral which shall be requested by the Company, the Lien of any
instrument comprising a portion of the Trust Estate shall be released in whole
or in part by the Collateral Agent acting solely at the direction and with the
consent of the Directing Holders.
7.3 Form and Sufficiency of Release. In the event that the Company
has or has caused to be sold or exchanged, or otherwise disposed of or proposes
to sell, exchange or otherwise dispose of any portion of the Collateral that
under the provisions of Section 7.2 may be sold, exchanged or otherwise
disposed of by the Company, and the Company requests the Collateral Agent to
furnish a written disclaimer, release or quitclaim of any interest in such
property under this Agreement and the Security Documents, the Collateral Agent
shall execute, acknowledge and deliver to the Company (in proper and recordable
form) such an instrument promptly after satisfaction of the conditions set
forth herein for delivery of any such release. Notwithstanding the preceding
sentence, all purchasers and grantees of any property or rights purporting to
be released herefrom shall be entitled to rely upon any release executed by the
Collateral Agent hereunder as sufficient for the purpose of this Agreement and
as constituting a
29
<PAGE> 32
EXHIBIT 4.9
good and valid release of the property therein described from the Lien of the
Security Documents.
7.4 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 Collateral Agent 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 any consideration
given by such purchaser or other transferee; nor shall any purchaser or other
transferee of any property or rights permitted to be sold in accordance
herewith be under any obligation to ascertain or inquire into the authority of
the Company to make or cause to be made any such sale or other transfer.
7.5 Amendment of Collateral Documents. The Directing Holders shall
have the exclusive authority to direct the Collateral Agent to amend,
supplement or waive any provision of any Title Policy or any Security Document
(other than the Indentures, the Credit Agreement or any of the provisions of
any Debt Instrument constituting Additional Senior Debt or Lender Interest Rate
Protection Agreements), in each case without any consent or approval, or prior
notice, to any other Secured Party; provided, however, that (A) to the extent
any amendment, supplement or waiver releases the Collateral, the same shall be
governed by the provisions of Section 7.2 and not this Section 7.5 and (B) no
such amendment, supplement or waiver shall affect the right of any Secured
Party (or any Person for whom a Secured Party acts as trustee, agent or
fiduciary) not consenting thereto in writing to equal and ratable security to
the extent and for the periods contemplated by this Agreement; and provided,
further, that the consent of no Secured Party signatory hereto or of any holder
of Notes or of Additional Senior Debt shall in any event be required to amend,
supplement or modify any Security Document (other than the Indentures and the
Credit Agreement) to make any customary, technical and/or conforming changes
thereto to the extent necessary to secure, and provide for the rights, remedies
and Obligations of, any Additional Senior Debt thereunder in the manner
contemplated herein and therein.
30
<PAGE> 33
EXHIBIT 4.9
ARTICLE 8
MISCELLANEOUS
8.1 Amendments, Supplements and Waivers. The Directing Holders, the
Collateral Agent and the Obligors may, from time to time, amend, supplement or
waive any provision hereof, provided, however, that no such amendment,
supplement or waiver shall adversely affect the rights of any Secured Party to
equal and ratable security to the extent and for the periods contemplated by
this Agreement unless consented to by all holders of the Senior Secured Notes,
Senior Secured Discount Notes, the Lenders or interests in any other Debt
Instrument constituting Additional Senior Debt or Lender Interest Rate
Protection Agreements affected thereby. Any amendment, supplement or waiver
made in compliance with the provisions of the preceding sentence of this
Section shall be binding upon the Secured Parties and their respective
successors and assigns. Notwithstanding the foregoing, the Obligors, the
Collateral Agent and any Secured Party in respect of any Additional Senior Debt
may, without the consent of any Secured Party signatory hereto, make any
customary, technical and/or conforming amendments to this Agreement to the
extent necessary to make such Secured Party a party hereto and to give effect
to the ratable proceeds distribution provisions contemplated herein.
8.2 Notices, Distributions and Payments.
(a) In each case herein or in any Security Document where any payment
or distribution is to be made or notice is to be given to Secured Parties, (i)
such payments, distributions and notices in respect of the Senior Secured Notes
shall be made to the Note Trustee for the benefit of the Senior Secured
Noteholders, (ii) such payments, distributions and notices in respect of the
Senior Secured Discount Notes shall be made to the Discount Note Trustee for
the benefit of the Senior Secured Discount Noteholders, (iii) such payments,
distributions and notices shall be made to the Administrative Agent for the
benefit of the Lenders, (iv) such payments, distributions and notices in
respect of the holders of any Additional Senior Debt shall be made to the
Additional Secured Party in respect thereof and (v) such payments,
distributions and notices in respect of any Lender Interest Rate Protection
Agreements shall be made to the Lender Interest Rate Protection Creditors in
respect thereof
(b) All notices, requests, demands and other communications
provided for or permitted hereunder shall be in writing (including telex and
telecopy communications) and shall be sent by mail, telex, telecopier or hand
delivery:
(i) If to the Obligors, to them at the Company's address
at:
13500 South Perry Avenue
Riverdale, Illinois 60827
Attention: Corporate Secretary with a
copy to the Treasurer
Telephone No.: (708) 849-2500
Telecopier No.: (708) 841-6010
(ii) If to the Collateral Agent, to it at its address at:
Goodwin Square
225 Asylum Street, 23rd Floor
Hartford, Connecticut 06103
Attention: Corporate Trust Administration
Telephone No.: (860) 244-1806
Telecopier No.: (860) 244-1889
31
<PAGE> 34
EXHIBIT 4.9
(iii) If to the Note Trustee, to it at its address at:
Goodwin Square
225 Asylum Street, 23rd Floor
Hartford, Connecticut 06103
Attention: Corporate Trust Administration
Telephone No.: (860) 244-1806
Telecopier No.: (860) 244-1889
(iv) If to the Discount Note Trustee, to it, at its
address at:
Goodwin Square
225 Asylum Street, 23rd Floor
Hartford, Connecticut 06103
Attention: Corporate Trust Administration
Telephone No.: (860) 244-1806
Telecopier No.: (860) 244-1889
(v) If to the Administrative Agent, to it at its address
at:
8400 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Dan Horn
Telephone No.: (312) 993-8095
Telecopier No.: (312) 993-8218
(vi) If to holders of Additional Senior Debt or any Lender
Interest Rate Protection Creditor, to it or them at the address(es)
provided by it or them in writing to the Company and the Collateral
Agent.
All such notices, requests, demands and communications shall be deemed to have
been duly given or made, when delivered by hand or five business days after
being deposited in the mail, postage prepaid, when telexed, answer back
received and when telecopied, receipt acknowledged.
8.3 Headings. Headings used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
8.4 Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall not invalidate the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.5 Dealings with the Company. Upon any application or demand by the
Company to the Collateral Agent to take or permit any action under any of the
provisions of this Agreement or under any Security Document, the Company shall
furnish to the Collateral Agent an Officers' Certificate and Opinion of Counsel
stating that all conditions precedent, if any, provided for in this Agreement
or such Security Document, as the case may be, relating to the proposed action
have been complied with, except that in the case of any such application or
demand as to which the furnishing of such documents is specifically required by
any provision of this Agreement or any Security Document relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
32
<PAGE> 35
EXHIBIT 4.9
8.6 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of each of the parties hereto and shall inure to the benefit of
the Secured Parties and their respective successors and assigns and nothing
herein or in any Security Document is intended or shall be construed to give
any other person any right, remedy or claim under, to or in respect of this
Agreement, the Collateral or the Trust Estate.
8.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
8.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST THE OBLIGORS WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE BOROUGH
OF MANHATTAN, STATE OF NEW YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
THE OBLIGORS ACCEPT FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. THE OBLIGORS DESIGNATE AND APPOINT CT
CORPORATION SYSTEM, WITH AN ADDRESS AT 1633 BROADWAY, NEW YORK, NEW YORK 10019
AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY THE COMPANY IRREVOCABLY
AGREEING IN WRITING TO SO SERVE, AS THEIR AGENT TO RECEIVE ON THEIR BEHALF,
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY THE OBLIGORS TO BE EFFECTIVE AND BINDING SERVICE
IN EVERY RESPECT. A COPY OF SUCH PROCESS SO SERVED SHALL BE MAILED BY
REGISTERED MAIL TO THE OBLIGORS C/O THE COMPANY AT ITS ADDRESS PROVIDED FOR IN
PARAGRAPH (D)) ABOVE EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW,
ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF
PROCESS. IF ANY AGENT APPOINTED BY THE OBLIGORS REFUSES TO RECEIVE AND FORWARD
SUCH SERVICE, THE OBLIGORS HEREBY AGREE THAT SERVICE UPON THEM 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 THE OBLIGORS IN THE COURTS OF ANY
OTHER JURISDICTION.
8.9 Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same instrument.
8.10 Certain References. Wherever in this Agreement the Collateral
Agent is permitted or required to take any action or make any election only
upon the direction and with the consent of the Directing Holders, the
Collateral Agent
33
<PAGE> 36
EXHIBIT 4.9
shall not be required to account to the Obligors to prove the direction and
consent of the Directing Holders to take such action or make such election, and
the taking of such action or the making of such election by the Collateral
Agent shall be deemed conclusive proof, as between the Obligors, on the one
hand, and the Collateral Agent and Secured Parties, on the other hand, that
such action or election was authorized. The Obligors shall not raise as a
defense to any action, claim, counterclaim or proceeding involving this
Agreement or any Security Document, any claim that any action taken or election
made by the Collateral Agent was not authorized by the Directing Holders if
such action or election was taken or made after the giving of a notice referred
to in Section 2.2(a), if applicable, and after any such direction to the
Collateral Agent.
8.11 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 Agreement upon the Company 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 of
any officer or officers thereof required by the provisions of this Agreement.
8.12 Possession and Use of Collateral. Subject to and in accordance
with the provisions of the Debt Instruments and the Security Documents, so long
as no Default or Event of Default shall have occurred and be continuing, each
Obligor shall have the right to remain in possession and retain exclusive
control of the Collateral owned or held by it (other than Trust Moneys,
securities and other personal property held by, or required to be deposited or
pledged with, the Collateral Agent under the Security Documents), to operate,
manage, develop, use and enjoy such Collateral (other than Trust Moneys) to
alter or repair any such Collateral consisting of machinery or equipment so
long as such alterations and repairs do not diminish the value thereof or
impair the Lien of the Security Documents thereon and to collect, receive, use,
invest and dispose of the reversions, remainders, rates, interest, rents,
issues, profits, revenues, proceeds and other income thereof (other than Trust
Moneys).
8.13 No Waiver, Discontinuance of Proceeding.
(i) No failure on the part of Collateral Agent to exercise,
no course of dealing with respect to, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise by the Collateral Agent of
any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
The remedies herein provided are to the fullest extent permitted by
the law cumulative and are not exclusive of any remedies provided by
law.
(ii) In the event the Collateral Agent 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 Collateral Agent, then and
in every such case the Obligors, the Collateral Agent and each Secured
Party shall be restored to their respective former positions and
rights hereunder with respect to the Collateral, and all rights,
remedies and powers of the Collateral Agent and the Secured Parties
shall continue as if no such proceeding had been instituted.
34
<PAGE> 37
EXHIBIT 4.9
8.14 Obligations Absolute. All obligations of the Obligors hereunder
shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of any
Obligor;
(ii) any lack of validity or enforceability of any Note,
any Debt Instrument governing Additional Senior Debt 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
any Debt Instrument governing Secured Obligations, or any other
agreement or instrument relating thereto;
(iv) any 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 or non-exercise, or any waiver of any
right, remedy, power or privilege under or in respect of this
Agreement, any Debt Instrument governing Secured Obligations except as
specifically set forth in a waiver granted pursuant to the provisions
of Section 8.1; or
(vi) any other circumstances which might otherwise
constitute a defense available to, or a discharge of, any Obligor.
35
<PAGE> 38
EXHIBIT 4.9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
ACME METALS INCORPORATED
By:
Name:
Title:
ACME STEEL COMPANY
By:
Name:
Title:
ACME PACKAGING CORPORATION
By:
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Collateral Agent
By:
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Note Trustee
By:
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Discount Notes Trustee
By:
Name:
Title:
BANKERS TRUST COMPANY, as
Administrative Agent
By:
Name:
Title:
36
<PAGE> 39
EXHIBIT 4.9
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 18th day of December, 1997, before me personally came
__________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________________ of Acme Metals Incorporated, that [s]he is
authorized to execute the foregoing Assignment on behalf of said corporation
and that [s]he did so by authority of the Board of Directors of said
corporation.
__________________________________
Notary Public
37
<PAGE> 40
EXHIBIT 4.9
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 18th day of December, 1997, before me personally came
__________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________________ of Acme Steel Company, that [s]he is
authorized to execute the foregoing Assignment on behalf of said corporation
and that [s]he did so by authority of the Board of Directors of said
corporation.
__________________________________
Notary Public
38
<PAGE> 41
EXHIBIT 4.9
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 18th day of December, 1997, before me personally came
__________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________________ of Acme Packaging Corporation, that [s]he
is authorized to execute the foregoing Assignment on behalf of said corporation
and that [s]he did so by authority of the Board of Directors of said
corporation.
__________________________________
Notary Public
39
<PAGE> 42
EXHIBIT 4.9
STATE OF CONNECTICUT )
) ss.:
COUNTY OF HARTFORD )
On this 18th day of December, 1997, before me personally came
__________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________________ of State Street Bank and Trust Company, as
Collateral Agent, that [s]he is authorized to execute the foregoing Assignment
on behalf of said corporation and that [s]he did so by authority of the Board
of Directors of said corporation.
__________________________________
Notary Public
40
<PAGE> 43
EXHIBIT 4.9
STATE OF CONNECTICUT )
) ss.:
COUNTY OF HARTFORD )
On this 18th day of December, 1997, before me personally came
__________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________________ of State Street Bank and Trust Company, as
Discount Note Trustee, that [s]he is authorized to execute the foregoing
Assignment on behalf of said corporation and that [s]he did so by authority of
the Board of Directors of said corporation.
__________________________________
Notary Public
41
<PAGE> 44
EXHIBIT 4.9
STATE OF CONNECTICUT )
) ss.:
COUNTY OF HARTFORD )
On this 18th day of December, 1997, before me personally came
__________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________________ of State Street Bank and Trust Company, as
Note Trustee, that [s]he is authorized to execute the foregoing Assignment on
behalf of said corporation and that [s]he did so by authority of the Board of
Directors of said corporation.
__________________________________
Notary Public
42
<PAGE> 45
EXHIBIT 4.9
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 18th day of December, 1997, before me personally came
__________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________________ of Bankers Trust Company, as Administrative
Agent, that [s]he is authorized to execute the foregoing Assignment on behalf
of said corporation and that [s]he did so by authority of the Board of
Directors of said corporation.
__________________________________
Notary Public
43
<PAGE> 46
EXHIBIT 4.9
LEGAL DESCRIPTION
This Exhibit consists of legal descriptions for six "Tracts" of land listed on
the following 18 pages as follows:
<TABLE>
<S> <C> <C>
Tract N941292 - 5 pages
Tract N941292A - 4 pages
Tract N941292B - 5 pages
Tract N941292C - 1 page
Tract N941292D - 1 page
Tract N941292E - 2 pages
</TABLE>
LEGAL DESCRIPTION
(RIVERDALE PLANT)
(TRACT N941292)
***(AFFECTS TRACT.- N941292):
PARCEL 1
ALL THAT PART OF THE SOUTHEAST 66 1/4 OF SECTION OF SECTION 33, TOWNSHIP 37
NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN, LYING NORTH OF A LINE
PARALLEL WITH AND 658.08 FEET SOUTH OF THE NORTH LINE OF THE SOUTHEAST 1/4 OF
SECTION 33 AND WEST OF THE RIGHT-OF-WAY OF PITTSBURGH CINCINNATI CHICAGO AND
ST. LOUIS RAILROAD COMPANY, IN COOK COUNTY, ILLINOIS.
ALSO
PARCEL 2
THAT PART OF PERRY AVENUE (66 FOOT WIDE) AS VACATED BY ORDINANCE RECORDED AS
DOCUMENT NUMBER 95871550 AND 97815719 BOUNDED AND DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WEST LINE OF PERRY AVENUE, SAID WEST LINE BEING 551
FEET EASTERLY OF AND PARALLEL TO THE WEST LINE OF THE SOUTHEAST QUARTER OF
SECTION 33, TOWNSHIP 37 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN,
ALSO SAID POINT BEING 658.08 FEET SOUTHERLY OF THE NORTH LINE OF SAID SOUTHEAST
QUARTER OF SECTION 33; THENCE EASTWARDLY ON A LINE THAT IS 658.08 FEET
SOUTHERLY OF AND PARALLEL TO THE NORTH LINE OF THE SOUTHEAST QUARTER OF SECTION
33, A DISTANCE OF 66 FEET TO A POINT ON A LINE THAT IS 617 FEET EASTERLY OF AND
PARALLEL TO THE WEST LINE OF THE SOUTHEAST QUARTER OF SECTION 33; THENCE
SOUTHERLY ON THE LAST DESCRIBED LINE, A DISTANCE OF 160 FEET TO A POINT 818.08
FEET SOUTHERLY OF SAID NORTH LINE OF THE SOUTHEAST QUARTER OF SECTION 33;
THENCE WESTERLY ON A STRAIGHT LINE A DISTANCE OF 70.09 FEET MORE OR LESS TO A
POINT ON THE WEST LINE OF SAID PERRY AVENUE, SAID POINT BEING 136.50 FEET
SOUTHERLY (AS MEASURED ON THE WEST LINE OF SAID PERRY AVENUE) OF THE POINT OF
BEGINNING; THENCE NORTHERLY A DISTANCE OF 136.50 FEET TO THE POINT OF
BEGINNING, IN COOK COUNTY, ILLINOIS.
ALSO
44
<PAGE> 47
EXHIBIT 4.9
PARCEL 3
AN IRREGULAR PARCEL OF LAND SITUATED IN THE NORTHEAST QUARTER OF THE SOUTHWEST
QUARTER OF SECTION 33, TOWNSHIP 37 NORTH, RANGE 14, EAST OF THE THIRD PRINCIPAL
MERIDIAN, AND IN BLOCK 20 IN OWNERS SUBDIVISION IN THE SOUTHEAST QUARTER OF
SAID SECTION 33, TOWNSHIP 37 NORTH, RANGE 14, EAST OF THE THIRD PRINCIPAL
MERIDIAN, LOCATED IN THE VILLAGE OF RIVERDALE DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WEST LINE OF PERRY AVENUE AS DEDICATED OCTOBER 16,
1925, SAID WEST LINE BEING 551 FEET EASTERLY OF AND PARALLEL TO THE WEST LINE
OF SAID SOUTHEAST QUARTER OF SECTION 33, SAID POINT BEING 658.08 FEET SOUTHERLY
OF THE NORTH LINE OF SAID SOUTHEAST QUARTER OF SECTION 33; THENCE SOUTHWARDLY
ALONG SAID WEST LINE OF PERRY AVENUE A DISTANCE OF 136.5 FEET; THENCE
NORTHWESTWARDLY ON A STRAIGHT LINE 77.85 FEET TO A POINT 73.35 FEET WESTERLY OF
THE SAID WEST LINE OF PERRY AVENUE AND 768.49 FEET SOUTHERLY OF SAID NORTH LINE
OF SAID SOUTHEAST QUARTER OF SECTION 33; THENCE NORTHWESTWARDLY ON A CURVED
LINE WITH A RADIUS OF 1910 FEET CONVEX TO THE NORTHEAST A DISTANCE OF 652.6
FEET MORE OR LESS TO A POINT ON THE NORTHERLY PROPERTY LINE OF THE BALTIMORE
AND OHIO CHICAGO TERMINAL RAILROAD COMPANY IN THE NORTHEAST QUARTER OF THE
SOUTHWEST QUARTER OF SECTION 33, SAID POINT BEING 162.40 FEET WESTERLY FROM THE
WEST LINE OF THE SOUTHEAST QUARTER OF SECTION 33, SAID NORTHERLY PROPERTY LINE
BEING ALSO THE SOUTH LINE OF ACME FOREST VIEW SUBDIVISION, SAID CURVED LINE
INTERSECTING THE SAID WEST LINE OF THE SOUTHEAST QUARTER OF SECTION 33, 665.0
FEET SOUTHERLY OF THE SAID NORTH LINE OF THE SOUTHEAST QUARTER OF SECTION 33;
THENCE EASTERLY FROM THE LAST DESCRIBED POINT AND ALONG THE SAID NORTHERLY
PROPERTY LINE OF THE BALTIMORE AND OHIO CHICAGO TERMINAL RAILROAD COMPANY
162.40 FEET TO A POINT ON THE SAID WEST LINE OF THE SOUTHEAST QUARTER OF
SECTION 33; SAID POINT BEING 658.08 FEET SOUTHERLY OF THE SAID NORTH LINE OF
THE SOUTHEAST QUARTER OF SECTION 33; THENCE CONTINUING EASTWARDLY ON A LINE
THAT IS 658.08 FEET SOUTHERLY OF AND PARALLEL TO SAID NORTH LINE OF THE
SOUTHEAST QUARTER OF SECTION 33, A DISTANCE OF 551 FEET TO THE PLACE OF
BEGINNING.
ALSO
45
<PAGE> 48
EXHIBIT 4.9
PARCEL 4
AN IRREGULAR PARCEL OF LAND IN BLOCKS 20 AND 21 IN OWNERS SUBDIVISION IN THE
SOUTHEAST QUARTER OF SECTION 33, TOWNSHIP 37 NORTH, RANGE 14, EAST OF THE THIRD
PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE EAST LINE OF PERRY AVENUE AS DEDICATED OCTOBER 16,
1925, SAID EAST LINE OF STREET BEING 617 FEET EASTERLY OF AND PARALLEL TO THE
WEST LINE OF SAID SOUTHEAST QUARTER OF SECTION 33, SAID POINT OF BEGINNING
BEING 658.08 FEET SOUTH OF THE NORTH LINE OF SAID SOUTHEAST QUARTER OF SAID
SECTION 33, THENCE EASTWARDLY ON A STRAIGHT LINE PARALLEL WITH AND 658.08 FEET
BY RECTANGULAR MEASUREMENT SOUTH OF THE SAID NORTH LINE OF SAID SOUTHEAST
QUARTER OF SECTION 33, A DISTANCE OF 310.8 FEET MORE OR LESS TO A POINT ON THE
SOUTHWESTERLY LINE OF THE PITTSBURGH CINCINNATI CHICAGO AND-ST. LOUIS
RAILROAD'S 100 FOOT RIGHT-OF-WAY; THENCE SOUTHEASTWARDLY ALONG THE SAID
SOUTHWESTERLY LINE OF THE PITTSBURGH CINCINNATI CHICAGO AND ST. LOUIS
RAILROAD, A DISTANCE OF 476.00 FEET, THENCE NORTHWESTWARDLY ON A STRAIGHT LINE
640.7 FEET MORE OR LESS TO A POINT ON THE SAID EAST LINE OF PERRY AVENUE 818.08
FEET SOUTH OF SAID NORTH LINE OF THE SOUTHEAST QUARTER OF SECTION 33; THENCE
NORTHWESTWARDLY ALONG SAID EAST LINE OF PERRY AVENUE 160 FEET TO POINT OF
BEGINNING ALL IN RIVERDALE;
(EXCEPTING THEREFROM THAT PART THEREOF DESCRIBED AS FOLLOWS:)
BEGINNING AT A POINT ON THE SOUTHWESTERLY LINE OF 100 FOOT RIGHT-OF-WAY OF
PITTSBURGH CINCINNATI CHICAGO AND ST. LOUIS RAILROAD, WHICH IS 476 FEET
(MEASURED ALONG SAID SOUTHWESTERLY RIGHT-OF-WAY LINE) SOUTHEAST FROM THE POINT
OF INTERSECTION OF SAID SOUTHWESTERLY RIGHT-OF-WAY LINE WITH A LINE 658.08 FEET
(BY RECTANGULAR MEASUREMENT) SOUTH OF AND PARALLEL WITH THE NORTH LINE OF THE
SOUTHEAST QUARTER OF SAID SECTION 33 AND RUNNING THENCE NORTHWESTWARDLY ALONG A
STRAIGHT LINE (WHICH LINE IF EXTENDED WOULD INTERSECT A LINE 617 FEET EASTERLY
FROM AND PARALLEL WITH THE WEST LINE OF SAID SOUTHEAST QUARTER OF SECTION 33 AT
A POINT 818.08 FEET SOUTH OF THE NORTH LINE OF SAID SOUTHEAST QUARTER) A
DISTANCE OF 106.67 FEET TO A POINT; THENCE NORTHEASTWARDLY ALONG A STRAIGHT
LINE A DISTANCE OF 64.62 FEET MORE OR LESS TO A POINT ON SAID SOUTHWESTERLY
RIGHT-OF-WAY LINE OF THE PITTSBURGH CINCINNATI CHICAGO AND ST. LOUIS RAILROAD;
THENCE SOUTHEASTWARDLY ALONG SAID SOUTHWESTERLY RIGHT-OF-WAY LINE OF THE
PITTSBURGH CINCINNATI CHICAGO AND ST. LOUIS RAILROAD A DISTANCE OF 120.09 FEET
TO THE PLACE OF BEGINNING.
ALSO
46
<PAGE> 49
EXHIBIT 4.9
PARCEL 5
THE NORTH 20 ACRES OF THE EAST 1/2 OF THE SOUTHWEST 1/4 OF SECTION 33,
TOWNSHIP 37 NORTH, RANGE 14, EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK
COUNTY, ILLINOIS.
PARCEL 6
THE NORTH 1/2 OF THE NORTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 33,
TOWNSHIP 37 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN (EXCEPTING
THEREFROM THE WEST 208.00 FEET THEREOF), IN COOK COUNTY, ILLINOIS.
ALSO
PARCEL 7:
THAT PART OF SECTIONS 28 AND 33, TOWNSHIP 37 NORTH, RANGE 14, EAST OF THE THIRD
PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS, TO WIT:
BEGINNING AT A POINT ON THE NORTH AND SOUTH CENTER LINE OF SECTION 33; LYING
SOUTH OF THE INDIAN BOUNDARY LINE, WHERE THE NORTHEASTERLY LINE OF RIGHT-OF-WAY
LINE OF THE PITTSBURGH AND CINCINNATI AND CHICAGO AND ST. LOUIS RAILWAY
COMPANY, INTERSECTS SAID NORTH AND SOUTH CENTER LINE OF SAID SECTION 33, WHICH
POINT IS 689.91 FEET NORTH OF THE CENTER OF SAID SECTION; RUNNING THENCE
NORTHWESTERLY ALONG THE NORTHEASTERLY LINE OF THE RIGHT-OF-WAY OF THE SAID
PITTSBURGH CINCINNATI CHICAGO AND ST. LOUIS RAILWAY COMPANY, 1704.52 FEET MORE
OR LESS TO THE MIDDLE OF THE CALUMET RIVER; THENCE FOLLOWING THE MIDDLE OF SAID
RIVER NORTHEASTERLY, EASTERLY, SOUTHEASTERLY, SOUTHERLY, SOUTHWESTERLY,
SOUTHERLY, SOUTHEASTERLY AND EASTERLY TO THE NORTHWESTERLY LINE OF THE
RIGHT-OF-WAY OF THE ILLINOIS CENTRAL RAILROAD COMPANY; THENCE SOUTHWESTERLY
ALONG THE NORTHWESTERLY LINE OF THE RIGHT-OF-WAY OF SAID ILLINOIS CENTRAL
RAILROAD COMPANY, 521.32 FEET MORE OR LESS TO A POINT WHERE THE NORTHEASTERLY
LINE OF THE RIGHT-OF-WAY OF THE PITTSBURGH CINCINNATI CHICAGO AND ST. LOUIS
RAILWAY COMPANY INTERSECTS THE NORTHWESTERLY LINE OF THE RIGHT-OF-WAY OF THE
SAID ILLINOIS CENTRAL RAILROAD COMPANY; THENCE NORTHWESTERLY ALONG THE
NORTHEASTERLY LINE OF THE RIGHT-OF-WAY OF THE SAID PITTSBURGH CINCINNATI
CHICAGO AND ST. LOUIS RAILWAY COMPANY, 2123.48 FEET TO THE PLACE OF BEGINNING.
EXCEPTING THEREFROM THE FOLLOWING DESCRIBED PARCELS OF REAL ESTATE:
(1) A STRIP OF LAND 50 FEET WIDE LOCATED IN THE SOUTHEAST 1/4 OF SECTION 33,
TOWNSHIP 37 NORTH, RANGE 14, EAST OF THE THIRD PRINCIPAL MERIDIAN, LYING ON THE
WESTERLY SIDE OF AND ADJOINING THE 200 FOOT RIGHT-OF-WAY OF THE ILLINOIS
CENTRAL RAILROAD COMPANY BOUNDED AND DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE WESTERLY LINE OF THE ILLINOIS CENTRAL
RAILROAD COMPANY'S RIGHT-OF-WAY WITH THE NORTHERLY LINE OF THE RIGHT-OF-WAY OF
THE PITTSBURGH CINCINNATI CHICAGO AND ST. LOUIS RAILROAD COMPANY AND RUNNING
THENCE WESTERLY
47
<PAGE> 50
EXHIBIT 4.9
ALONG SAID NORTHERLY RIGHT-OF-WAY LINE TO A POINT 50 FEET WESTERLY FROM THE
WESTERLY LINE OF THE ILLINOIS CENTRAL RAILROAD COMPANY, RIGHT-OF-WAY MEASURED
PERPENDICULARLY THERETO, THENCE NORTHERLY PARALLEL TO THE RIGHT-OF-WAY OF THE
ILLINOIS CENTRAL RAILROAD COMPANY TO THE CALUMET THENCE EAST ALONG CALUMET
RIVER 50 FEET MORE OR LESS TO THE WESTERLY LINE OF THE ILLINOIS CENTRAL
RAILROAD COMPANY'S 200 FEET RIGHT-OF-WAY, THENCE SOUTHERLY ALONG SAID WESTERLY
LINE OF RIGHT-OF-WAY TO THE PLACE OF BEGINNING.
(2) THAT PART OF THE SOUTHEAST 1/4 OF SECTION 33, TOWNSHIP 37 NORTH, RANGE 14,
EAST OF THE THIRD PRINCIPAL MERIDIAN, (SOUTH OF THE INDIAN BOUNDARY LINE)
DESCRIBED AS FOLLOWS:
BEGINNING AT THE POINT OF INTERSECTION OF THE NORTHEASTERLY LINE OF THE 100
FOOT RIGHT-OF-WAY OF THE PENNSYLVANIA RAILROAD (FORMERLY THE PITTSBURGH
CINCINNATI CHICAGO AND ST. LOUIS RAILROAD COMPANY) WITH A LINE 50 FEET
(MEASURED PERPENDICULARLY) NORTHWESTERLY FROM AND PARALLEL WITH THE
NORTHEASTERLY LINE OF THE 200 FOOT RIGHT-OF-WAY OF THE ILLINOIS CENTRAL
RAILROAD COMPANY AND RUNNING THENCE NORTHEASTWARDLY ALONG THE ABOVE MENTIONED
PARALLEL LINE A DISTANCE OF 387.45 FEET THENCE SOUTHWESTWARDLY A DISTANCE OF
193.96 FEET TO A POINT 146.98 FEET (MEASURED PERPENDICULARLY) NORTHWESTERLY
FROM SAID NORTHWESTERLY RIGHT-OF-WAY LINE OF THE ILLINOIS CENTRAL RAILROAD
COMPANY; THENCE SOUTHWESTERLY A DISTANCE OF 160.75 FEET TO A POINT ON SAID
NORTHEASTERLY LINE OF THE 100 FOOT RIGHT-OF-WAY OF THE PENNSYLVANIA RAILROAD
WHICH IS 151.84 FEET (MEASURED PERPENDICULARLY) NORTHWESTERLY FROM SAID
NORTHWESTERLY RIGHT-OF-WAY LINE OF THE ILLINOIS CENTRAL RAILROAD COMPANY AND
THENCE SOUTHEASTWARDLY ALONG SAID NORTHEASTERLY RIGHT-OF-WAY LINE A DISTANCE OF
117.59 FEET TO THE PLACE OF BEGINNING), IN COOK COUNTY, ILLINOIS.
48
<PAGE> 51
EXHIBIT 4.9
PARCEL 8
THAT PART OF THE CONSOLIDATED RAIL CORPORATION (FORMERLY THE PENNSYLVANIA
RAILROAD ORIGINAL) 100 FOOT WIDE RIGHT-OF-WAY IN SECTION 33, SOUTH OF THE
INDIAN BOUNDARY LINE, IN TOWNSHIP 37 NORTH, RANGE 14, EAST OF THE THIRD
PRINCIPAL MERIDIAN, WHICH LIES SOUTH OF THE GOVERNMENT'S SOUTHERLY CHANNEL LINE
OR EXTENSION THEREOF, IN THE LITTLE CALUMET RIVER, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE NORTHERLY LINE OF SAID RIGHT-OF-WAY, WHICH IS 80.24
FEET SOUTH OF SAID SOUTHERLY CHANNEL LINE; THENCE SOUTH 81 DEGREES, 26 MINUTES,
40 SECONDS EAST, ALONG SAID NORTHERLY LINE 89.12 FEET TO A POINT OF CURVE;
THENCE SOUTHEASTERLY ALONG SAID NORTHERLY LINE WHICH IS THE ARC OF A CIRCLE,
CONVEX TO THE SOUTHWEST, HAVING A RADIUS OF 3,994.51 FEET, A DISTANCE OF 596.47
FEET TO A POINT OF TANGENCY; THENCE SOUTH 90 DEGREES, 00 MINUTES, 00 SECONDS
EAST, ALONG SAID NORTHERLY LINE, A DISTANCE OF 1,763.55 FEET; THENCE SOUTH 00
DEGREES, 00 MINUTES, 00 SECONDS WEST, A DISTANCE OF 27.97 FEET; THENCE NORTH 87
DEGREES, 17 MINUTES, 24 SECONDS WEST, A DISTANCE OF 60.07 FEET; THENCE SOUTH 85
DEGREES, 55 MINUTES, 43 SECONDS WEST A DISTANCE OF 68.17 FEET; THENCE SOUTH 82
DEGREES, 50 MINUTES, 46 SECONDS WEST, A DISTANCE OF 205.01 FEET; THENCE SOUTH
80 DEGREES, 55 MINUTES, 47 SECONDS WEST, A DISTANCE OF 19.22 FEET; THENCE SOUTH
88 DEGREES, 34 MINUTES, 14 SECONDS WEST, A DISTANCE OF 123.07 FEET; THENCE
SOUTH 86 DEGREES, 40 MINUTES, 53 SECONDS WEST, A DISTANCE OF 93.29 FEET; THENCE
NORTH 90 DEGREES, 00 MINUTES, 00 SECONDS WEST ALONG A LINE 67.00 FEET SOUTHERLY
OF AND PARALLEL WITH SAID NORTHERLY RIGHT-OF-WAY LINE, A DISTANCE OF 1,158.00
FEET; THENCE SOUTH 83 DEGREES, 42 MINUTES, 04 SECONDS WEST, A DISTANCE OF
120.34 FEET; THENCE SOUTH 88 DEGREES, 21 MINUTES, 26 SECONDS WEST, A DISTANCE
OF 77.33 FEET; THENCE NORTH 66 DEGREES, 17 MINUTES, 40 SECONDS, A DISTANCE OF
54.32 FEET; THENCE SOUTH 88 DEGREES, 02 MINUTES, 18 SECONDS WEST, A DISTANCE OF
112.22 FEET; THENCE NORTH 89 DEGREES 48 MINUTES 58 SECONDS WEST A DISTANCE OF
86.68 FEET; THENCE NORTH 81 DEGREES, 26 MINUTES, 40 SECONDS WEST, ALONG A LINE
80.00 FEET SOUTHERLY OF AND PARALLEL WITH SAID NORTHERLY LINE, A DISTANCE OF
284.83 FEET; THENCE NORTH 04 DEGREES, 07 MINUTES, 03 SECONDS EAST, A DISTANCE
OF 80.24 FEET TO THE POINT OF BEGINNING, IN COOK COUNTY, ILLINOIS.
(NOTE: ALL BEARINGS DESCRIBED IN THIS PARCEL ARE BASED ON ACME PLANT NORTH
BEING 52 DEGREES 01 MINUTES 30 SECONDS EAST OF THE ASSUMED GENERAL NORTH
DIRECTION.)
49
<PAGE> 52
EXHIBIT 4.9
PIN Nos.
25-28-429-001, 25-33-200-001, 25-33-306-024, 25-33-306-025, 25-33-307-011,
25-33-307-014, 25-33-307-017, 25-33-307- 018, 25-33-307-019, 25-33-307-020,
25-33-307-021, 25-33-307-023, 25-33-307-024, 25-33-309-034, 25-33-310-012,
25-33-400- 001, 25-33-400-002, 25-33-400-012, 25-33-400-014, 25-33-400-024,
25-33-500-001, 25-33-306-003, 25-33-306-004, 25-33-306- 005, 25-33-306-006,
25-33-306-007, 25-33-306-023, 25-33-307-010.
Common Address: 13500 South Perry Avenue
Riverdale, Illinois 60827
50
<PAGE> 53
EXHIBIT 4.9
LEGAL DESCRIPTION
(RAILROAD RIGHT-OF-WAY PARCEL
RIVERDALE AND CHICAGO)
(TRACT N941292A)
***(AFFECTS TRACT - N941292A):
PARCEL 1:
THAT PART OF THE CONSOLIDATED RAIL CORPORATION (FORMERLY PENNSYLVANIA RAILROAD)
ORIGINAL 100 FOOT WIDE RIGHT-OF-WAY IN SECTION 28 AND 33, TOWNSHIP 37 NORTH,
RANGE 14 EAST OF THE THIRD PRINCIPAL, MERIDIAN, IN COOK COUNTY, ILLINOIS, WHICH
LIES NORTHERLY OF THE GOVERNMENT'S NORTHERLY CHANNEL LINE, OR EXTENSION
THEREOF, IN THE LITTLE CALUMET RIVER AND LYING SOUTH LINE OF 127TH STREET (PER
DOCUMENT NUMBER 11034051) AND AS EXTENDED WEST TO THE SOUTHWESTERLY 100 FOOT
WIDE RIGHT- OF-WAY LINE OF THE SAID CONSOLIDATED RAIL CORPORATION EXCEPTING
THEREFROM THAT PART DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE EASTERLY LINE OF SAID RIGHT-OF-WAY, 130.00 FEET
NORTHERLY OF SAID NORTHERLY CHANNEL LINE AS MEASURED ON SAID EASTERLY
RIGHT-OF-WAY, THENCE NORTH 29 DEGREES 40 MINUTES 56 SECONDS WEST ALONG SAID
EASTERLY LINE, A DISTANCE OF 347.13 FEET TO A POINT OF CURVE; THENCE
NORTHWESTERLY ALONG SAID EASTERLY LINE WHICH IS THE ARC OF A CIRCLE, CONVEX TO
THE SOUTHWEST, HAVING A RADIUS OF 3819.83 FEET, A DISTANCE OF 522.87 FEET;
THENCE SOUTH 20 DEGREES 51 MINUTES 26 SECONDS EAST, A DISTANCE OF 331.36 FEET
TO A POINT 20.00 WEST OF SAID EASTERLY LINE (MEASURED NORMAL TO SAID EASTERLY
LINE); THENCE 23 DEGREES 23 MINUTES 40 SECONDS EAST, A DISTANCE OF 131.23 FEET
TO A POINT 30.00 FEET WEST OF SAID EASTERLY LINE (MEASURED NORMAL TO SAID
EASTERLY LINE); THENCE SOUTH 26 DEGREES 20 MINUTES 46 SECONDS EAST, A DISTANCE
OF 180.80 FEET TO A POINT 40.00 FEET WEST OF SAID EASTERLY LINE (MEASURED
NORMAL TO SAID EASTERLY LINE); THENCE SOUTH 28 DEGREES 27 MINUTES 32 SECONDS
EAST, A DISTANCE OF 232.08 FEET; THENCE NORTH 57 DEGREES 44 MINUTES 31 SECONDS
EAST ALONG A LINE PARALLEL WITH SAID NORTHERLY CHANNEL LINE, A DISTANCE OF
45.00 FEET TO THE POINT OF BEGINNING)
ALSO
ALL OF TRACT NOS. 100-1, 100-2, 101-1 AND 101-2 AS PER QUIT CLAIM DEED RECORDED
NOVEMBER 30, 1982 AS DOCUMENT NUMBER 26425159 FROM THE UNITED STATES OF AMERICA
TO CONSOLIDATED RAIL CORPORATION MORE PARTICULARLY BOUNDED AND DESCRIBED AS
FOLLOWS:
BEGINNING AT THE POINT OF INTERSECTION OF THE WESTERLY RIGHT-OF-WAY LINE OF
SAID RAILROAD AND THE GOVERNMENTS NORTHERLY CHANNEL LINE, OR EXTENSION THEREOF,
IN THE LITTLE CALUMET RIVER, SAID POINT BEING COMMON WITH THE SOUTHEASTERLY
CORNER OF LOT 13 IN ROBERT J. HILLS RESUBDIVISION OF BLOCK 17 IN NEW ROSELAND,
A SUBDIVISION OF PART OF FRACTIONAL SECTION 33 NORTH OF INDIAN BOUNDARY LINE
AND PART OF FRACTIONAL SECTION 28 AND 33 SOUTH OF INDIAN BOUNDARY LINE, ALL IN
51
<PAGE> 54
EXHIBIT 4.9
TOWNSHIP 37 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK
COUNTY, ILLINOIS ACCORDING TO THE PLAT THEREOF RECORDED APRIL 25, 1957 AS
DOCUMENT NUMBER 16886789; THENCE SOUTH 57 DEGREES 44 MINUTES 31 SECONDS WEST ON
SAID NORTHERLY CHANNEL LINE A DISTANCE OF 85.09 FEET TO A POINT ON A LINE 4.85
FEET EAST OF AND PARALLEL TO THE WEST LINE OF LOT 14 AND SAID LINE EXTENDED
SOUTH IN SAID HILLS RESUBDIVISION; THENCE NORTH 29 DEGREES 40 MINUTES 56
SECONDS WEST ON THE LAST DESCRIBED PARALLEL LINE A DISTANCE OF 109.44 FEET;
THENCE NORTH 23 DEGREES 06 MINUTES 14 SECONDS WEST A DISTANCE OF 79.02 FEET TO
A POINT ON THE NORTHERLY LINE OF SAID LOT 14, SAID POINT BEING 14.47 FEET
EASTERLY OF THE NORTHWESTERLY CORNER OF SAID LOT 14 (AS MEASURED ON THE
NORTHERLY LINE OF SAID LOT 14); THENCE NORTH 23 DEGREES 16 MINUTES 58 SECONDS
WEST A DISTANCE OF 93.66 FEET ON A LINE DRAWN TO A POINT 15.51 FEET WESTERLY OF
THE SOUTHEASTERLY CORNER OF LOT 11 IN SAID HILLS RESUBDIVISION, (AS MEASURED ON
THE SOUTHEASTERLY LINE OF SAID LOT 11); THENCE NORTH 23 DEGREES 31 MINUTES 20
SECONDS WEST A DISTANCE OF 279.12 FEET TO A POINT WHICH IS 72.17 FEET EASTERLY
OF (MEASURED AT RIGHT ANGLES TO) THE WEST LINE OF LOT 3 AND 20.40 FEET SOUTH OF
(MEASURED AT RIGHT ANGLES TO) THE NORTH LINE OF LOT 3 IN SAID HILLS
RESUBDIVISION; THENCE NORTH 21 DEGREES 08 MINUTES 32 SECONDS WEST A DISTANCE OF
216.13 FEET TO A POINT ON THE WEST LINE OF LOT 1 IN SAID HILLS RESUBDIVISION,
SAID POINT BEING 34.75 FEET SOUTH OF THE MOST NORTHERLY CORNER OF SAID LOT 1;
THENCE NORTH 20 DEGREE 40 MINUTES 20 SECONDS WEST ON A STRAIGHT LINE, A
DISTANCE OF 312.00 FEET MORE OR LESS TO A POINT ON THE WESTERLY LINE OF SAID
RAILROAD, SAID POINT BEING 282.37 FEET NORTHWESTERLY OF (AS MEASURED ON THE
WESTERLY LINE OF SAID RAILROAD) THE MOST NORTHERNMOST POINT OF BLOCK 17 IN NEW
ROSELAND, A SUBDIVISION IN SAID SECTIONS, SAID POINT ALSO IDENTIFIED AS THE
POINT OF TANGENT OF THE WESTERLY RIGHT-OF-WAY LINE OF SAID RAILROAD; THENCE
SOUTHEASTERLY ON THE WESTERLY LINE OF SAID RAILROAD; THENCE SOUTHEASTERLY ON
THE WESTERLY LINE OF SAID RAILROAD, BEING A CURVE CONVEX TO THE SOUTHWEST AN
ARC DISTANCE OF 592.11 FEET (AS SHOWN ON SAID PLAT OF NEW ROSELAND SUBDIVISION)
TO A POINT OF TANGENT OF SAID RAILROAD; THENCE SOUTH 29 DEGREES 40 MINUTES 56
SECONDS EAST, ON THE WESTERLY LINE OF SAID RAILROAD AND TANGENT TO THE LAST
DESCRIBED CURVED LINE, A DISTANCE OF 481.63 FEET TO THE POINT OF BEGINNING, IN
COOK COUNTY, ILLINOIS.
ALSO
52
<PAGE> 55
EXHIBIT 4.9
PARCEL 2:
THAT PART OF THE CONSOLIDATED RAIL CORPORATION (FORMERLY PENNSYLVANIA RAILROAD
ORIGINAL) 100 FOOT WIDE RIGHT-OF-WAY IN SECTION 33, TOWNSHIP 37 NORTH, RANGE 14
EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS, TOGETHER WITH A
70.00 FOOT PARCEL (AS MEASURED AT 90 DEGREES TO THE SOUTHWESTERLY RIGHT-OF-WAY
LINE OF SAID RAILROAD) LYING SOUTHWEST OF AND ADJOINING THE SOUTHWESTERLY
RIGHT-OF-WAY OF SAID RAILROAD, ALL WHICH LIES SOUTHERLY OF THE GOVERNMENT'S
NORTHERLY CHANNEL LINE, OR EXTENSION THEREOF, IN THE LITTLE CALUMET RIVER AND
WHICH LIES NORTH OF THE GOVERNMENT'S SOUTHERLY CHANNEL LINE OR EXTENSION
THEREOF, IN THE LITTLE CALUMET RIVER, IN COOK COUNTY, ILLINOIS.
PARCEL 3:
THAT PART OF THE CONSOLIDATED RAIL CORPORATION (FORMERLY THE PENNSYLVANIA
RAILROAD ORIGINAL 100 FOOT WIDE RIGHT-OF-WAY) 100 FOOT WIDE RIGHT-OF-WAY IN
SECTION 33, SOUTH OF THE INDIAN BOUNDARY LINE, IN TOWNSHIP 37 NORTH, RANGE 14,
EAST OF THE THIRD PRINCIPAL MERIDIAN, WHICH LIES SOUTH OF THE GOVERNMENT'S
SOUTHERLY CHANNEL LINE OR EXTENSION THEREOF, IN THE LITTLE CALUMET RIVER,
TOGETHER WITH THAT PART OF THE NORTH HALF OF FRACTIONAL SECTION 33 SOUTH OF THE
INDIAN BOUNDARY LINE, TOWNSHIP 37 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL
MERIDIAN, IN COOK COUNTY, ILLINOIS, LYING SOUTH OF THE GOVERNMENT SOUTHEASTERLY
CHANNEL LINE OF THE LITTLE CALUMET RIVER, WEST OF THE SOUTHWESTERLY LINE OF THE
EXISTING 100 FOOT WIDE RIGHT-OF-WAY OF THE CONSOLIDATED RAIL CORPORATION, AND
INCLUDING ALL THAT PART OF SAID NORTH HALF OF FRACTIONAL SECTION 33 DESCRIBED
IN QUIT CLAIM DEED RECORDED NOVEMBER 30, 1982 AS DOCUMENT 26425159 AS TRACT
NUMBER 200, BOUNDED AND DESCRIBED AS FOLLOWS:
BEGINNING AT THE POINT OF INTERSECTION OF THE SOUTHEASTERLY LINE OF SAID
CHANNEL LINE AND THE NORTHERLY LINE OF SAID RIGHT-OF-WAY; THENCE SOUTH 81
DEGREES, 26 MINUTES, 40 SECONDS EAST, ALONG SAID NORTHERLY RAILROAD
RIGHT-OF-WAY LINE 80.24 FEET TO A POINT; THENCE SOUTH 04 DEGREES 07 MINUTES 03
SECONDS WEST, PARALLEL TO SAID CHANNEL LINE, A DISTANCE OF 80.24 FEET; THENCE
SOUTH 81 DEGREES 26 MINUTES 40 SECONDS EAST, ALONG A LINE 80.00 FEET SOUTHERLY
OF AND PARALLEL WITH SAID NORTHERLY LINE, A DISTANCE OF 284.83 FEET; THENCE
NORTH 89 DEGREES 48 MINUTES 58 SECONDS EAST, A DISTANCE OF 86.68 FEET; THENCE
NORTH 88 DEGREES 02 MINUTES 18 SECONDS EAST, A DISTANCE OF 112.22 FEET; THENCE
SOUTH 66 DEGREES 17 MINUTES 40 SECONDS EAST, A DISTANCE OF 54.32 FEET; THENCE
NORTH 88 DEGREES 21 MINUTES 26 SECONDS EAST, A DISTANCE OF 77.33 FEET; THENCE
NORTH 83 DEGREES 42 MINUTES 04 SECONDS EAST, A DISTANCE OF 120.34 FEET; THENCE
NORTH 90 DEGREES 00 MINUTES 00 SECONDS EAST, A DISTANCE OF 1158.00 FEET; THENCE
NORTH 86 DEGREES 40 MINUTES 53 SECONDS EAST, A DISTANCE OF 93.29 FEET; THENCE
NORTH 88 DEGREES 34 MINUTES 14 SECONDS EAST, A DISTANCE OF 123.07 FEET; THENCE
NORTH 80 DEGREES 55 MINUTES 47 SECONDS EAST, A DISTANCE OF 19.22 FEET; THENCE
NORTH 82 DEGREES 50 MINUTES 46 SECONDS EAST, A DISTANCE OF 205.01 FEET; THENCE
53
<PAGE> 56
EXHIBIT 4.9
NORTH 85 DEGREES 55 MINUTES 43 SECONDS EAST, A DISTANCE OF 68.17 FEET; THENCE
SOUTH 87 DEGREES 17 MINUTES 24 SECONDS EAST, A DISTANCE OF 60.07 FEET, THENCE
NORTH 00 DEGREES 00 MINUTES 00 SECONDS EAST, A DISTANCE OF 27.97 FEET TO A
POINT ON THE NORTHERLY LINE OF SAID RAILROAD RIGHT-OF-WAY, SAID POINT BEING
2.18 FEET SOUTH-EASTERLY OF THE EAST-WEST CENTERLINE OF, SAID SECTION 33, (AS
MEASURED ON SAID RAILROAD RIGHT-OF-WAY LINE); THENCE NORTH 89 DEGREES 57
MINUTES 09 SECONDS EAST, ON THE NORTHEASTERLY RAILROAD RIGHT-OF-WAY LINE, A
DISTANCE OF 249.63 FEET; THENCE SOUTH 00 DEGREES 02 MINUTES 51 SECONDS EAST, A
DISTANCE OF 100.00 TO A POINT ON THE SOUTHWESTERLY RAILROAD RIGHT-OF-WAY LINE;
THENCE SOUTH 89 DEGREES 57 MINUTES 09 SECONDS WEST ON THE SOUTHWESTERLY
RAILROAD RIGHT-OF-WAY LINE, A DISTANCE OF 330.19 FEET TO A POINT ON THE
EAST-WEST CENTER -LINE OF SAID SECTION 33; THENCE SOUTH 38 DEGREES 02 MINUTES
23 SECONDS WEST, ON THE EAST- WEST CENTERLINE OF SAID SECTION 33, A DISTANCE OF
11.34 FEET TO A POINT, (THE FOLLOWING COURSES AS DESCRIBED IN SAID DOCUMENT
26425159); THENCE NORTHWESTERLY ALONG A CURVED LINE CONVEXED NORTHEASTERLY
ALONG A CURVED LINE CONVEXED NORTH- EASTERLY, HAVING A RADIUS OF 3769.70 FEET,
FOR A DISTANCE OF 210.89 FEET (A CHORD BEARING OF SOUTH 84 DEGREES 27 MINUTES
12 SECONDS WEST) TO A POINT OF TANGENT; THENCE NORTHWESTERLY IN A STRAIGHT
LINE, TANGENT To THE LAST DESCRIBED CURVED LINE (BEARING SOUTH 82 DEGREES 51
MINUTES 01 SECONDS WEST) A DISTANCE OF 165.44 FEET TO A POINT OF CURVE; THENCE
NORTHWESTERLY ON A CURVED LINE CONVEXED SOUTH WESTERLY, HAVING A RADIUS OF
3869.70 FEET, FOR A DISTANCE OF 482.91 FEET, (A CHORD BEARING SOUTH 86 DEGREES
25 MINUTES 30 SECONDS WEST), TO A POINT OF TANGENT; THENCE NORTHWESTERLY IN A
STRAIGHT LINE, TANGENT TO THE LAST DESCRIBED CURVED LINE, SAID STRAIGHT LINE
BEING 80 FEET SOUTH-WESTERLY OF AND PARALLEL WITH THE AFORESAID RAILROAD
RIGHT-OF-WAY LINE FOR A DISTANCE OF 779.46 FEET TO A POINT OF CURVE, (SAID
STRAIGHT LINE BEARING SOUTH 90 DEGREES 00 MINUTES 00 SECONDS WEST); THENCE
NORTHWESTERLY ON A CURVED LINE CONVEXED SOUTHWESTERLY, HAVING A RADIUS OF
3869.70, FOR A DISTANCE OF 575.77 FEET, (A CHORD BEARING NORTH 85 DEGREES 43
MINUTES 20 SECONDS WEST) TO A POINT OF TANGENT; (SAID POINT OF TANGENT BEING
243.81 FEET SOUTHEASTERLY OF THE AFORESAID CHANNEL LINE AS MEASURED ALONG A
LINE 70 FEET SOUTHWESTERLY OF AND PARALLEL WITH THE AFORESAID SOUTHWESTERLY
RAILROAD RIGHT-OF-WAY LINE) THENCE NORTHWESTERLY IN A STRAIGHT LINE, TANGENT TO
THE LAST DESCRIBED CURVED LINE, SAID STRAIGHT LINE BEING 70 FEET SOUTH-
WESTERLY OF AND PARALLEL WITH THE AFORESAID SOUTHWESTERLY RAIL-ROAD
RIGHT-OF-WAY LINE, A DISTANCE OF 233.81 FEET-TO A POINT, (SAID STRAIGHT LINE
BEARING NORTH 81 DEGREES 26 MINUTES 40 SECONDS WEST) SAID POINT BEING 70.21
FEET SOUTHWESTERLY OF THE AFORESAID SOUTH-WESTERLY RAILROAD RIGHT-OF-WAY LINE
AS MEASURED ON A LINE PARALLEL WITH AFORESAID CHANNEL LINE, SAID PARALLEL LINE
HAVING A BEARING OF SOUTH 04 DEGREES 07 MINUTES 03 SECONDS WEST, THENCE SOUTH
04 DEGREES 07 MINUTES 03 SECONDS WEST ON A LINE 10 FEET EAST OF AND PARALLEL
WITH AFORESAID CHANNEL LINE, A
54
<PAGE> 57
EXHIBIT 4.9
DISTANCE OF 20.06 FEET TO A POINT. THENCE NORTH 81 DEGREES 26 MINUTES 40
SECONDS WEST ON A LINE 90.27 FEET (AS MEASURED ON AFORESAID CHANNEL LINE) AND
PARALLEL TO AFORESAID RAILROAD RIGHT-OF-WAY LINE, A DISTANCE OF 10 FEET TO A
POINT ON THE AFORESAID CHANNEL LINE; THENCE NORTH 04 DEGREES 07 MINUTES 03
SECONDS EAST ON THE AFORESAID CHANNEL LINE, A DISTANCE OF 190.57 FEET TO THE
POINT OF BEGINNING, IN COOK COUNTY, ILLINOIS.
(NOTE: ALL BEARINGS DESCRIBED IN THIS TRACT ARE BASED ON ACME PLANT NORTH,
BEING 52 DEGREES 01 MINUTES 30 SECONDS EAST OF THE ASSUMED GENERAL NORTH
DIRECTION.)
PIN Nos.
25-33-500-001, 25-33-120-002-8001, 25-33-120-002-8002, 25-33-119-021,
25-33-119-023
Common Address:
Parcel 1: 427 West 127th Street
Chicago, Illinois 60628
Parcels 2 and 3: 13500 South Perry Avenue
Riverdale; Illinois 60827
55
<PAGE> 58
EXHIBIT 4.9
LEGAL DESCRIPTION
(CHICAGO)
(TRACT N941292B)
***(AFFECTS TRACT N941292B):
56
<PAGE> 59
EXHIBIT 4.9
PARCEL 1:
THAT PART OF SECTION 18, TOWNSHIP 37 NORTH, RANGE 15 EAST OF THE THIRD
PRINCIPAL MERIDIAN, BOUNDED AND DESCRIBED AS FOLLOWS: BEGINNING AT A POINT
WHICH IS 1500 FEET NORTH OF THE CENTER LINE OF EAST 111TH STREET (NOW VACATED)
AND 121.80 FEET WEST OF THE WEST LINE OF BURLEY AVENUE; THENCE NORTH 0 DEGREES
21 MINUTES 13 SECONDS EAST, 1025.17 FEET PARALLEL TO THE WEST LINE OF SOUTH
BURLEY AVENUE TO A POINT ON THE NORTHWESTERLY RIGHT-OF-WAY LINE OF THE SOUTH
CHICAGO AND SOUTHERN RAILROAD COMPANY AS CONVEYED BY DOCUMENT DATED SEPTEMBER
1, 1887 AND RECORDED JANUARY 25, 1888 IN THE RECORDERS OFFICE OF COOK COUNTY,
ILLINOIS AS DOCUMENT NUMBER 916702; THENCE ALONG THE NORTHWESTERLY RIGHT-OF-WAY
LINE OF SAID RAILROAD TO THE NORTH LINE OF LOT 3 OF MC REYNOLDS ELEVATOR
SUBDIVISION OF PART OF THE NORTHWEST 1/4 OF THE NORTHEAST 1/4 OF SECTION 18,
AFORESAID, LYING EAST OF THE CALUMET RIVER; THENCE WEST ALONG THE NORTH LINE OF
SAID LOT 3 TO THE EASTERLY DOCK LINE OF THE CALUMET RIVER (AS SAID LINE IS
SHOWN ON GOVERNMENT SURVEY MAP THEREOF RECORDED MAY 17, 1889 IN BOOK 39 OF
PLATS, PAGES 1 TO 9); THENCE SOUTHWESTERLY, SOUTHERLY AND SOUTHEASTERLY ALONG
SAID EASTERLY DOCK LINE TO THE CENTER OF EAST 111TH STREET (NOW VACATED);
THENCE EASTERLY ALONG THE CENTER OF SAID EAST 111TH STREET TO A POINT WHICH IS
456.20 FEET WEST OF THE WEST LINE OF BURLEY AVENUE; THENCE NORTHEASTERLY ALONG
A CURVED LINE WITH A RADIUS OF 400 FEET CONVEX TO THE SOUTHEAST, AN ARC
DISTANCE OF 484.63 FEET TO A POINT OF TANGENCY, SAID POINT BEING 376.02 FEET
NORTH OF THE CENTER LINE OF EAST 111TH STREET (NOW VACATED); THENCE NORTH 0
DEGREES 21 MINUTES 13 SECONDS EAST ALONG THE LINE THAT IS TANGENT TO THE LAST
DESCRIBED CURVE, A DISTANCE OF 673.98 FEET TO A POINT THAT IS 1050.0 FEET NORTH
OF THE CENTER LINE OF EAST 111TH STREET (NOW VACATED) MEASURED ALONG THE LAST
DESCRIBED COURSE; THENCE NORTH 9 DEGREES 49 MINUTES 33 SECONDS EAST, A DISTANCE
OF 455.76 FEET TO THE POINT OF BEGINNING, (EXCEPTING FROM THE ABOVE DESCRIBED
PROPERTY ALL THAT PART OF THE ABOVE DESCRIBED PROPERTY LYING NORTHWESTERLY,
NORTHERLY AND NORTHEASTERLY OF THE SOUTHEASTERLY, SOUTHERLY AND SOUTHWESTERLY
PROPERTY LINES AS DESCRIBED AS PARCELS A AND B IN DOCUMENT 88081403, RECORDED
FEBRUARY 25, 1988, ALSO EXCEPTING THEREFROM THAT PART OF THE NORTHEAST 1/4 OF
SAID SECTION 18 LYING NORTH OF THE FOLLOWING DESCRIBED LINE: COMMENCING AT THE
SOUTHWEST CORNER OF THE NORTHWEST 1/4 OF THE NORTHEAST 1/4 OF SAID SECTION
18; THENCE NORTH 0 DEGREES 14 MINUTES 58 SECONDS WEST ALONG THE WEST LINE OF
THE NORTHWEST 1/4 OF THE NORTHEAST 1/4 OF SAID SECTION 18, A DISTANCE OF 8.58
FEET TO THE POINT OF BEGINNING; THENCE NORTH 89 DEGREES 18 MINUTES 29 SECONDS
EAST, A DISTANCE OF 42.42 FEET, MORE OR LESS, TO A POINT ON THE MOST WESTERLY
LIMITS OF PARCEL 5 (TRACT B) AS DESCRIBED IN DOCUMENT 88081403, RECORDED ON
FEBRUARY 25, 1988), IN COOK COUNTY, ILLINOIS.
57
<PAGE> 60
EXHIBIT 4.9
PARCEL 2:
THAT PART OF THE SOUTH 1/2 OF SECTION 18, TOWNSHIP 37 NORTH, RANGE 15 EAST OF
THE THIRD PRINCIPAL MERIDIAN, BOUNDED AND DESCRIBED AS FOLLOWS: BEGINNING AT A
POINT ON THE CENTER LINE OF EAST 111TH STREET (NOW VACATED), A DISTANCE OF
456.20 FEET WEST OF THE WEST LINE OF SOUTH BURLEY AVENUE; THENCE SOUTH 84
DEGREES 52 MINUTES 7 SECONDS WEST, A DISTANCE OF 1273.04 FEET TO A POINT ON THE
EASTERLY CHANNEL LINE OF THE CALUMET RIVER AS ESTABLISHED BY THE SURVEY OF THE
UNITED STATES ENGINEERS OFFICE WAR DEPARTMENT (AS SHOWN ON SHEET NUMBER 6 DATED
MARCH 1939 AND SHEET NUMBER 7 DATED MARCH 1938) TITLED: "CONTROL SURVEY CALUMET
RIVER"; THENCE NORTH 0 DEGREES 39 MINUTES 3 SECONDS WEST ALONG SAID EASTERLY
CHANNEL LINE OF SAID RIVER, A DISTANCE OF 129.26 FEET TO THE POINT OF
INTERSECTION OF THE CENTER LINE OF EAST 111TH STREET (NOW VACATED) WITH SAID
EASTERLY CHANNEL LINE OF SAID RIVER; THENCE SOUTH 89 DEGREES 18 MINUTES 20
SECONDS EAST ALONG THE CENTER LINE OF SAID EAST 111TH STREET (NOW VACATED), A
DISTANCE OF 1269.56 FEET TO THE POINT OF BEGINNING, ALL IN COOK COUNTY,
ILLINOIS.
PARCEL 3
THAT PART OF THE SOUTH 778.66 FEET OF THAT PART OF THE NORTH 1/2 OF THE
SOUTHWEST 1/4 OF SECTION 18, TOWNSHIP 37 NORTH, RANGE 15, EAST OF THE THIRD
PRINCIPAL MERIDIAN LYING WESTERLY OF THE WESTERLY LINE OF THE CALUMET RIVER AS
SAID WESTERLY LINE IS ESTABLISHED BY THE UNITED STATES GOVERNMENT SURVEY AND
SHOWN ON THE PLAT RECORDED MAY 17, 1889 AS DOCUMENT 1102284 IN BOOK 39 OF
PLATS, PAGES 1 TO 9, BOUNDED AND DESCRIBED AS FOLLOWS: COMMENCING AT A POINT ON
THE SOUTH LINE OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF SECTION 18, 724.54
FEET EAST OF (AS MEASURED ON SAID SOUTH LINE OF THE NORTH 1/2 OF THE SOUTHWEST
1/4 OF SECTION 18), THE WEST LINE OF THE SOUTHWEST 1/4 OF SECTION 18; THENCE
SOUTH 89 DEGREES 49 MINUTES 21 SECONDS EAST ON THE SOUTH LINE OF THE NORTH 1/2
OF THE SOUTHWEST 1/4 OF SECTION 18; A DISTANCE OF 348.56 FEET TO THE POINT OF
BEGINNING, THENCE NORTH 46 DEGREES 50 MINUTES 14 SECONDS EAST ON A STRAIGHT
LINE, A DISTANCE OF 1134.54 FEET TO A POINT ON THE NORTH LINE OF SAID SOUTH
778.66 FEET; THENCE SOUTH 89 DEGREES 49 MINUTES 21 SECONDS EAST ON SAID 778.66
FOOT LINE, A DISTANCE OF 24.28 FEET TO THE WESTERLY LINE OF THE CALUMET RIVER
AS ESTABLISHED BY THE UNITED STATES GOVERNMENT SURVEY AFORESAID; THENCE SOUTH
34 DEGREES 53 MINUTES 52 SECONDS EAST ON THE WESTERLY LINE OF THE CALUMET RIVER
AS ESTABLISHED BY THE UNITED STATES GOVERNMENT SURVEY AFORESAID, A DISTANCE OF
84.20 FEET; THENCE SOUTH 46 DEGREES 50 MINUTES 14 SECONDS WEST, A DISTANCE OF
1034.12 FEET TO A POINT ON THE SOUTH LINE OF THE NORTH 1/2 OF THE SOUTHWEST
1/4 OF SECTION 18, SAID POINT BEING 1218.80 FEET EAST OF (AS MEASURED ON SAID
SOUTH LINE OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF SECTION 18), THE WEST
LINE OF THE SOUTHWEST 1/4 OF SECTION 18; THENCE NORTH 89 DEGREES 49 MINUTES 21
SECONDS WEST ON THE SOUTH LINE OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF
SECTION 18, A DISTANCE OF 145.70 FEET TO THE POINT OF BEGINNING (EXCEPTING
THEREFROM THE SOUTH 33.00 FEET THEREOF) IN COOK COUNTY, ILLINOIS.
ALSO
58
<PAGE> 61
EXHIBIT 4.9
THAT PART OF THE SOUTH 83.00 FEET OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF
SECTION 18, TOWNSHIP 37 NORTH, RANGE 15, EAST OF THE THIRD PRINCIPAL MERIDIAN,
LYING WEST OF A LINE DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTH
LINE OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF SECTION 18, 724.54 FEET EAST OF
(AS MEASURED ON SAID SOUTH LINE OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF
SECTION 18), THE WEST LINE OF THE SOUTHWEST 1/4 OF SECTION 18; THENCE NORTH 00
DEGREES 05 MINUTES 07 SECONDS EAST ON A STRAIGHT LINE TO A POINT ON THE NORTH
LINE OF THE SOUTH 778.66 FEET OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF
SECTION 18, SAID POINT BEING 732.89 FEET (MEASURED ON SAID NORTH LINE) EAST OF
THE WEST LINE OF THE SOUTHWEST 1/2 OF SECTION 18, AND LYING EAST OF A LINE
DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTH LINE OF THE NORTH 1/2
OF THE SOUTHWEST 1/4 OF SECTION 18, 300.72 FEET EAST OF (MEASURED ON SAID
SOUTH LINE OF THE NORTH 1/4 OF THE SOUTHWEST 1/4 OF SECTION 18), THE WEST LINE
OF THE SOUTHWEST 1/4 OF SECTION 18; THENCE NORTHWESTERLY ON A STRAIGHT LINE TO
A POINT 245.50 FEET EAST OF THE WEST LINE AND 386.79 FEET NORTH OF THE SOUTH
LINE (MEASURED AT RIGHT ANGLES TO AND PARALLEL WITH SAID WEST LINE) OF THE
NORTH 1/2 OF THE SOUTHWEST 1/4 OF SECTION 18, IN COOK COUNTY, ILLINOIS.
ALSO
THE SOUTH 33.00 FEET OF THAT PART OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF
SECTION 18, TOWNSHIP 37 NORTH, RANGE 15, EAST OF THE THIRD PRINCIPAL MERIDIAN,
LYING WESTERLY OF THE WESTERLY LINE OF THE CALUMET RIVER, AS SAID WESTERLY LINE
IS ESTABLISHED BY THE UNITED STATES GOVERNMENT SURVEY AND SHOWN ON THE PLAT
RECORDED MAY 17, 1889 AS DOCUMENT 1102284 IN BOOK 39 OF PLATS, PAGES 1 TO 9 AND
LYING EAST OF A LINE DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTH
LINE OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF SECTION 18, 724.54 FEET EAST OF
(AS MEASURED ON SAID SOUTH LINE OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF
SECTION 18), THE WEST LINE OF THE SOUTHWEST 1/4 OF SECTION 18; THENCE NORTH 00
DEGREES 05 MINUTES 07 SECONDS EAST ON A STRAIGHT LINE TO A POINT ON THE NORTH
LINE OF THE SOUTH 778.66 FEET OF THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF
SECTION 18, SAID POINT BEING 732.89 FEET (MEASURED ON SAID NORTH LINE) EAST OF
THE WEST LINE OF THE SOUTHWEST 1/4 OF SECTION 18, IN COOK COUNTY, ILLINOIS.
ALSO
ALL THAT PART OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 18,
TOWNSHIP 37 NORTH, RANGE 15, EAST OF THE THIRD PRINCIPAL MERIDIAN, LYING EAST
OF A LINE PARALLEL TO AND DISTANT 505 FEET EAST OF THE WEST LINE OF SECTION 18
AND LYING NORTHWEST OF THE FOLLOWING DESCRIBED LINE: BEGINNING AT A POINT ON
THE EAST LINE OF THE WEST 505 FEET AFORESAID, SAID POINT BEING 529.98 FEET
SOUTH OF THE NORTH LINE OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SAID
SECTION 18, SAID EAST LINE OF THE WEST 505 FEET HAVING A BEARING OF NORTH 00
DEGREES 31 MINUTES 45 SECONDS WEST; THENCE NORTH 46 DEGREES 50 MINUTES 14
SECONDS EAST, A DISTANCE OF 772.13 FEET TO A POINT ON THE NORTH LINE OF THE
SOUTHWEST 1/4 OF THE SOUTHWEST 1/4, OF SECTION 18, SAID POINT BEING 1073.10
FEET EAST OF (AS MEASURED ON THE NORTH LINE OF THE SOUTHWEST 1/4 OF SECTION
18), THE WEST LINE OF THE SOUTHWEST 1/4 OF SECTION 18, SAID POINT ALSO BEING
568.10 FEET EAST OF THE POINT OF BEGINNING, IN COOK COUNTY, ILLINOIS.
ALSO
THAT PART OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 18, TOWNSHIP
37 NORTH, RANGE 15, EAST OF THE THIRD PRINCIPAL MERIDIAN, BOUNDED AND DESCRIBED
AS FOLLOWS: BEGINNING AT A POINT ON THE NORTH LINE OF THE SOUTHWEST 1/4 OF THE
SOUTHWEST 1/4 OF SECTION 18, 1073.10 FEET EAST OF (AS MEASURED ON THE NORTH
LINE OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 18), THE WEST LINE
OF THE SOUTHWEST 1/4 OF SECTION 18; THENCE SOUTH 89 DEGREES 49 MINUTES 21
SECONDS FAST ON THE NORTH LINE OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF
SECTION 18, 145.70 FEET; THENCE SOUTH 46 DEGREES 50 MINUTES 14 SECONDS WEST,
902.19 FEET TO A POINT ON A LINE 555 FEET EAST OF (AS MEASURED ON THE NORTH
LINE OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 18), THE WEST LINE
OF THE SOUTHWEST 1/4 OF SECTION 18; THENCE SOUTH 00 DEGREES 31 MINUTES 45
SECONDS EAST ON SAID LINE 555 FEET EAST OF THE WEST LINE OF THE SOUTHWEST 1/4
OF SECTION 18, 702.65 FEET TO THE SOUTH LINE OF THE SOUTHWEST 1/4 OF SECTION
18; THENCE NORTH 89 DEGREES 47 MINUTES 35 SECONDS WEST ON THE SOUTH LINE OF THE
SOUTHWEST 1/4 OF SECTION 18, 50.0 FEET TO A POINT ON A LINE 505 FEET EAST OF
59
<PAGE> 62
EXHIBIT 4.9
(AS MEASURED ON THE NORTH LINE OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF
SECTION 18), THE WEST LINE OF THE SOUTHWEST 1/4 OF SECTION 18; THENCE NORTH 00
DEGREES 31 MINUTES 45 SECONDS WEST ON SAID LINE 505 FEET EAST OF THE WEST LINE
OF THE SOUTHWEST 1/4 OF SECTION 18, 791.90 FEET TO A POINT 529.98 FEET SOUTH
OF THE NORTH LINE OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 18;
THENCE NORTH 46 DEGREES 50 MINUTES 14 SECONDS EAST, 772.13 FEET TO THE POINT OF
BEGINNING (EXCEPTING THEREFROM THE SOUTH 33 FEET THEREOF) IN COOK COUNTY,
ILLINOIS.
ALSO
THAT PART OF THE SOUTH 1/2 OF THE SOUTHWEST 1/4 OF SECTION 18, TOWNSHIP 37
NORTH, RANGE 15 EAST OF THE THIRD PRINCIPAL MERIDIAN IN COOK COUNTY, ILLINOIS
LYING WESTERLY OF THE WESTERLY LINE OF THE CALUMET RIVER AS SAID WESTERLY LINE
IS ESTABLISHED BY THE UNITED STATES GOVERNMENT SURVEY AND SHOWN ON THE PLAT
RECORDED MAY 17, 1889 AS DOCUMENT 1102284 IN BOOK 39 OF PLATS, PAGES 1 TO 9,
AND LYING EAST AND SOUTHEASTERLY OF THE FOLLOWING DESCRIBED LINE: BEGINNING AT
A POINT ON THE NORTH LINE OF THE SOUTH 1/2 OF THE SOUTHWEST 1/4 OF SECTION
18, 1218.80 FEET EAST OF (AS MEASURED ON THE NORTH LINE OF THE SOUTH 1/2 OF
THE SOUTHWEST 1/4 OF SECTION 18), THE WEST LINE OF THE SOUTHWEST 1/4 OF
SECTION 18, SAID NORTH LINE OF THE SOUTH 1/2 OF THE SOUTHWEST 1/4 OF SECTION
18 HAVING A BEARING OF SOUTH 89 DEGREES 49 MINUTES 21 SECONDS EAST; THENCE
SOUTH 46 DEGREES 50 MINUTES 14 SECONDS WEST, 902.19 FEET TO A POINT ON A LINE
555 FEET OF (AS MEASURED ON THE NORTH LINE OF THE SOUTH 1/2 OF THE SOUTHWEST
1/4 OF SECTION 18), THE WEST LINE OF THE SOUTHWEST 1/4 OF SECTION 18; THENCE
SOUTH 00 DEGREES 31 MINUTES 45 SECONDS EAST ON SAID LINE 555 FEET EAST OF THE
WEST LINE OF THE
60
<PAGE> 63
EXHIBIT 4.9
SOUTHWEST 1/4 OF SECTION 18, 702.65 FEET TO THE SOUTH LINE OF THE SOUTHWEST
1/4 OF SECTION 18, (EXCEPTING THEREFROM THE SOUTH 33 FEET OF THAT PART OF THE
SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 LYING EAST OF THE WEST 555 FEET THEREOF,
AND LYING WEST OF A LINE 837 FEET EAST OF THE WEST LINE OF THE SOUTHWEST 1/4)
IN COOK COUNTY, ILLINOIS.
PARCEL 4
THE EAST 1/2 OF THE SOUTHEAST 1/4 OF SECTION 13 LYING SOUTH OF THE INDIAN
BOUNDARY LINE, TOWNSHIP 37 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL
MERIDIAN, (EXCEPTING THEREFROM, ALL RAILROAD RIGHTS OF WAY NOW LAID OUT AND
EXISTING ACROSS SAID PREMISES; ALSO EXCEPTING THEREFROM, THAT CERTAIN TRACT OF
LAND LOCATED AT THE SOUTHWEST CORNER OF 110TH STREET AND TORRENCE AVENUE, BEING
DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHWEST CORNER OF THE 110TH STREET
AND TORRENCE AVENUE; THENCE SOUTH ON THE WEST LINE OF TORRENCE AVENUE; A
DISTANCE OF 600.19 FEET; THENCE WEST 274 FEET 4 INCHES, MORE OR LESS, TO THE
NORTHEASTERLY LINE OF THE RIGHT-OF-WAY OF THE CHICAGO AND WESTERN INDIANA
RAILROAD; THENCE NORTHWESTERLY ON THE NORTHEASTERLY LINE OF SAID RIGHT-OF-WAY,
A DISTANCE OF 714 FEET AND 4 INCHES, MORE OR LESS, TO THE SOUTH LINE OF 110TH
STREET; THENCE EAST ON THE SOUTH LINE OF 110TH STREET, A DISTANCE OF 665 FEET,
MORE OR LESS, TO THE POINT OF BEGINNING, IN COOK COUNTY, ILLINOIS.
PARCEL 5
THE NORTHEAST 1/4 OF THE NORTHEAST 1/4 (EXCEPT THE WEST 33 FEET THEREOF) OF
SECTION 24, TOWNSHIP 37 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN,
IN COOK COUNTY, ILLINOIS.
PIN Nos.
25-24-201-001, 26-18-100-005, 26-18-200-007, 26-18-200-009, 26-18-200-011,
26-18-200-013, 26-18-210-021, 26-18-210-023, 26-18-300-019, 26-18-300-023,
26-18-300-024, 26-18-300-026, 26-18-301-006, 26-18-301-010, 26-18-301-011,
26-18-400-003, 26-18-402-005, 26-18-408-005, 25-13-400-008, 25-18-200-019,
25-18-200-020, 25-18-200-021
Common Address:
Parcel 1 and Parcel 2: 10730 South Burley
Chicago, Illinois 60617
Parcels 3, 4 and 5: 11236 South Torrence Avenue
Chicago, Illinois 60617
61
<PAGE> 64
EXHIBIT 4.9
LEGAL DESCRIPTION
(WILDWOOD PARCEL)
(TRACT N941292C)
*(AFFECTS TRACT N941292C):
THOSE PARTS OF FRACTIONAL SECTIONS 28 AND 33 SOUTH OF THE INDIAN BOUNDARY LINE
AND OF FRACTIONAL SECTION 33 NORTH OF THE INDIAN BOUNDARY LINE IN TOWNSHIP 37
NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS:
LYING NORTHEASTERLY OF THE NORTHEASTERLY LINE OF THE CONSOLIDATED RAIL
CORPORATION (FORMERLY THE PENNSYLVANIA RAILROAD ORIGINAL) 100 FOOT WIDE
RIGHT-OF-WAY; LYING SOUTH OF THE SOUTH LINE OF 127TH STREET (PER DOCUMENT
NUMBER 11045051) AND AS EXTENDED WEST TO THE NORTHEASTERLY 100 FOOT WIDE
RIGHT-OF-WAY OF THE CONSOLIDATED RAIL CORPORATION (FORMERLY THE PENNSYLVANIA
RAILROAD); LYING NORTHWESTERLY OF THE U.S. CHANNEL LINE BY GRANT RECORDED
FEBRUARY 6, 1939 AS DOCUMENT NUMBER 12268331; AND LYING WEST AND SOUTHWESTERLY
OF THE FOLLOWING DESCRIBED LINE: COMMENCING AT THE POINT OF INTERSECTION OF THE
SOUTH LINE OF WEST 127TH STREET (66 FEET WIDE) AS RECORDED UNDER DOCUMENT
NUMBER 11045051 IN COOK COUNTY, RECORDER'S OFFICE WITH THE SOUTHERLY
PROLONGATION OF THE CENTER LINE OF SOUTH WENTWORTH AVENUE; THENCE WESTERLY
ALONG THE SOUTH LINE OF SAID WEST 127TH STREET A DISTANCE OF 468.65 FEET TO THE
PLACE OF BEGINNING FOR SAID LINE; THENCE SOUTH A DISTANCE OF 646.52 FEET,
THENCE SOUTH 46 DEGREES 47 MINUTES 38 SECONDS EAST A DISTANCE OF 525.85 FEET,
MORE OR LESS TO THE U.S. CHANNEL LINE BY GRANT RECORDED FEBRUARY 6, 1939 AS
DOCUMENT NUMBER 12268331, BEING THE POINT OF TERMINATION OF SAID LINE, ALL IN
COOK COUNTY, ILLINOIS.
PIN Nos. 25-28-426-004, 25-33-109-001, 25-33-109-003
Common Address: 427 West 127th Street
Chicago, Illinois 60628
62
<PAGE> 65
EXHIBIT 4.9
LEGAL DESCRIPTION
(BURLEY STREET LOTS, CHICAGO)
(TRACT N941292D)
*(AFFECTS TRACT N941292D)
PARCEL 1:
LOTS 35 TO 45, BOTH INCLUSIVE, IN BLOCK 4 IN GAGNE'S SUBDIVISION OF THE WEST
1/2 OF THE SOUTH WEST 1/4 OF THE NORTH EAST 1/4 OF THE NORTH EAST 1/4 OF
SECTION 18, TOWNSHIP 37 NORTH, RANGE 15 EAST OF THE THIRD PRINCIPAL MERIDIAN IN
COOK COUNTY, ILLINOIS.
PARCEL 2:
LOTS 25 THROUGH 48 INCLUSIVE, IN BLOCK 5 IN RUSSELL'S SUBDIVISION OF THE SOUTH
EAST 1/4 OF THE NORTH EAST 1/4 OF SECTION 18, TOWNSHIP 37 NORTH, RANGE 15
EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS.
PIN Nos. 26-18-205-049, 26-18-215-059
Common Address: 10730 South Burley
Chicago, Illinois 60617
63
<PAGE> 66
EXHIBIT 4.9
LEGAL DESCRIPTION
(ADDITIONAL CHICAGO PROPERTY)
(TRACT N941292E)
PARCEL 1:
A PARCEL OF LAND 30 FEET IN WIDTH LOCATED IN THE SOUTHEAST 1/4 (SOUTH OF THE
INDIAN BOUNDARY LINE) OF SECTION 13, TOWNSHIP 37 NORTH, RANGE 14 EAST OF THE
THIRD PRINCIPAL MERIDIAN COOK COUNTY, ILLINOIS, AND MORE PARTICULARLY,
DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTHEAST CORNER OF SAID SOUTHEAST QUARTER OF SECTION 13, AND
THENCE SOUTH ALONG THE EAST LINE OF SAID SOUTHEAST QUARTER, A DISTANCE OF SIX
HUNDRED FORTY AND EIGHT ONE-HUNDREDTHS (640.08) FEET TO A POINT; THENCE
WESTERLY ALONG A LINE PERPENDICULAR TO THE LAST DESCRIBED A COURSE A DISTANCE
OF FORTY (40) FEET TO A POINT; THENCE WESTERLY ALONG A LINE FORMING AN ANGLE OF
0 DEGREES 42 MINUTES 30 SECONDS TO THE RIGHT WITH A PROLONGATION OF THE LAST
DESCRIBED COURSE, A DISTANCE OF TWO HUNDRED THIRTY-EIGHT AND NINE
ONE-HUNDREDTHS (238.09) FEET MORE OR LESS TO A POINT OF INTERSECTION WITH A
LINE WHICH IS PARALLEL TO AND 30 FEET NORTHEASTERLY OF (MEASURED
PERPENDICULARLY) THE EASTERLY LINE OF THE NEW RIGHT-OF-WAY OF THE CHICAGO AND
WESTERN INDIANA RAILROAD, SAID POINT OF INTERSECTION BEING THE POINT OF
BEGINNING OF THE PARCEL HEREIN DESCRIBED; THENCE CONTINUING WEST ALONG THE LAST
DESCRIBED COURSE, A DISTANCE OF THIRTY- SIX AND TWENTY-FOUR ONE-HUNDREDTHS
(36.24) FEET, MORE OR LESS, TO A POINT IN THE EASTERLY LINE OF THE NEW
RIGHT-OF-WAY OF THE CHICAGO AND WESTERN INDIANA RAILROAD; THENCE NORTHWESTERLY
ALONG SAID EASTERLY RIGHT-OF-WAY LINE, A DISTANCE OF FOUR HUNDRED NINETY-ONE
AND FIFTY-THREE ONE HUNDREDTHS (491.53) FEET MORE OR LESS TO A POINT WHICH IS
TWO HUNDRED TWENTY-TWO AND EIGHTY ONE-HUNDREDTHS (222.80) FEET SOUTHEASTERLY
(MEASURED ALONG SAID EASTERLY RIGHT-OF-WAY LINE) OF A LINE WHICH IS PARALLEL
TO AND FORTY (40) FEET SOUTH OF (MEASURED PERPENDICULARLY) THE NORTH LINE OF
THE SOUTHEAST QUARTER OF SAID SECTION 13; THENCE NORTHEASTERLY ALONG A LINE
PERPENDICULAR TO SAID EASTERLY RIGHT-OF-WAY LINE A DISTANCE OF THIRTY (30) FEET
TO A POINT: THENCE SOUTHEASTERLY ALONG A LINE WHICH IS PARALLEL TO AND THIRTY
(30) FEET NORTHEASTERLY OF (MEASURED PERPENDICULARLY) SAID EASTERLY
RIGHT-OF-WAY LINE, A DISTANCE OF FIVE HUNDRED ELEVEN AND EIGHTY-SEVEN
ONE-HUNDREDTHS (511.87) FEET, MORE OR LESS, TO THE POINT OF BEGINNING.
64
<PAGE> 67
EXHIBIT 4.9
PARCEL 2:
THAT PART OF THE EAST 1/2OF THE SOUTHEAST 1/4 (SOUTH OF THE INDIAN BOUNDARY
LINE) OF SECTION 13, TOWNSHIP 37 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL
MERIDIAN, IN COOK COUNTY, ILLINOIS DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON A LINE, FORTY (40) FEET SOUTH AND FOUR HUNDRED
EIGHTY-FOUR AND NINE-TENTHS (484.9) FEET WEST OF THE INTERSECTION OF THE NORTH
LINE OF THE SOUTHEAST ONE-QUARTER (SE 1/4) (SOUTH OF THE INDIAN BOUNDARY LINE)
OF SECTION THIRTEEN (13), TOWNSHIP THIRTY-SEVEN (37) NORTH, RANGE FOURTEEN (14)
EAST OF THE THIRD PRINCIPAL MERIDIAN WITH THE EAST LINE OF SAID SECTION, SAID
POINT BEING ON A LINE PARALLEL TO THE NORTH LINE OF SAID SECTION; THENCE SOUTH
FOR A DISTANCE OF ONE HUNDRED NINETEEN AND EIGHT-TENTHS FEET (119.8) ON A LINE
PERPENDICULAR TO SAID LINE; THENCE SOUTHWESTERLY FOR A DISTANCE OF ONE HUNDRED
TWENTY AND FIVE-TENTHS, (120.5) FEET TO A POINT ON THE EASTERLY LINE OF
RIGHT-OF-WAY OF THE CHICAGO AND WESTERN INDIANA RAILROAD COMPANY, SAID
RIGHT-OF-WAY LINE BEING PERPENDICULAR TO SAID SOUTHWESTERLY LINE; THENCE IN A
NORTHWESTERLY DIRECTION ALONG SAID EASTERLY RIGHT-OF-WAY LINE FOR A DISTANCE OF
TWO HUNDRED TWENTY-TWO AND EIGHT-TENTHS (222.8) FEET TO A POINT ON A LINE FORTY
(40) FEET SOUTH AND SEVEN HUNDRED EIGHT (708) FEET WEST OF THE INTERSECTION OF
THE NORTH LINE OF SAID SOUTHEAST ONE-QUARTER (SE 1/4) OF SAID SECTION WITH THE
EAST LINE OF SAID SECTION; THENCE EAST ALONG SAID LINE PARALLEL TO THE NORTH
LINE OF SAID SECTION FOR A DISTANCE OF TWO HUNDRED TWENTY- THREE AND ONE-TENTH
(223.1) FEET TO THE POINT OF BEGINNING.
PIN Nos.: 25-13-400-003, 25-13-400-006
Common Address: 11236 South Torrence
Chicago, Illinois 60617
65
<PAGE> 1
EXHIBIT 4.17
ACME METALS INCORPORATED,
as Issuer,
ACME STEEL COMPANY,
as Guarantor,
and
HARRIS TRUST AND SAVINGS BANK,
as Trustee
Indenture
Dated as of December 18, 1997
10 7/8% Senior Notes Due 2007
<PAGE> 2
EXHIBIT 4.17
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Sections Indenture Sections
- ------------ ------------------
<S> <C>
Section 310(a)(1) .................... 7.09
(a)(2) .................... 7.09
(b) ....................... 7.02; 7.07
Section 311(a) ....................... 7.02
(b) ....................... 7.02
Section 312(a) ....................... 2.03
Section 313(a) ....................... 7.05
(c) ....................... 7.04; 7.05; 11.02
(d) ....................... 7.05
Section 314(a) ....................... 4.18; 7.04; 11.02
(a)(4) .................... 4.17; 11.02
(c)(1) .................... 11.03
(c)(2) .................... 11.03
(e) ....................... 4.17; 11.04
Section 315(a) ....................... 7.01
(b) ....................... 7.04; 11.02
(c) ....................... 7.01
(d) ....................... 7.01
(e) ....................... 6.11
Section 316(a)(1)(A) ................. 6.05
(a)(1)(B) ................. 6.04
(b) ....................... 6.07
(c) ....................... 9.03
Section 317(a)(1) .................... 6.08
(a)(2) .................... 6.09
(b) ....................... 2.04
Section 318(a) ....................... 11.01
(c) ....................... 11.01
</TABLE>
Note: The Cross-Reference Table shall not for any purpose be deemed to
be a part of the Indenture.
<PAGE> 3
EXHIBIT 4.17
TABLE OF CONTENTS(1)
Page
RECITALS OF THE COMPANY
ARTICLE ONE
Definitions and Incorporation by Reference
SECTION 1.01. Definitions 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act 24
SECTION 1.03. Rules of Construction 24
ARTICLE TWO
The Notes
SECTION 2.01. Form and Dating 25
SECTION 2.02. Restrictive Legends 26
SECTION 2.03. Execution, Authentication and Denominations 28
SECTION 2.04. Registrar and Paying Agent 29
SECTION 2.05. Paying Agent to Hold Money in Trust 30
SECTION 2.06. Transfer and Exchange 30
SECTION 2.07. Book-Entry Provisions for Global Notes 31
SECTION 2.08. Special Transfer Provisions 33
SECTION 2.09. Replacement Notes 36
SECTION 2.10. Outstanding Notes 37
SECTION 2.11. Temporary Notes 38
SECTION 2.12. Cancellation 38
SECTION 2.13. CUSIP Numbers 38
SECTION 2.14. Defaulted Interest 38
SECTION 2.15. Issuance of Additional Notes 39
ARTICLE THREE
- ------------
(1) Note: The Table of Contents shall not for any purposes be deemed to be a
part of the Indenture.(2) The Holder's signature must be guaranteed by a
member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an "eligible
guarantor institution" as defined by Rule 17Ad-15 under the Exchange Act.
<PAGE> 4
EXHIBIT 4.17
Redemption
SECTION 3.01. Right of Redemption 39
SECTION 3.02. Notices to Trustee 39
SECTION 3.03. Selection of Notes to Be Redeemed 40
SECTION 3.04. Notice of Redemption 40
SECTION 3.05. Effect of Notice of Redemption 41
SECTION 3.06. Deposit of Redemption Price 41
SECTION 3.07. Payment of Notes Called for Redemption 42
SECTION 3.08. Notes Redeemed in Part 42
ARTICLE FOUR
Covenants
SECTION 4.01. Payment of Notes 42
SECTION 4.02. Maintenance of Office or Agency 43
SECTION 4.03. Limitation on Indebtedness 43
SECTION 4.04. Limitation on Restricted Payments 47
SECTION 4.05. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted
Subsidiaries 50
SECTION 4.06. Limitation on the Issuance and Sale of
Capital Stock of Restricted Subsidiaries 51
SECTION 4.07. Limitation on Issuances of Guarantees by
Restricted Subsidiaries 51
SECTION 4.08. Limitation on Transactions with Shareholders and
Affiliates 52
SECTION 4.09. Limitation on Liens 53
SECTION 4.10. Limitation on Sale-Leaseback Transactions 54
SECTION 4.11. Limitation on Asset Sales 55
SECTION 4.12. Repurchase of Notes upon a Change of Control 56
SECTION 4.13. [RESERVED] 56
SECTION 4.14. Existence 56
SECTION 4.15. Payment of Taxes and Other Claims 56
SECTION 4.16. Maintenance of Properties and Insurance 56
SECTION 4.17. Compliance Certificates 57
SECTION 4.18. Commission Reports and Reports to Holders 58
SECTION 4.19. Waiver of Stay, Extension or Usury Laws 58
ARTICLE FIVE
Successor Corporation
SECTION 5.01. When Company May Merge, Etc. 59
SECTION 5.02. Successor Substituted 60
<PAGE> 5
EXHIBIT 4.17
ARTICLE SIX
Default and Remedies
SECTION 6.01. Events of Default 60
SECTION 6.02. Acceleration 62
SECTION 6.03. Other Remedies 62
SECTION 6.04. Waiver of Past Defaults 62
SECTION 6.05. Control by Majority 63
SECTION 6.06. Limitation on Suits 63
SECTION 6.07. Rights of Holders to Receive Payment 64
SECTION 6.08. Collection Suit by Trustee 64
SECTION 6.09. Trustee May File Proofs of Claim 64
SECTION 6.10. Priorities 65
SECTION 6.11. Undertaking for Costs 65
SECTION 6.12. Restoration of Rights and Remedies 65
SECTION 6.13. Rights and Remedies Cumulative 66
SECTION 6.14. Delay or Omission Not Waiver 66
ARTICLE SEVEN
Trustee
SECTION 7.01. Rights of Trustee 66
SECTION 7.02. Individual Rights of Trustee 69
SECTION 7.03. Trustee's Disclaimer 69
SECTION 7.04. Notice of Default 69
SECTION 7.05. Reports by Trustee to Holders 69
SECTION 7.06. Compensation and Indemnity 70
SECTION 7.07. Replacement of Trustee 71
SECTION 7.08. Successor Trustee by Merger, Etc. 72
SECTION 7.09. Eligibility 72
SECTION 7.10. Money Held in Trust 72
ARTICLE EIGHT
Discharge of Indenture
SECTION 8.01. Termination of Company's Obligations 73
SECTION 8.02. Defeasance and Discharge of Indenture 74
SECTION 8.03. Defeasance of Certain Obligations 76
SECTION 8.04. Application of Trust Money 77
SECTION 8.05. Repayment to Company 77
<PAGE> 6
EXHIBIT 4.17
SECTION 8.06. Reinstatement 78
ARTICLE NINE
Amendments, Supplements and Waivers
SECTION 9.01. Without Consent of Holders 78
SECTION 9.02. With Consent of Holders 79
SECTION 9.03. Revocation and Effect of Consent 80
SECTION 9.04. Notation on or Exchange of Notes 81
SECTION 9.05. Trustee to Sign Amendments, Etc. 81
SECTION 9.06. Conformity with Trust Indenture Act 81
ARTICLE TEN
Guarantee of Notes
SECTION 10.01. Note Guarantee 81
SECTION 10.02. Obligations Unconditional 83
SECTION 10.03. Notice to Trustee 83
SECTION 10.04. This Article Not to Prevent Events of Default 83
SECTION 10.05. Net Worth Limitation 83
ARTICLE ELEVEN
Miscellaneous
SECTION 11.01. Trust Indenture Act of 1939 84
SECTION 11.02. Notices 84
SECTION 11.03. Certificate and Opinion as to Conditions Precedent 85
SECTION 11.04. Statements Required in Certificate or Opinion 85
SECTION 11.05. Acts of Holders 86
SECTION 11.06. Rules by Trustee, Paying Agent or Registrar 87
SECTION 11.07. Payment Date Other Than a Business Day 87
SECTION 11.08. Governing Law 87
SECTION 11.09. No Adverse Interpretation of Other Agreements 87
SECTION 11.10. No Recourse Against Others 88
SECTION 11.11. Successors 88
SECTION 11.12. Duplicate Originals 88
SECTION 11.13. Separability 88
SECTION 11.14. Table of Contents, Headings, Etc. 88
SECTION 12.01. Purposes for Which Meetings May Be Called 88
SECTION 12.02. Manner of Calling Meetings 89
SECTION 12.03. Call of Meetings by the Company or Holders 89
<PAGE> 7
EXHIBIT 4.17
SECTION 12.04. Who May Attend and Vote at Meetings 90
SECTION 12.05. Quorum; Action 90
SECTION 12.06. Regulations May Be Made by Trustee; Conduct
of the Meeting; Voting Rights; Adjournment 91
SECTION 12.07. Voting at the Meeting and Record to Be Kept 91
SECTION 12.08. Exercise of Rights of Trustee or Holders May
Not Be Hindered or Delayed by Call of Meeting 92
SECTION 12.09. Procedures Not Exclusive 92
SIGNATURES
EXHIBIT A Form of Note
EXHIBIT B Form of Certificate
EXHIBIT C Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors
EXHIBIT D Form of Certificate to Be Delivered in connection with
Transfers Pursuant to Regulation S
<PAGE> 8
EXHIBIT 4.17
INDENTURE, dated as of December 18, 1997, between ACME METALS
INCORPORATED, a Delaware corporation, as Issuer (the "Company"), ACME
STEEL COMPANY, a Delaware corporation, as Guarantor (the "Guarantor"),
and Harris Trust and Savings Bank, a bank organized under the laws of
the State of Illinois, as trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of up to $200,000,000 aggregate
principal amount of the Company's 10 7/8% Senior Notes Due 2007 (the
"Notes") issuable as provided in this Indenture. All things necessary
to make this Indenture a valid agreement of the Company and the
Guarantor, in accordance with its terms, have been done; and, the
Company and the Guarantor has done all things necessary to make the
Notes, when executed by the Company and the Guarantor and authenticated
and delivered by the Trustee hereunder and duly issued by the Company,
the valid obligations of the Company and the Guarantor as hereinafter
provided.
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act of 1939, as amended, that are
required to be a part of and to govern indentures qualified under the
Trust Indenture Act of 1939, as amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of the
Notes by the Holders (as defined herein) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all
Holders, as follows:
ARTICLE ONE
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Acme Packaging" means Acme Packaging Corporation, a Delaware
corporation, and a Wholly Owned Subsidiary of the Company.
"Acquired Indebtedness" means Indebtedness of a Person existing at
the time such Person becomes a Restricted Subsidiary or
<PAGE> 9
EXHIBIT 4.17
assumed in connection with an Asset Acquisition by the Company or a Restricted
Subsidiary and not Incurred in connection with, or in anticipation of, such
Person becoming a Restricted Subsidiary or such Asset Acquisition; provided
that Indebtedness of such Person which is redeemed, defeased, retired or
otherwise repaid at the time of or immediately upon consummation of the
transactions by which such Person becomes a Restricted Subsidiary or such Asset
Acquisition shall not be Acquired Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted
Subsidiaries for such period determined in conformity with GAAP;
provided that the following items shall be excluded in computing
Adjusted Consolidated Net Income (without duplication): (i) the net
income of any Person (other than Wabush and NACME) that is not a
Restricted Subsidiary, except to the extent of the amount of dividends
or other distributions actually paid to the Company or any of its
Restricted Subsidiaries by such Person during such period; (ii) solely
for the purposes of calculating the amount of Restricted Payments that
may be made pursuant to clause (C) of the first paragraph of Section
4.04 (and in such case, except to the extent includable pursuant to
clause (i) above), the net income (or loss) of any Person accrued prior
to the date it becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or any of its Restricted Subsidiaries or
all or substantially all of the property and assets of such Person are
acquired by the Company or any of its Restricted Subsidiaries; (iii) the
net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income is not at the time permitted by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary; (iv) any gains or losses (on
an after-tax basis) attributable to Asset Sales; (v) except for purposes
of calculating the amount of Restricted Payments that may be made
pursuant to clause (C) of the first paragraph of Section 4.04, any
amount paid or accrued as dividends on Preferred Stock of the Company or
any Restricted Subsidiary owned by Persons other than the Company and
any of its Restricted Subsidiaries; and (vi) all extraordinary gains and
extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" means the total amount
of assets of the Company and its Restricted Subsidiaries (less
applicable depreciation, amortization and other valuation reserves),
except to the extent resulting from write-ups of capital assets
(excluding write-ups in connection with accounting for acquisitions in
conformity with GAAP), after deducting therefrom (i) all current
liabilities of the Company and its Restricted Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent quarterly or annual
consolidated balance sheet of the Company and its Restricted
Subsidiaries, prepared in conformity with GAAP and filed with the
Commission or provided to the Trustee pursuant to Section 4.18.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person; provided that an Affiliate of
the Company or any of its Restricted Subsidiaries shall not include
(i) Wabush, (ii) NACME or (iii) any other
<PAGE> 10
EXHIBIT 4.17
Restricted Subsidiary. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" means any Registrar, Paying Agent, authenticating agent or
co-Registrar.
"Agent Members" has the meaning provided in Section 2.07(a).
"Asset Acquisition" means (i) an investment by the Company or any
of its Restricted Subsidiaries in any other Person pursuant to which
such Person shall become a Restricted Subsidiary or shall be merged into
or consolidated with the Company or any of its Restricted Subsidiaries;
provided that such Person's primary business is related, ancillary or
complementary to the businesses of the Company and its Restricted
Subsidiaries on the date of such investment or (ii) an acquisition by
the Company or any of its Restricted Subsidiaries of the property and
assets of any Person other than the Company or any of its Restricted
Subsidiaries that constitute all or substantially all of a division or
line of business of such Person; provided that the property and assets
acquired are related, ancillary or complementary to the businesses of
the Company and its Restricted Subsidiaries on the date of such
acquisition.
"Asset Disposition" means the sale or other disposition by the
Company or any of its Restricted Subsidiaries (other than to the Company
or another Restricted Subsidiary of the Company) of (i) all or
substantially all of the Capital Stock of any Restricted Subsidiary of
the Company or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback
transaction) in one transaction or a series of related transactions by
the Company or any of its Restricted Subsidiaries to any Person other
than the Company or any of its Restricted Subsidiaries of (i) all or any
of the Capital Stock of any Restricted Subsidiary, (ii) all or
substantially all of the property and assets of an operating unit or
business of the Company or any of its Restricted Subsidiaries or
(iii) any other property and assets (other than the Capital Stock or
other Investment in an Unrestricted Subsidiary) of the Company or any of
its Restricted Subsidiaries outside the ordinary course of business of
the Company or such Restricted Subsidiary and, in each case, that is not
governed by Article Five; provided that "Asset Sale" shall not include
(a) sales or other dispositions of inventory, receivables and other
current assets, (b) sales, transfers or other dispositions of assets
constituting a Restricted Payment permitted to be made under Section
4.04, (c) sales, transfers or other dispositions of assets with a fair
market value not in excess of $1.0 million in any transaction or series
of related transactions or (d) sales or other
<PAGE> 11
EXHIBIT 4.17
dispositions of assets for consideration at least equal to the fair market
value of the assets sold or disposed of, to the extent that the consideration
received would satisfy clause (B) of Section 4.11.
"Average Life" means, at any date of determination with respect to
any debt security, the quotient obtained by dividing (i) the sum of the
products of (a) the number of years from such date of determination to
the dates of each successive scheduled principal payment of such debt
security and (b) the amount of such principal payment by (ii) the sum of
all such principal payments.
"Board of Directors" means the Board of Directors of the Company or
any committee of such Board of Directors duly authorized to act under
this Indenture.
"Board Resolution" means a copy of a resolution, certified by the
Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Borrowing Base" means, with respect to the Company and its
Restricted Subsidiaries, the Borrowing Base as defined in (i) the
Working Capital Facility so long as such definition is based on
percentages of accounts receivable and inventories and if such
definition is not based on accounts receivable and inventories, then
(ii) the Amended and Restated Credit Agreement dated as of December 18,
1997 among the Company, certain of its Subsidiaries, Harris Trust and
Savings Bank and the First National Bank of Chicago, as co-agents, and
the lenders thereto, as amended on the Closing Date.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in The City of New York or The City of
Chicago, or in the city of the Corporate Trust Office of the Trustee,
are authorized by law to close.
"Capital Expenditure" means expenditures (whether paid in cash or
accrued as liabilities and including Capital Lease Obligations) of the
Company and its Restricted Subsidiaries relating to the acquisition of
equipment used or useful in the business of the Company or any
Restricted Subsidiary.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) in equity of such Person,
whether outstanding on the Closing Date or issued thereafter, including,
without limitation, all Common Stock and Preferred Stock.
<PAGE> 12
EXHIBIT 4.17
"Capitalized Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person as lessee, in
conformity with GAAP, is required to be capitalized on the balance sheet
of such Person.
"Capitalized Lease Obligations" means the discounted present value
of the rental obligations under a Capitalized Lease.
"Change of Control" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act) of more than 35% of the total voting power of the
Voting Stock of the Company on a fully diluted basis; or
(ii) individuals who on the Closing Date constitute the Board of
Directors (together with any new directors whose election by the Board
of Directors or whose nomination by the Board of Directors for election
by the Company's stockholders was approved by a vote of at least
two-thirds of the members of the Board of Directors then in office who
either were members of the Board of Directors on the Closing Date or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the members of the
Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally
issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any
time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the TIA,
then the body performing such duties at such time.
"Commodity Agreement" means forward contracts, options, future
contracts, future options or similar agreements or arrangements entered
into by the Company or any of its Restricted Subsidiaries to protect the
Company or any of its Restricted Subsidiaries from fluctuations in the
price of iron, iron ore, natural gas, oil, coal or any other commodity
of a nature or type that is used in the business of the Company and its
Restricted Subsidiaries existing on the date any such agreements or
arrangements are entered into.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of such Person's equity, other
than Preferred Stock of such Person, whether now outstanding or issued
after the Closing Date, including without limitation, all series and
classes of such common stock.
<PAGE> 13
EXHIBIT 4.17
"Company" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to Article Five of
this Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name
of the Company (i) by its Chairman, a Vice Chairman, its President or a
Vice President and (ii) by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary and delivered to the Trustee;
provided, however, that such written request or order may be signed by
any two of the Persons listed in clause (i) above in lieu of being
signed by one of such Persons listed in such clause (i) and one of the
officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated
Net Income for such period plus, to the extent such amount was deducted
in calculating such Adjusted Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) income taxes (other than income taxes (either
positive or negative) attributable to extraordinary and non-recurring
gains or losses or sales of assets), (iii) depreciation expense,
(iv) amortization expense and (v) all other non-cash items reducing
Adjusted Consolidated Net Income (other than items that will require
cash payments and for which an accrual or reserve is, or is required by
GAAP to be, made), less all non-cash items increasing Adjusted
Consolidated Net Income, all as determined on a consolidated basis for
the Company and its Restricted Subsidiaries in conformity with GAAP;
provided that, if any Restricted Subsidiary is not a Wholly Owned
Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the
extent not otherwise reduced in accordance with GAAP) by an amount equal
to (A) the amount of the Adjusted Consolidated Net Income attributable
to such Restricted Subsidiary multiplied by (B) the percentage ownership
interest in the income of such Restricted Subsidiary not owned on the
last day of such period by the Company or any of its Restricted
Subsidiaries.
"Consolidated Interest Expense" means, for any period, the
aggregate amount of interest in respect of Indebtedness (including,
without limitation, amortization of original issue discount on any
Indebtedness and the interest portion of any deferred payment
obligation, calculated in accordance with the effective interest method
of accounting; all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by the Company or any of its
Restricted Subsidiaries) and all but the principal component of rentals
in respect of Capitalized Lease Obligations paid, accrued or scheduled
to be paid or to be accrued by the Company and its Restricted
Subsidiaries during such period; excluding, however, (i) any amount of
such interest of any Restricted Subsidiary if the net income of such
Restricted Subsidiary is excluded in the calculation of Adjusted
Consolidated Net Income pursuant to clause (iii) of the definition
thereof (but only in the same proportion as the net income of such
Restricted Subsidiary is excluded from the calculation of Adjusted
Consolidated Net Income pursuant to clause (iii) of the definition
thereof), (ii) any premiums, fees and expenses (and any amortization
thereof) payable in connection with the offering of the Notes, the
consummation of the Credit Agreement and any amendment to the Working
Capital Facility and in connection with any financing for Phase II to
the extent permitted under Section 4.03, all as determined on a
consolidated basis
<PAGE> 14
EXHIBIT 4.17
(without taking into account Unrestricted Subsidiaries) in conformity
with GAAP and (iii) the interest portion of any amount deposited with
the Trustee to defease any outstanding 1994 Notes pursuant to the 1994
Indentures.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available
quarterly or annual consolidated balance sheet of the Company and its
Restricted Subsidiaries (which shall be as of a date not more than 90
days prior to the date of such computation, and which shall not take
into account Unrestricted Subsidiaries), less any amounts attributable
to Disqualified Stock or any equity security convertible into or
exchangeable for Indebtedness, the cost of treasury stock and the
principal amount of any promissory notes receivable from the sale of the
Capital Stock of the Company or any of its Restricted Subsidiaries, each
item to be determined in conformity with GAAP (excluding the effects of
foreign currency exchange adjustments under Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 52).
"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular
time, be principally administered, which office is, at the date of this
Indenture, located at 311 West Monroe Street, Chicago, Illinois 60606,
Attention: Indenture Trust Division.
"Credit Agreement" means the credit agreement entered into on
December 18, 1997 among the Company, the lenders named therein, Morgan
Stanley Senior Funding, Inc., as syndication agent and arranger, and
Bankers Trust Company, as administrative agent, together with all other
agreements, instruments and documents executed or delivered pursuant
thereto (including, without limitation, any guarantee agreements and
security documents), in each case as such agreements may be amended
(including any amendment and restatement thereof), supplemented,
replaced or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including by way of 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.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees, and
their respective successors, until a successor Depositary shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder.
<PAGE> 15
EXHIBIT 4.17
"Disqualified Stock" means any class or series of Capital Stock of
any Person that by its terms or otherwise is (i) required to be redeemed
prior to the Stated Maturity of the Notes, (ii) redeemable at the option
of the holder of such class or series of Capital Stock at any time prior
to the Stated Maturity of the Notes or (iii) convertible into or
exchangeable for Capital Stock referred to in clause (i) or (ii) above
or Indebtedness having a scheduled maturity prior to the Stated Maturity
of the Notes; provided that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the
right to require such Person to repurchase or redeem such Capital Stock
upon the occurrence of an "asset sale" or "change of control" occurring
prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of
such Capital Stock than the provisions contained in Section 4.11 and
Section 4.12 and such Capital Stock specifically provides that such
Person shall not repurchase or redeem any such stock pursuant to such
provision prior to the Company's repurchase of such Notes as are
required to be repurchased pursuant to Section 4.11 and Section 4.12.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.11.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means any securities of the Company containing
terms identical to the Notes (except that such Exchange Notes shall be
registered under the Securities Act) that are issued and exchanged for
the Notes pursuant to the Registration Rights Agreement and this
Indenture.
"fair market value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion
to buy, as determined in good faith by the Board of Directors, whose
determination shall be conclusive if evidenced by a Board Resolution.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including,
without limitation, those 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 approved by a significant segment of the accounting
profession. All ratios and computations contained or referred to in
this Indenture shall be computed in conformity with GAAP applied on a
consistent basis, except that calculations made for purposes of
determining compliance with the terms of the covenants and with other
<PAGE> 16
EXHIBIT 4.17
provisions of this Indenture shall be made without giving effect to
(i) the amortization of any expenses incurred in connection with the
offering of the Notes, the consummation of the Credit Agreement and any
amendment to the Working Capital Facility and in connection with any
financing for Phase II to the extent permitted under Section 4.03 and
(ii) except as otherwise provided, the amortization of any amounts
required or permitted by Accounting Principles Board Opinion Nos. 16 and
17.
"Global Notes" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other
Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services (unless such purchase
arrangements are on arm's-length terms and are entered into in the
ordinary course of business), to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the
payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided that the term "Guarantee" shall
not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantor" means the party named as such in the first paragraph of
this Indenture and any successor Trustee.
"Holder" or "Noteholder" means the registered holder of any Note.
"Incur" means, with respect to any Indebtedness, to incur, create,
issue, assume, Guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of, contingently or
otherwise, such Indebtedness, including an "Incurrence" of Acquired
Indebtedness; provided that neither the accrual of interest nor the
accretion of original issue discount shall be considered an Incurrence
of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person
for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other
similar instruments (including reimbursement obligations with respect
thereto, but excluding obligations with respect to letters of credit
(including trade letters of credit) securing obligations entered into in
the ordinary course of business of such Person to the extent such
letters of credit are not drawn upon or, if drawn upon, to the extent
such drawing is reimbursed
<PAGE> 17
EXHIBIT 4.17
no later than the third Business Day following receipt by such Person of a
demand for reimbursement), (iv) all obligations of such Person to pay the
deferred and unpaid purchase price of property or services, which
purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables, (v) all Capitalized Lease Obligations,
(vi) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person; provided
that the amount of such Indebtedness shall be the lesser of (A) the fair market
value of such asset at such date of determination and (B) the amount of such
Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such Person
to the extent such Indebtedness is Guaranteed by such Person and (viii) to the
extent not otherwise included in this definition, obligations under Currency
Agreements, Interest Rate Agreements and Commodity Agreements. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided (A) that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as determined
in conformity with GAAP, (B) that money borrowed and set aside at the time of
the Incurrence of any Indebtedness in order to prefund the payment of the
interest on such Indebtedness shall not be deemed to be "Indebtedness" so long
as such money is held to secure the payment of such interest and (C) that
Indebtedness shall not include any liability for federal, state, local or other
taxes.
"Indenture" means this Indenture as originally executed or as it
may be amended or supplemented from time to time by one or more
indentures supplemental to this Indenture entered into pursuant to the
applicable provisions of this Indenture.
"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.
"Interest Coverage Ratio" means, on any Transaction Date, the ratio
of (i) the aggregate amount of Consolidated EBITDA for the then most
recent four fiscal quarters prior to such Transaction Date for which
reports have been filed with the Commission or the Trustee pursuant to
Section 4.18 (the "Four Quarter Period") to (ii) the aggregate
Consolidated Interest Expense during such Four Quarter Period. In
making the foregoing calculation, (A) pro forma effect shall be given to
any Indebtedness Incurred or repaid during the period (the "Reference
Period") commencing on the first day of the Four Quarter Period and
ending on the Transaction Date (other than Indebtedness Incurred or
repaid under a revolving credit or similar arrangement to the extent of
the commitment thereunder (or under any predecessor revolving credit or
similar arrangement) in effect on the last day of such Four Quarter
Period unless any portion of such Indebtedness is projected, in the
reasonable judgment of the senior management of the Company, to remain
outstanding for a period in excess of 12 months from the date of the
Incurrence thereof), in each case as if such Indebtedness
<PAGE> 18
EXHIBIT 4.17
had been Incurred or repaid on the first day of such Reference Period;
(B) Consolidated Interest Expense attributable to interest on any Indebtedness
(whether existing or being Incurred) computed on a pro forma basis and bearing
a floating interest rate shall be computed as if the rate in effect on the
Transaction Date (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in
excess of 12 months or, if shorter, at least equal to the remaining term of
such Indebtedness) had been the applicable rate for the entire period; (C) pro
forma effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving pro forma effect to the application of proceeds of any Asset
Disposition) that occur during such Reference Period as if they had occurred
and such proceeds had been applied on the first day of such Reference Period;
and (D) pro forma effect shall be given to asset dispositions and asset
acquisitions (including giving pro forma effect to the application of proceeds
of any asset disposition) that have been made by any Person that has become a
Restricted Subsidiary or has been merged with or into the Company or any
Restricted Subsidiary during such Reference Period and that would have
constituted Asset Dispositions or Asset Acquisitions had such transactions
occurred when such Person was a Restricted Subsidiary as if such asset
dispositions or asset acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such Reference Period; provided
that to the extent that clause (C) or (D) of this sentence requires that pro
forma effect be given to an Asset Acquisition or Asset Disposition, such pro
forma calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or division or line of business
of the Person, that is acquired or disposed for which financial information is
available.
"Interest Payment Date" means each semiannual interest payment date
on June 15 and December 15 of each year, commencing June 15, 1998.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate hedge agreement, option or
future contract or other similar agreement or arrangement.
"Investment" in any Person means any direct or indirect advance,
loan or other extension of credit (including, without limitation, by way
of Guarantee or similar arrangement; but excluding advances to customers
in the ordinary course of business that are, in conformity with GAAP,
recorded as accounts receivable on the balance sheet of the Company or
its Restricted Subsidiaries) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property
or services for the account or use of others), or any purchase or
acquisition of Capital Stock, bonds, notes, debentures or other similar
instruments issued by, such Person and shall include (i) the designation
of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the
fair market value of the Capital Stock (or any other Investment), held
by the Company or any of its Restricted Subsidiaries, of (or in) any
Person that has ceased to be a Restricted Subsidiary, including without
limitation, by reason of any transaction permitted by clause (iii) of
Section 4.06. For purposes of the definition of "Unrestricted
Subsidiary" and Section 4.04,
<PAGE> 19
EXHIBIT 4.17
(i) "Investment" shall include the fair market value of the assets (net of
liabilities (other than liabilities to the Company or any of its Restricted
Subsidiaries)) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value
of the assets (net of liabilities (other than liabilities to the Company or any
of its Restricted Subsidiaries)) of any Unrestricted Subsidiary at the time
that such Unrestricted Subsidiary is designated a Restricted Subsidiary shall
be considered a reduction in outstanding Investments and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the
nature thereof or any agreement to give any security interest).
"Moody's" means Moody's Investors Service, Inc. and its successors.
"NACME" means the joint venture between the Guarantor, NPS Holding,
L.L.C., and National Material, L.P.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the
extent corresponding to the principal, but not interest, component
thereof) when received in the form of cash or cash equivalents (except
to the extent such obligations are financed or sold with recourse to the
Company or any Restricted Subsidiary) and proceeds from the conversion
of other property received when converted to cash or cash equivalents,
net of (i) brokerage commissions and other fees and expenses (including
fees and expenses of counsel, accountants and investment bankers)
related to such Asset Sale, (ii) provisions for all taxes (whether or
not such taxes will actually be paid or are payable) as a result of such
Asset Sale without regard to the consolidated results of operations of
the Company and its Restricted Subsidiaries, taken as a whole,
(iii) payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that either (A) is secured by
a Lien on the property or assets sold or (B) is required to be paid as a
result of such sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Subsidiary as a reserve against any
liabilities associated with such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as
determined in conformity with GAAP and (b) with respect to any issuance
or sale of Capital Stock, the proceeds of such issuance or sale in the
form of cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the
form of cash or cash equivalents (except to the extent such obligations
are financed or sold with recourse to the Company or any Restricted
Subsidiary) and proceeds from the conversion of other property received
when converted to cash or cash equivalents, net of attorney's fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and
<PAGE> 20
EXHIBIT 4.17
brokerage, consultant and other fees incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"Non U.S. Person" means a person who is not a "U.S. person" (as
defined in Regulation S).
"Note Guarantee" means the unconditional guarantee of the Notes by
the Guarantor, as set forth in Article Ten.
"Note Register" has the meaning provided in Section 2.04.
"Notes" means any of the notes, as defined in the first paragraph
of the recitals hereof, that are authenticated and delivered under this
Indenture. For all purposes of this Indenture, the term "Notes" shall
include the Notes initially issued on the Closing Date, any Exchange
Notes to be issued and exchanged for any Notes pursuant to the
Registration Rights Agreement and this Indenture and any other Notes
issued after the Closing Date under this Indenture. For purposes of
this Indenture, all Notes shall vote together as one series of Notes
under this Indenture.
"Offer to Purchase" means an offer to purchase Notes by the Company
from the Holders commenced by mailing a notice to the Trustee and each
Holder stating: (i) the covenant pursuant to which the offer is being
made and that all Notes validly tendered will be accepted for payment on
a pro rata basis; (ii) the purchase price and the date of purchase
(which shall be a Business Day no earlier than 20 days nor later than 60
days from the date such notice is mailed) (the "Payment Date");
(iii) that any Note not tendered will continue to accrue interest
pursuant to its terms; (iv) that, unless the Company defaults in the
payment of the purchase price, any Note accepted for payment pursuant to
the Offer to Purchase shall cease to accrue interest on and after the
Payment Date; (v) that Holders electing to have a Note purchased
pursuant to the Offer to Purchase will be required to surrender the
Note, together with the form entitled "Option of the Holder to Elect
Purchase" on the reverse side of the Note completed, to the Paying Agent
at the address specified in the notice prior to the close of business on
the Business Day immediately preceding the Payment Date; (vi) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the
principal amount of Notes delivered for purchase and a statement that
such Holder is withdrawing his election to have such Notes purchased;
and (vii) that Holders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered; provided that each Note purchased and each new
Note issued shall be in a principal amount of $1,000 or integral
multiples thereof. On the Payment Date, the Company shall (i) accept
for payment on a pro rata basis Notes or portions thereof tendered
pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent
money sufficient to pay the purchase price of all Notes or portions
thereof so accepted; and (iii) deliver, or cause to be delivered, to the
Trustee all Notes or portions thereof so accepted together with an
Officers' Certificate specifying
<PAGE> 21
EXHIBIT 4.17
the Notes or portions thereof accepted for payment by the Company. The
Paying Agent shall promptly mail to the Holders of Notes so accepted
payment in an amount equal to the purchase price, and the Trustee shall
promptly authenticate and mail to such Holders a new Note equal in
principal amount to any unpurchased portion of the Note surrendered;
provided that each Note purchased and each new Note issued shall be in a
principal amount of $1,000 or integral multiples thereof. The Company
will publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the Paying
Agent for an Offer to Purchase. The Company will comply with Rule 14e-1
under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable, in
the event that the Company is required to repurchase Notes pursuant to
an Offer to Purchase.
"Officer" means with respect to the Company, the Chairman of the
Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer or any Assistant Treasurer, or the Secretary or any Assistant
Secretary.
"Officers' Certificate" means a certificate signed by two Officers.
Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in
TIA Section 314(e).
"Offshore Global Note" has the meaning provided in Section 2.01.
"Offshore Physical Note" has the meaning provided in Section 2.01.
"Opinion of Counsel" means a written opinion signed by legal
counsel who is reasonably acceptable to the Trustee. Such counsel may
be an employee of or counsel to the Company or the Trustee. Each such
Opinion of Counsel shall include the statements provided for in TIA
Section 314(e). Opinions of Counsel required to be delivered may have
qualifications customary for opinions of the type required.
"Paying Agent" has the meaning provided in Section 2.04, except
that, for the purposes of Article Eight, the Paying Agent shall not be
the Company or a Subsidiary of the Company or an Affiliate of any of
them. The term "Paying Agent" includes any additional Paying Agent.
"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary or be merged or consolidated
with or into or transfer or convey all or substantially all its assets
to, the Company or a Restricted Subsidiary; provided that such person's
primary business is related, ancillary or complementary to the
businesses of the Company and its Restricted Subsidiaries on the date of
such Investment; (ii) Temporary Cash Investments; (iii) payroll, travel
and similar advances to cover matters that
<PAGE> 22
EXHIBIT 4.17
are expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP; (iv) stock, obligations or securities received in
satisfaction of judgments or pursuant to any plan of reorganization or similar
arrangement or upon any bankruptcy or insolvency of any Person; (v) Investments
in Interest Rate Agreements, Currency Agreements or Commodity Agreements to the
extent permitted under Section 4.03; (vi) Investments received in connection
with Asset Sales meeting the requirements of clauses (i) and (ii) of Section
4.11, Investments received in connection with sales, transfers or other
dispositions of assets with a fair market value not in excess of $1.0 million
in any transaction or series of related transactions or Investments received in
connection with the sale of all of the Capital Stock or all or substantially
all of the property and assets of Universal for a consideration at least equal
to the fair market value of the assets sold or disposed of; (vii) Guarantees of
Indebtedness to the extent permitted under Section 4.03; (viii) obligations
received by the Company from the employees of the Company or its Restricted
Subsidiaries, to the extent the consideration therefor consists solely of the
Capital Stock of the Company and (ix) purchase of shares of Common Stock in
connection with the funding of the Company's directors deferred compensation
program in an aggregate principal amount not to exceed $5 million.
"Permitted Liens" means, with respect to the Company or any of its
Restricted Subsidiaries, (i) Liens for taxes, assessments, governmental
charges or claims not yet delinquent or that are being contested in good
faith by appropriate legal proceedings promptly instituted and
diligently conducted and for which a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall
have been made; (ii) statutory and common law Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or
other similar Liens arising in the ordinary course of business and with
respect to amounts not yet delinquent or being contested in good faith
by appropriate legal proceedings promptly instituted and diligently
conducted and for which a reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made;
(iii) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and
other types of social security; (iv) Liens incurred or deposits made to
secure the performance of tenders, bids, leases, statutory or regulatory
obligations, bankers' acceptances, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations
of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);
(v) easements, rights-of-way, municipal and zoning ordinances and
similar charges, encumbrances, title defects or other irregularities
that do not materially interfere with the ordinary course of business of
the Company or any of its Restricted Subsidiaries; (vi) Liens (including
extensions and renewals thereof) upon real or personal property acquired
after the Closing Date; provided that (a) such Lien is created solely
for the purpose of securing Indebtedness Incurred, in accordance with
Section 4.03, to finance the cost (including the cost of improvement or
construction) of the item of property or assets subject thereto and such
Lien is created prior to, at the time of or within six months after the
later of the acquisition, the completion of construction or the
commencement of full operation of such property, (b) the principal
amount of the Indebtedness secured by such Lien does not exceed 100% of
such cost and (c) any such Lien shall not extend to or cover any
property or assets other than such item of property or assets and any
improvements on such item; (vii) licenses, leases or subleases granted
<PAGE> 23
EXHIBIT 4.17
to others that do not materially interfere with the ordinary course of
business of the Company and its Restricted Subsidiaries, taken as a
whole; (viii) Liens encumbering property or assets under construction
arising from progress or partial payments by a customer of the Company
or its Restricted Subsidiaries relating to such property or assets;
(ix) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease; (x) Liens arising from filing
Uniform Commercial Code financing statements regarding leases;
(xi) Liens on property of, or on shares of Capital Stock or Indebtedness
of, any Person existing at the time such Person becomes, or becomes a
part of, the Company or any Restricted Subsidiary; provided that such
Liens do not extend to or cover any property or assets of the Company or
any Restricted Subsidiary other than the property or assets acquired;
(xii) Liens in favor of the Company or any Restricted Subsidiary;
(xiii) Liens arising from the rendering of a final judgment or order
against the Company or any Restricted Subsidiary that does not give rise
to an Event of Default; (xiv) Liens securing reimbursement obligations
with respect to letters of credit that encumber documents and other
property relating to such letters of credit and the products and
proceeds thereof; (xv) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (xvi) Liens encumbering
customary initial deposits and margin deposits, and other Liens that are
incurred in the ordinary course of business, in each case, securing
Indebtedness under Interest Rate Agreements, Currency Agreements and
Commodity Agreements and forward contracts, options, future contracts,
futures options or similar agreements or arrangements designed solely to
protect the Company or any of its Restricted Subsidiaries from
fluctuations in interest rates, currencies or the price of commodities;
(xvii) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into
by the Company or any of its Restricted Subsidiaries in the ordinary
course of business in accordance with the past practices of the Company
and its Restricted Subsidiaries prior to the Closing Date; and (xviii)
Liens on or sales of receivables.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency
or political subdivision thereof.
"Phase II" means an expansion of the Company's facilities in
Riverdale, Illinois to more fully utilize the available capacity of the
Company's existing hot mill, which expansion may involve the addition of
an electric arc furnace, a second caster, a second tunnel furnace and
related machinery and equipment.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of such Person's preferred or
preference equity, whether outstanding on the Closing Date or issued
thereafter, including, without limitation, all series and classes of
such preferred or preference stock.
<PAGE> 24
EXHIBIT 4.17
"principal" of a debt security, including the Notes, means the
principal amount due on the Stated Maturity as shown on such debt
security.
"Private Placement Legend" means the legend initially set forth on
the Notes in the form set forth in Section 2.02.
"Public Equity Offering" means an underwritten primary public
offering of Common Stock of the Company pursuant to an effective
registration statement under the Securities Act.
A "Public Market" shall be deemed to exist if (i) a Public Equity
Offering has been consummated and (ii) at least 15% of the total issued
and outstanding Common Stock of the Company has been distributed by
means of an effective registration statement under the Securities Act or
sales pursuant to Rule 144 under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Redemption Date", when used with respect to any Note to be
redeemed, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price", when used with respect to any Note to be
redeemed, means the price at which such Note is to be redeemed pursuant
to this Indenture.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of December 18, 1997 between the Company and Morgan
Stanley & Co. Incorporated, Salomon Brothers Inc, First Chicago Capital
Markets, Inc. and Nesbitt Burns Securities Inc.
"Registration Statement" means the Registration Statement as
defined and described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the June 1 or December 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
<PAGE> 25
EXHIBIT 4.17
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice chairman of the board of directors, the
chairman or any vice chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, any assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the
controller or any assistant controller or any other officer of the
Trustee customarily performing functions similar to those performed by
any of the above designated officers (including any officer within the
Indenture Trust Division (or any successor group) of the Trustee) and
also means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Payments" has the meaning provided in Section 4.04.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Revised Consolidated EBITDA" means, for any period, Adjusted
Consolidated Net Income for such period plus, to the extent such amount
was deducted in calculating such Adjusted Consolidated Net Income,
(i) Consolidated Interest Expense, (ii) income taxes (other than income
taxes (either positive or negative) attributable to extraordinary and
non-recurring gains or losses or sales of assets), (iii) depreciation
expense, (iv) amortization expense, (v) all other non-cash items
reducing Adjusted Consolidated Net Income (other than items that will
require cash payments and for which an accrual or reserve is, or is
required by GAAP to be, made) and (vi) expenses in connection with the
start-up of Phase II not to exceed $8.0 million in any fiscal quarter,
less all non-cash items increasing Adjusted Consolidated Net Income, all
as determined on a consolidated basis for the Company and its Restricted
Subsidiaries in conformity with GAAP; provided that, if any Restricted
Subsidiary is not a Wholly Owned Restricted Subsidiary, Revised
Consolidated EBITDA shall be reduced (to the extent not otherwise
reduced in accordance with GAAP) by an amount equal to (A) the amount of
the Adjusted Consolidated Net Income attributable to such Restricted
Subsidiary multiplied by (B) the percentage ownership interest in the
income of such Restricted Subsidiary not owned on the last day of such
period by the Company or any of its Restricted Subsidiaries.
"Revised Interest Coverage Ratio" means, on any Transaction Date,
the ratio of (i) the aggregate amount of Revised Consolidated EBITDA for
the then most recent fiscal quarter prior to such Transaction Date for
which reports have been filed with the Commission or the Trustee
pursuant to Section 4.18 (the "Single Quarter Period") to (ii) the
aggregate Consolidated Interest Expense during such Single Quarter
Period. In making the foregoing calculation, (A) pro forma effect shall
be given to any Indebtedness Incurred or repaid during the period (the
"Single Reference Period") commencing on the first day of the Single
Quarter Period and ending on the Transaction Date (other than
Indebtedness
<PAGE> 26
EXHIBIT 4.17
Incurred or repaid under a revolving credit or similar arrangement to
the extent of the commitment thereunder (or under any predecessor
revolving credit or similar arrangement) in effect on the last day of
such Single Quarter Period unless any portion of such Indebtedness is
projected, in the reasonable judgment of the senior management of the
Company, to remain outstanding for a period in excess of 12 months from
the date of the Incurrence thereof), in each case as if such
Indebtedness had been Incurred or repaid on the first day of such Single
Reference Period; (B) Consolidated Interest Expense attributable to
interest on any Indebtedness (whether existing or being Incurred)
computed on a pro forma basis and bearing a floating interest rate shall
be computed as if the rate in effect on the Transaction Date (taking
into account any Interest Rate Agreement applicable to such Indebtedness
if such Interest Rate Agreement has a remaining term in excess of 12
months or, if shorter, at least equal to the remaining term of such
Indebtedness) had been the applicable rate for the entire period;
(C) pro forma effect shall be given to Asset Dispositions and Asset
Acquisitions (including giving pro forma effect to the application of
proceeds of any Asset Disposition) that occur during such Single
Reference Period as if they had occurred and such proceeds had been
applied on the first day of such Single Reference Period; and (D) pro
forma effect shall be given to asset dispositions and asset acquisitions
(including giving pro forma effect to the application of proceeds of any
asset disposition) that have been made by any Person that has become a
Restricted Subsidiary or has been merged with or into the Company or any
Restricted Subsidiary during such Single Reference Period and that would
have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Restricted Subsidiary as if
such asset dispositions or asset acquisitions were Asset Dispositions or
Asset Acquisitions that occurred on the first day of such Single
Reference Period; provided that to the extent that clause (C) or (D) of
this sentence requires that pro forma effect be given to an Asset
Acquisition or Asset Disposition, such pro forma calculation shall be
based upon the then most recent fiscal quarter immediately preceding the
Transaction Date of the Person, or division or line of business of the
Person, that is acquired or disposed for which financial information is
available.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Ratings Service and its successors.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the following obligations of the
Company or any of its Restricted Subsidiaries, whether outstanding on
the Closing Date or thereafter incurred: (i) all Indebtedness of the
Company or any of its Restricted Subsidiaries under the Credit
Agreement, the Working Capital Facility or any Interest Rate Agreement
and (ii) all Indebtedness of the Company or any of its Restricted
Subsidiaries under any other credit agreement or similar agreement,
whether a term loan or revolving credit facility, with federally or
state chartered banks, federally or state chartered savings and loan
associations or other financial institutions that offer investment
banking services.
<PAGE> 27
EXHIBIT 4.17
"Shelf Registration Statement" has the meaning provided in the
Registration Rights Agreement.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary of the Company that, together with its
Subsidiaries, (i) for the most recent fiscal year of the Company,
accounted for more than 10% of the consolidated revenues of the Company
and its Restricted Subsidiaries or (ii) as of the end of such fiscal
year, was the owner of more than 10% of the consolidated assets of the
Company and its Restricted Subsidiaries, all as set forth on the most
recently available consolidated financial statements of the Company for
such fiscal year.
"Specified Date" means any Redemption Date, any Payment Date for an
Offer to Purchase pursuant to Section 4.11 or Section 4.12 or any date
on which the Notes are due and payable after an Event of Default.
"Stated Maturity" means, (i) with respect to any debt security, the
date specified in such debt security as the fixed date on which the
final installment of principal of such debt security is due and payable
and (ii) with respect to any scheduled installment of principal of or
interest on any debt security, the date specified in such debt security
as the fixed date on which such installment is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the
voting power of the outstanding Voting Stock is owned, directly or
indirectly, by such Person and one or more other Subsidiaries of such
Person.
"Temporary Cash Investment" means (a) (i) obligations of or
guaranteed by the U.S. government, its agencies or government-sponsored
enterprises; (ii) short-term commercial bank and corporate obligations
that have received the highest rating from two of the following rating
organizations: S&P, Moody's, Duff & Phelps Credit Rating Co., Fitch
Investor Service, Inc., IBCA Ltd. and Thomson Bankwatch, Inc.;
(iii) money market preferred stocks which, at the date of acquisition
are accorded ratings of at least A- or A3 by S&P or Moody's,
respectively; (iv) tax-exempt obligations that are accorded ratings at
the time of purchase of at least A- or A3 (or equivalent short-term
ratings) by S&P or Moody's, respectively; (v) master repurchase
agreements with foreign or domestic banks having a capital and surplus
of not less than $250,000,000 or primary dealers so long as such
agreements are collateralized with obligations of the U.S. government or
its agencies at a ratio of 102%, or with other collateral rated at least
AA or Aa2 by S&P or Moody's, respectively, at a ratio of 103% and, in
either case, marked-to-market weekly and held by a third-party agent;
(vi) guaranteed investment contracts and/or agreements of a bank,
insurance company or other institution whose unsecured, uninsured and
unguaranteed obligations (or claims-paying ability) have at the time of
purchase ratings of at least AAA or Aaa by S&P or Moody's, respectively;
(vii) time deposits with, and certificates of deposit and banker's
acceptances issued by, any bank having capital surplus and undivided
profits aggregating at least $50,000,000; and (viii) money
<PAGE> 28
EXHIBIT 4.17
market funds. In no event shall any of the Temporary Cash Investments
described in clauses (i) through (vii) above have a final maturity more
than one year from the date of purchase.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of
1939, as amended (15 U.S. Code Section Section 77aaa-77bbb), as in
effect on the date this Indenture was executed, except as provided in
Section 9.06.
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade
creditors created, assumed or Guaranteed by such Person or any of its
Subsidiaries arising in the ordinary course of business in connection
with the acquisition of goods or services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the
date such Indebtedness is to be Incurred and, with respect to any
Restricted Payment, the date such Restricted Payment is to be made.
"Trustee" means the party named as such in the first paragraph of
this Indenture until a successor replaces it in accordance with the
provisions of Article Seven of this Indenture and thereafter means such
successor.
"Universal" means Universal Tool & Stamping Company, Inc., an
Indiana corporation.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below; and
(ii) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Restricted Subsidiary (including any newly
acquired or newly formed Subsidiary of the Company) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock
of, or owns or holds any Lien on any property of, the Company or any
Restricted Subsidiary; provided that (A) any Guarantee by the Company or
any Restricted Subsidiary of any Indebtedness of the Subsidiary being so
designated shall be deemed an "Incurrence" of such Indebtedness and an
"Investment" by the Company or such Restricted Subsidiary (or both, if
applicable) at the time of such designation; (B) either (I) the
Subsidiary to be so designated has total assets of $1,000 or less or
(II) if such Subsidiary has assets greater than $1,000, such designation
would be permitted under Section 4.04 and (C) if applicable, the
Incurrence of Indebtedness and the Investment referred to in clause (A)
of this proviso would be permitted under Section 4.03 and Section 4.04.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that (i) no Default or Event of Default
shall have occurred and be continuing at the time of or after giving
effect to such designation and (ii) all Liens and Indebtedness of such
Unrestricted Subsidiary outstanding immediately after such designation
would, if Incurred at such time, have been permitted to be Incurred (and
shall be deemed to have been Incurred) for all purposes of this
Indenture. Any such designation by the Board of Directors shall be
evidenced to the Trustee by promptly filing with the Trustee a copy of
the Board Resolution giving effect to
<PAGE> 29
EXHIBIT 4.17
such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"U.S. Global Notes" has the meaning provided in Section 2.01.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality
of the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the
option of the issuer thereof at any time prior to the Stated Maturity of
the Notes, and shall also include a depository receipt issued by a bank
or trust company as custodian with respect to any such U.S. Government
Obligation or a specific payment of interest on or principal of any such
U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt; provided that (except as required by
law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government Obligation
or the specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
"U.S. Physical Notes" has the meaning provided in Section 2.01.
"United States Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended and as codified in Title 11 of the United States Code,
as amended from time to time hereafter, or any successor federal
bankruptcy law.
"Voting Stock" means with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election
of directors, managers or other voting members of the governing body of
such Person.
"Wabush" means Wabush Mines, an iron ore mining venture in Eastern
Canada, in which the Guarantor has an interest, indirectly through
Wabush Iron Co. Limited.
"Wabush Agreements" means the Wabush Mines Joint Venture Agreement
among Wabush Iron Co. Limited, et al., and the Royal Trust Company, as
trustee, and other agreements executed in connection therewith, all
dated as of January 1, 1967.
"Wholly Owned" means, with respect to any Subsidiary of any Person,
the ownership of all of the outstanding Capital Stock of such Subsidiary
(other than any director's qualifying shares or Investments by foreign
nationals
<PAGE> 30
EXHIBIT 4.17
mandated by applicable law) by such Person or one or more Wholly Owned
Subsidiaries of such Person.
"Working Capital Facility" means the working capital facility
pursuant to the Amended and Restated Credit Agreement dated as of
December 18, 1997 among the Company, certain of its Subsidiaries, Harris
Trust and Savings Bank and the First National Bank of Chicago, as
co-agents, and the lenders thereto, together with any agreements,
instruments and documents executed or delivered pursuant to or in
connection with such Credit Agreement, in each case as such Credit
Agreement or such agreements, instruments or documents may be amended
(including any amendment and restatement thereof), supplemented,
extended, renewed, replaced, refinanced or otherwise modified from time
to time.
"1994 Notes" means the Company's 12 1/2% Senior Secured Notes due
2002 and 13 1/2% Senior Secured Discount Notes due 2004, each issued
under an indenture, dated August 11, 1994.
"1994 Indentures" means the indentures, each dated August 11, 1994,
pursuant to which the 1994 Notes were issued.
SECTION 1.02. 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 or a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the indenture notes means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by a rule of
the Commission and not otherwise defined herein have the meanings
assigned to them therein.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
<PAGE> 31
EXHIBIT 4.17
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision;
(vii) all ratios and computations based on GAAP contained in this
Indenture shall be computed in accordance with the definition of GAAP
set forth in Section 1.01; and
(viii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
The Notes
SECTION 2.01. Form and Dating. The Notes and the Trustee's
certificate of authentication shall be substantially in the form annexed
hereto as Exhibit A. The Notes may have notations, legends or
endorsements required by law, stock exchange agreements to which the
Company is subject or usage. The Company shall approve the form of the
Notes and any notation, legend or endorsement on the Notes. Each Note
shall be dated the date of its authentication.
The terms and provisions contained in the form of the Notes annexed
hereto as Exhibit A shall constitute, and are hereby expressly made, a
part of this Indenture. To the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in
<PAGE> 32
EXHIBIT 4.17
registered form, substantially in the form set forth in Exhibit A
(the "U.S. Global Notes"), deposited with the Trustee, as custodian for
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, as custodian for the
Depositary or its nominee, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more
permanent global Notes in registered form substantially in the form set
forth in Exhibit A (the "Offshore Global Notes") deposited with the
Trustee, as custodian for the Depositary, duly executed by the Company
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Offshore Global Notes may from time to time be
increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Notes offered and sold in reliance on Regulation D under the
Securities Act shall be issued in the form of permanent certificated
Notes in registered form in substantially the form set forth in Exhibit
A (the "U.S. Physical Notes"). Notes issued pursuant to Section 2.07 in
exchange for interests in the Offshore Global Notes shall be in the form
of permanent certificated Notes in registered form substantially in the
form set forth in Exhibit A (the "Offshore Physical Notes").
The Offshore Physical Notes and U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes". The U.S.
Global Note and the Offshore Global Note are sometimes referred to
herein as the "Global Notes".
The definitive Notes shall be typed, printed, lithographed or
engraved or produced by any combination of these methods or may be
produced in any other manner permitted by the rules of any securities
exchange on which the Notes may be listed, all as determined by the
Officers executing such Notes, as evidenced by their execution of such
Notes.
SECTION 2.02. Restrictive Legends. Unless and until a Note is
exchanged for an Exchange Note in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement,
(i) each U.S. Global Note and each U.S. Physical Note shall bear the
legend, set forth below on the face thereof and (ii) each Offshore
Physical Note and each Offshore Global Note shall bear the legend set
forth below on the face thereof until at least the 41st day after the
Closing Date and receipt by the Company and the Trustee of a certificate
substantially in the form of Exhibit B hereto.
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 IN
<PAGE> 33
EXHIBIT 4.17
THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN
RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF TRANSFER
OF SUCH NOTE RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO ACME
METALS INCORPORATED OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN $100,000, AN OPINION OF
COUNSEL ACCEPTABLE TO ACME METALS INCORPORATED THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE.
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND ACME
METALS INCORPORATED 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 MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
<PAGE> 34
EXHIBIT 4.17
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
Each Global Note, whether or not an Exchange Note, shall also bear
the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.08 OF THE INDENTURE.
SECTION 2.03. Execution, Authentication and Denominations.
Subject to Article Four, the aggregate principal amount of Notes which
may be authenticated and delivered under this Indenture is unlimited.
The Notes shall be executed by two Officers of the Company, by facsimile
or manual signature, in the name and on behalf of the Company.
If an Officer whose signature is on a Note no longer holds that
office at the time the Trustee or authenticating agent authenticates the
Note, the Note shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall upon receipt of
a
<PAGE> 35
EXHIBIT 4.17
Company Order authenticate for original issue Notes in the aggregate principal
amount specified in such Company Order; provided that the Trustee shall
be entitled to receive an Officers' Certificate and an Opinion of Counsel of
the Company that it may reasonably request in connection with such
authentication of Notes. Such Company Order shall specify the amount of Notes
to be authenticated, the date on which the original issue of Notes is to be
authenticated and the aggregate principal amount of Notes then authorized and
in case of an issuance of Notes pursuant to Section 2.15, shall certify that
such issuance is in compliance with Article Four.
The Trustee may appoint an authenticating agent to authenticate
Notes. If the appointment of such authenticating agent is not at the
discretion and for the convenience of the Trustee, then such
authenticating agent shall be compensated by the Company. 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 authenticating agent. An authenticating
agent has the same rights as an Agent to deal with the Company or an
Affiliate of the Company.
The Notes shall be issuable only in registered form without coupons
and only in denominations of $1,000 in principal amount and any integral
multiple thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall
maintain an office or agency where Notes may be presented for
registration of transfer or for exchange (the "Registrar"), an office or
agency where Notes may be presented for payment (the "Paying Agent") and
an office or agency where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served, which shall be in
the Borough of Manhattan, The City of New York and, in the event the
Notes are listed on the Luxembourg Stock Exchange, in Luxembourg. The
Company shall cause the Registrar to keep a register of the Notes and of
their transfer and exchange (the "Note Register"). The Note Register
shall be in written form or any other form capable of being converted
into written form within a reasonable time. The Company may have one or
more co-Registrars and one or more additional Paying Agents.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company
shall give prompt written notice to the Trustee of the name and address
of any such Agent and any change in the address of such Agent. If the
Company fails to maintain a Registrar, Paying Agent and/or agent for
service of notices and demands, the Trustee shall act as such Registrar,
Paying Agent and/or agent for service of notices and demands. The
Company may remove any Agent upon written notice to such Agent and the
Trustee; provided that no such removal shall become effective until (i)
the acceptance of an appointment by a successor Agent to such Agent as
evidenced by an appropriate agency agreement entered into by the Company
and such successor Agent and delivered to the Trustee or (ii)
notification to the Trustee that the Trustee shall serve as such Agent
until the appointment of a successor Agent in accordance with clause (i)
of this
<PAGE> 36
EXHIBIT 4.17
proviso. The Company, any Subsidiary of the Company, or any Affiliate of
any of them may act as Paying Agent, Registrar or co-Registrar, and/or agent
for service of notice and demands.
The Company initially appoints the Trustee as Registrar, Paying
Agent, authenticating agent and agent for service of notice and demands.
If, at any time, the Trustee is not the Registrar, the Company shall
furnish, or cause to be furnished, to the Trustee at least seven
Business Days before each Interest Payment Date and at such other times
as the Trustee may reasonably request, the names and addresses of the
Holders as they appear in the Note Register. At the option of the
Company, payment of interest may be made by check mailed to the address
of the Holders as such address appears in the Note Register.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than
each due date of the principal, premium, if any, and interest on any
Notes, the Company shall deposit with the Paying Agent money in
immediately available funds sufficient to pay such principal, premium,
if any, and interest so becoming due. The Company shall require each
Paying Agent other than the Trustee to agree in writing that such Paying
Agent shall hold in trust for the benefit of the Holders or the Trustee
all money held by the Paying Agent for the payment of principal of,
premium, if any, and interest on the Notes (whether such money has been
paid to it by the Company or any other obligor on the Notes), and such
Paying Agent shall promptly notify the Trustee of any default by the
Company (or any other obligor on the Notes) in making any such payment.
The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and account for any funds disbursed, and the
Trustee may at any time during the continuance of any payment default,
upon written request to a Paying Agent, require such Paying Agent to pay
all money held by it to the Trustee and to account for any funds
disbursed. Upon doing so, the Paying Agent shall have no further
liability for the money so paid over to the Trustee. If the Company or
any Subsidiary of the Company or any Affiliate of any of them acts as
Paying Agent, it will, on or before each due date of any principal of,
premium, if any, or interest on the Notes, segregate and hold in a
separate trust fund for the benefit of the Holders a sum of money
sufficient to pay such principal, premium, if any, or interest so
becoming due until such sum of money shall be paid to such Holders or
otherwise disposed of as provided in this Indenture, and will promptly
notify the Trustee of its action or failure to act.
SECTION 2.06. Transfer and Exchange. The Notes are issuable only
in registered form. A Holder may transfer a Note by written application
to the Registrar stating the name of the proposed transferee and
otherwise complying with the terms of this Indenture. No such transfer
shall be effected until, and such transferee shall succeed to the rights
of a Holder only upon, final acceptance and registration of the transfer
by the Registrar in the Note Register. Prior to the registration of any
transfer by a Holder as provided herein, the Company, the Trustee, and
any agent of the Company shall treat the person in whose name the Note
is registered as the owner thereof for all purposes whether or not the
Note shall be overdue, and neither the Company, the Trustee, nor any
such agent shall be affected by notice to the contrary. Furthermore,
any Holder of a Global Note shall, by acceptance of such Global Note,
agree that transfers of beneficial interests in such Global Note
<PAGE> 37
EXHIBIT 4.17
may be effected only through a book entry system maintained by the
Holder of such Global Note (or its agent) and that ownership of a
beneficial interest in the Note shall be required to be reflected in a
book entry. When Notes are presented to the Registrar or a co-Registrar
with a request to register the transfer or to exchange them for an equal
principal amount of Notes of other authorized denominations (including
an exchange of Notes for Exchange Notes), the Registrar shall register
the transfer or make the exchange as requested if its requirements for
such transactions are met; provided that no exchanges of Notes for
Exchange Notes shall occur until a Registration Statement shall have
been declared effective by the Commission (confirmed in an Officers'
Certificate delivered to the Trustee) and that any Notes that are
exchanged for Exchange Notes shall be cancelled by the Trustee. To
permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Notes at the Registrar's
request. No service charge shall be made for any registration of
transfer or exchange or redemption of the Notes, 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 other similar governmental charge payable upon
exchanges pursuant to Section 2.11, 3.08 or 9.04).
The Registrar shall not be required (i) to issue, register the
transfer of or exchange any Note during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Notes selected for redemption under Section 3.03 and
ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Note so selected for redemption
in whole or in part, except the unredeemed portion of any Note being
redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Notes. (a) The
U.S. Global Notes and Offshore Global Notes initially shall (i) be
registered in the name of the Depositary for such Global Notes or the
nominee of such Depositary, (ii) be delivered to the Trustee as
custodian for such Depositary and (iii) bear legends as set forth in
Section 2.02.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depositary, or the Trustee as its
custodian, or under the 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 governing the
exercise of the rights of a holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers of
such Global Note in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners
in a Global Note may be transferred in accordance with the rules and
procedures of the Depositary and the provisions of
<PAGE> 38
EXHIBIT 4.17
Section 2.08. In addition, U.S. Physical Notes and Offshore Physical
Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the U.S. Global Notes or the Offshore
Global Notes, respectively, if (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for the U.S.
Global Notes or the Offshore Global Notes, as the case may be, and a
successor depositary is not appointed by the Company within 90 days of
such notice or (ii) an Event of Default has occurred and is continuing
and the Registrar has received a request to the foregoing effect from
the Depositary.
(c) Any beneficial interest in one of the Global Notes that is
transferred to a person who takes delivery in the form of an interest in
the other Global Note will, upon transfer, cease to be an interest in
such Global Note and become an interest in the other Global Note and,
accordingly, will thereafter be subject to all transfer restrictions, if
any, and other procedures applicable to beneficial interests in such
other Global Note for as long as it remains such an interest.
(d) In connection with any transfer of a portion of the beneficial
interests in a U.S. Global Note or Offshore Global Note to beneficial
owners pursuant to paragraph (b) of this Section, the Registrar shall
reflect on its books and records the date and a decrease in the
principal amount of the U.S. Global Notes or Offshore Global Notes in an
amount equal to the principal amount of the beneficial interest in such
Global Notes to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more U.S. Physical Notes
or Offshore Physical Notes, as the case may be, of like tenor and
amount.
(e) In connection with the transfer of the entire U.S. Global Note
or Offshore Global Note to beneficial owners pursuant to paragraph (b)
of this Section, the U.S. Global Note or Offshore Global Note, as the
case may be, shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the
Depositary in exchange for its beneficial interest in the U.S. Global
Note or Offshore Global Note, as the case may be, an equal aggregate
principal amount of U.S. Physical Notes or Offshore Physical Notes, as
the case may be, of authorized denominations.
(f) Any U.S. Physical Note delivered in exchange for an interest in
the U.S. Global Note pursuant to paragraph (b), (d) or (e) of this
Section shall, except as otherwise provided by paragraph (e) of Section
2.08, bear the legend regarding transfer restrictions applicable to the
U.S. Physical Note set forth in Section 2.02.
(g) Any Offshore Physical Note delivered in exchange for an
interest in the Offshore Global Note pursuant to paragraph (b), (d) or
(e) of this Section shall, except as otherwise provided by paragraph (e)
of Section 2.08, bear the legend regarding transfer restrictions
applicable to the Offshore Physical Note set forth in Section 2.02.
<PAGE> 39
EXHIBIT 4.17
(h) The registered holder of a Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that
may hold interests through Agent Members, to take any action which a
Holder is entitled to take under this Indenture or the Notes.
(i) Beneficial owners of interests in a U.S. Global Note may
receive U.S. Physical Notes (which shall bear the Private Placement
Legend if required by Section 2.02) in accordance with the procedures of
the Depositary. In connection with the execution, authentication and
delivery of such U.S. Physical Notes, the Registrar shall reflect on its
books and records a decrease in the principal amount of the relevant
U.S. Global Note equal to the principal amount of such U.S. Physical
Notes and the Company shall execute and the Trustee shall authenticate
and deliver one or more U.S. Physical Notes having an equal aggregate
principal amount.
SECTION 2.08. Special Transfer Provisions. Unless and until a
Note is exchanged for an Exchange Note in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement,
the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note to any Institutional Accredited Investor
which is not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note, whether
or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the time period referred to in Rule 144(k)
under the Securities Act as in effect with respect to such transfer or
(y) the proposed transferee has delivered to the Registrar (A) a
certificate substantially in the form of Exhibit C hereto and (B) if the
aggregate principal amount of the Notes being transferred is less than
$100,000 at the time of such transfer, an opinion of counsel acceptable
to the Company that such transfer is in compliance with the Securities
Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Note, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and
(y) instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S.
Global Note in an amount equal to the principal amount of the beneficial
interest in the U.S. Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or
more U.S. Physical Notes of like tenor and amount.
<PAGE> 40
EXHIBIT 4.17
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a U.S. Physical
Note, an interest in a U.S. Global Note or an interest in an Offshore
Global Note prior to the removal of the Private Placement Legend to a
QIB (excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) either (A) an
interest in a Offshore Global Note prior to the removal of the Private
Placement Legend or (B) U.S. Physical Notes, the Registrar shall
register the transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the form of Note
stating, or has otherwise advised the Company and the Registrar in
writing, that the sale has been made in compliance with the provisions
of Rule 144A to a transferee who has signed the certification provided
for on the form of Note stating, or has otherwise advised the Company
and the Registrar in writing, that it is purchasing the Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the meaning
of Rule 144A, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A or (y) an
interest in the U.S. Global Notes, the transfer of such interest may be
effected only through the book entry system maintained by the
Depositary.
(ii) If the proposed transferee is an Agent Member, and the Note to
be transferred consists of U.S. Physical Notes, upon receipt by the
Registrar of the documents referred to in clause (i) and instructions
given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the
date and an increase in the principal amount of the U.S. Global Notes in
an amount equal to the principal amount of the U.S. Physical Notes, to
be transferred, and the Trustee shall cancel the U.S. Physical Notes so
transferred.
(c) Transfers of Interests in the Offshore Global Note or Offshore
Physical Notes. The following provisions shall apply with respect to
any transfer of interests in the Offshore Global Notes or Offshore
Physical Notes:
(i) prior to the removal of the Private Placement Legend from a
Offshore Global Note or Offshore Physical Note pursuant to Section 2.02,
the Registrar shall refuse to register such transfer unless such
transfer complies with Section 2.08(b) or Section 2.08(d), as the case
may be; and
<PAGE> 41
EXHIBIT 4.17
(ii) after such removal, the Registrar shall register the transfer
of any such Note without requiring any additional certification.
(d) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Note to a
Non-U.S. Person:
(i) The Registrar shall register any proposed transfer to any
Non-U.S. Person if the Note to be transferred is a U.S. Physical Note or
an interest in the U.S. Global Note only upon receipt of a certificate
substantially in the form of Exhibit D from the proposed transferor.
(ii) (a) If the proposed Transferor is an Agent Member holding a
beneficial interest in a U.S. Global Note, upon receipt by the Registrar
of (x) the documents required by paragraph (i) and (y) instructions in
accordance with the Depositary's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and a decrease
in the principal amount of such U.S. Global Note in an amount equal to
the principal amount of the beneficial interest in the U.S. Global Note
to be transferred, and (b) if the proposed transferee is an Agent
Member, upon receipt by the Registrar of instructions given in
accordance with the Depositary's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Offshore Global Note in an
amount equal to the principal amount of the U.S. Physical Notes or the
U.S. Global Note, as the case may be, to be transferred, and the Trustee
shall cancel the Physical Note, if any, so transferred or decrease the
amount of the U.S. Global Note.
(e) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that
bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraphs (a)(i)(x) or (c)(ii) of this Section 2.08
exist or (ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect
that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the
Securities Act.
(f) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Note
only as provided in this Indenture. The Registrar shall not register a
transfer of any Note unless such transfer complies with the restrictions
on transfer of such Note set forth in this Indenture. In connection with
any transfer of Notes, each Holder agrees by its acceptance of the Notes
<PAGE> 42
EXHIBIT 4.17
to furnish the Registrar or the Company such certifications, legal
opinions or other information as either of them may reasonably require
to confirm that such transfer is being made pursuant to an exemption
from, or a transaction not subject to, the registration requirements of
the Securities Act; provided that the Registrar shall not be required to
determine (but may conclusively rely on a determination made by the
Company with respect to) the sufficiency of any such certifications,
legal opinions or other information.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.07 or this Section
2.08. The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable
time upon the giving of reasonable written notice to the Registrar.
Notwithstanding anything herein to the contrary, as to any
certifications and certificates delivered to the Registrar pursuant to
this Section 2.08, the Registrar's duties shall be limited to confirming
that any such certifications and certificates delivered to it are in the
form of Exhibits B, C and D attached hereto. The Registrar shall not be
responsible for confirming the truth or accuracy of representations made
in any such certifications or certificates.
SECTION 2.09. Replacement Notes. If a mutilated Note is
surrendered to the Trustee or if the Holder claims that the Note has
been lost, destroyed or wrongfully taken, then, in the absence of notice
to the Company or the Trustee that such Note has been acquired by a bona
fide purchaser, the Company shall issue and the Trustee shall
authenticate a replacement Note of like tenor and principal amount;
provided that the requirements of this Section 2.09 are met. If
required by the Trustee or the Company, an indemnity bond must be
furnished that is sufficient in the judgment of both the Trustee and the
Company to protect the Company, the Trustee or any Agent from any loss
that any of them may suffer if a Note is replaced. The Company may
charge such Holder for the expenses of the Company and the Trustee in
replacing a Note. In case any such mutilated, lost, destroyed or
wrongfully taken Note has become or is about to become due and payable,
the Company in its discretion may pay such Note instead of issuing a new
Note in replacement thereof.
Every replacement Note is an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
The provisions of this Section 2.09 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies against
the Company and the Trustee with respect to the replacement or payment
of mutilated, destroyed, lost or wrongfully taken Notes.
SECTION 2.10. Outstanding Notes. Notes outstanding at any time
are all Notes that have been authenticated by the Trustee except for
those cancelled by it, those delivered to it for cancellation and those
described in this Section 2.10 as not outstanding.
<PAGE> 43
EXHIBIT 4.17
If a Note is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
satisfactory to each of them that the replaced Note is held by a bona
fide purchaser.
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds on a Redemption Date or the Stated Maturity of the Notes
money sufficient to pay Notes payable on that date, then on and after
that date such Notes cease to be outstanding and interest on them shall
cease to accrue.
Notes, or portions thereof, for the payment or redemption of which
moneys or U.S. Government Obligations (as provided for in Article Eight)
in the necessary amount shall have been deposited in trust with the
Trustee or with any Paying Agent (other than the Company) or shall have
been set aside, segregated and held in trust by the Company for the
Holders of such Notes (if the Company shall act as its own Paying
Agent), on and after that time shall cease to be outstanding and, in the
case of redemption, interest on such Notes shall cease to accrue,
provided that if such Notes, or portions thereof, are to be redeemed
prior to the maturity thereof, notice of such redemption shall have been
given as herein provided, or provision satisfactory to the Trustee shall
have been made for giving such notice.
A Note does not cease to be outstanding because the Company or one
of its Affiliates holds such Note; provided, however, that, in
determining whether the Holders of the requisite principal amount of the
outstanding Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Notes owned by the
Company or any other obligor upon the Notes or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to
be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which the Trustee has
actual knowledge to be so owned shall be so disregarded. Notes so owned
which have been pledged in good faith may be regarded as outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not
the Company or any other obligor upon the Notes or any Affiliate of the
Company or of such other obligor.
SECTION 2.11. Temporary Notes. Until definitive Notes are ready
for delivery, the Company may prepare and execute and the Trustee shall
authenticate temporary Notes. Temporary Notes shall be substantially in
the form of definitive Notes but may have insertions, substitutions,
omissions and other variations determined to be appropriate by the
Officers executing the temporary Notes, as evidenced by their execution
of such temporary Notes. If temporary Notes are issued, the Company
will cause definitive Notes to be prepared without unreasonable delay.
After the preparation of definitive Notes, the temporary Notes shall be
exchangeable for definitive Notes upon surrender of the temporary Notes
at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder. Upon surrender
for cancellation of any one or more
<PAGE> 44
EXHIBIT 4.17
temporary Notes, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.12. Cancellation. The Company at any time may deliver,
or cause to be delivered, Notes to the Trustee for cancellation. The
Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for transfer, exchange or payment. The Trustee (and
no one else) shall cancel all Notes surrendered for transfer, exchange,
payment, replacement or cancellation and shall destroy them in
accordance with its normal procedure.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may
use "CUSIP," "CINS" and "ISIN" numbers (if then generally in use), and
the Trustee shall use CUSIP, CINS or ISIN numbers, as the case may be,
in notices of redemption or exchange as a convenience to Holders;
provided that any such notice shall state that no representation is made
as to the correctness of such CUSIP, CINS or ISIN numbers either as
printed on the Notes or as contained in any notice of redemption or
exchange and that reliance may be placed only on the other
identification numbers printed on the Notes; and provided further that
failure to use CUSIP, CINS or ISIN numbers in any notice of redemption
or exchange shall not affect the validity or sufficiency of such notice.
The Company shall promptly notify the Trustee of any change in CUSIP
numbers.
SECTION 2.14. Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay, or shall deposit with
the Paying Agent, money in immediately available funds sufficient to pay
the defaulted interest, plus (to the extent lawful) any interest payable
on the defaulted interest, to the Persons who are Holders on a
subsequent special record date. A special record date, as used in this
Section 2.14 with respect to the payment of any defaulted interest,
shall mean the 15th day next preceding the date fixed by the Company for
the payment of defaulted interest, whether or not such day is a Business
Day. At least 15 days before the subsequent special record date, the
Company shall mail to each Holder and to the Trustee a notice that
states the subsequent special record date, the payment date and the
amount of defaulted interest to be paid.
SECTION 2.15. Issuance of Additional Notes. The Company may,
subject to Article Four of this Indenture, issue additional Notes under
this Indenture. The Notes issued on the Closing Date and any additional
Notes subsequently issued shall be treated as a single class for all
purposes under this Indenture.
ARTICLE THREE
Redemption
<PAGE> 45
EXHIBIT 4.17
SECTION 3.01. Right of Redemption. (a) The Notes may be redeemed
at the election of the Company, in whole or in part, at any time and
from time to time on or after December 15, 2002 and prior to maturity,
upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail (pursuant to the requirements of Section 11.02) to each
Holder's last address as it appears in the Note Register, at the
Redemption Prices (expressed in percentages of principal amount) set
forth below, plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular
Record Date that is prior to the Redemption Date to receive interest
due, if any, on an Interest Payment Date) if redeemed during the
12-month period commencing on December 15 of the years set forth below:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2002 ................. 105.438%
2003 ................. 102.719%
2004 and thereafter .. 100.000%
</TABLE>
(b) In addition, at any time prior to December 15, 2000, the
Company may redeem up to 35% of the principal amount of the Notes with
the proceeds of one or more Public Equity Offerings at any time as a
whole or from time to time in part, at a Redemption Price (expressed as
a percentage of principal amount) of 110.0%; provided that after any
such redemption at least $125,000,000 aggregate principal amount of the
Notes remains outstanding.
SECTION 3.02. Notices to Trustee. If the Company elects to redeem
Notes pursuant to Section 3.01(a) or (b), it shall notify the Trustee in
writing of the Redemption Date, the principal amount at Stated Maturity
of Notes to be redeemed and the clause of this Indenture pursuant to
which the redemption shall occur.
The Company shall give each notice provided for in this Section
3.02 in an Officers' Certificate at least 45 days before the Redemption
Date (unless a shorter period shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Notes to Be Redeemed. If less than all
of the Notes are to be redeemed at any time, the Trustee will select the
Notes, or portions thereof, for redemption 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 listed on a national
securities exchange, on a pro rata basis, by lot or by such other method
as the Trustee in its sole discretion shall deem to be fair and
appropriate; provided that no Note of $1,000 in principal amount or less
shall be redeemed in part. If any Note is to be redeemed in part only,
the notice of redemption relating to such Note shall state the portion
of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note.
The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption. Notes in denominations of $1,000
in principal amount at
<PAGE> 46
EXHIBIT 4.17
Stated Maturity may only be redeemed in whole. The Trustee may select
for redemption portions (equal to $1,000 in principal amount at Stated
Maturity or any integral multiple thereof) of Notes that have
denominations larger than $1,000 in principal amount at Stated Maturity.
Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption. The Trustee
shall notify the Company and the Registrar promptly in writing of the
Notes or portions of Notes to be called for redemption.
SECTION 3.04. Notice of Redemption. With respect to any
redemption of Notes pursuant to Section 3.01, at least 30 days but not
more than 60 days before a Redemption Date the Company shall mail or
cause to be mailed, a notice of redemption by first class mail (pursuant
to the requirements of Section 11.02) to each Holder whose Notes are to
be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date and the only remaining right of the Holders is
to receive payment of the Redemption Price plus accrued and unpaid
interest to the Redemption Date upon surrender of the Notes to the
Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion of
the principal amount (equal to $1,000 in principal amount at Stated
Maturity or any integral multiple thereof) of such Note to be redeemed
and that, on and after the Redemption Date, upon surrender of such Note,
a new Note or Notes in principal amount equal to the unredeemed portion
thereof will be reissued;
(vii) that, if any Note contains a CUSIP, CINS, or ISIN number as
provided in Section 2.13, no representation is being made as to the
correctness of the CUSIP, CINS, or ISIN number either as printed on the
Notes or as contained in the notice of redemption and that reliance may
be placed only on the other identification numbers printed on the Notes;
and
(viii) the aggregate principal amount at Stated Maturity of Notes
being redeemed.
<PAGE> 47
EXHIBIT 4.17
At the Company's request (which request may be revoked by the
Company at any time prior to the time at which the Trustee shall have
given such notice to the Holders), made in writing to the Trustee, at
least 45 days (or such shorter period as shall be satisfactory to the
Trustee) before a Redemption Date, the Trustee shall give the notice of
redemption in the name and at the expense of the Company. If, however,
the Company gives such notice to the Holders, the Company shall
concurrently deliver to the Trustee an Officers' Certificate stating
that such notice has been given.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes called for redemption become due and payable
on the Redemption Date and at the Redemption Price. Upon surrender of
any Notes to the Paying Agent, such Notes shall be paid at the
Redemption Price, plus accrued and unpaid interest to the Redemption
Date.
Notice of redemption shall be deemed to be given when mailed,
whether or not the Holder receives the notice. In any event, failure to
give such notice, or any defect therein, shall not affect the validity
of the proceedings for the redemption of Notes held by Holders to whom
such notice was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior to 10:00
a.m. New York City time on any Redemption Date, the Company shall
deposit with the Paying Agent (or, if the Company is acting as its own
Paying Agent, shall segregate and hold in trust as provided in Section
2.05) money in immediately available funds sufficient to pay the
Redemption Price of and accrued and unpaid interest on all Notes to be
redeemed on that date other than Notes or portions thereof called for
redemption on that date that have been delivered by the Company to the
Trustee for cancellation.
SECTION 3.07. Payment of Notes Called for Redemption. If notice
of redemption has been given in the manner provided above, the Notes or
portion of Notes specified in such notice to be redeemed shall become
due and payable on the Redemption Date at the Redemption Price stated
therein, together with accrued and unpaid interest to such Redemption
Date, and on and after such date (unless the Company shall default in
the payment of such Notes at the Redemption Price and accrued and unpaid
interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate
prescribed in the Notes), such Notes shall cease to accrue interest.
Upon surrender of any Note for redemption in accordance with a notice of
redemption, such Note shall be paid and redeemed by the Company at the
Redemption Price, together with accrued and unpaid interest to the
Redemption Date; provided that installments of interest whose record
date is prior to the Redemption Date shall be payable to the Holders
registered as such at the close of business such record date, if any.
SECTION 3.08. Notes Redeemed in Part. Upon surrender of any Note
that is redeemed in part, the Company shall at its expense issue and the
Trustee shall authenticate for the Holder a new Note equal in principal
amount to the unredeemed portion of such surrendered Note.
<PAGE> 48
EXHIBIT 4.17
ARTICLE FOUR
Covenants
SECTION 4.01. Payment of Notes. The Company shall pay the
principal of, premium, if any, and interest on the Notes on the dates
and in the manner provided in the Notes and this Indenture. An
installment of principal, premium, if any, or interest shall be
considered paid on the date due if the Trustee or Paying Agent (other
than the Company, a Subsidiary of the Company, or any Affiliate of any
of them) holds as of 10:00 A.M. New York City time on the due date money
deposited by the Company in immediately available funds and designated
for and sufficient to pay the installment. If the Company or any
Subsidiary of the Company or any Affiliate of any of them, acts as
Paying Agent, an installment of principal, premium, if any, or interest
shall be considered paid on the due date if the entity acting as Paying
Agent complies with the last sentence of Section 2.05. As provided in
Section 6.09, upon any bankruptcy or reorganization procedure relative
to the Company, the Trustee shall serve as the Paying Agent and
conversion agent, if any, for the Notes.
The Company shall pay interest on overdue principal, premium, if
any, and interest on overdue installments of interest, to the extent
lawful, at the rate per annum specified in the Notes.
SECTION 4.02. Maintenance of Office or Agency. The Company will
maintain an office or agency where Notes may be surrendered for
registration of transfer or exchange or for presentation for payment and
where notices and demands to or upon the Company in respect of the Notes
and this Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee
set forth in Section 11.02.
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. 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 initially designates the Corporate Trust Office
of the Trustee's affiliate as such office of the Company in accordance
with Section 2.04.
SECTION 4.03. Limitation on Indebtedness. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries to, Incur
any Indebtedness (other than the Notes and Indebtedness existing on the
Closing Date); provided that the Company and any of its Restricted
Subsidiaries may Incur Indebtedness if, after giving effect to the
Incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Interest Coverage Ratio would be greater than
2:1.
<PAGE> 49
EXHIBIT 4.17
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the
following:
(i) Indebtedness of the Company or any of its Restricted
Subsidiaries outstanding at any time in an aggregate principal amount
not to exceed $175 million Incurred under the Credit Agreement less any
amount of such Indebtedness permanently repaid as provided under Section
4.11;
(ii) Indebtedness owed (A) by a Restricted Subsidiary to the
Company evidenced by an unsubordinated promissory note or (B) by the
Company or a Restricted Subsidiary to any Restricted Subsidiary;
provided that any event that results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any subsequent transfer of such
Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute an Incurrence
of such Indebtedness not permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding Indebtedness
(other than Indebtedness Incurred under clause (i), (ii), (iv), (vi),
(vii), (viii), (xi) or (xii) of this Section 4.03(a)) and any
refinancings thereof in an amount not to exceed the amount so refinanced
or refunded (plus premiums, accrued interest, fees and expenses);
provided that Indebtedness the proceeds of which are used to refinance
or refund the Notes or Indebtedness that is pari passu with, or
subordinated in right of payment to, the Notes shall only be permitted
under this clause (iii) if (A) in case the Notes are refinanced in part
or the Indebtedness to be refinanced is pari passu with the Notes, such
new Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is outstanding, is
expressly made pari passu with, or subordinate in right of payment to,
the remaining Notes, (B) in case the Indebtedness to be refinanced is
subordinated in right of payment to the Notes, such new Indebtedness, by
its terms or by the terms of any agreement or instrument pursuant to
which such new Indebtedness is issued or remains outstanding, is
expressly made subordinate in right of payment to the Notes at least to
the extent that the Indebtedness to be refinanced is subordinated to the
Notes and (C) such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to the Stated
Maturity of the Indebtedness to be refinanced or refunded, and the
Average Life of such new Indebtedness is at least equal to the remaining
Average Life of the Indebtedness to be refinanced or refunded; and
provided further that in no event may Indebtedness of the Company be
refinanced by means of any Indebtedness of any Restricted Subsidiary
pursuant to this clause (iii);
(iv) Indebtedness (A) in respect of performance, surety or appeal
bonds provided in the ordinary course of business, (B) under Currency
Agreements, Interest Rate Agreements and Commodity Agreements; provided
that such agreements (a) are designed solely to protect the Company or
its Restricted Subsidiaries against fluctuations in foreign currency
exchange rates, interest rates or commodity prices and (b) do not
<PAGE> 50
EXHIBIT 4.17
increase the Indebtedness of the obligor outstanding at any time other than as
a result of fluctuations in foreign currency exchange rates, interest rates or
commodity prices or by reason of fees, indemnities and compensation payable
thereunder; and (C) arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from Guarantees or
letters of credit, surety bonds or performance bonds securing any obligations
of the Company or any of its Restricted Subsidiaries pursuant to such
agreements, in any case Incurred in connection with the disposition of any
business, assets or Restricted Subsidiary (other than Guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing such
acquisition), in a principal amount not to exceed the gross proceeds actually
received by the Company or any Restricted Subsidiary in connection with such
disposition;
(v) Indebtedness of the Company, to the extent the net proceeds thereof
are promptly (A) used to purchase Notes tendered in an Offer to Purchase made
as a result of a Change in Control or (B) deposited to defease the Notes as set
forth in Section 8.03;
(vi) Guarantees of the Notes and Guarantees of Indebtedness of the
Company or any of its Restricted Subsidiaries by the Company or any
Restricted Subsidiary, provided the Guarantee of such Indebtedness, in the case
of the Restricted Subsidiary, is permitted by and made in accordance with
Section 4.07;
(vii) Indebtedness of the Company and any of its Restricted Subsidiaries
(in addition to Indebtedness permitted under clauses (i) through (vi) above and
(viii) through (xii) below) in an aggregate principal amount outstanding at any
time not to exceed $50 million, less any amount of such Indebtedness
permanently repaid as provided under Section 4.11, provided that each time the
Company issues and sells its Capital Stock (other than Disqualified Stock) to
Persons that are not Subsidiaries of the Company, to the extent such sale of
Capital Stock has not been used (A) pursuant to clause (iii), (iv) or (vi) of
the second paragraph of Section 4.04 to make a Restricted Payment or (B)
pursuant to clause (ix)(B) of the second paragraph of this Section 4.03 to
incur Indebtedness, the Indebtedness that is available to the Company pursuant
to this clause (vii) at such time shall be increased by the Net Cash Proceeds
received by the Company from such sale but in no event shall such available
Indebtedness be increased to an amount greater than $50 million, less any
amount of such Indebtedness permanently repaid as provided under Section 4.11;
(viii) Indebtedness of the Company and any of its Restricted Subsidiaries
Incurred under the Working Capital Facility outstanding at any time in an
aggregate amount not to exceed the greater of (A) $80 million or (B) the
Borrowing Base;
(ix) Indebtedness of the Company and any of its Restricted Subsidiaries
Incurred to finance Phase II, in an aggregate amount not to exceed at any one
time outstanding the greater of (A) $100 million, provided the Revised Interest
Coverage Ratio is greater than 1.70:1 ($0 if the Revised Interest Coverage
Ratio is less than or
<PAGE> 51
EXHIBIT 4.17
equal to 1.70:1) or (B) an amount, up to $100 million, equal to the
aggregate Net Cash Proceeds received by the Company after the Closing
Date from the issuance and sale of its Capital Stock (other than
Disqualified Stock) to Persons that are not Subsidiaries of the Company,
to the extent such sale of Capital Stock has not been used pursuant to
clause (iii), (iv) or (vi) of the second paragraph of Section 4.04 to
make a Restricted Payment;
(x) Indebtedness of the Company and any of its Restricted
Subsidiaries Incurred to finance Capital Expenditures in an aggregate
amount not to exceed $50 million;
(xi) Capital Lease Obligations of the Company or Acme Packaging
Incurred to finance plastic strapping manufacturing equipment of Acme
Packaging in an aggregate amount not to exceed $ 5.3 million; and
(xii) deferred payment obligations of the Company or any of its
Restricted Subsidiaries in connection with the Company's or Acme Steel's
contracts with Raytheon Engineers & Constructors, Incorporated and SMS
Schloemann-Siemag AG in an aggregate amount not to exceed $7 million.
(b) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or a Restricted
Subsidiary may Incur pursuant to this Section 4.03 shall not be deemed
to be exceeded, with respect to any outstanding Indebtedness due solely
to the result of fluctuations in the exchange rates of currencies.
(c) For purposes of determining any particular amount of
Indebtedness under this Section 4.03, (1) Indebtedness Incurred under
the Credit Agreement on or prior to the Closing Date shall be treated as
Incurred pursuant to clause (i) of the second paragraph of Section
4.03(a), (2) Indebtedness Incurred under the Working Capital Facility up
to an aggregate amount of the greater of (A) $80 million or (B) the
Borrowing Base shall be treated as Incurred pursuant to clause (viii) of
the second paragraph of Section 4.03(a), (3) Guarantees, Liens or
obligations with respect to letters of credit supporting Indebtedness
otherwise included in the determination of such particular amount shall
not be included and (4) any Liens granted pursuant to the equal and
ratable provisions referred to in Section 4.09 shall not be treated as
Indebtedness. For purposes of determining compliance with Section 4.03,
in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described in the above clauses
(other than Indebtedness referred to in clauses (1) and (2) of the
preceding sentence), the Company, in its sole discretion, shall classify
such item of Indebtedness and only be required to include the amount and
type of such Indebtedness in one of such clauses. Notwithstanding
Section 4.03(a)(i), the Company or any of its Restricted Subsidiaries
may Incur Indebtedness under the Credit Agreement in an amount that
exceeds $175 million so long as such amount is allowed under clauses
(vii), (ix), or (x) of Section 4.03(a), or under the first paragraph of
Section 4.03(a).
<PAGE> 52
EXHIBIT 4.17
SECTION 4.04. Limitation on Restricted Payments. The Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or make any distribution on or with respect to
its Capital Stock (other than (x) dividends or distributions payable solely in
shares of its Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to acquire shares of such Capital Stock and (y) pro
rata dividends or distributions on Common Stock of Restricted Subsidiaries held
by minority stockholders) held by Persons other than the Company or any of its
Restricted Subsidiaries, (ii) purchase, redeem, retire or otherwise acquire for
value any shares of Capital Stock of (A) the Company or an Unrestricted
Subsidiary (including options, warrants or other rights to acquire such shares
of Capital Stock) held by any Person or (B) a Restricted Subsidiary (including
options, warrants or other rights to acquire such shares of Capital Stock) held
by any Affiliate of the Company (other than a Wholly Owned Restricted
Subsidiary) or any holder (or any Affiliate of such holder) of 5% or more of the
Capital Stock of the Company, (iii) make any voluntary or optional principal
payment, or voluntary or optional redemption, repurchase, defeasance, or other
acquisition or retirement for value, of Indebtedness of the Company that is
subordinated in right of payment to the Notes or (iv) make any Investment, other
than a Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being, collectively, "Restricted
Payments") if, at the time of, and after giving effect to, the proposed
Restricted Payment: (A) a Default or Event of Default shall have occurred and be
continuing, (B) the Company could not Incur at least $1.00 of Indebtedness under
the first paragraph of Section 4.03(a) or (C) the aggregate amount of all
Restricted Payments (the amount, if other than in cash, to be determined in good
faith by the Board of Directors, whose determination shall be conclusive and
evidenced by a Board Resolution) made after the Closing Date shall exceed the
sum of (1) 50% of the aggregate amount of the Adjusted Consolidated Net Income
(or, if the Adjusted Consolidated Net Income is a loss, minus 100% of the amount
of such loss) (determined by excluding income resulting from transfers of assets
by the Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued
on a cumulative basis during the period (taken as one accounting period)
beginning on the first day of the fiscal quarter immediately following the
Closing Date and ending on the last day of the last fiscal quarter preceding the
Transaction Date for which reports have been filed with the Commission or
provided to the Trustee pursuant to Section 4.18 plus (2) the aggregate Net Cash
Proceeds received by the Company after the Closing Date from the issuance and
sale permitted by this Indenture of its Capital Stock (other than Disqualified
Stock) to a Person who is not a Subsidiary of the Company, including an issuance
or sale permitted by this Indenture of Indebtedness of the Company for cash
subsequent to the Closing Date upon the conversion of such Indebtedness into
Capital Stock (other than Disqualified Stock) of the Company, or from the
issuance to a Person who is not a Subsidiary of the Company of any options,
warrants or other rights to acquire Capital Stock of the Company (in each case,
exclusive of any Disqualified Stock or any options, warrants or other rights
that are redeemable at the option of the holder, or are required to be redeemed,
prior to the Stated Maturity of the Notes) plus (3) an amount equal to the net
reduction in Investments (other than reductions in Permitted Investments) in any
Person resulting from payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other transfers of assets, in each case to
the Company or any Restricted Subsidiary or from the Net Cash Proceeds from the
sale of any such Investment (except, in each case, to the extent any such
payment or proceeds are included in the calculation of Adjusted Consolidated Net
Income), or
<PAGE> 53
EXHIBIT 4.17
from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investments"), not to
exceed, in each case, the amount of Investments previously made by the Company
or any Restricted Subsidiary in such Person or Unrestricted Subsidiary plus
(4) $10Emillion.
The foregoing provision shall not be violated by reason of:
(i) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would
comply with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of
payment to the Notes, including premium, if any, and accrued and unpaid
interest, with the proceeds of, or in exchange for, Indebtedness Incurred
under clause (iii) of the second paragraph of Section 4.03(a);
(iii) the repurchase, redemption or other acquisition of Capital Stock
of the Company or an Unrestricted Subsidiary (or options, warrants or other
rights to acquire such Capital Stock) in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of Capital
Stock (other than Disqualified Stock) of the Company (or options,
warrants or other rights to acquire such Capital Stock);
(iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company that is subordinated in right of payment to
the Notes in exchange for, or out of the proceeds of, a substantially
concurrent offering of, shares of the Capital Stock (other than
Disqualified Stock) of the Company (or options, warrants or other rights
to acquire such Capital Stock);
(v) payments or distributions to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with a consolidation, merger
or transfer of assets that complies with the provisions of this Indenture
applicable to mergers, consolidations and transfers of all or
substantially all of the property and assets of the Company;
(vi) Investments acquired in exchange for Capital Stock (other than
Disqualified Stock) of the Company;
(vii) the redemption, repurchase or defeasance of the 1994 Notes
outstanding after the Closing Date in accordance with the 1994 Indentures,
including accrued and unpaid interest, if any;
(viii) Investments in or payments to Wabush pursuant to the Company's
or its Restricted Subsidiaries' obligations under the Wabush Agreements;
<PAGE> 54
EXHIBIT 4.17
(ix) the purchase, redemption, retirement or other acquisition for
value of shares of Capital Stock of the Company, or options to purchase
such shares, held by directors, employees, or former directors or
employees of the Company or any Restricted Subsidiary (or their estates
or beneficiaries under their estates) upon their death, disability,
retirement, termination of employment or pursuant to the terms of any
agreement under which such shares of Capital Stock or options were issued;
provided that the aggregate consideration paid for such purchase,
redemption, retirement or other acquisition for value of such shares of
Capital Stock or options after the Closing Date does not exceed $5 million
in the aggregate; or
(x) Investments in a joint venture or joint ventures that is or are
similar or related to the nature or type of the business of the Company
and its Restricted Subsidiaries existing on the date of such
investment with any Person or Persons by the Company or any of its
Restricted Subsidiaries in an aggregate amount not to exceed $15 million;
provided that, except in the case of clauses (i) and (iii), no Default or
Event of Default shall have occurred and be continuing or occur as a
consequence of the actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding
paragraph (other than the Restricted Payment referred to in clause (ii) thereof,
an exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any issuance of Capital Stock referred
to in clauses (iii) and (iv), shall be included in calculating whether the
conditions of clause (C) of the first paragraph of this Section 4.04 have been
met with respect to any subsequent Restricted Payments. In the event the
proceeds of an issuance of Capital Stock of the Company are used for the
redemption, repurchase or other acquisition of the Notes, or Indebtedness that
is pari passu with the Notes, then the Net Cash Proceeds of such issuance shall
be included in clause (C) of the first paragraph of this Section 4.04 only to
the extent such proceeds are not used for such redemption, repurchase or other
acquisition of Indebtedness.
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Company will not, and will not permit
any Restricted Subsidiary to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (i) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of such
Restricted Subsidiary owned by the Company or any other Restricted Subsidiary,
(ii) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary, (iii) make loans or advances to the Company or any other Restricted
Subsidiary or (iv) transfer any of its property or assets to the Company or any
other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(i) existing on the Closing Date in the Credit Agreement, this
Indenture, the Working Capital Facility or any other agreements in effect
on the Closing Date, and any extensions, refinancings, renewals or
replacements of such agreements; provided that the
<PAGE> 55
EXHIBIT 4.17
encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect to
the Holders than those encumbrances or restrictions that are then in effect
and that are being extended, refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or assets of
such Person acquired by the Company or any Restricted Subsidiary, existing
at the time of such acquisition and not incurred in contemplation thereof,
which encumbrances or restrictions are not applicable to any Person or the
property or assets of any Person other than such Person or the property or
assets of such Person so acquired;
(iv) in the case of clause (iv) of the first paragraph of this
Section 4.05, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (B) existing by
virtue of any transfer of, agreement to transfer, option or right with
respect to, or Lien on, any property or assets of the Company or any
Restricted Subsidiary not otherwise prohibited by this Indenture or (C)
arising or agreed to in the ordinary course of business, not relating to
any Indebtedness, and that do not, individually or in the aggregate,
detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material to the Company or any
Restricted Subsidiary;
(v) with respect to a Restricted Subsidiary and imposed pursuant
to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock of, or property and
assets of, such Restricted Subsidiary; or
(vi) contained in the terms of any Indebtedness or any agreement
pursuant to which such Indebtedness was issued if (A) the encumbrance or
restriction applies only in the event of a payment default or a default
with respect to a financial covenant contained in such Indebtedness or
agreement, (B) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Notes than is customary in comparable
financings (as determined by the Company) and (C) the Company determines
that any such encumbrance or restriction will not materially affect the
Company's ability to make principal or interest payments on the Notes.
Nothing contained in this Section 4.05 shall prevent the Company or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering
to exist any Liens otherwise permitted in Section 4.09 or (2) restricting
the sale or other disposition of property or assets of the Company or any
of its Restricted Subsidiaries that secure Indebtedness of the Company or
any of its Restricted Subsidiaries.
SECTION 4.06. Limitation on the Issuance and Sale of Capital
Stock of Restricted Subsidiaries. The Company will not sell, and will not permit
any Restricted Subsidiary, directly or indirectly, to issue or sell, any shares
of Capital Stock of a Restricted
<PAGE> 56
EXHIBIT 4.17
Subsidiary (including options, warrants or other rights to purchase shares of
such Capital Stock) except (i) to the Company or a Wholly Owned Restricted
Subsidiary; (ii) issuances of director's qualifying shares or sales to foreign
nationals of shares of Capital Stock of foreign Restricted Subsidiaries, to the
extent required by applicable law; (iii) if, immediately after giving effect to
such issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such Person remaining after giving
effect to such issuance or sale would have been permitted to be made under
Section 4.04 if made on the date of such issuance or sale; or (iv) if,
immediately after giving effect to such issuance or sale, the Company and/or any
of its Restricted Subsidiaries would own at least 80% of shares of each class of
Capital Stock of such Restricted Subsidiary and the Net Cash Proceeds, if any,
of any such sale are applied in accordance with clause (A) or (B) of Section
4.11.
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries. The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness, other than the Notes or Senior
Indebtedness of the Company or any of its Restricted Subsidiaries permitted
under Section 4.03, that is pari passu with or subordinate in right of payment
to the Notes ("Guaranteed Indebtedness"), unless (i) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a Guarantee (a "Subsidiary Guarantee") of payment of the Notes by
such Restricted Subsidiary and (ii) such Restricted Subsidiary waives and will
not in any manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other rights against
the Company or any other Restricted Subsidiary as a result of any payment by
such Restricted Subsidiary under its Subsidiary Guarantee, until the Notes have
been indefeasibly paid in full; provided that this paragraph shall not be
applicable to any Guarantee of any Restricted Subsidiary (x) that existed at the
time such Person became a Restricted Subsidiary and was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary or (y) of the 1994 Notes outstanding on the Closing Date. If the
Guaranteed Indebtedness is (A) pari passu with the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be pari passu with, or subordinated to, the
Subsidiary Guarantee or (B) subordinated to the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be subordinated to the Subsidiary Guarantee
at least to the extent that the Guaranteed Indebtedness is subordinated to the
Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of the Company, of all of the Company's and each
Restricted Subsidiary's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by this Indenture) or (ii) the release or discharge of the Guarantee
that resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
SECTION 4.08. Limitation on Transactions with Shareholders and
Affiliates. The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale,
<PAGE> 57
EXHIBIT 4.17
lease or exchange of property or assets, or the rendering of any service) with
any holder (or any Affiliate of such holder) of 5% or more of any class of
Capital Stock of the Company or with any Affiliate of the Company or any
Restricted Subsidiary, except upon fair and reasonable terms no less favorable
to the Company or such Restricted Subsidiary than could be obtained at the time
of such transaction or, if such transaction is pursuant to a written agreement,
at the time of the execution of the agreement providing therefor, in a
comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(i) transactions (A) approved by a majority of the disinterested
members of the Board of Directors or (B) for which the Company or a
Restricted Subsidiary delivers to the Trustee a written opinion of a
nationally recognized investment banking firm stating that the transaction
is fair to the Company or such Restricted Subsidiary from a financial point
of view;
(ii) any transaction solely between the Company and any of its Wholly
Owned Restricted Subsidiaries or solely between Wholly Owned Restricted
Subsidiaries;
(iii) the payment of reasonable and customary regular fees to directors
of the Company who are not employees of the Company;
(iv) any payments or other transactions pursuant to any tax-sharing
agreement between the Company and any other Person with which the Company
files a consolidated tax return or with which the Company is part of a
consolidated group for tax purposes; or
(v) any Restricted Payments not prohibited by Section 4.04.
Notwithstanding the foregoing, any transaction or series of related transactions
covered by the first paragraph of this Section 4.08 and not covered by clauses
(ii) through (v) of this paragraph, (a) the aggregate amount of which exceeds $2
million in value, must be approved or determined to be fair in the manner
provided for in clause (i)(A) or (B) above and (b) the aggregate amount of which
exceeds $10 million in value, must be determined to be fair in the manner
provided for in clause (i)(B) above.
SECTION 4.09. Limitation on Liens. The Company will not, and will not
permit any Restricted Subsidiary to, create, incur, assume or suffer to exist
any Lien on any of its assets or properties of any character, or any shares of
Capital Stock or Indebtedness of any Restricted Subsidiary, without making
effective provision for all of the Notes and all other amounts due under this
Indenture to be directly secured equally and ratably with (or, if the obligation
or liability to be secured by such Lien is subordinated in right of payment to
the Notes, prior to) the obligation or liability secured by such Lien.
The foregoing limitation does not apply to:
<PAGE> 58
EXHIBIT 4.17
(i) Liens existing on the Closing Date;
(ii) Liens securing obligations under the Credit Agreement, the
Working Capital Facility and other Senior Indebtedness of the Company or
any of its Restricted Subsidiaries permitted under Section 4.03;
(iii) Liens securing obligations under any industrial revenue bonds or
purchase money liens;
(iv) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of the
Holders;
(v) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or such
other Restricted Subsidiary;
(vi) Liens securing Indebtedness that is Incurred to refinance
secured Indebtedness that is permitted to be Incurred under clause
(iii) of the second paragraph of Section 4.03(a); provided that such Liens
do not extend to or cover any property or assets of the Company or any
Restricted Subsidiary other than the property or assets securing the
Indebtedness being refinanced;
(vii) Liens on any property or assets of a Restricted Subsidiary
securing Indebtedness of such Restricted Subsidiary permitted under Section
4.03;
(viii) Permitted Liens; or
(ix) Liens on plastic strapping manufacturing equipment of Acme
Packaging securing Indebtedness Incurred under clause (xi) of the second
paragraph of Section 4.03.
SECTION 4.10. Limitation on Sale-Leaseback Transactions. The Company
will not, and will not permit any Restricted Subsidiary to, enter into any
sale-leaseback transaction involving any of its assets or properties now owned,
whereby the Company or a Restricted Subsidiary sells or transfers such assets or
properties and then or thereafter leases such assets or properties or any part
thereof or any other assets or properties that the Company or such Restricted
Subsidiary, as the case may be, intends to use for substantially the same
purpose or purposes as the assets or properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback
transaction if:
(i) the lease is for a period, including renewal rights, of not in
excess of three years;
(ii) the lease secures or relates to industrial revenue or pollution
control bonds;
<PAGE> 59
EXHIBIT 4.17
(iii) the transaction is solely between the Company and any Wholly
Owned Restricted Subsidiary or solely between Wholly Owned Restricted
Subsidiaries; or
(iv) the Company or such Restricted Subsidiary, within 12 months after
the sale or transfer of any assets or properties is completed, applies an
amount not less than the net proceeds received from such sale in accordance
with clause (A) or (B) of the first paragraph of Section 4.11.
SECTION 4.11. Limitation on Asset Sales. The Company will not, and will
not permit any Restricted Subsidiary to, consummate any Asset Sale (other than
the sale of all of the Capital Stock or all or substantially all of the
property and assets of Universal for a consideration at least equal to the fair
market value of the assets sold or disposed of), unless (i) the consideration
received by the Company or such Restricted Subsidiary is at least equal to the
fair market value of the assets sold or disposed of and (ii) at least 75% of
the consideration received consists of cash or Temporary Cash Investments. In
the event and to the extent that the Net Cash Proceeds received by the Company
or any of its Restricted Subsidiaries from one or more Asset Sales (other than
the sale of all of the Capital Stock or all or substantially all of the
property and assets of Universal for a consideration at least equal to the fair
market value of the assets sold or disposed of), occurring on or after the
Closing Date in any period of 12 consecutive months, exceed $10 million or 10%
of Adjusted Consolidated Net Tangible Assets (determined as of the date closest
to the commencement of such 12-month period for which a consolidated balance
sheet of the Company and its Subsidiaries has been filed with the Commission or
provided to the Trustee pursuant to Section 4.18), then the Company shall or
shall cause the relevant Restricted Subsidiary to (i) within 12 months after
the date Net Cash Proceeds so received exceed such amount or 10% of Adjusted
Consolidated Net Tangible Assets (A) apply an amount equal to such excess Net
Cash Proceeds to permanently repay unsubordinated Indebtedness of the Company
or any Restricted Subsidiary in each case owing to a Person other than the
Company or any of its Restricted Subsidiaries or (B) invest an equal amount, or
the amount not so applied pursuant to clause (A) (or enter into a definitive
agreement committing to so invest within 12 months after the date of such
agreement), in property or assets (other than current assets) of a nature or
type or that are used in a business (or in a company having property and assets
of a nature or type, or engaged in a business) similar or related to the nature
or type of the property and assets of, or the business of, the Company and its
Restricted Subsidiaries existing on the date of such investment and (ii) apply
(no later than the end of the 12-month period referred to in clause (i)) such
excess Net Cash Proceeds (to the extent not applied pursuant to clause (i)) as
provided in the following paragraph of this Section 4.11. The amount of such
excess Net Cash Proceeds required to be applied (or to be committed to be
applied) during such 12-month period as set forth in clause (i) of the
preceding sentence and not applied as so required by the end of such period
shall constitute "Excess Proceeds".
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 4.11 totals at least $10 million, the Company must commence, not later
than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds on such date, at a purchase
<PAGE> 60
EXHIBIT 4.17
price equal to 100% of the principal amount of the Notes, plus, in each case,
accrued interest (if any) to the Payment Date.
SECTION 4.12. Repurchase of Notes upon a Change of Control.
The Company shall commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount thereof, plus accrued
interest (if any) to the Payment Date.
SECTION 4.13. [RESERVED].
SECTION 4.14. Existence. Subject to Articles Four and Five of this
Indenture, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and the existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of the Company and each such Restricted Subsidiary and
the rights (whether pursuant to charter, partnership certificate, agreement,
statute or otherwise), licenses and franchises of the Company and each such
Restricted Subsidiary; provided that the Company shall not be required to
preserve any such right, license or franchise, or the existence of any
Restricted Subsidiary, if the maintenance or preservation thereof is no longer
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries taken as a whole; and provided further that any Restricted
Subsidiary may consolidate with, merge into, or sell, convey, transfer, lease or
otherwise dispose of all or part of its property and assets to the Company or
any Wholly Owned Restricted Subsidiary.
SECTION 4.15. Payment of Taxes and Other Claims. The Company will pay
or discharge and shall cause each of its Subsidiaries to pay or discharge, or
cause to be paid or discharged, before the same shall become delinquent (i) all
material taxes, assessments and governmental charges levied or imposed upon
(a) the Company or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Company or any such
Subsidiary and (ii) all material lawful claims for labor, materials and supplies
that, if unpaid, might by law become a lien upon the property of the Company or
any such Subsidiary; provided that the Company shall not be required to pay or
discharge, or cause to be paid or discharged, any such tax, assessment, charge
or claim the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established.
SECTION 4.16. Maintenance of Properties and Insurance. The Company will
cause all properties used or useful in the conduct of its business or the
business of any Restricted Subsidiary and material to the Company and its
Restricted Subsidiaries taken as a whole, to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided that nothing in
this Section 4.16 shall prevent the Company or any such Restricted Subsidiary
from discontinuing the use, operation or maintenance of any of such properties
or disposing of any of them, if such discontinuance or disposal is, in the
judgment of
<PAGE> 61
EXHIBIT 4.17
the Board of Directors or the board of directors of such Restricted Subsidiary
having managerial responsibility for any such property, desirable in the conduct
of the business of the Company or such Restricted Subsidiary.
The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers or with the government of the United States of America, or an agency or
instrumentality thereof, in such amounts, with such deductibles and by such
methods as the Company in good faith shall determine to be reasonable and
appropriate in the circumstances.
SECTION 4.17. Compliance Certificates. (a) The Company shall deliver to
the Trustee, within 60 days after the end of each fiscal quarter (120 days after
the end of the last fiscal quarter of each year), an Officers' Certificate
stating whether or not the signers know of any Default or Event of Default that
occurred during such fiscal quarter. In the case of the Officers' Certificate
delivered within 120 days of the end of the Company's fiscal year, such
certificate shall comply with the applicable provisions of the TIA. If any of
the signers of the Officers' Certificate have knowledge of such a Default or
Event of Default, the certificate shall describe any such Default or Event of
Default and its status. The first certificate to be delivered pursuant to this
Section 4.17(a) shall be for the first fiscal quarter beginning after the
execution of this Indenture.
(b) The Company shall deliver to the Trustee, within 120 days after the
end of the Company's fiscal year, a certificate signed by the Company's
independent certified public accountants stating (i) that their audit
examination has included a review of the terms of this Indenture and the Notes
as they relate to accounting matters, (ii) that they have read the most recent
Officers' Certificate delivered to the Trustee pursuant to paragraph (a) of this
Section 4.17 and (iii) whether, in connection with their audit examination,
anything came to their attention that caused them to believe that the Company
was not in compliance with any of the terms, covenants, provisions or conditions
of Article Four and Section 5.01 of this Indenture as they pertain to accounting
matters and, if any Default or Event of Default has come to their attention,
specifying the nature and period of existence thereof; provided that such
independent certified public accountants shall not be liable in respect of such
statement by reason of any failure to obtain knowledge of any such Default or
Event of Default that would not be disclosed in the course of an audit
examination conducted in accordance with generally accepted auditing standards
in effect at the date of such examination.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.18. Commission Reports and Reports to Holders. The Company
shall file with the Commission the annual, quarterly and other reports and other
information
<PAGE> 62
EXHIBIT 4.17
required by Section 13(a) or 15(d) of the Exchange Act, regardless of whether
such Sections of the Exchange Act are applicable to the Company, and shall mail
or cause to be mailed copies of such reports to Holders and the Trustee within
15 days after the date it would have been required to file such reports with the
Commission had it been subject to such Sections; provided, however, that the
copies of such reports mailed to Holders may omit exhibits, which the Company
will supply to any Holder at such Holder's request. The Company also shall
comply with the other provisions of TIA Section 314(a).
SECTION 4.19. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of, premium, if any, or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
<PAGE> 63
EXHIBIT 4.17
ARTICLE FIVE
Successor Corporation
SECTION 5.01. When Company May Merge, Etc. The Company shall not
consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially an entirety in one transaction or a series of related
transactions) to, any Person or permit any Person to merge with or into the
Company unless:
(i) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of
the Company shall be a corporation organized and validly existing under
the laws of the United States of America or any jurisdiction thereof and
shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, all of the obligations of the Company on all of
the Notes and under this Indenture;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a pro
forma basis, the Company or any Person becoming the successor obligor of
the Notes shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such
transaction;
(iv) immediately after giving effect to such transaction on a pro
forma basis the Company, or any Person becoming the successor obligor
of the Notes, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.03(a); provided,
however, that this clause (iv) shall not apply to a consolidation or
merger with or into a Wholly Owned Restricted Subsidiary with a positive
net worth; provided that, in connection with any such merger or
consolidation, no consideration (other than Capital Stock (other than
Disqualified Stock) in the surviving Person or the Company) shall be
issued or distributed to the stockholders of the Company; and
(v) the Company delivers to the Trustee an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with
clauses (iii) and (iv)) and Opinion of Counsel, in each case stating that
such consolidation, merger or transfer and such supplemental indenture
complies with this provision and that all conditions precedent provided for
herein relating to such transaction have been complied with; provided,
however, that clauses (iii) and (iv) above do not apply if, in the good
faith determination of the Board of Directors of the Company, whose
determination shall be evidenced by a Board Resolution, the principal
purpose of such transaction is to change the state of incorporation of the
Company; and provided further that any such transaction shall not have as
one of its purposes the evasion of the foregoing limitations.
<PAGE> 64
EXIBIT 4.17
SECTION 5.02. Successor Substituted. Upon any consolidation or merger,
or any sale, conveyance, transfer or other disposition of all or substantially
all of the property and assets of the Company in accordance with Section 5.01 of
this Indenture, the successor Person formed by such consolidation or into which
the Company is merged or to which such sale, conveyance, transfer or other
disposition is made shall succeed to, and be substituted for, 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 in the case of a lease, the Company shall not be released from the
obligation to pay the principal of and interest on the Notes.
ARTICLE SIX
Default and Remedies
SECTION 6.01. Events of Default. An "Event of Default" shall occur with
respect to the Notes if:
(a) the Company defaults in the payment of principal of (or premium, if
any, on) any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise;
(b) the Company defaults in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period
of 30 days;
(c) the Company defaults in the performance or breach of the provisions
of Article Five or fails to make or consummate an Offer to Purchase in
accordance with Section 4.11 or Section 4.12;
(d) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in this Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) above) and such
default or breach continues for a period of 30 consecutive days after
written notice by the Trustee or the Holders of 25% or more in aggregate
principal amount of the Notes;
(e) there occurs with respect to any issue or issues of Indebtedness of
the Company or any Significant Subsidiary having an outstanding principal
amount of $10 million or more in the aggregate for all such issues of all
such Persons, whether such Indebtedness now exists or shall hereafter be
created, (I) an event of default that has caused the holder thereof to
declare such Indebtedness to be due and payable prior to its Stated
Maturity and such Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the
final (but not any interim) fixed
<PAGE> 65
EXHIBIT 4.17
maturity and such defaulted payment shall not have been made, waived or
extended within 30 days of such payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $10 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 60 consecutive days
following entry of the final judgment or order that causes the aggregate
amount for all such final judgments or orders outstanding and not paid or
discharged against all such Persons to exceed $10 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant
Subsidiary in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (B) appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding-up or liquidation of the affairs
of the Company or any Significant Subsidiary and, in each case, such decree
or order shall remain unstayed and in effect for a period of 30 consecutive
days; or
(h) the Company or any Significant Subsidiary (A) commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consents to the entry of an order for relief in
an involuntary case under any such law, (B) consents to the appointment of
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Company or any Significant
Subsidiary or for all or substantially all of the property and assets of
the Company or any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event
of Default specified in clause (g) or (h) of Section 6.01 that occurs with
respect to the Company) occurs and is continuing under this Indenture, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes, then outstanding, by written notice to the Company (and to the Trustee if
such notice is given by the Holders), may, and the Trustee at the request of
such Holders shall, declare the principal of, premium, if any, and accrued
interest on the Notes to be immediately due and payable. Upon a declaration of
acceleration, such principal of, premium, if any, and accrued interest shall be
immediately due and payable. In the event of a declaration of acceleration
because an Event of Default set forth in Section 6.01(e) above has occurred and
is continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default triggering such Event of Default pursuant
to Section 6.01(e) shall be remedied or cured by the Company or the relevant
Significant Subsidiary or waived by the holders of the relevant Indebtedness
within 60 days after the declaration of acceleration with respect thereto. If
<PAGE> 66
EXHIBIT 4.17
an Event of Default specified in clause (g) or (h) of Section 6.01 occurs with
respect to the Company, the principal of, premium, if any, and accrued interest
on the Notes then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. The Holders of at least a majority in principal amount of the
outstanding Notes, by written notice to the Company and to the Trustee, may
waive all past defaults and rescind and annul a declaration of acceleration and
its consequences if (i) all existing Events of Default, other than the
nonpayment of the principal of, premium, if any, and interest on the Notes that
have become due solely by such declaration of acceleration, have been cured or
waived and (ii) the rescission would not conflict with any judgment or decree of
a court of competent jurisdiction.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of, premium, if any, or interest
on the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
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.
SECTION 6.04. Waiver of Past Defaults. Subject to Sections 6.02, 6.07
and 9.02, the Holders of at least a majority in aggregate principal amount of
the outstanding Notes, by notice to the Trustee, may waive an existing Default
or Event of Default and its consequences, except a Default in the payment of
principal of, premium, if any, or interest on any Note as specified in clause
(a) or (b) of Section 6.01 (including in connection with an Offer to Purchase)
or in respect of a covenant or provision of this Indenture 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 Event of Default or impair any right consequent thereto.
SECTION 6.05. Control by Majority. The Holders of at least a majority
in aggregate principal amount of the outstanding Notes, by notice to the
Trustee, 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 the Trustee; provided that the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, that may involve the
Trustee in personal liability, or that the Trustee determines in good faith may
be unduly prejudicial to the rights of Holders not joining in the giving of such
direction, it being understood that the Trustee shall have no duty to ascertain
whether or not such actions or forebearances are unduly prejudicial to such
holders; and provided further that the Trustee may take any other action it
deems proper that is not inconsistent with any directions received from Holders
of Notes pursuant to this Section 6.05.
SECTION 6.06. Limitation on Suits. A Holder may not institute any
proceeding, judicial or otherwise, with respect to this Indenture or the Notes,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
<PAGE> 67
EXHIBIT 4.17
(i) such Holder has previously given to the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against any costs, liabilities or
expenses to be incurred in compliance with such request;
(iv) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(v) during such 60-day period, the Holders of a majority in aggregate
principal amount of the outstanding Notes have not given the Trustee a
direction that is inconsistent with such written request.
For purposes of Section 6.05 of this Indenture and this Section 6.06,
the Trustee shall comply with TIA Section 316(a) in making any determination of
whether the Holders of the required aggregate principal amount of outstanding
Notes have concurred in any request or direction of the Trustee to pursue any
remedy available to the Trustee or the Holders with respect to this Indenture or
the Notes or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder of a Note to receive
payment of the principal amount of, premium, if any, or interest on such
Holder's Note on or after the respective due dates expressed on such Note
(including in a notice with respect to 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.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
payment of principal, premium or interest specified in clause (a) or (b) of
Section 6.01 occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company or any other
obligor of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate specified
in 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.
<PAGE> 68
EXHIBIT 4.17
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.06) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Notes or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official 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 agent and counsel, and any other
amounts due the Trustee under Section 7.06. Nothing herein contained shall be
deemed to empower 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 thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant to
this Article Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.06, 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 for amounts then due and unpaid for principal amount
of, premium, if any, and interest on the Notes in respect of which or for
the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal, premium, if any, and interest,
respectively; and
Third: to the Company or any other obligors of the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to Holders 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 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
<PAGE> 69
EXHIBIT 4.17
Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 of this Indenture, or a suit by Holders of more than
10% in principal amount of the outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then, and in
every such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Company, Trustee and the Holders shall continue as though no such proceeding had
been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Notes in Section 2.09, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article Six or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
ARTICLE SEVEN
Trustee
SECTION 7.01. Rights of Trustee. (i) Except during the continuance of
an Event of Default,
(a) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(b) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth and correctness of the statements and
certificates or opinions furnished to it and conforming to the requirements
of this Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be
<PAGE> 70
EXHIBIT 4.17
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture.
(ii) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(iii) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(a) this Subsection shall not be construed to limit the effect of
Subsection (i) of this Section;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in aggregate principal amount of
the outstanding Notes, relating to the time, method and place of
conducting any proceeding for exercising any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture with respect to the Notes.
(iv) Subject to TIA Sections 315(a) through (d):
(a) the Trustee may 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 Officers' Certificate or an Opinion of Counsel, which shall conform
to Section 11.04. The Trustee shall not be liable for any action it takes
or omits to take in good faith in reliance on such certificate or opinion;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders, unless such Holders shall have offered to the
Trustee security or indemnity reasonable to it against the costs, expenses
and liabilities that might be incurred by it in compliance with such
request or direction;
<PAGE> 71
EXHIBIT 4.17
(d) the Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within its rights
or powers; provided that the Trustee's conduct does not constitute
negligence or bad faith;
(e) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it;
(f) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed), may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(g) before the Trustee acts or refrains from acting, it may consult
with counsel and the advice of such counsel or any opinion of counsel shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;
(h) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(i) the Trustee may execute any of the trusts or powers hereunder
either directly or by or through agents or attorneys and the Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder;
(j) the Trustee may conclusively rely as to the identity and addresses
of Holders and other matters contained therein on the register of the Notes
maintained by the Registrar pursuant to Section 2.04 hereof and shall not
be affected by notice to the contrary;
(k) unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient
if signed by an Officer of the Company;
(l) the Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder; and
<PAGE> 72
EXHIBIT 4.17
(m) the permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty.
SECTION 7.02. 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 or its Affiliates with the same rights it
would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.03. Trustee's Disclaimer. The Trustee (i) shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, (ii) shall not be accountable for the Company's
use of the proceeds from the Notes, (iii) shall not be responsible for the use
or application of any money received by any Paying Agent other than the
Trustee, and (iv) shall not be responsible for any statement in the Notes other
than its certificate of authentication.
SECTION 7.04. Notice of Default. If any Default or any Event of Default
occurs and is continuing and if such Default or Event of Default is known to a
Responsible Officer of the Trustee, the Trustee shall mail to each Holder in the
manner and to the extent provided in TIA Section 313(c) notice of the Default or
Event of Default within 45 days after it occurs, unless such Default or Event of
Default has been cured or waived; provided, however, that, except in the case of
a default in the payment of the principal of, premium, if any, or interest on
any Note, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interest of the Holders.
The Trustee shall not be deemed to have knowledge of any Default or
Event of Default except (i) a default described in Section 6.01(a) or (b) so
long as the Trustee is the Paying Agent or (ii) any Default or Event of Default
of which the Trustee shall have received written notification or a Responsible
Officer charged with the administration of this Indenture shall have obtained
actual knowledge, and such notification shall not be deemed to include receipt
of information obtained in any report or other reports and documents furnished
under Section 4.17 of this Indenture which reports and documents the Trustee
shall have no duty to examine.
SECTION 7.05. Reports by Trustee to Holders. Within 60 days after each
May 15, beginning with May 15, 1998, the Trustee shall mail to each Holder as
provided in TIA Section 313(c) a brief report dated as of such May 15, if
required by TIA Section 313(a).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the Commission and each
stock exchange 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 or of any delisting thereof.
<PAGE> 73
EXHIBIT 4.17
SECTION 7.06. Compensation and Indemnity. The Company shall pay to the
Trustee such compensation as shall be agreed upon in writing for its services
hereunder. The compensation of the Trustee shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, expenses and
advances incurred or made by it in addition to compensation for its services.
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee (including its agents,
officers, directors and employees) for, and hold it harmless against, any loss
or liability or expense incurred by it without negligence or willful misconduct
on its part in connection with the acceptance or administration of this
Indenture and its duties under this Indenture and the Notes, including the costs
and expenses of defending itself against or investigating any claim or liability
and of complying with any process served upon it or any of its officers in
connection with the exercise or performance of any of its powers or duties under
this Indenture and the Notes. The Trustee shall notify the Company promptly of
any claim asserted against the Trustee for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay reasonable fees
and expenses of such counsel. The Company need not pay for any settlements made
without its consent; provided that such consent shall not be unreasonably
withheld. The Company need not reimburse any expense or indemnity against any
loss or liability incurred by the Trustee through negligence or willful
misconduct.
The Trustee shall have a claim prior to the Notes on all money or
property held or collected by the Trustee, in its capacity as Trustee, for any
amount owing it pursuant to this Section 7.06, except money or property held in
trust to pay principal of, premium, if any, and interest on particular Notes.
If the Trustee incurs expenses or renders services after the occurrence
of an Event of Default specified in clause (g) or (h) of Section 6.01, the
expenses and the compensation for the services (including the reasonable fees
and expenses of its agents and counsel) will be intended to constitute expenses
of administration under Title 11 of the United States Bankruptcy Code or any
applicable federal or state law for the relief of debtors.
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 this Section 7.06 out of the estate in any such
proceeding, shall be denied for any reason, other than solely because of the
misconduct of the Trustee or its Agents, 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.
The provisions of this Section 7.06 shall survive the termination of
this Indenture.
<PAGE> 74
EXHIBIT 4.17
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.07. 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
7.07.
The Trustee may resign by so notifying the Company in writing at least
30 days prior to the date of the proposed resignation. The Holders of a majority
in aggregate principal amount of the outstanding Notes may remove the Trustee by
so notifying the Trustee in writing and may appoint a successor Trustee with the
consent of the Company. The Company may remove the Trustee if:
(i) the Trustee fails to comply with Section 7.09;
(ii) the Trustee is adjudged a bankrupt or an insolvent;
(iii) a receiver or other public officer takes charge of the Trustee or
its property; or
(iv) 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 aggregate principal amount of the outstanding Notes may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.
If the 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 a majority in aggregate principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.06, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) the successor Trustee shall have all
the rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder.
If the Trustee fails to comply with Section 7.09, any Holder who
satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect provided in this Section.
<PAGE> 75
EXHIBIT 4.17
Notwithstanding replacement of the Trustee pursuant to this Section
7.07, the Company's obligation under Section 7.06 shall continue for the benefit
of the retiring Trustee.
SECTION 7.08. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.09. Eligibility. Any Trustee serving hereunder shall be a
bank or trust company, within or without the state, which is authorized by law
to perform all of the duties imposed upon it hereby and which either (i) has a
reported capital and surplus aggregating at least $25,000,000 or (ii) is a
wholly owned subsidiary of a bank, a trust company or a bank holding company
having a reported capital and surplus aggregating at least $25,000,000, and
shall at all times satisfy the requirements of TIA Section 310(a)(i).
SECTION 7.10. Money Held in Trust. The Trustee shall not be liable for
interest on any money received by it except as the Trustee may agree with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law and except for money held in trust
under Article Eight of this Indenture.
ARTICLE EIGHT
Discharge of Indenture
SECTION 8.01. Termination of Company's Obligations. Except as otherwise
provided in this Section 8.01, the Company may terminate its obligations under
the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to the
Company, as provided in Section 8.05) have been delivered to the Trustee
for cancellation and the Company has paid all sums payable by it hereunder;
or
(ii) (A) the Notes have become due and payable, mature within one year
or all of them are to be called for redemption within one year under
arrangements satisfactory to the Trustee for giving the notice of
redemption, (B) the Company irrevocably deposits in trust with the Trustee
during such one-year period, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee, as trust funds
solely for the benefit of the Holders for that purpose, money or U.S.
Government Obligations sufficient (in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee), without consideration of
any reinvestment of any interest thereon, to pay principal, premium, if,
<PAGE> 76
EXHIBIT 4.17
any, and interest on the Notes to maturity or redemption, as the case may
be, and to pay all other sums payable by it hereunder, (C) no Default or
Event of Default with respect to the Notes shall have occurred and be
continuing on the date of such deposit, (D) such deposit will not result in
a breach or violation of, or constitute a default under, this Indenture or
any other agreement or instrument to which the Company is a party or by
which it is bound and (E) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, in each case stating that
all conditions precedent provided for herein relating to the satisfaction
and discharge of this Indenture have been complied with.
With respect to the foregoing clause (i), the Company's obligations
under Section 7.06 shall survive. With respect to the foregoing clause (ii), the
Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.09, 2.14, 4.01,
4.02, 7.06, 7.07, 8.04, 8.05 and 8.06 shall survive until the Notes are no
longer outstanding. Thereafter, only the Company's obligations in Sections 7.06,
8.04, 8.05 and 8.06 shall survive. After any such irrevocable deposit, the
Trustee upon request shall acknowledge in writing the discharge of the Company's
obligations under the Notes and this Indenture except for those surviving
obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The Company will
be deemed to have paid and will be discharged from any and all obligations in
respect of the Notes on the 123rd day after the date of the deposit referred to
in clause (A) of this Section 8.02, and the provisions of this Indenture will no
longer be in effect with respect to the Notes, and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same, except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
apparently mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of
Holders to receive payments of principal thereof and interest thereon, (iv) the
Company's obligations under Section 4.02, (v) the rights, obligations and
immunities of the Trustee hereunder and (vi) the rights of the Holders as
beneficiaries of this Indenture with respect to the property so deposited with
the Trustee payable to all or any of them; provided that the following
conditions shall have been satisfied:
(A) the Company has deposited with the Trustee in trust, money and/or
U.S. Government Obligations that, through the payment of interest and
principal in respect thereof in accordance with their terms, will provide,
not later than one day before the due date of any payment referred to in
this clause (A), money in an amount sufficient in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee to pay the principal
of, premium, if any, and accrued interest on the Notes on the Stated
Maturity of such payments in accordance with the terms of this Indenture
and the Notes and shall have irrevocably instructed the Trustee to apply
such money to the payment of such principal, premium and interest;
(B) the Company has delivered to the Trustee (i) either (x) an Opinion
of Counsel to the effect that Holders will not recognize income, gain or
loss for federal income tax purposes as a result of the Company's exercise
of its option under this Section 8.02 and will be subject to federal income
tax on the same amount and in the same
<PAGE> 77
EXHIBIT 4.17
manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred, which Opinion of Counsel must be
based upon (and accompanied by a copy of) a ruling of the Internal Revenue
Service to the same effect unless there has been a change in applicable federal
income tax law after the date of this Indenture such that a ruling is no longer
required or (y) a ruling directed to the Trustee received from the Internal
Revenue Service to the same effect as the aforementioned Opinion of Counsel and
(ii) an Opinion of Counsel to the effect that the creation of the defeasance
trust does not violate the Investment Company Act of 1940 and after the passage
of 123 days following the deposit (except, with respect to any trust funds for
the account of a Holder who may be deemed to be an "insider" for purposes of the
United States Bankruptcy Code, after one year following the deposit), the trust
fund will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in a case
commenced by or against the Company under either such statute, and either
(I) the trust funds will no longer remain the property of the Company (and
therefore will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally) or (II) if a court were to rule under any such law in any case or
proceeding that the trust funds remained property of the Company, (a) assuming
such trust funds remained in the possession of the Trustee prior to such court
ruling to the extent not paid to the Holders, the Trustee will hold, for the
benefit of the Holders, a valid and perfected security interest in such trust
funds that is not avoidable in bankruptcy or otherwise except for the effect of
Section 552(b) of the United States Bankruptcy Code on interest on the trust
funds accruing after the commencement of a case under such statute, (b) the
Holders will be entitled to receive adequate protection of their interests in
such trust funds if such trust funds are used in such case or proceeding and (c)
no property, rights in property or other interests granted to the Trustee or the
Holders in exchange for, or with respect to, such trust funds will be subject to
any prior rights of holders of other Indebtedness of the Company or any of its
Subsidiaries;
(C) immediately after giving effect to such deposit on a pro forma
basis, no Event of Default, or event that after the giving of notice or lapse of
time or both would become an Event of Default, shall have occurred and be
continuing on the date of such deposit or during the period ending on the 123rd
day after the date of such deposit, and such deposit shall not result in a
breach or violation of, or constitute a default under, any other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound;
(D) if at such time the Notes are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Notes will not be delisted as a result of such deposit,
defeasance and discharge; and
(E) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the defeasance contemplated by this Section 8.02
have been complied with.
<PAGE> 78
EXHIBIT 4.17
Notwithstanding the foregoing, prior to the end of the 123-day (or one
year) period referred to in clause (B)(ii) of this Section 8.02, none of the
Company's obligations under this Indenture shall be discharged. Subsequent to
the end of such 123-day (or one year) period with respect to this Section 8.02,
the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.09, 2.14, 4.01,
4.02, 7.06, 7.07, 8.04, 8.05 and 8.06 shall survive until the Notes are no
longer outstanding. Thereafter, only the Company's obligations in Sections 7.06,
8.05 and 8.06 shall survive. If and when a ruling from the Internal Revenue
Service or an Opinion of Counsel referred to in clause (B)(i) of this Section
8.02 is able to be provided specifically without regard to, and not in reliance
upon, the continuance of the Company's obligations under Section 4.01, then the
Company's obligations under such Section 4.01 shall cease upon delivery to the
Trustee of such ruling or Opinion of Counsel and compliance with the other
conditions precedent provided for herein relating to the defeasance contemplated
by this Section 8.02.
After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Company may omit
to comply with any term, provision or condition set forth in clauses (iii) and
(iv) of Section 5.01 and Sections 4.03 through 4.17 and clause (c) of Section
6.01 with respect to such clauses (iii) and (iv) of Section 5.01, clause (d) of
Section 6.01, and Sections 4.03 through 4.17 and clauses (e) and (f) of Section
6.01 shall be deemed not to be Events of Default, in each case with respect to
the outstanding Notes if:
(i) the Company has deposited with the Trustee in trust, money and/or
U.S. Government Obligations that, through the payment of interest and
principal in respect thereof in accordance with their terms, will provide,
not later than one day before the due date of any payment referred to in
this clause (i), money in an amount sufficient in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee to pay the principal
of, premium, if any, and accrued interest on the Notes on the Stated
Maturity of such payments in accordance with the terms of this Indenture
and the Notes and shall have irrevocably instructed the Trustee to apply
such money to the payment of such principal, premium and interest;
(ii) immediately after giving effect to such deposit on a pro forma
basis, no Event of Default, or event that after the giving of notice or
lapse of time or both would become an Event of Default, shall have occurred
and be continuing on the date of such deposit or during the period ending
on the 123rd day after the date of such deposit, and such deposit shall not
result in a breach or violation of, or constitute a default under, any
other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound;
(iii) the Company has delivered to the Trustee an Opinion of Counsel to
the effect that (A) the creation of the defeasance trust does not violate
the Investment
<PAGE> 79
EXHIBIT 4.17
Company Act of 1940, (B) the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance of
certain obligations and will be subject to federal income tax on the same amount
and in the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred and (C) after the passage of 123 days
following the deposit (except, with respect to any trust funds for the account
of any Holder who may be deemed to be an "insider" for purposes of the United
States Bankruptcy Code, after one year following the deposit), the trust funds
will not be subject to the effect of Section 547 of the United States Bankruptcy
Code or Section 15 of the New York Debtor and Creditor Law in a case commenced
by or against the Company under either such statute, and either (I) the trust
funds will no longer remain the property of the Company (and therefore will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally) or (II) if
a court were to rule under any such law in any case or proceeding that the trust
funds remained property of the Company, (a) assuming such trust funds remained
in the possession of the Trustee prior to such court ruling to the extent not
paid to the Holders, the Trustee will hold, for the benefit of the Holders, a
valid and perfected security interest in such trust funds that is not avoidable
in bankruptcy or otherwise except for the effect of Section 552(b) of the United
States Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute, (b) the Holders will be entitled to
receive adequate protection of their interests in such trust funds if such trust
funds are used in such case or proceeding and (c) no property, rights in
property or other interests granted to the Trustee or the Holders in exchange
for, or with respect to, such trust funds will be subject to any prior rights of
holders of other Indebtedness of the Company or any of its Subsidiaries;
(iv) at such time the Notes are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel to
the effect that the Notes will not be delisted as a result of such deposit,
defeasance and discharge; and
(v) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by
this Section 8.03 have been complied with.
SECTION 8.04. Application of Trust Money. Subject to Sections 8.05 and
8.06, the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the
case may be, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with the Notes and this Indenture to the
payment of principal of, premium, if any, and interest on the Notes; but such
money need not be segregated from other funds except to the extent required by
law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.06, 8.01,
8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Company upon request set forth in an Officers' Certificate any excess money held
by them at any time and thereupon shall be relieved from all liability with
respect to such money. The Trustee and the Paying Agent shall pay to the Company
upon written request any money held by them for the payment of principal,
<PAGE> 80
EXHIBIT 4.17
premium, if any, or interest that remains unclaimed for two years; provided that
the Trustee or such Paying Agent before being required to make any payment may
cause to be published at the expense of the Company once in a newspaper of
general circulation in the City of New York and, in the event the Notes are
listed on the Luxembourg Stock Exchange, in Luxembourg, or mail to each Holder
entitled to such money at such Holder's address (as set forth in the Note
Register) notice that such money remains unclaimed and that after a date
specified therein (which shall be at least 30 days from the date of such
publication or mailing) any unclaimed balance of such money then remaining will
be repaid to the Company. After payment to the Company, Holders entitled to such
money must look to the Company for payment as general creditors unless an
applicable law designates another Person, and all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with Section
8.01, 8.02 or 8.03, as the case may be, by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.01, 8.02 or 8.03, as the
case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money or U.S. Government Obligations in accordance with
Section 8.01, 8.02 or 8.03, as the case may be; provided that, if the Company
has made any payment of principal of, premium, if any, or interest on any Notes
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
Amendments, Supplements and Waivers
SECTION 9.01. Without Consent of Holders. The Company, when authorized
by a resolution of its Board of Directors, and the Trustee may amend or
supplement this Indenture or the Notes without notice to or the consent of any
Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article Five;
(3) to comply with any requirements of the Commission in connection
with the qualification of this Indenture under the TIA;
(4) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee;
<PAGE> 81
EXHIBIT 4.17
(5) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(6) to add one or more Subsidiary Guarantees on the terms required by
this Indenture; or
(7) to make any change that does not adversely affect the rights of any
Holder.
SECTION 9.02. With Consent of Holders. Subject to Sections 6.04 and
6.07 and without prior notice to the Holders, the Company, when authorized by
its Board of Directors (as evidenced by a Board Resolution), and the Trustee may
amend this Indenture and the Notes with the written consent of the Holders of
not less than a majority in principal amount of the Notes then outstanding, and
the Holders of not less than a majority in principal amount of the Notes then
outstanding by written notice to the Trustee may waive future compliance by the
Company with any provision of this Indenture or the Notes.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Note;
(ii) reduce the principal amount of, or premium, if any, or interest
on, any Note or adversely affect any right of repayment at the option of
any Holder;
(iii) change the place or currency of payment of principal of, or
premium, if any, or interest on, any Note;
(iv) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption,
on or after the Redemption Date) of any Note;
(v) reduce the above-stated percentage of outstanding Notes the
consent of whose Holders is necessary to modify or amend this Indenture;
(vi) waive a default in the payment of principal of, premium, if any,
or interest on the Notes;
(vii) reduce the percentage of aggregate principal amount of
outstanding Notes the consent of whose Holders is necessary for waiver of
compliance with certain provisions of this Indenture or for waiver of
certain defaults; or
(viii) modify any of the provisions of this Section 9.02, except to
increase any such percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Note affected thereby.
<PAGE> 82
EXHIBIT 4.17
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement 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 affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. Any failure of the Company
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an amendment or
waiver becomes effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note or portion of its Note. Such
revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective on receipt
by the Trustee of written consents from the Holders of the requisite percentage
in principal amount of the outstanding Notes.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies) and only those
persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders 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 unless it is of the type described in any of clauses (i)
through (v) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (v) of Section 9.02, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Note that evidences the same indebtedness as the Note of the consenting Holder.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note about the changed terms and return it to the Holder and the
Trustee may place an appropriate notation on any Note thereafter authenticated.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms. Failure to make the appropriate notation or
issue a new Note shall not affect the validity and effect of such amendment,
supplement or waiver.
<PAGE> 83
EXHIBIT 4.17
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall
be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article Nine is authorized or permitted by
this Indenture. Subject to the preceding sentence, the Trustee shall sign such
amendment, supplement or waiver if the same does not adversely affect the
rights of the Trustee. The Trustee may, but shall not be obligated to, execute
any such amendment, supplement or waiver that affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article Nine shall conform to the
requirements of the TIA as then in effect.
ARTICLE TEN
Guarantee of Notes
SECTION 10.01. Note Guarantee. Subject to the provisions of this
Article Ten, the Guarantor hereby fully, unconditionally and irrevocably
guarantees to each Holder and to the Trustee on behalf of the Holders: (i) the
due and punctual payment of the principal of, premium, if any, on and interest
on each Note, when and as the same shall become due and payable, whether at
maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal of and interest, if any, on the Notes, to the
extent lawful, and the due and punctual performance of all other obligations of
the Company to the Holders or the Trustee, all in accordance with the terms of
such Note and this Indenture and (ii) in the case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, at Stated Maturity, by acceleration or
otherwise. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company, the
benefit of discussion, protest or notice with respect to any such Note or the
debt evidenced thereby and all demands whatsoever, and covenants that this Note
Guarantee will not be discharged as to any such Note except by payment in full
of the principal thereof and interest thereon and as provided in Section 8.01
and Section 8.02 (subject to Section 8.06). The maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Six for the
purposes of this Article Ten. In the event of any declaration of acceleration
of such obligations as provided in Article Six, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantor
for the purpose of this Article Ten. In addition, without limiting the
foregoing provisions, upon the effectiveness of an acceleration under Article
Six, the Trustee shall promptly make a demand for payment on the Notes under
the Note Guarantee provided for in this Article Ten.
If the Trustee or the Holder of any Note is required by any court or
otherwise to return to the Company or the Guarantor, or any custodian,
receiver, liquidator, trustee,
<PAGE> 84
EXHIBIT 4.17
sequestrator or other similar official acting in relation to the Company or the
Guarantor, any amount paid to the Trustee or such Holder in respect of a Note,
this Note Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect. The Guarantor further agrees, to the fullest extent
that it may lawfully do so, that, as between it, on the one hand, and the
Holders and the Trustee, on the other hand, the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Six hereof for the
purposes of this Note Guarantee, notwithstanding any stay, injunction or other
prohibition extant under any applicable bankruptcy law preventing such
acceleration in respect of the obligations Guaranteed hereby.
The Guarantor hereby irrevocably waives any claim or other rights which
it may now or hereafter acquire against the Company that arise from the
existence, payment, performance or enforcement of its obligations under this
Note Guarantee and this Indenture, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of the Holders against the Company
or any collateral that any such Holder or the Trustee on behalf of such Holder
hereafter acquires, whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law, including, without
limitation, the right to take or receive from the Company, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to the Guarantor in violation of the preceding sentence and the
principal of, premium, if any, and accrued interest on the Notes shall not have
been paid in full, such amount shall be deemed to have been paid to the
Guarantor for the benefit of, and held in trust for the benefit of, the
Holders, and shall forthwith be paid to the Trustee for the benefit of the
Holders to be credited and applied upon the principal of, premium, if any, and
accrued interest on the Notes. The Guarantor acknowledges that it will receive
direct and indirect benefits from the issuance of the Notes pursuant to this
Indenture and that the waivers set forth in this Section 10.01 are knowingly
made in contemplation of such benefits.
The Note Guarantee set forth in this Section 10.01 shall not be valid or
become obligatory for any purpose with respect to a Note until the certificate
of authentication on such Note shall have been signed by or on behalf of the
Trustee.
SECTION 10.02. Obligations Unconditional. Subject to Section 10.05,
nothing contained in this Article Ten or elsewhere in this Indenture or in the
Notes is intended to or shall impair, as among the Guarantor and the holders of
the Notes, the obligation of the Guarantor, which is absolute and
unconditional, upon failure by the Company, to pay to the holders of the Notes
the principal of, premium, if any, and interest on the Notes as and when the
same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of the Notes and
creditors of the Guarantor, nor shall anything herein or therein prevent the
holder of any Note or the Trustee on their behalf from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture.
Without limiting the foregoing, nothing contained in this Article Ten will
restrict the right of the Trustee or the holders of the Notes to take any
action to declare the Note
<PAGE> 85
EXHIBIT 4.17
Guarantee to be due and payable prior to the Stated Maturity of the Notes
pursuant to Section 6.02 or to pursue any rights or remedies hereunder.
SECTION 10.03. Notice to Trustee. The Guarantor shall give prompt
written notice to the Trustee of any fact known to the Guarantor that would
prohibit the making of any payment to or by the Trustee in respect of the Note
Guarantee pursuant to the provisions of this Article Ten.
SECTION 10.04. This Article Not to Prevent Events of Default. The
failure to make a payment on account of principal of, premium, if any, or
interest on the Notes by reason of any provision of this Article Ten will not
be construed as preventing the occurrence of an Event of Default.
SECTION 10.05. Net Worth Limitation. Notwithstanding any other provision
of this Indenture or the Notes, the Note Guarantee shall not be enforceable
against the Guarantor in an amount in excess of the net worth of the Guarantor
at the time that determination of such net worth is, under applicable law,
relevant to the enforceability of the Note Guarantee. Such net worth shall
include any claim of the Guarantor against the Company for reimbursement and
any claim against any grantor of a Subsidiary Guarantee for contribution.
ARTICLE ELEVEN
Miscellaneous
SECTION 11.01. Trust Indenture Act of 1939. This Indenture is subject to
the provisions of the TIA that are required to be a part of this Indenture and
shall, to the extent applicable, be governed by such provisions.
SECTION 11.02. Notices. Any notice or communication shall be
sufficiently 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 addressed as
follows:
if to the Company:
Acme Metals Incorporated
13500 South Perry Avenue
Riverdale, IL 60827-1182
Telecopier No.: (708) 841-6010
Attention: Secretary with a copy to the Treasurer
with a copy to: (which shall not constitute notice)
Ungaretti & Harris
<PAGE> 86
EXHIBIT 4.17
3500 Three First National Plaza
Chicago, IL 60602
Telecopier No.: (312) 977-4405
Attention: Alton B. Harris
if to the Trustee:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, IL 60606
Telecopier No.: (312) 461-3525
Attention: Indenture Trust Division
The Company or the Trustee by notice to the other 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 mailed; when answered back, if telexed; when receipt 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) to its address shown
on the register kept by the Registrar and shall be sufficiently given to such
Holder if so mailed or delivered within the time presented. 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. Except for a
notice to the Trustee, which is deemed given only when received, and except as
otherwise provided in this Indenture, if a notice or communication is mailed in
the manner provided in this Section 11.02, it is duly given, whether or not the
addressee receives it.
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 Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 11.03. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
<PAGE> 87
EXHIBIT 4.17
(ii) an Opinion of Counsel reasonably satisfactory to the Trustee
stating that, in the opinion of such Counsel, all such conditions
precedent have been complied with.
SECTION 11.04. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that the person making such certificate or
opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based;
(iii) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with, and such
other opinions as the Trustee may reasonably request; provided, however,
that, with respect to matters of fact, an Opinion of Counsel may rely on
an Officers' Certificate or certificates of public officials.
SECTION 11.05. Acts of Holders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are received by the Trustee and, where it is hereby expressly
required, to the Company. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section.
(b) The ownership of Notes shall be proved by the Note Register.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Note shall bind every future Holder of the
same Note or the Holder of every Note issued upon the transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, suffered or
omitted to be done by the Trustee, any Paying Agent or the Company in reliance
thereon, whether or not notation of such action is made upon such Note.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver of other act, the Company
may, at its option, by
<PAGE> 88
EXHIBIT 4.17
or pursuant to a Board Resolution, fix in advance a record date for the
determination of such Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other act, but the Company
shall have no obligation to do so. Notwithstanding Trust Indenture Act Section
316(c), any such record date shall be the record date specified in or pursuant
to such Board Resolution, which shall be a date not more than 30 days prior to
the first solicitation of Holders generally in connection therewith and no
later than the date such solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for purposes of determining
whether Holders of the requisite proportion of Notes then outstanding have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other act, and for this purpose the Notes
then outstanding shall be computed as of such record date; provided that no
such request, demand, authorization, direction, notice, consent, waiver or
other act by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not
later than six months after the record date.
SECTION 11.06. Rules by Trustee, Paying Agent or Registrar. The Trustee
may make reasonable rules for action by or at a meeting of Holders. The Paying
Agent or Registrar may make reasonable rules for its functions.
SECTION 11.07. Payment Date Other Than a Business Day. If an Interest
Payment Date, Redemption Date, Payment Date for an Offer to Purchase, Stated
Maturity or date of maturity of any Note shall not be a Business Day at any
place of payment, then payment of principal of, premium, if any, or interest on
such Note, as the case may be, need not be made on such date, but may be made
on the next succeeding Business Day at such place of payment with the same
force and effect as if made on the Interest Payment Date, Payment Date for an
Offer to Purchase, or Redemption Date, or at the Stated Maturity or date of
maturity of such Note; provided that no interest shall accrue for the period
from and after such Interest Payment Date, Payment Date for an Offer to
Purchase, Redemption Date, Stated Maturity or date of maturity, as the case may
be.
SECTION 11.08. Governing Law. This Indenture and the Notes shall be
governed by the laws of the State of New York. The Trustee, the Company and
the Holders agree to submit to the jurisdiction of the courts of the State of
New York in any action or proceeding arising out of or relating to this
Indenture or the Notes.
SECTION 11.09. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any Subsidiary of the Company. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
<PAGE> 89
EXHIBIT 4.17
SECTION 11.10. No Recourse Against Others. No recourse for the payment
of the principal of, premium, if any, or interest on any of the Notes, or for
any claim based thereon or otherwise in respect thereof, and no recourse under
or upon any obligation, covenant or agreement of the Company contained in this
Indenture, or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator or
against any past, present or future partner, shareholder, other equityholder,
officer, director, employee or controlling person, as such, of the Company or
of any successor Person, either directly or through the Company or any
successor Person, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Notes.
SECTION 11.11. Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 11.12. Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
SECTION 11.13. Separability. 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 11.14. Table of Contents, Headings, Etc. The Table of Contents,
Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
ARTICLE TWELVE
Meetings of Holders
SECTION 12.01. Purposes for Which Meetings May Be Called.
A meeting of Holders may be called at any time and from time to
time pursuant to the provisions of this Article Twelve for any of the
following purposes:
(a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to waive or to consent to the
waiving of any Default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Holders pursuant to any of the provisions of Article Six;
<PAGE> 90
EXHIBIT 4.17
(b) to remove the Trustee or appoint a successor Trustee pursuant
to the provisions of Article Seven;
(c) to consent to an amendment, supplement or waiver pursuant to
the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on
behalf of the Holders of any specified aggregate principal amount of
the Notes under any other provision of this Indenture, or authorized
or permitted by law.
SECTION 12.02. Manner of Calling Meetings.
The Trustee may at any time call a meeting of Holders to take any action
specified in Section 12.01, to be held at such time and at such place in The
City of New York, New York or elsewhere as the Trustee will determine. Notice
of every meeting of Holders, setting forth the time and place of such meeting
and in general terms the action proposed to be taken at such meeting, will be
mailed by the Trustee, first-class postage prepaid, to the Company and to the
Holders at their last addresses as they will appear on the registration books
of the Registrar not less than 10 nor more than 60 days prior to the date fixed
for a meeting.
Any meeting of Holders will be valid without notice if the Holders of all
outstanding Notes are present in Person or by proxy, or if notice is waived
before or after the meeting by the Holders of all outstanding Notes, and if the
Company and the Trustee are either present by duly authorized representatives
or have, before or after the meeting, waived notice.
SECTION 12.03. Call of Meetings by the Company or Holders.
In case at any time the Company, pursuant to a Board Resolution, or the
Holders of not less than 10% in aggregate principal amount of the outstanding
Notes will have requested the Trustee to call a meeting of Holders to take any
action specified in Section 12.01, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee will not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or the Holders of Notes in the amount
above specified may determine the time and place in The City of New York, New
York or elsewhere for such meeting and may call such meeting for the purpose of
taking such action, by mailing or causing to be mailed notice thereof as
provided in Section 12.02, or by causing notice thereof to be published at
least once in each of two successive calendar weeks (on any Business Day during
such week) in a newspaper or newspapers printed in the English language,
customarily published at least five days a week of a general circulation in The
City of New York, State of New York and, in the event the Notes are listed on
the Luxembourg Stock Exchange, in Luxembourg, the first such publication to be
not less than 10 nor more than 60 days prior to the date fixed for the meeting.
SECTION 12.04. Who May Attend and Vote at Meetings.
<PAGE> 91
EXHIBIT 4.17
To be entitled to vote at any meeting of Holders, a Person will (i) be a
registered Holder of one or more Notes, or (ii) be a Person appointed by an
instrument in writing as proxy for the registered Holder or Holders of Notes.
The only Persons who will be entitled to be present or to speak at any meeting
of Holders will be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and their counsel.
SECTION 12.05. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
outstanding Notes shall constitute a quorum. In the absence of a quorum within
30 minutes of the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Notes, be dissolved. In any other case
the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the adjournment of
such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 12.02, except that such notice need be
given only once and not less than five days prior to the date on which the
meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage of the principal amount
of the outstanding Notes which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting adjourned for
a lack of a quorum, the Persons entitled to vote 25% in principal amount of the
outstanding Notes at the time shall constitute a quorum for the taking of any
action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at which a quorum
is present as aforesaid, any action or matter, except as otherwise specified
herein, shall be effectively passed and decided if passed or decided by the
Persons entitled to vote not less than a majority in principal amount of
outstanding Notes represented and voting at such meeting.
Any action or matter passed or decision taken at any meeting of Holders of
Notes duly held in accordance with this Section 12.05 shall be binding on all
the Holders of Notes, whether or not present or represented at the meeting.
SECTION 12.06. Regulations May Be Made by Trustee; Conduct of the
Meeting; Voting Rights; Adjournment.
Notwithstanding any other provision of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any action by or
any meeting of Holders, in regard to proof of the holding of Notes and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, and submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it will think appropriate. Such regulations may fix
a record date and time for
<PAGE> 92
EXHIBIT 4.17
determining the Holders of record of Notes entitled to vote at such meeting, in
which case those and only those Persons who are Holders of Notes at the record
date and time so fixed, or their proxies, will be entitled to vote at such
meeting whether or not they will be such Holders at the time of the meeting.
The Trustee will, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting will have been called by the
Company or by Holders as provided in Section 12.03, in which case the Company
or the Holders calling the meeting, as the case may be, will in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary
of the meeting will be elected by vote of the Holders of a majority in
principal amount of the Notes represented at the meeting and entitled to vote.
At any meeting each Holder or proxy will, subject to the provisions of
Section 12.04 hereof, be entitled to one vote for each $1,000 principal amount
of Notes held or represented by him or her; provided, however, that no vote
will be cast or counted at any meeting in respect of any Notes challenged as
not outstanding and ruled by the chairman of the meeting to be not outstanding.
The chairman may adjourn any such meeting if he is unable to determine whether
any Holder or proxy will be entitled to vote at such meeting. The chairman of
the meeting will have no right to vote other than by virtue of Notes held by
him or instruments in writing as aforesaid duly designating him as the proxy to
vote on behalf of other Holders. Any meeting of Holders duly called pursuant
to the provisions of Section 12.02 or Section 12.03 may be adjourned from time
to time by vote of the Holders of a majority in aggregate principal amount of
the Notes represented at the meeting and entitled to vote, and the meeting may
be held as so adjourned without further notice.
SECTION 12.07. Voting at the Meeting and Record to Be Kept.
The vote upon any resolution submitted to any meeting of Holders will be
by written ballots on which will be subscribed the signatures of the Holders of
Notes or/of their representatives by proxy and the principal amount of the
Notes voted by the ballot. The permanent chairman of the meeting will appoint
two inspectors of votes, who will count all votes cast at the meeting for or
against any resolution and will make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting.
A record in duplicate of the proceedings of each meeting of Holders will be
prepared by the secretary of the meeting and there will be attached to such
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more Persons having knowledge of the
facts, setting forth a copy of the notice of the meeting and showing that such
notice was mailed as provided in Section 12.02. The record will be signed and
verified by the affidavits of the permanent chairman and the secretary of the
meeting and one of the duplicates will be delivered to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have
attached thereto the ballots voted at the meeting.
Any record so signed and verified will be conclusive evidence of the
matters therein stated.
<PAGE> 93
EXHIBIT 4.17
SECTION 12.08. Exercise of Rights of Trustee or Holders May Not Be
Hindered or Delayed by Call of Meeting.
Nothing contained in this Article Twelve will be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders or any
rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Holders under any of the provisions of this
Indenture or of the Notes.
SECTION 12.09. Procedures Not Exclusive.
The procedures set forth in this Article Twelve are not exclusive and the
rights and obligations of the Company, the Trustee and the Holders under other
Articles of this Indenture (including, without limitation, Articles Six, Seven,
Eight and Nine) will in no way be limited by the provisions of this Article
Twelve.
<PAGE> 94
EXHIBIT 4.17
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
ACME METALS INCORPORATED,
as Issuer
Name:
Title:
ACME STEEL COMPANY,
as Guarantor
Name:
Title:
HARRIS TRUST AND SAVINGS BANK,
as Trustee
Name:
Title:
<PAGE> 95
EXHIBIT 4.17
EXHIBIT A
ACME METALS INCORPORATED
10 7/8% Senior Notes due 2007
[CUSIP] [CINS] [ ]
No. $______
ACME METALS INCORPORATED, a Delaware corporation (the "Company", which
term includes any successor under the Indenture hereinafter referred to), for
value received, promises to pay to _________________, or its registered assigns,
the principal sum of _________________________ ($___________) on December 15,
2007.
Interest Payment Dates: June 15 and December 15, commencing June 15, 1998.
Regular Record Dates: June 1 and December 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE> 96
EXHIBIT 4.17
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: ACME METALS INCORPORATED
By_______________________________
Name:
Title:
By_______________________________
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 10 7/8% Senior Notes due 2007 described in the
within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By ______________________________
Authorized Signatory
<PAGE> 97
EXHIBIT 4.17
[REVERSE SIDE OF NOTE]
ACME METALS INCORPORATED
10 7/8% Senior Note due 2007
1. Principal and Interest.
The Company will pay the principal of this Note on December 15, 2007.
The Company promises to pay interest on the principal amount of this Note
on each Interest Payment Date, as set forth below, at the rate per annum shown
above.
Interest will be payable semiannually (to the holders of record of the
Notes at the close of business on June 15 or December 15 immediately preceding
the Interest Payment Date) on each Interest Payment Date, commencing June 15,
1998.
If an exchange offer registered under the Securities Act is not
consummated and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before June 18, 1998 in accordance with the terms of the Registration Rights
Agreement dated as of December 18, 1997 between the Company and Morgan Stanley
& Co. Incorporated, Salomon Brothers Inc, First Chicago Capital Markets, Inc.
and Nesbitt Burns Securities Inc., the annual interest rate borne by the Notes
shall increase by 0.5% from the rate shown above accruing from June 18, 1998,
payable in cash semiannually, in arrears, on each June 15 and December 15,
commencing December 15, 1998, until the exchange offer is completed or the
shelf registration statement is declared effective. The Holder of this Note is
entitled to the benefits of such Registration Rights Agreement.
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 December 18,
1997; provided that, if there is no existing default in the payment of interest
and if this Note is authenticated between a Regular Record Date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such Interest Payment Date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at the
rate borne by the Notes.
<PAGE> 98
EXHIBIT 4.17
2. Method of Payment.
The Company will pay interest (except defaulted interest) on the principal
amount of the Notes as provided above on each June 15 and December 15 to the
persons who are Holders (as reflected in the Note Register at the close of
business on the June 1 and December 1 immediately preceding the Interest
Payment Date), in each case, even if the Note is cancelled on registration of
transfer, registration of exchange, redemption or repurchase after such record
date; provided that, with respect to the payment of principal, the Company will
make payment to the Holder that surrenders this Note to a Paying Agent on or
after December 15, 2007.
The Company will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company, at its
option, may pay principal, premium, if any, and interest by its check payable
in such money. It may mail an interest check to a Holder's registered address
(as reflected in the Note Register). If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as authenticating agent, Paying Agent and
Registrar. The Company may change any authenticating agent, Paying Agent or
Registrar without notice. The Company, any Subsidiary or any Affiliate of any
of them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Limitations.
The Company issued the Notes under an Indenture dated as of
December 18, 1997 (the "Indenture"), between the Company, Acme Steel Company
(the "Guarantor") and Harris Trust and Savings Bank, as trustee (the
"Trustee"). Capitalized terms herein are used as defined in the Indenture
unless otherwise indicated. 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. The Notes are subject to all such terms, and Holders are
referred to the Indenture and the Trust Indenture Act for a statement of all
such terms. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Note and the terms of the Indenture,
the terms of the Indenture shall control.
The Notes are unsecured senior obligations of the Company.
5. Redemption.
<PAGE> 99
EXHIBIT 4.17
The Notes are redeemable, at the Company's option, in whole or in part, at
any time and from time to time on or after December 15, 2002 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address as it appears in the Note
Register, at the Redemption Prices (expressed in percentages of principal
amount) set forth below, plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is prior to the Redemption Date to receive interest
due, if any, on an Interest Payment Date) if redeemed during the 12-month
period commencing on December 15 of the years set forth below:
Redemption
Year Price
---------------------- ----------
2002 ................. 105.438%
2003 ................. 102.719%
2004 and thereafter .. 100.000%
In addition, at any time prior to December 15, 2000, the Company may
redeem up to 35% of the principal amount of the Notes with the proceeds of one
or more Public Equity Offerings at any time as a whole or from time to time in
part, at a Redemption Price (expressed as a percentage of principal amount on
the Redemption Date) of 110.0%; provided that after any such redemption at
least $125,000,000 aggregate principal amount at maturity of Notes remains
outstanding.
Notice of any optional redemption will be mailed at least 30 days but not
more than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at his last address as it appears in the Note Register. Notes in
denominations larger than $1,000 may be redeemed in part. On and after the
Redemption Date, interest ceases to accrue on Notes or portions of Notes called
for redemption, unless the Company defaults in the payment of the Redemption
Price.
6. Repurchase upon Change of Control.
Upon the occurrence of any Change of Control, each Holder shall have the
right to require the repurchase of its Notes by the Company in cash pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30 days after any
Change of Control occurs to each Holder at his last address as it appears in
the Note Register. Notes in denominations larger than $1,000 may be sold to
the Company in part. On and after the Payment Date, interest ceases to accrue
on Notes or portions of Notes surrendered for purchase by the Company, unless
the Company defaults in the payment of the Change of Control Payment.
<PAGE> 100
EXHIBIT 4.17
7. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in
denominations of $1,000 of principal amount and multiples of $1,000
in excess thereof. A Holder may register the transfer or exchange
of Notes in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need
not register the transfer or exchange of any Notes selected for
redemption. Also, it need not register the transfer or exchange of
any Notes for a period of 15 days before the day of the mailing of
a notice of redemption of Notes selected for redemption.
8. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
9. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its written request. After that, Holders entitled
to the money must look to the Company for payment, unless an abandoned property
law designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company or the Guarantor deposits with the Trustee money or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes (a) to redemption or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) to the
Stated Maturity, the Company and the Guarantor will be discharged from certain
covenants set forth in the Indenture.
11. Amendment; Supplement; 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
principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
<PAGE> 101
EXHIBIT 4.17
ambiguity, defect or inconsistency or make any change that does not adversely
affect the rights of any Holder.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries, among other things, to Incur additional
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
suffer to exist restrictions on the ability of Restricted Subsidiaries to make
certain payments to the Company, issue Capital Stock of Restricted
Subsidiaries, engage in transactions with Affiliates, suffer to exist or incur
Liens, Guarantee Indebtedness of the Company or merge, consolidate or transfer
substantially all of its assets. Within 60 days after the end of each fiscal
quarter (120 days after the end of the last fiscal quarter of each year), the
Company shall deliver to the Trustee an Officers' Certificate stating whether
or not the signers know of any Default or Event of Default under such
restrictive covenants.
13. Successor Persons.
When a successor person or other entity assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor person will
be released from those obligations.
14. Defaults and Remedies.
The following events constitute an "Event of Default" with respect to
the Notes under the Indenture: (a) a default in the payment of principal of (or
premium, if any, on) any Note when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise; (b) a default in the
payment of interest on any Note when the same becomes due and payable, and such
default continues for a period of 30 days; (c) a default in the performance or
breach of the provisions of Article Five or fails to make or consummate an
Offer to Purchase in accordance with Section 4.11 or Section 4.12; (d) a
default in the performance of or breaches any other covenant or agreement of
the Company in the Indenture or under the Notes (other than a default specified
in clause (a), (b) or (c) above) and such default or breach continues for a
period of 30 consecutive days after written notice by the Trustee or the
Holders of 25% or more in aggregate principal amount of the Notes; (e) there
occurs with respect to any issue or issues of Indebtedness of the Company or
any Significant Subsidiary having an outstanding principal amount of $10
million or more in the aggregate for all such issues of all such Persons,
whether such Indebtedness now exists or shall hereafter be created, (I) an
event of default that has caused the holder thereof to declare such
Indebtedness to be due and payable prior to its Stated Maturity and such
Indebtedness has not been discharged in full or such acceleration has not been
rescinded or annulled within 30 days of such acceleration and/or (II) the
failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall
<PAGE> 102
EXHIBIT 4.17
not have been made, waived or extended within 30 days of such payment default;
(f) any final judgment or order (not covered by insurance) for the payment
of money in excess of $10 million in the aggregate for all such final judgments
or orders against all such Persons (treating any deductibles, self-insurance or
retention as not so covered) shall be rendered against the Company or any
Significant Subsidiary and shall not be paid or discharged, and there shall be
any period of 60 consecutive days following entry of the final judgment or
order that causes the aggregate amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to exceed $10
million during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; (g) a court
having jurisdiction in the premises enters a decree or order for (A) relief in
respect of the Company or any Significant Subsidiary in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) the winding-up or
liquidation of the affairs of the Company or any Significant Subsidiary and, in
each case, such decree or order shall remain unstayed and in effect for a
period of 30 consecutive days; or (h) the Company or any Significant Subsidiary
(A) commences a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes may declare all the Notes to be due and payable. If a
bankruptcy or insolvency default with respect to the Company occurs and is
continuing, the Notes automatically become due and payable. Holders may not
enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of at least a
majority in principal amount of the Notes then outstanding may direct the
Trustee in its exercise of any trust or power.
15. Guarantee.
The Company's obligations under the Notes are guaranteed on a senior,
unsecured basis by the Guarantor.
16. Trustee Dealings with the Company or the Guarantor.
<PAGE> 103
EXHIBIT 4.17
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company, the Guarantor or their Affiliates and may otherwise deal with the
Company, the Guarantor or their Affiliates as if it were not the Trustee.
17. No Recourse Against Others.
No incorporator or any past, present or future partner, shareholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company, or the Guarantor or of any successor Person shall have any
liability for any obligations of the Company or the Guarantor under the Notes
or the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder by accepting a Note expressly
waives and releases all such liability. The waiver and release are a condition
of, and part of the consideration for the issuance of the Notes.
18. Authentication.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
19. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to Acme Metals
Incorporated, 13500 South Perry Avenue, Riverdale, IL 60827-1182, Attention:
General Counsel.
<PAGE> 104
EXHIBIT 4.17
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
Please print or typewrite name and address including zip code of assignee
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _________________ attorney to transfer said Note on the books of the
Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED OFFSHORE GLOBAL NOTES AND
UNLEGENDED OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date the shelf registration statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act of 1933
provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with
(a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Note and the
Indenture.
<PAGE> 105
EXHIBIT 4.17
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date: ____________ __________________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933 and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: _________
______________________
NOTICE: To be executed by an executive officer
<PAGE> 106
EXHIBIT 4.17
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: _
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount:
$___________________.
Date: ________
Your Signature: ______
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:(2) ______________________________
<PAGE> 107
EXHIBIT 4.17
EXHIBIT B
Form of Certificate
________________, __
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, IL 60606
Attention: Indenture Trust Division
Re: Acme Metals Incorporated (the "Company")
10 7/8% Senior Notes due 2007 (the "Notes")
Dear Sirs:
This letter relates to U.S. $____________ principal amount of Notes
represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of
the Indenture dated as of December 18, 1997 (the "Indenture") relating to the
Notes, we hereby certify that we are (or we will hold such securities on behalf
of) a person outside the United States to whom the Notes could be transferred
in accordance with Rule 904 of Regulation S promulgated under the U.S.
Securities Act of 1933. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Notes, all in the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:______________________________
Authorized Signature
<PAGE> 108
EXHIBIT 4.17
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
__________, ___
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, IL 60606
Attention: Indenture Trust Division
Re: Acme Metals Incorporated (the "Company")
10% Senior Notes due 2007 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of $______________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject to
certain restrictions and conditions set forth in the Indenture dated as of
December 18, 1997 (the "Indenture"), relating to the Notes, and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Notes except in compliance with, such restrictions and conditions and the
Securities Act of 1933 (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Notes, we will do so only (A) to the Company
or any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein), (C)
to an institutional "accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you and to the Company a signed letter substantially in the
form of this letter, (D) outside the United States in accordance with Rule 904
of Regulation S under the Securities Act, (E) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act, or (F) pursuant to
an effective registration statement under the Securities Act, and
<PAGE> 109
EXHIBIT 4.17
we further agree to provide to any person purchasing any of the Notes from us
a notice advising such purchaser that resales of the Notes are restricted as
stated herein.
3. We understand that, on any proposed resale of any Notes, we will be
required to furnish to you and the Company such certifications, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes purchased by us for our own account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
Authorized Signature
<PAGE> 110
EXHIBIT 4.17
EXHIBIT D
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
_________, __
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, IL 60606
Attention: Indenture Trust Division
Re: Acme Metals Incorporated (the "Company")
10 7/8% Senior Notes due 2007 (the "Notes")
Dear Sirs:
In connection with our proposed sale of U.S. $__________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933 and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or
<PAGE> 111
EXHIBIT 4.17
legal proceedings or official inquiry with respect to the matters covered
hereby. Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Transferor]
By:
Authorized Signature
<PAGE> 1
EXHIBIT 4.18
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into December 18, 1997, between ACME METALS INCORPORATED, a Delaware
corporation (the "Company"), and MORGAN STANLEY & CO. INCORPORATED, SALOMON
BROTHERS INC, FIRST CHICAGO CAPITAL MARKETS, INC. and NESBITT BURNS SECURITIES
INC. (the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement
dated December 16, 1997, between the Company and the Placement Agents (the
"Placement Agreement"), which provides for the sale by the Company to the
Placement Agents of an aggregate of $200,000,000 principal amount of the
Company's 10 7/8% Senior Notes due 2007 (the "Securities"). The obligations of
the Company under the Securities and the Indenture will be guaranteed by Acme
Steel Company, a wholly owned subsidiary of the Company ("Acme Steel"), on a
senior unsecured basis pursuant to the terms of the Indenture. In order to
induce the Placement Agents to enter into the Placement Agreement, the Company
has agreed to provide to the Placement Agents and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Acme Steel" shall have the meaning set forth in the preamble
to this Agreement and shall also include Acme Steel's successors.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Company" shall have the meaning set forth in the preamble to
this Agreement and shall also include the Company's successors.
"Exchange Offer" shall mean the exchange offer by the Company
of Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
<PAGE> 2
EXHIBIT 4.18
"Exchange Offer Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an
exchange offer registration statement on Form S-4 (or, if applicable, on
another appropriate form) and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Exchange Securities" shall mean securities issued by the
Company and guaranteed by Acme Steel under the Indenture containing terms
identical to the Securities (except that the Exchange Securities will not
contain restrictions on transfer) and to be offered to Holders of
Securities in exchange for Securities pursuant to the Exchange Offer.
"Holder" shall mean the Placement Agents, for so long as they
own any Registrable Securities, and each of their successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture; provided that for purposes of Sections 4
and 5 of this Agreement, the term "Holder" shall include Participating
Broker-Dealers (as defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the
Securities to be dated as of the Closing Date between the Company and
Harris Trust and Savings Bank, trustee, and as the same may be amended from
time to time in accordance with the terms thereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities; provided
that whenever the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities
held by the Company or any of its affiliates (as such term is defined in
Rule 405 under the 1933 Act) (other than the Placement Agents or subsequent
holders of Registrable Securities if such subsequent holders are deemed to
be such affiliates solely by reason of their holding of such Registrable
Securities) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage or amount.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the
preamble to this Agreement.
"Placement Agreement" shall have the meaning set forth in the
preamble to this Agreement.
<PAGE> 3
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by
a Shelf Registration Statement, and by all other amendments and
supplements to such prospectus, and in each case including all material
incorporated by reference therein.
"Registrable Securities" shall mean the Securities; provided,
however, that the Securities shall cease to be Registrable Securities
(i) when a Registration Statement with respect to such Securities shall
have been declared effective under the 1933 Act and such Securities
shall have been disposed of pursuant to such Registration Statement,
(ii) when such Securities have been sold to the public pursuant to Rule
144(k) (or any similar provision then in force, but not Rule 144A)
under the 1933 Act or (iii) when such Securities shall have ceased to
be outstanding.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company with this
Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and
filing fees, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws (including reasonable
fees and disbursements of counsel for any underwriters or Holders in
connection with blue sky qualification of any of the Exchange
Securities or Registrable Securities), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus,
any amendments or supplements thereto, any underwriting agreements,
securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, (iv) all rating
agency fees, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii) the
fees and disbursements of counsel for the Company and, in the case of a
Shelf Registration Statement, the fees and disbursements of one counsel
for the Holders (which counsel shall be selected by the Majority
Holders and which counsel may also be counsel for the Placement Agents)
and (viii) the fees and disbursements of the independent public
accountants of the Company, including the expenses of any special
audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding fees and expenses of counsel
to the underwriters (other than fees and expenses set forth in clause
(ii) above) or the Holders and underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement
of the Company that covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement and
all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
<PAGE> 4
EXHIBIT 4.18
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section
2(b) of this Agreement which covers all of the Registrable Securities (but
no other securities unless approved by the Holders whose Registrable
Securities are covered by such Shelf Registration Statement) on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the
Securities under the Indenture.
"Underwriter" shall have the meaning set forth in Section 3
hereof.
"Underwritten Offering" shall mean a registration in which
Registrable Securities are sold to an Underwriter for reoffering to the
public.
2. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the Staff of the SEC, the Company shall
use its best efforts to cause to be filed an Exchange Offer
Registration Statement covering the offer by the Company to the Holders to
exchange all of the Registrable Securities for Exchange Securities and to
have such Registration Statement remain effective until the closing of the
Exchange Offer. The Company shall commence the Exchange Offer promptly
after the Exchange Offer Registration Statement has been declared effective
by the SEC and use its best efforts to have the Exchange Offer consummated
not later than 60 days after such effective date. The Company shall
commence the Exchange Offer by mailing the related exchange offer
Prospectus and accompanying documents to each Holder stating, in addition
to such other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities
validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such notice is
mailed) (the "Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement;
<PAGE> 5
EXHIBIT 4.18
(iv) that Holders electing to have a Registrable Security
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Security, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their
election, not later than the close of business on the last Exchange
Date, by sending to the institution and at the address (located
in the Borough of Manhattan, The City of New York) specified in the
notice a telegram, telex, facsimile transmission or letter setting forth
the name of such Holder, the principal amount of Registrable Securities
delivered for exchange and a statement that such Holder is withdrawing
his election to have such Securities exchanged.
As soon as practicable after the last Exchange Date, the Company
shall:
(A) accept for exchange Registrable Securities or portions
thereof tendered and not validly withdrawn pursuant to the Exchange
Offer; and
(B) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted
for exchange by the Company and issue, and cause the Trustee to
promptly authenticate and mail to each Holder, an Exchange Security
equal in principal amount to the principal amount of the Registrable
Securities surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws and regulations in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC. The Company shall inform the
Placement Agents of the names and addresses of the Holders to whom the Exchange
Offer is made, and the Placement Agents shall have the right, subject to
applicable law, to contact such Holders and otherwise facilitate the tender of
Registrable Securities in the Exchange Offer.
(b) In the event that (i) the Company determines that the
Exchange Offer Registration provided for in Section 2(a) above is not available
or may not be consummated as soon as practicable after the last Exchange Date
because it would violate applicable law or the applicable interpretations of the
Staff of the SEC, (ii) the Exchange Offer is not for any other reason
consummated by June 18, 1998 or (iii) the Exchange Offer has been completed and
in the opinion of counsel for the Placement Agents a Registration Statement must
be filed and a Prospectus must be delivered by the Placement Agents in
connection with any offering or sale of Registrable Securities, the Company
shall use its best efforts to cause to be filed as soon as practicable after
such determination, date or notice of such opinion of counsel is given to the
Company, as the case may be, a Shelf Registration Statement providing for the
sale by the Holders of all of the Registrable Securities and to have such Shelf
Registration Statement
<PAGE> 6
EXHIBIT 4.18
declared effective by the SEC. In the event the Company is required to file a
Shelf Registration Statement solely as a result of the matters referred to in
clause (iii) of the preceding sentence, the Company shall use its best efforts
to file and have declared effective by the SEC both an Exchange Offer
Registration Statement pursuant to Section 2(a) with respect to all Registrable
Securities and a Shelf Registration Statement (which may be a combined
Registration Statement with the Exchange Offer Registration Statement) with
respect to offers and sales of Registrable Securities held by the Placement
Agents after completion of the Exchange Offer. The Company agrees to use its
best efforts to keep the Shelf Registration Statement continuously effective
until expiration of the period referred to in Rule 144(k) under the 1933 Act
with respect to all Registrable Securities covered by the Shelf Registration
Statement or such shorter period that will terminate when all of the Registrable
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement. The Company further agrees to supplement or
amend the Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the 1933 Act or by any other rules and
regulations thereunder for shelf registration or if reasonably requested by a
Holder with respect to information relating to such Holder, and to use its best
efforts to cause any such amendment to become effective and such Shelf
Registration Statement to become usable as soon as practicable thereafter. The
Company agrees to furnish to the Holders of Registrable Securities copies of any
such supplement or amendment promptly after its being used or filed with the
SEC.
(c) The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a) or Section 2(b). Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section
2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that, if, after it has been declared
effective, the offering of Registrable Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. As provided for in
the Indenture, in the event the Exchange Offer is not consummated and the Shelf
Registration Statement is not declared effective on or prior to June 18, 1998,
the annual interest rate on the Securities (and the Exchange Securities) will
increase by .5% until the Exchange Offer is consummated or the Shelf
Registration Statement is declared effective by the SEC.
(e) Without limiting the remedies available to the Placement
Agents and the Holders, the Company acknowledges that any failure by the Company
to comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury to the Placement Agents or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
<PAGE> 7
EXHIBIT 4.18
failure, the Placement Agents or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of the Company with respect
to the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof,
the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on
the appropriate form under the 1933 Act, which form (x) shall be
selected by the Company and (y) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities
by the selling Holders thereof and (z) shall comply as to form in all
material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed
therewith, and use its best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period and cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the 1933 Act; and keep each Prospectus
current during the period described under Section 4(3) and Rule 174
under the 1933 Act that is applicable to transactions by brokers or
dealers with respect to the Registrable Securities or Exchange
Securities;
(c) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, to counsel for the Placement Agents,
to counsel for the Holders and to each Underwriter of an Underwritten
Offering of Registrable Securities, if any, without charge, as many
copies of each Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto and such other documents as such
Holder or Underwriter may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Securities; and
the Company consents to the use of such Prospectus and any amendment or
supplement thereto in accordance with applicable law by each of the
selling Holders of Registrable Securities and any such Underwriters in
connection with the offering and sale of the Registrable Securities
covered by and in the manner described in such Prospectus or any
amendment or supplement thereto in accordance with applicable law;
(d) use its best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder of Registrable Securities
covered by a Registration Statement shall reasonably request in writing
by the time the applicable Registration Statement is declared effective
by the SEC, to cooperate with such Holders in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc. and do any and all other acts and
<PAGE> 8
EXHIBIT 4.18
things which may be reasonably necessary or advisable to enable such
Holder to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that
the Company shall not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d),
(ii) file any general consent to service of process or (iii) subject
itself to taxation in any such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for the Holders and counsel for the
Placement Agents promptly and, if requested by any such Holder or
counsel, confirm such advice in writing (i) when a Registration
Statement has become effective and when any post-effective amendment
thereto has been filed and becomes effective, (ii) of any request by
the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to the offering cease to be true and
correct in all material respects or if the Company receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation
of any proceeding for such purpose, (v) of the happening of any event
during the period a Shelf Registration Statement is effective which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making
of any changes in such Registration Statement or Prospectus in order to
make the statements therein not misleading and (vi) of any
determination by the Company that a post-effective amendment to a
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at
the earliest possible moment and provide immediate notice to each
Holder of the withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, without charge, at least one
conformed copy of each Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference
or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends and
enable such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and registered in
such names as the selling Holders may
<PAGE> 9
EXHIBIT 4.18
reasonably request at least one business day prior to the closing of
any sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence
of any event contemplated by Section 3(e)(v) hereof, use its best
efforts to prepare and file with the SEC a supplement or post-effective
amendment to a Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company agrees to notify the
Holders to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holders hereby agree to
suspend use of the Prospectus until the Company has amended or
supplemented the Prospectus to correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of
such document to the Placement Agents and their counsel (and, in the
case of a Shelf Registration Statement, the Holders and their counsel)
and make such of the representatives of the Company as shall be
reasonably requested by the Placement Agents or their counsel (and, in
the case of a Shelf Registration Statement, the Holders or their
counsel) available for discussion of such document, and shall not at
any time file or make any amendment to the Registration Statement, any
Prospectus or any amendment of or supplement to a Registration
Statement or a Prospectus or any document which is to be incorporated
by reference into a Registration Statement or a Prospectus, of which
the Placement Agents and their counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel) shall not have
previously been advised and furnished a copy or to which the Placement
Agents or their counsel (and, in the case of a Shelf Registration
Statement, the Holders or their counsel) shall reasonably object;
(k) obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the
effective date of a Registration Statement;
(l) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Securities or Registrable Securities, as
the case may be, cooperate with the Trustee and the Holders to effect
such changes to the Indenture as may be required for the Indenture to
be so qualified in accordance with the terms of the TIA and execute,
and use its best efforts to cause the Trustee to execute, all documents
as may be required to effect such changes and all other forms and
documents required to be filed with the SEC to enable the Indenture to
be so qualified in a timely manner;
<PAGE> 10
EXHIBIT 4.18
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable
Securities, any Underwriter participating in any disposition pursuant
to such Shelf Registration Statement, and attorneys and accountants
designated by the Holders, at reasonable times and in a reasonable
manner, all financial and other records, pertinent documents and
properties of the Company, and cause the respective officers, directors
and employees of the Company to supply all information reasonably
requested by any such representative, Underwriter, attorney or
accountant in connection with a Shelf Registration Statement;
(n) in the case of a Shelf Registration, use its best efforts
to cause all Registrable Securities to be listed on any securities
exchange or any automated quotation system on which similar securities
issued by the Company are then listed if requested by the Majority
Holders, to the extent such Registrable Securities satisfy applicable
listing requirements;
(o) use its best efforts to cause the Exchange Securities or
Registrable Securities, as the case may be, to be rated by two
nationally recognized statistical rating organizations (as such term is
defined in Rule 436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable
Securities covered by a Registration Statement, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information with respect to such Holder as such Holder reasonably
requests to be included therein and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as
the Company has received notification of the matters to be incorporated
in such filing; and
(q) in the case of a Shelf Registration, enter into such
customary agreements and take all such other actions in connection
therewith (including those requested by the Holders of a majority of
the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities including,
but not limited to, an Underwritten Offering and in such connection,
(i) to the extent possible, make such representations and warranties to
the Holders and any Underwriters of such Registrable Securities with
respect to the business of the Company and its subsidiaries, the
Registration Statement, Prospectus and documents incorporated by
reference or deemed incorporated by reference, if any, in each case, in
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested, (ii) obtain opinions of counsel to the Company (which
counsel and opinions, in form, scope and substance, shall be reasonably
satisfactory to the Holders and such Underwriters and their respective
counsel) addressed to each selling Holder and Underwriter of
Registrable Securities, covering the matters customarily covered in
opinions requested in underwritten offerings, (iii) obtain "cold
comfort" letters from the independent certified public accountants of
the Company (and, if necessary, any other certified public accountant
of any subsidiary of the Company, or of any business acquired by the
Company for which financial statements and financial data are or are
required to be included in the Registration Statement) addressed to
each selling
<PAGE> 11
EXHIBIT 4.18
Holder and Underwriter of Registrable Securities, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings, and
(iv) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority in principal amount of the
Registrable Securities being sold or the Underwriters, and which are
customarily delivered in underwritten offerings, to evidence the
continued validity of the representations and warranties of the Company
made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company may
require each Holder of Registrable Securities to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Securities as the Company may from time to time reasonably
request in writing.
In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e)(v) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to a
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by the Company, such Holder will deliver to the Company (at its
expense) all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. If the Company shall give any
such notice to suspend the disposition of Registrable Securities pursuant to a
Registration Statement, the Company shall extend the period during which the
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions. The Company may give any such notice only twice during any
365 day period and any such suspensions may not exceed 30 days for each
suspension and there may not be more than two suspensions in effect during any
365 day period.
The Holders of Registrable Securities covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an Underwritten Offering. In any such Underwritten Offering, the investment
banker or investment bankers and manager or managers (the "Underwriters") that
will administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.
4. Participation of Broker-Dealers in Exchange Offer.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Securities that were acquired by such
broker-dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), may be deemed to be an "underwriter" within the
<PAGE> 12
EXHIBIT 4.18
meaning of the 1933 Act and must deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of such Exchange Securities.
The Company understands that it is the Staff's position that
if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and
the means by which Participating Broker-Dealers may resell the Exchange
Securities, without naming the Participating Broker-Dealers or specifying the
amount of Exchange Securities owned by them, such Prospectus may be delivered by
Participating Broker-Dealers to satisfy their prospectus delivery obligation
under the 1933 Act in connection with resales of Exchange Securities for their
own accounts, so long as the Prospectus otherwise meets the requirements of the
1933 Act.
(b) In light of the above, notwithstanding the other
provisions of this Agreement, the Company agrees that the provisions of this
Agreement as they relate to a Shelf Registration shall also apply to an Exchange
Offer Registration to the extent, and with such reasonable modifications thereto
as may be, reasonably requested by the Placement Agents or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; provided that:
(i) the Company shall not be required to amend or supplement
the Prospectus contained in the Exchange Offer Registration Statement,
as would otherwise be contemplated by Section 3(i), for a period
exceeding 180 days after the last Exchange Date (as such period may be
extended pursuant to the penultimate paragraph of Section 3 of this
Agreement) and Participating Broker-Dealers shall not be authorized by
the Company to deliver and shall not deliver such Prospectus after such
period in connection with the resales contemplated by this Section 4;
and
(ii) the application of the Shelf Registration procedures set
forth in Section 3 of this Agreement to an Exchange Offer Registration,
to the extent not required by the positions of the Staff of the SEC or
the 1933 Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to the Company by the Placement
Agents or with the reasonable request in writing to the Company by one
or more broker-dealers who certify to the Placement Agents and the
Company in writing that they anticipate that they will be Participating
Broker-Dealers; and provided further that, in connection with such
application of the Shelf Registration procedures set forth in Section 3
to an Exchange Offer Registration, the Company shall be obligated (x)
to deal only with one entity representing the Participating
Broker-Dealers, which shall be Morgan Stanley & Co. Incorporated unless
it elects not to act as such representative, (y) to pay the fees and
expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Placement Agents unless
such counsel elects not to so act and (z) to cause to be delivered only
one, if any, "cold comfort" letter with respect to the Prospectus in
the form existing on the last Exchange Date and with respect to each
subsequent amendment or supplement, if any, effected during the period
specified in clause (i) above.
<PAGE> 13
EXHIBIT 4.18
(c) The Placement Agents shall have no liability to the
Company or any Holder with respect to any request that it may make pursuant to
Section 4(b) above.
5. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Placement Agents, each Holder and each Person, if any, who controls any
Placement Agent or any Holder within the meaning of either Section 15 of the
1933 Act or Section 20 of the 1934 Act from and against all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement (or any amendment
thereto) pursuant to which Exchange Securities or Registrable Securities were
registered under the 1933 Act, including all documents incorporated therein by
reference, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or caused by any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to the Placement Agents or any Holder furnished to the Company in
writing by the Placement Agents or any selling Holder expressly for use therein.
In connection with any Underwritten Offering permitted by Section 3, the Company
will also indemnify the Underwriters, if any, selling brokers, dealers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of the 1933 Act and the 1934 Act) to the same extent as provided
above with respect to the indemnification of the Holders, if requested in
connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Placement Agents and the other
selling Holders, and each of their respective directors, each officer of the
Company who signed the Registration Statement and each Person, if any, who
controls the Company, the Placement Agents and any other selling Holder within
the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act
to the same extent as the foregoing indemnity from the Company to the Placement
Agents and the Holders, but only with reference to information relating to such
Holder furnished to the Company in writing by such Holder expressly for use in
any Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in
<PAGE> 14
EXHIBIT 4.18
writing and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for (a) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Placement Agents and
all Persons, if any, who control any Placement Agent within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees
and expenses of more than one separate firm (in addition to any local counsel)
for the Company, its directors, its officers who signed the Registration
Statement and each Person, if any, who controls the Company within the meaning
of either such Section and (c) the fees and expenses of more than one separate
firm (in addition to any local counsel) for all Holders and all Persons, if any,
who control any Holders within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In such case
involving the Placement Agents and Persons who control the Placement Agents,
such firm shall be designated in writing by Morgan Stanley & Co. Incorporated.
In such case involving the Holders and such Persons who control Holders, such
firm shall be designated in writing by the Majority Holders. In all other cases,
such firm shall be designated by the Company. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent but, if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party for such fees and expenses of
counsel in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which such indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such
<PAGE> 15
EXHIBIT 4.18
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Holders 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 or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this Section 5(d) are several
in proportion to the respective amount of Registrable Securities of such Holder
that were registered pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be
just or equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, 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 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Securities were sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in
this Section 5 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of the Placement Agents, any Holder or any Person controlling any
Placement Agent or any Holder, or by or on behalf of the Company, its officers
or directors or any Person controlling the Company, (iii) acceptance of any of
the Exchange Securities and (iv) any sale of Registrable Securities pursuant to
a Shelf Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not
entered into, and on or after the date of this Agreement will not enter into,
any agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any
<PAGE> 16
EXHIBIT 4.18
way conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities under any such
agreements.
(b) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or consent; provided, however, that no amendment,
modification, supplement, waiver or consent to any departure from the provisions
of Section 5 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder.
(c) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or any courier guaranteeing
overnight delivery (i) if to a Holder, at the most current address given by such
Holder to the Company by means of a notice given in accordance with the
provisions of this Section 6(c), which address initially is, with respect to the
Placement Agents, the address set forth in the Placement Agreement; and (ii) if
to the Company, initially at the Company's address set forth in the Placement
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(c).
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 answered back, if telexed; when receipt is acknowledged, 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.
(d) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Placement Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such person shall be entitled to receive the benefits hereof. The
Placement Agents (in their capacity as Placement Agents) shall have no liability
or obligation to the Company with respect to any failure by a Holder to comply
with, or any breach by any Holder of, any of the obligations of such Holder
under this Agreement.
<PAGE> 17
EXHIBIT 4.18
(e) Purchase and Sales of Securities. The Company shall
not, and shall use its best efforts to cause its affiliates (as defined in
Rule 405 under the 1933 Act) not to, purchase and then resell or otherwise
transfer any Securities.
(f) Third Party Beneficiary. Each Holder shall be a third
party beneficiary to the agreements made hereunder between the Company, on the
one hand, and the Placement Agents, on the other hand, and any Holder 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.
(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.
(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.
<PAGE> 18
EXHIBIT 4.18
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ACME METALS INCORPORATED
By __________________________________
Name:
Title:
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
FIRST CHICAGO CAPITAL MARKETS, INC.
NESBITT BURNS SECURITIES INC.
By: MORGAN STANLEY & CO. INCORPORATED
By______________________________
Name: Jonathan Morphett
Title: Principal
<PAGE> 19
EXHIBIT 4.18
REGISTRATION RIGHTS AGREEMENT
Dated December 18, 1997
between
ACME METALS INCORPORATED
and
MORGAN STANLEY & CO. INCORPORATED,
SALOMON BROTHERS INC,
FIRST CHICAGO CAPITAL MARKETS, INC. and
NESBITT BURNS SECURITIES INC.
<PAGE> 1
EXHIBIT 10.7
ACME GROUP
FOURTH AMENDMENT TO CREDIT AGREEMENT
Harris Trust and Savings Bank National City Bank
Chicago, Illinois Cleveland, Ohio
NBD Bank General Electric Capital Corporation
Chicago, Illinois Chicago, Illinois
Mercantile Bank of St. Louis
National Association
St. Louis, Missouri
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
August 11, 1994 between the undersigned, Acme Steel Company, a Delaware
corporation ("Acme Steel"), Acme Packaging Corporation, a Delaware corporation
("Acme Packaging"), Alpha Tube Corporation, a Delaware corporation ("Alpha
Tube"), and Universal Tool & Stamping Company, Inc., an Indiana corporation
("Universal Tool") (Acme Steel, Acme Packaging, Alpha Tube and Universal Tool
are being hereinafter referred to collectively as the "Borrowers" and
individually as a "Borrower") and you (the "Lenders") as amended by that
certain First Amendment to Credit Agreement dated as of May 21, 1995, that
certain Second Amendment to Credit Agreement effective as of August 8, 1995 and
that certain Third Amendment to Credit Agreement dated as of April 5, 1996
(said Credit Agreement as so amended being referred to herein as the "Credit
Agreement"). All capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Credit Agreement.
The Borrowers have requested that the Lenders amend Section 7.6 of the
Credit Agreement, and the Lenders are willing to do so under the terms and
conditions set forth in this Amendment.
1. AMENDMENT.
Upon the satisfaction of the conditions set forth in Section 2 below,
Section 7.6 of the Credit Agreement shall be amended (effective as of April 1,
1997) and as so amended shall be restated in its entirety to read as follows:
<PAGE> 2
"Section 7.6. Current Ratio. The Acme Group will at all
times maintain a Consolidated Current Ratio of not less than
1.25 to 1.0."
2. CONDITIONS PRECEDENT.
Upon the execution and delivery of this Amendment by the Borrowers and
the Lenders, this Amendment shall become effective as of April 1, 1997.
3. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment,
the Borrowers hereby represent to the Lenders that as of the date hereof, the
representations and warranties set forth in Section 5 of the Credit Agreement
are and shall be and remain true and correct (except that the representations
contained in Section 5.6 shall be deemed to refer to the most recent financial
statements of the Company delivered to the Lenders) and the Borrowers are in
full compliance with all of the terms and conditions of the Credit Agreement
and no Default or Event of Default has occurred and is continuing under the
Credit Agreement or shall result after giving effect to this Amendment.
4. MISCELLANEOUS.
(a) Except as specifically amended herein, the Credit Agreement
shall continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
or any other instrument or document executed in connection therewith, or in any
certificate, letter or communication issued or made pursuant to or with respect
to the Credit Agreement, any reference in any of such items to the Credit
Agreement being sufficient to refer to the Credit Agreement as amended hereby.
(b) The Borrowers agree to pay on demand all costs and expenses of
or incurred by the Agent in connection with the negotiation, preparation,
execution and delivery of this Amendment, including the fees and expenses of
counsel for the Agent.
(c) This Amendment may be executed in any number of counterparts,
and by the different parties on different counterpart signature pages, all of
which taken together shall constitute one and the same agreement. Any of the
parties hereto may execute this Amendment by signing any such counterpart and
each of such counterparts shall for all purposes be deemed to be an original.
This Amendment shall be governed by the internal laws of the State of Illinois.
-2-
<PAGE> 3
Dated as of this 30th day of April, 1997 (but effective as of April 1, 1997).
ACME STEEL COMPANY
By
Its
-------------------------------
ACME PACKAGING CORPORATION
By
Its
-------------------------------
ALPHA TUBE CORPORATION
By
Its
-------------------------------
UNIVERSAL TOOL & STAMPING COMPANY, INC.
By
Its
-------------------------------
ACME METALS INCORPORATED
By
Its
-------------------------------
-3-
<PAGE> 4
Accepted and agreed to as of the date and year last above written.
HARRIS TRUST AND SAVINGS BANK
By
Its Vice President
NBD BANK
By
Its
-------------------------------
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By
Its
-------------------------------
NATIONAL CITY BANK
By
Its
-------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By
Its
-------------------------------
-4-
<PAGE> 1
EXHIBIT 10.8
ACME GROUP
FIFTH AMENDMENT TO CREDIT AGREEMENT
Harris Trust and Savings Bank National City Bank
Chicago, Illinois Cleveland, Ohio
NBD Bank General Electric Capital Corporation
Chicago, Illinois Chicago, Illinois
Mercantile Bank National Association
St. Louis, Missouri
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
August 11, 1994 between the undersigned, Acme Steel Company, a Delaware
corporation ("Acme Steel"), Acme Packaging Corporation, a Delaware corporation
("Acme Packaging"), Alpha Tube Corporation, a Delaware corporation ("Alpha
Tube"), and Universal Tool & Stamping Company, Inc., an Indiana corporation
("Universal Tool") (Acme Steel, Acme Packaging, Alpha Tube and Universal Tool
are being hereinafter referred to collectively as the "Borrowers" and
individually as a "Borrower") and you (the "Lenders") as amended by that
certain First Amendment to Credit Agreement dated as of May 21, 1995, that
certain Second Amendment to Credit Agreement effective as of August 8, 1995,
that certain Third Amendment to Credit Agreement dated as of April 5, 1996 and
that certain Fourth Amendment to Credit Agreement dated as of April 30, 1997
(said Credit Agreement as so amended being referred to herein as the "Credit
Agreement"). All capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Credit Agreement.
The Borrowers have requested that the Lenders amend various provisions
of the Credit Agreement, and the Lenders are willing to do so under the terms
and conditions set forth in this amendment.
SECTION 1. AMENDMENTS.
Upon the satisfaction of the conditions precedent set forth in Section
2 hereof, the Credit Agreement shall be and hereby is amended (effective as of
September 27, 1997) as follows:
-1-
<PAGE> 2
(a) Section 1.1 of the Credit Agreement shall be amended
and as so amended shall be restated in its entirety to read as
follows:
"Section 1.1. Revolving Credit. Subject to all of the terms
and conditions hereof, each Lender, by its acceptance hereof,
severally agrees to extend a Revolving Credit to the Borrowers
in the amount of its commitment to extend the Revolving Credit
set forth on the applicable signature page hereof (its
"Commitment" and cumulatively for all the Lenders, the
"Commitments") (subject to any reductions thereof pursuant to
the terms hereof) prior to the Termination Date. Such
Revolving Credit may be availed of by each Borrower in its
discretion from time to time, be repaid and used again, during
the period from the date hereof to and including the
Termination Date. The Revolving Credit, subject to all of the
terms and conditions hereof, may be utilized by any one or
more of the Borrowers in the form of Revolving Loans, Swing
Line Loans and Letters of Credit, all as more fully
hereinafter set forth; provided, however, that the aggregate
amount of the Revolving Loans, the Swing Line Loans and the
L/C Obligations outstanding at any one time from all the
Borrowers taken together shall not at any time exceed the
lesser of the Commitments then in effect or the Available
Borrowing Base as then determined and computed for all the
Borrowers; provided further, however, that the aggregate
amount outstanding at any time on Revolving Loans and Swing
Line Loans made to each Borrower, and L/C Obligations in
respect of Letters of Credit issued for such Borrower's sole
or joint account, shall not exceed such Borrower's Available
Borrowing Base as then determined and computed. For all
purposes of this Agreement and except as otherwise set forth
in Section 3.1 hereof, where a determination of the unused or
available amount of the Commitments is necessary, the
Revolving Loans, the Swing Line Loans and the L/C Obligations
shall all be deemed to utilize the Commitments. The
obligations of the Lenders hereunder are several and not joint
and no Lender shall under any circumstances be obligated to
extend credit hereunder in excess of its Commitment."
(b) Section 1 of the Credit Agreement shall be amended by
inserting the following new Section 1.2-A immediately after Section
1.2 thereof:
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<PAGE> 3
"Section 1.2-A. The Swing Line.
(a) Swing Line Loans. Subject to all of the
terms and conditions hereof, Harris Trust and Savings Bank
("Harris Bank") agrees to make loans ("Swing Line Loans") to
each Borrower under a swing line of credit ("Swing Line");
provided, however, that the aggregate amount of Swing Line
Loans at any time outstanding to all Borrowers taken together
shall not exceed the Swing Line Commitment; provided further,
however, that the aggregate amount of the Revolving Loans, the
Swing Line Loans and the L/C Obligations outstanding at any
one time from all the Borrowers taken together shall not at
any time exceed the lesser of the Commitments then in effect
or the Available Borrowing Base as then determined and
computed for all the Borrowers; provided still further,
however, that the aggregate amount outstanding at any time on
Revolving Loans and Swing Line Loans made to each Borrower,
and L/C Obligations in respect of Letters of Credit issued for
such Borrower's sole or joint account, shall not exceed such
Borrower's Available Borrowing Base as then determined and
computed. The Swing Line Commitment shall be available to the
Borrowers and may be availed of by each Borrower from time to
time and borrowings thereunder may be repaid and used again
during the period ending on the Termination Date. Without
regard to the face principal amount of the Swing Line Note,
the actual principal amount at any time outstanding and owing
by the Borrowers on account of the Swing Line Note on any date
during the period ending on the Termination Date shall be the
sum of all Swing Line Loans then or theretofor made thereon
through such date less all payments actually received thereon
through such date. Each Swing Line Loan shall be due and
payable on the last day of the Interest Period selected
therefor.
(b) Minimum Borrowing Amount. Each Swing Line
Loan shall be in an amount not less than $250,000.
(c) Interest on Swing Line Loans. Each Swing
Line Loan shall bear interest (computed on the basis of a year
of 360 days and actual days elapsed) for the Interest Period
selected by the Company (which is acting on behalf of the
Borrowers pursuant to Section 1.5 hereof) therefor at the
Domestic Rate or at Harris
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<PAGE> 4
Bank's Quoted Rate for such Interest Period, provided that if
any Swing Line Loan is not paid when due (whether by lapse of
time, acceleration or otherwise) such Swing Line Loan shall
bear interest whether before or after judgment, until payment
in full thereof through the end of the Interest Period then
applicable thereto at the rate per annum determined by adding
2% to the Domestic Rate. Interest on each Swing Line Loan
shall be due and payable on the last day of each Interest
Period applicable thereto, and interest after maturity
(whether by lapse of time, acceleration or otherwise) shall be
due and payable upon demand.
(d) Requests for Swing Line Loans. The Company
(which is acting on behalf of the Borrowers pursuant to
Section 1.5 hereof) shall give Harris Bank prior notice (which
may be written or oral) no later than 12:00 Noon (Chicago
time) on the date upon which any Swing Line Loan is to be
made, specifying in each case the Borrower to which the
proceeds of such Loan are to be made, the amount and date of
such Swing Line Loan and the Interest Period selected
therefor. Within thirty (30) minutes after receiving such
notice, Harris Bank shall quote an interest rate determined in
its discretion to the Company at which Harris Bank would be
willing to make such Swing Line Loan available to the relevant
Borrower for such Interest Period (the rate so quoted for a
given Interest Period being herein referred to as "Harris
Bank's Quoted Rate"). The Borrowers acknowledge and agree
that Harris Bank's Quoted Rate is given to the Company for
immediate and irrevocable acceptance, and if the Company does
not so immediately accept Harris Bank's Quoted Rate for the
full amount requested by the Company for such Swing Line Loan,
Harris Bank's Quoted Rate shall be deemed immediately
withdrawn and such Swing Line Loan shall be made at the
Domestic Rate. Subject to all of the terms and conditions
hereof, the proceeds of such Swing Line Loan shall be made
available to the relevant Borrower on the date so requested at
the offices of the Agent in Chicago, Illinois. Anything
contained in the foregoing to the contrary notwithstanding (i)
the obligation of Harris Bank to make Swing Line Loans shall
be subject to all of the terms and conditions of this
Agreement and (ii) Harris Bank shall not be obligated to make
more than one Swing Line Loan during any one day.
-4-
<PAGE> 5
(e) Refunding Loans. In its sole and absolute
discretion, Harris Bank may at any time, on behalf of the
Borrowers (which hereby irrevocably authorize Harris Bank to
act on their behalf for such purpose), request each Lender to
make a Borrowing of Revolving Loans in an amount equal to such
Lender's pro rata share of the amount of the Swing Line Loans
outstanding on the date such notice is given. Borrowings of
Revolving Loans under this Section 1.2-A(e) shall initially
bear interest at the Domestic Rate unless timely notice is
given pursuant to Section 2.4 hereof. Unless any of the
conditions of Section 6 are not fulfilled on such date, each
Lender shall make its requested Revolving Loan available to
Harris Bank, in immediately available funds, at the principal
office of Harris Bank in Chicago, Illinois, before 11:00 a.m.
(Chicago time) on the Business Day following the day such
notice is given. The proceeds of such Revolving Loans shall
be immediately applied to repay the outstanding Swing Line
Loans.
(f) Participations. If any Lender refuses or
otherwise fails to make a Revolving Loan when requested by
Harris Bank pursuant to Section 1.2-A(e) above (because the
conditions in Section 6 are not satisfied or otherwise), such
Lender will, by the time and in the manner such Revolving Loan
was to have been funded to Harris Bank, purchase from Harris
Bank an undivided participating interest in the outstanding
Swing Line Loans in an amount equal to its pro rata share of
the aggregate principal amount of Swing Line Loans that were
to have been repaid with such Revolving Loans. Each Lender
that so purchases a participation in a Swing Line Loan shall
thereafter be entitled to receive its pro rata share of each
payment of principal received on the Swing Line Loan and of
interest received thereon accruing from the date such Lender
funded to Harris Bank its participation in such Loan. The
obligation of the Lenders to Harris Bank shall be absolute and
unconditional and shall not be affected or impaired by any
Default or Event of Default which may then be continuing
hereunder."
(c) The first sentence of Section 1.3(a) of the Credit
Agreement shall be amended and as so amended shall be restated in its
entirety to read as follows:
-5-
<PAGE> 6
"Subject to the terms and conditions hereof, as part of the
Revolving Credit, the Agent shall issue standby or commercial
letters of credit (each a "Letter of Credit") for the account
of any one or more of the Borrowers in U.S. Dollars in an
aggregate undrawn face amount up to the amount of the L/C
Commitment; provided, however, that the aggregate L/C
Obligations at any time outstanding shall not exceed the
difference between the Commitments in effect at such time and
the aggregate principal amount of Revolving Credit Loans and
Swing Line Loans then outstanding; provided further, however,
that the aggregate amount outstanding at any time on Revolving
Loans and Swing Line Loans made to each Borrower, and L/C
Obligations in respect of Letters of Credit issued for such
Borrower's account, shall not exceed such Borrower's Available
Borrowing Base as then determined and computed."
(d) The heading for Section 2 of the Credit Agreement
shall be amended and as so amended shall be restated in its entirety
to read as follows: SECTION 2. INTEREST ON REVOLVING CREDIT NOTES."
(e) Section 3.1 of the Credit Agreement shall be amended
by deleting the phrase "1/2 of 1% per annum" appearing therein and
substituting therefor the phrase "3/8 of 1% per annum". Section 3.1
of the Credit Agreement shall be further amended by inserting the
following new sentence immediately at the end thereof:
"Solely for purposes of this Section 3.1 and determining each
Lender's pro rata share of the commitment fee, outstanding
Swing Line Loans shall be deemed to utilize Harris Bank's
Commitment so that the unused portion of each other Lender's
Commitment remains the same whether or not Swing Line Loans
are outstanding."
(f) Section 3.5 of the Credit Agreement shall be amended
by inserting the following new sentence immediately at the end
thereof:
"The Borrowers may voluntarily prepay any Swing Line Loan
bearing interest at the Domestic Rate before its maturity at
any time upon notice to the Agent prior to 2:00 p.m. (Chicago
time) on the date fixed for prepayment, each such prepayment
to be made by the payment of the principal amount to be
prepaid and accrued
-6-
<PAGE> 7
interest thereon to the date of prepayment; however, the
Borrowers may not voluntarily prepay any Swing Line Loan
bearing interest at Harris Bank's Quoted Rate before its
maturity."
(g) Section 3.6 of the Credit Agreement shall be amended
and as so amended shall be restated in its entirety to read as
follows:
"Section 3.6. Mandatory Prepayment upon Borrowing Base
Deficiency. In the event that the aggregate amount
outstanding on the Revolving Loans and Swing Line Loans to a
Borrower, and the L/C Obligations in respect of Letters of
Credit issued for such Borrower's sole or joint account, shall
at any time and for any reason exceed such Borrower's
Available Borrowing Base as then determined and computed, the
Borrowers shall immediately and without notice or demand pay
over the amount of the excess to the Agent to be applied as a
mandatory prepayment on the Revolving Credit Notes until such
Revolving Loans have been prepaid in full, then applied to the
Swing Line Loans until payment in full thereof and if L /C
Obligations are outstanding, then and in any such event, such
remainder shall be paid over to the Agent to be applied
against, or held as collateral security for, as applicable,
such L/C Obligations. Each such repayment shall be
accompanied by accrued interest on the amount prepaid to the
date of such prepayment together with any amount due the
Lenders under Section 2.8 hereof."
(h) Section 3.7 of the Credit Agreement shall be amended
and as so amended shall be restated in its entirety to read as
follows:
"Section 3.7. Voluntary Terminations. The Borrowers shall
have the privilege upon notice from the Company (which need
not be joined in by any Borrower) to the Agent (which shall
promptly notify the Lenders) received on or before 10:00 a.m.
Chicago time at least five Business Days before the
Termination Date to ratably terminate the Commitments in whole
or in part (but if in part then in the amount of $5,000,000 or
such greater amount which is an integral multiple of
$500,000). All partial terminations of the Commitments
hereunder shall automatically reduce the L/C Commitment and
the Swing Line Commitment, in each case as from time to time
in effect hereunder, by the same percentage as
-7-
<PAGE> 8
the percentage termination in the Commitments. Not later than
the termination date stated in such notice, there shall be
made such payments to the Agent as may be necessary to reduce
the sum of the aggregate outstanding principal amount of the
Revolving Loans, Swing Line Loans and L/C Obligations to the
amount to which the Commitments have been reduced, together
with (x) any amount due the Lenders under Section 2.8 hereof
and (y) in the case of a termination in whole, all interest,
fees and other amounts due on the Obligations. The foregoing
to the contrary notwithstanding, (i) no termination of the
Revolving Credit may be effected hereunder if as a result
thereof the outstanding aggregate amount of Letters of Credit
would exceed the L/C Commitment as reduced by such
termination, (ii) no termination of the Revolving Credit may
be effected hereunder if as a result thereof the outstanding
aggregate amount of Swing Line Loans would exceed the Swing
Line Commitment as reduced by such termination and (iii) the
Commitments may not be terminated below $100,000 except
concurrently with their termination in whole. No termination
of the Commitments may be reinstated."
(i) Sections 5.2 and 5.5 of the Credit Agreement shall be
amended by deleting the phrases "Revolving Credit" and "(when
issued)" wherever appearing therein.
(j) Section 6.1 of the Credit Agreement shall be amended
and as so amended shall be restated in its entirety to read as
follows:
"Section 6.1. All Advances. The obligation of the Lenders
to make any Loan or other financial accommodation to a
Borrower hereunder (including the first such accommodation)
shall also be subject to the conditions precedent that as of
the time of the making of each such Loan or other
accommodation hereunder:
(a) each of the representations and
warranties set forth herein and in the other Loan
Documents shall be and remain true and correct as of
said time, except to the extent the same expressly
relate to an earlier date;
(b) the Acme Group shall be in
compliance with all of the terms and conditions
hereof and of the other Loan
-8-
<PAGE> 9
Documents, and no Default or Event of Default shall
have occurred and be continuing;
(c) after giving effect to such
extension of credit to the relevant Borrower, (i) the
aggregate principal amount of all Revolving Loans,
Swing Line Loans and L/C Obligations shall not exceed
the lesser of (x) the Commitments then in effect and
(y) the Available Borrowing Base of all the Borrowers
as then determined and computed and (ii) the
aggregate principal amount of the Revolving Loans and
Swing Line Loans made to such Borrower and the L/C
Obligations in respect of Letters of Credit issued
for such Borrower's account shall not exceed such
Borrower's Available Borrowing Base as then
determined and computed;
(d) such extension of credit shall not
violate any order, judgment or decree of any court or
other authority or any provision of law or regulation
applicable to the Agent or any Lender (including,
without limitation, Regulation U of the Board of
Governors of the Federal Reserve System) as then in
effect; and
(e) in the case of the issuance of any
Letter of Credit, the Agent shall have received a
properly completed Application therefor and, in the
case of an extension or increase in the amount of the
Letter of Credit, the Agent shall have received a
written request therefor, in a form acceptable to the
Agent, with such Application or written request, in
each case to be accompanied by the fees required by
this Agreement.
Any request made by the Acme Group to the Agent for credit
hereunder shall be deemed to constitute a representation and
warranty that the foregoing statements are true and correct."
(k) Section 7.7 of the Credit Agreement shall be amended
and as so amended shall be restated in its entirety to read as
follows:
-9-
<PAGE> 10
"Section 7.7. Consolidated Tangible Net Worth. The Acme
Group will at all times maintain a Consolidated Tangible Net
Worth of not less than (a) $210,000,000 during the period from
September 28, 1997 through September 27, 1998, (b)
$220,000,000 during the period from September 28, 1998 through
March 27, 1999 and (c) $230,000,000 on March 28, 1999 and at
all times thereafter."
(l) Section 7.8 of the Credit Agreement shall be amended
and as so amended shall be restated in its entirety to read as
follows:
"Section 7.8. Leverage. For the period from and including
September 29, 1997 through and including June 28, 1998, the
Acme Group will at all times maintain a Consolidated Leverage
Ratio of not more than 0.70 to 1.0; provided, however, that as
of the last day of each fiscal quarter ending during such
period, the Acme Group will maintain a Consolidated Leverage
Ratio of not more than 0.65 to 1.0. On June 29, 1998 and at
all times thereafter, the Acme Group will at all times
maintain a Consolidated Leverage Ratio of not more than 0.65
to 1.0."
(m) Section 7.11(d) of the Credit Agreement shall be
amended and as so amended shall be restated in its entirety to read as
follows:
"(d) indebtedness not otherwise permitted by this Section
aggregating not more than $30,000,000 at any one time
outstanding."
(n) Section 7.12(i) of the Credit Agreement shall be
amended and as so amended shall be restated in its entirety to read as
follows:
"(i) loans and advances by (A) Subsidiaries to the Company of
their surplus cash which are repayable on demand and advanced
to the Company as part of the centralized cash management
system of the Acme Group in the ordinary course of its
business as presently conducted, the proceeds of which are
used by the Company to make Permitted Investments for the
benefit of such lending Subsidiary and (B) any Borrower to any
other Borrower so long as such loans and advances are
evidenced by a note which is pledged to the Agent for the
benefit of the Lenders;"
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<PAGE> 11
(o) Section 7.13(b) of the Credit Agreement shall be
amended by inserting the following new sentence immediately at the end
thereof:
"The parties hereto further acknowledge and agree that this
subsection (b) shall in no event apply to nor operate to
prevent any Borrower's repayment of loans and advances made by
another Borrower to it to the extent such loans and advances
are permitted by Section 7.12(i)(B) hereof."
(p) Section 8.1(a) of the Credit Agreement shall be
amended and as so amended shall be restated in its entirety to read as
follows:
"(a) default for a period of five days in the payment when
due of all or any part of the principal of or interest on any
Note (whether at the stated maturity thereof or at any other
time provided for in this Agreement) or of any Reimbursement
Obligation or of any fee or other amount payable hereunder or
under any other Loan Document;"
(q) Sections 8.2 and 8.3 of the Credit Agreement shall be
amended by deleting the phrase "Revolving Credit" wherever appearing
therein.
(r) The definition of the term "Consolidated Cash Flow
Coverage Ratio" appearing in Section 9.1 of the Credit Agreement shall
be amended by deleting the percentage "30%" appearing therein and
substituting therefor the percentage "20%".
(s) The definition of the term "Domestic Rate Margin"
appearing in Section 9.1 of the Credit Agreement shall be amended and
as so amended shall be restated in its entirety to read as follows:
""Domestic Rate Margin" means 0%."
(t) The definition of the term "Interest Period"
appearing in Section 9.1 of the Credit Agreement shall be amended and
as so amended shall be restated in its entirety to read as follows:
""Interest Period" shall mean (i) with respect to any Swing
Line Loan, the period commencing on the date such Swing Line
Loan is made and ending 1-7 days thereafter as selected by the
Company in
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<PAGE> 12
its notice as provided herein and (ii) with respect to any
LIBOR Portion:
(a) initially, the period commencing on,
as the case may be, the creation or conversion date
with respect to such LIBOR Portion and ending one,
two, three or six months thereafter as selected by
the Company in its notice as provided herein; and
(b) thereafter, each period commencing
on the last day of the next preceding Interest Period
applicable to such LIBOR Portion and ending one, two,
three or six months thereafter as selected by the
Company in its notice as provided herein;
provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would
otherwise end on a day which is not a Business Day,
that Interest Period shall be extended to the next
succeeding Business Day, unless the result of such
extension would be to carry such Interest Period into
another calendar month in which event such Interest
Period shall end on the immediately preceding
Business Day;
(ii) no Interest Period may extend beyond
the final maturity date of the relevant Notes; and
(iii) the interest rate to be applicable
to each Portion for each Interest Period shall apply
from and including the first day of such Interest
Period to but excluding the last day thereof.
For purposes of determining an Interest Period, a month means
a period starting on one day in a calendar month and ending on
a numerically corresponding day in the next calendar month,
provided, however, if there is no numerically corresponding
day in the month in which an Interest Period is to end, then
such Interest Period shall end on the last Business Day of
such month."
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<PAGE> 13
(u) The definition of the term "LIBOR Margin" appearing
in Section 9.1 of the Credit Agreement shall be amended and as so
amended shall be restated in its entirety to read as follows:
""LIBOR Margin" shall mean initially mean 2.00%; provided,
however, that such LIBOR Margin shall be subject to quarterly
adjustment as follows:
<TABLE>
<CAPTION>
If the Consolidated Leverage Ratio as of LIBOR Margin
the close of any fiscal quarter is: shall be:
---------------------------------------- ------------
<S> <C>
Greater than or equal to 60% 2.00%
Greater than or equal to 50% but less
than 60% 1.85%
Greater than or equal to 40% but less
than 50% 1.60%
Less than 40% 1.35%
</TABLE>
On the date that is ten (10) days after the date on which the
Acme Group delivers to the Lenders the quarterly financial
statements pursuant to Sections 7.5(a)(ii) hereof for a given
fiscal quarter (commencing with the fiscal quarter ending
September 28, 1997) and the compliance certificate required
for such period pursuant to Section 7.5 hereof, the Agent
shall determine whether such financial information indicates
such a change in the Consolidated Leverage Ratio (the
Consolidated Leverage Ratio to be computed as of the close of
such fiscal quarter (such date that is ten days after the date
on which the Acme Group delivers such compliance certificate
being hereinafter referred to as a "Test Date")) as would
justify a change in the LIBOR Margin and shall then notify the
Acme Group and the Lenders of such determination and of any
change in the LIBOR Margin resulting therefrom. Any change in
the LIBOR Margin shall be effective as of the related Test
Date and with such new LIBOR Margin to continue in effect
until the effectiveness of the next redetermination thereof.
Any determination by the Agent of the Consolidated Leverage
Ratio shall be conclusive and binding upon the Acme Group
provided
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<PAGE> 14
that it has been made reasonably and in good faith. Anything
contained herein to the contrary notwithstanding, the LIBOR
Margin shall be the highest Margin set forth herein during the
continuance of: (x) any Event of Default, (y) any Default
(whether or not any grace period applicable thereto has
passed) in the payment of any principal or interest on any
Note or any fee or other amount payable by the Acme Group
hereunder or (z) any Default by the Acme Group in supplying
the financial statements required by Sections 7.5(a)(ii)
hereof or the compliance certificate required by Section
7.5(b) hereof, in each case by the deadlines expressed in such
Sections."
(v) The definition of the term "Loan Documents" appearing
in Section 9.1 of the Credit Agreement shall be amended and as so
amended shall be restated in its entirety to read as follows:
""Loan Documents" shall mean this Agreement, the Notes, the
L/C Documents and the Collateral Documents and each other
instrument or document to be delivered hereunder or thereunder
or otherwise in connection therewith."
(w) The definition of the term "Termination Date"
appearing in Section 9.1 of the Credit Agreement shall be amended and
as so amended shall be restated in its entirety to read as follows:
""Termination Date" shall mean August 11, 2000 or such earlier
date on which the Commitments are terminated in whole pursuant
to Sections 3.7, 8.2 or 8.3 hereof or such later date to which
the Commitments are extended pursuant to Section 12.16
hereof."
(x) Section 9.1 of the Credit Agreement shall be amended
by deleting the definition of the term "Utilization Ratio" appearing
therein.
(y) Section 9.1 of the Credit Agreement shall be further
amended by inserting the following new definitions in the appropriate
alphabetical order:
""Loans" means and includes Revolving Loans and the Swing Line
Loans unless the context shall otherwise require.
-14-
<PAGE> 15
"Notes" means and includes Revolving Credit Notes and the
Swing Line Note unless the context shall otherwise require.
"Swing Line Commitment" means the commitment of Harris Bank to
make Swing Line Loans in the amount of $5,000,000.
"Swing Line Note" means the promissory note of the Borrowers
payable jointly and severally to the order of Harris Bank in
the principal amount of its Swing Line Commitment and
otherwise in the form of Exhibit A-1 hereto.
"Swing Line Loans" is defined in Section 1.2-A(a) hereof."
(z) Sections 10.2, 10.3, 11.1, 11.2(g), 11.3, 12.2, 12.14
of the Credit Agreement shall be amended by deleting the phrase
"Revolving Credit" wherever appearing therein.
(aa) Section 12.4 of the Credit Agreement shall be amended
by deleting the phrase "Revolving Credit" wherever appearing therein
and by inserting the phrase "(or, if relevant, Swing Line Commitment)"
immediately after the phrase "such Lender's Commitment" appearing in
the sixth line thereof.
(bb) Section 12.16 of the Credit Agreement shall be
amended and as so amended shall be restated in its entirety to read as
follows:
"Section 12.16. Extensions of the Commitments. Not less than
60 days or more than 120 days prior to the one-year, two-year
and three-year anniversaries of the date hereof, the Company
(acting on behalf of the Borrowers pursuant to Section 1.5
hereof) may advise the Agent in writing of its desire to
extend the Termination Date for an additional 12 months (but
not beyond August 11, 2002) and the Agent shall promptly
notify the Lenders of each such request; provided not more
than one such request for the extension of the Termination
Date may be made in any one calendar year. In the event that
the Lenders are agreeable to such extension (it being
understood that any Lender may accept or decline such a
request in its sole discretion), the Acme Group, the Lenders
and the Agent shall enter into such documents as the Agent may
reasonably deem necessary or appropriate to reflect such
extension and to assure that all extensions of credit pursuant
-15-
<PAGE> 16
to the Commitments and the Swing Line Commitment as so
extended are secured by the Liens created by the Collateral
Documents in favor of the Agent, all costs and expenses
incurred by the Agent in connection therewith to be paid by
the Borrowers. In the event that some, but not all, of the
Lenders are agreeable to an extension, the Company may
(provided that no Default or Event of Default has occurred and
is then continuing) terminate the Commitment (and, if
relevant, the Swing Line Commitment) of the Lender or Lenders
declining to extend and repay all borrowings outstanding
against the Revolving Credit Note (and, if relevant, the Swing
Line Note) held by such Lender or Lenders and upon such
repayment the Commitment (and, if relevant, the Swing Line
Commitment) of such Lender or Lenders shall be canceled or, at
the option of the Company, the Acme Group may obtain a new
Lender or Lenders reasonably acceptable to the Agent and the
Required Lenders to replace the Commitment (and, if relevant,
the Swing Line Commitment) of the Lender or Lenders declining
to extend and in such event the Commitment (and, if relevant,
the Swing Line Commitment) of the Lender or Lenders not
desiring to extend shall be canceled. In the event a Lender
elects not to extend, all amounts outstanding under its
Revolving Credit Note (and, if relevant, its Swing Line Note)
shall be paid to it no later than the then current Termination
Date to which it has agreed. The Acme Group, the Agent and
the new Lender shall thereupon execute such instruments and
documents as shall in the opinion of the Agent be reasonably
necessary or appropriate to substitute the new approved Lender
under the Revolving Credit and, if relevant, the Swing Line
(including without limitation the issuance of a new Revolving
Credit Note (and, if relevant, Swing Line Note) to the
substitute Lender, the execution of an amendment making the
new Lender a party hereto and such amendments to the
Collateral Documents as may be necessary or appropriate to
assure the credit extended by the new Lender is secured and/or
supported by the Collateral Documents). The new Lender shall
make an initial Revolving Loan under its Revolving Credit Note
in the amount necessary to retire the indebtedness evidenced
by the Revolving Credit Note held by the declining Lender
(and, if relevant, make an initial Swing Line Loan under its
Swing Line in the amount necessary to retire the indebtedness
evidenced by the Swing Line Note held by the declining Lender)
and all reasonable expenses of
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<PAGE> 17
the Agent incurred in connection with the foregoing shall be
paid by the Acme Group."
(cc) Section 12.18 of the Credit Agreement shall be
amended and as so amended shall be restated in its entirety to read as
follows:
"Section 12.18. Assignment Agreements. Each Lender may, from
time to time upon at least five Business Days' notice to the
Agent, assign to other financial institutions all or part of
its rights and obligations under this Agreement (including
without limitation the indebtedness evidenced by the Notes
then owned by such assigning Lender, together with an
equivalent proportion of its obligation to make loans and
advances and participate in Letters of Credit hereunder)
pursuant to an Assignment Agreement; provided, however, that
(i) except with respect to the Swing Line Loans which must be
assigned in whole, each such assignment shall be of a
constant, and not a varying, percentage of the assigning
Lender's rights and obligations under this Agreement and the
assignment shall cover the same percentage of such Lender's
Commitment, Revolving Loans, Revolving Credit Note and
interests in Letters of Credit; (ii) unless the Agent
otherwise consents, each such assignment (determined as of the
effective date of the relevant Assignment Agreement) shall in
no event be in an aggregate amount of less than $5,000,000 and
shall be in integral multiples of $1,000,000; (iii) unless the
Company otherwise consents, each Lender (other than the
Lenders party hereto as of the date hereof) shall maintain for
its own account at least 50% of its original Commitment; (iv)
the Agent and the Company (which is acting on its own behalf
and pursuant to Section 1.5 hereof on behalf of the Borrowers
as well) must each consent, which consent shall not be
unreasonably withheld and shall be evidenced by execution of a
counterpart of the relevant Assignment Agreement in the space
provided thereon for such acceptance, to each such assignment
to a party which was not an original signatory of this
Agreement (it being understood and agreed the Company may
condition its acceptance of an assignment on payment by the
assigning or assignee Lender of the Security Assignment Costs
referred to in Section 12.5 hereof) and (v) the assigning
Lender (other than the Lenders party hereto as of the date
hereof) must pay to the Agent a processing and recordation fee
of $3,000 and any
-17-
<PAGE> 18
reasonable out-of-pocket attorney's fees incurred by the Agent
in connection with such Assignment Agreement. Upon the
execution of each Assignment Agreement by the assigning Lender
thereunder, the assignee lender thereunder, the Company and
the Agent and payment to such assigning Lender by such
assignee lender of the purchase price for the portion of the
indebtedness of the Acme Group being acquired by it, (i) such
assignee lender shall thereupon become a "Lender" for all
purposes of this Agreement and the other Loan Documents (and,
if relevant, shall be deemed to be Harris Bank for purposes of
Swing Line Loans) with a Commitment (and, if relevant, a Swing
Line Commitment) in the amount set forth in such Assignment
Agreement and with all the rights, powers and obligations
afforded a Lender hereunder, (ii) such assigning Lender shall
have no further liability for funding the portion of its
Commitment (and, if relevant, Swing Line Commitment) assumed
by such other Lender and (iii) the address for notices to such
assignee Lender shall be as specified in the Assignment
Agreement executed by it. Concurrently with the execution and
delivery of such Assignment Agreement, the Borrowers shall
execute and deliver a Revolving Credit Note (and, if relevant,
a Swing Line Note) to the assignee Lender in the amount of its
Commitment (and, if relevant, Swing Line Commitment) and a new
Revolving Credit Note to the assigning Lender in the amount of
its Commitment after giving effect to the reduction occasioned
by such assignment, all such Revolving Credit Notes to
constitute "Revolving Credit Notes" for all purposes of the
Loan Documents and such new Swing Line Note to constitute the
"Swing Line Note" for all purposes of the Loan Documents.
Upon completion of the foregoing, the assigning Lender shall
surrender to the Company its old Revolving Credit Note (and,
if relevant, Swing Line Note)."
(dd) Exhibit A-1 is hereby added to the Credit Agreement
in the form attached to this Amendment as Annex A.
SECTION 2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
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<PAGE> 19
(a) The Borrowers and the Lenders shall have executed and
delivered this Amendment.
(b) The Agent shall have received copies (executed or
certified, as may be appropriate) of all legal documents or
proceedings taken in connection with the execution and delivery of
this Amendment to the extent the Agent or its counsel may reasonably
request.
(c) Legal matters incident to the execution and delivery
of this Amendment shall be satisfactory to the Lenders and their
counsel.
(d) The Agent shall have received, for the ratable
benefit of the Lenders, an amendment fee in the amount of $80,000.
SECTION 3. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment,
the Borrowers hereby represent to the Agent and the Lenders that as of the date
hereof, the representations and warranties set forth in Section 5 of the Credit
Agreement are and shall be and remain true and correct (except that the
representations contained in Section 5.6 shall be deemed to refer to the most
recent financial statements of the Company delivered to the Lenders) and the
Borrowers are in full compliance with all of the terms and conditions of the
Credit Agreement and no Default or Event of Default has occurred and is
continuing under the Credit Agreement or shall result after giving effect to
this Amendment.
SECTION 4. MISCELLANEOUS.
(a) The Borrowers have heretofore executed and delivered to the
Agent certain Collateral Documents and each Borrower hereby acknowledges and
agrees that, notwithstanding the execution and delivery of this Amendment, the
Collateral Documents to which it is a party remain in full force and effect and
the rights and remedies of the Agent and Lenders thereunder, the obligations of
such Borrower thereunder and the liens and security interests created and
provided for thereunder remain in full force and effect and shall not be
affected, impaired or discharged hereby. Nothing herein contained shall in any
manner affect or impair the priority of the liens and security interests
created and provided for by the Collateral Documents as to the indebtedness
which would be secured thereby prior to giving effect to this Amendment.
(b) Except as specifically amended herein, the Credit Agreement
shall continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
or any other instrument or document executed in
-19-
<PAGE> 20
connection therewith, or in any certificate, letter or communication issued or
made pursuant to or with respect to the Credit Agreement, any reference in any
of such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.
(c) The Borrowers agree to pay on demand all costs and expenses of
or incurred by the Agent in connection with the negotiation, preparation,
execution and delivery of this Amendment, including the fees and expenses of
counsel for the Agent.
(d) This Amendment may be executed in any number of counterparts,
and by the different parties on different counterpart signature pages, all of
which taken together shall constitute one and the same agreement. Any of the
parties hereto may execute this Amendment by signing any such counterpart and
each of such counterparts shall for all purposes be deemed to be an original.
This Amendment shall be governed by the internal laws of the State of Illinois.
-20-
<PAGE> 21
Dated as of this 15th day of October, 1997 (but effective as of September 27,
1997).
ACME STEEL COMPANY
By
Its
----------------------------------
ACME PACKAGING CORPORATION
By
Its
----------------------------------
ALPHA TUBE CORPORATION
By
Its
----------------------------------
UNIVERSAL TOOL & STAMPING COMPANY, INC.
By
Its
----------------------------------
ACME METALS INCORPORATED
By
Its
----------------------------------
-21-
<PAGE> 22
Accepted and agreed to as of the date and year last above written.
HARRIS TRUST AND SAVINGS BANK
By
Its Vice PRESIDENT
NBD BANK
By
Its
----------------------------------
MERCANTILE BANK NATIONAL ASSOCIATION
By
Its
----------------------------------
NATIONAL CITY BANK
By
Its
----------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By
Its
----------------------------------
-22-
<PAGE> 23
ANNEX A TO FIFTH AMENDMENT TO CREDIT AGREEMENT
EXHIBIT A-1
ACME GROUP
SWING LINE NOTE
Chicago, Illinois
$5,000,000.00 October 15, 1997
On the Termination Date, for value received, the undersigned, Acme
Steel Company, a Delaware corporation ("Acme Steel"), Acme Packaging
Corporation, a Delaware corporation ("Acme Packaging"), Alpha Tube Corporation,
an Indiana corporation, ("Alpha Tube"), and Universal Tool & Stamping Company,
Inc., an Indiana corporation ("Universal Tool") (Acme Steel, Acme Packaging,
Alpha Tube and Universal Tool are being hereinafter referred to collectively as
the "Borrowers") hereby jointly and severally promise to pay to the order of
Harris Trust and Savings Bank (the "Lender"), at the principal office of Harris
Trust and Savings Bank in Chicago, Illinois, the principal sum of (i) Five
Million and 00/100 Dollars ($5,000,000.00), or (ii) such lesser amount as may
at the time of the maturity hereof, whether by acceleration or otherwise, be
the aggregate unpaid principal amount of all Swing Line Loans owing from the
Borrowers to the Lender under the Swing Line Commitment provided for in the
Credit Agreement hereinafter mentioned.
This Note evidences Swing Line Loans made and to be made to the
Borrowers by the Lender under the Swing Line Commitment provided for under that
certain Credit Agreement dated as of August 11, 1994, by and among the
Borrowers, Acme Metals Incorporated, Harris Trust and Savings Bank,
individually and as Agent thereunder, and the other Lenders which are now or
may from time to time hereafter become parties thereto (said Credit Agreement,
as the same may from time to time be modified, amended or restated being
referred to herein as the "Credit Agreement"), and the Borrowers hereby jointly
and severally promise to pay interest at the office described above on each
Swing Line Loan evidenced hereby at the rates and at the times and in the
manner specified therefor in the Credit Agreement.
Each Swing Line Loan made under the Swing Line Commitment provided for
in the Credit Agreement by the Lender to the Borrowers against this Note, any
repayment of principal hereon and the interest rates applicable thereto shall
be endorsed by the holder hereof on a schedule to this Note or recorded on the
books and records of the holder hereof (provided that
-1-
<PAGE> 24
such entries shall be endorsed on a schedule to this Note prior to any
negotiation hereof). The Borrowers agree that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so
endorsed a schedule to this Note or recorded on the books and records of the
holder hereof shall be prima facie evidence of the unpaid principal balance of
this Note and the interest rates applicable thereto.
This Note is issued by the Borrowers under the terms and provisions of
the Credit Agreement and is secured by the Collateral Documents, and this Note
and the holder hereof are entitled to all of the benefits and security provided
for thereby or referred to therein, to which reference is hereby made for a
statement thereof. This Note may be declared to be, or be and become, due
prior to its expressed maturity, voluntary prepayments may be made hereon, and
certain prepayments are required to be made hereon, all in the events, on the
terms and with the effects provided in the Credit Agreement. All capitalized
terms used herein without definition shall have the same meanings herein as
such terms have in the Credit Agreement.
This Note shall be construed in accordance with, and governed by, the
internal laws of the State of Illinois without regard to principles of conflict
of law.
The Borrowers hereby jointly and severally promise to pay all
reasonable costs and expenses (including attorneys' fees) suffered or incurred
by the holder hereof in collecting this Note or enforcing any rights in any
collateral therefor. The Borrowers hereby waive presentment for payment and
demand.
ACME STEEL COMPANY
By
Its
----------------------------------
ACME PACKAGING CORPORATION
By
Its
----------------------------------
ALPHA TUBE CORPORATION
By
Its
----------------------------------
UNIVERSAL TOOL & STAMPING COMPANY, INC.
By
Its
----------------------------------
-2-
<PAGE> 1
EXHIBIT ____
================================================================================
U.S. $80,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
by and among
ACME GROUP
and
HARRIS TRUST AND SAVINGS BANK,
individually and as Agent,
THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Co-Agent
and
the Lenders
which are or become parties hereto Dated as of December 18, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
SECTION 1. THE CREDITS................................................2
Section 1.1. Present Loans..........................................2
Section 1.2. Revolving Credit.......................................2
Section 1.3. Revolving Loans........................................3
Section 1.4. The Swing Line.........................................3
(a) Swing Line Loans.......................................3
(b) Minimum Borrowing Amount...............................4
(c) Interest on Swing Line Loans...........................4
(d) Requests for Swing Line Loans..........................4
(e) Refunding Loans........................................4
(f) Participations.........................................5
Section 1.5. Letters of Credit......................................5
(a) General Terms..........................................5
(b) Applications...........................................5
(c) The Reimbursement Obligation...........................6
(d) The Participating Interests............................7
(e) Indemnification........................................8
Section 1.6. Manner of Borrowing Loans..............................8
(a) Generally..............................................8
(b) Reimbursement Obligation...............................8
(c) Agent Reliance on Bank Funding.........................9
Section 1.7. Appointment of Company as Agent for
Borrowers; Reliance by Agent...........................9
(a) Appointment............................................9
(b) Reliance...............................................9
SECTION 2. INTEREST ON REVOLVING CREDIT NOTES.........................9
Section 2.1. Options................................................9
Section 2.2. Domestic Rate Portion.................................10
Section 2.3. LIBOR Portions........................................10
Section 2.4. Manner of Rate Selection..............................11
Section 2.5. Change of Law.........................................11
Section 2.6. Unavailability of Deposits or Inability to
Ascertain the Adjusted LIBOR Rate.....................11
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
Section 2.7. Taxes and Increased Costs.............................12
Section 2.8. Funding Indemnity.....................................13
Section 2.9. Lending Branch........................................13
Section 2.10. Change of Lending Branch..............................13
Section 2.11. Discretion of Lenders as to Manner of Funding.........14
Section 2.12. Computation of Interest...............................14
Section 2.13. Interest Rate and Exchange Rate Protection............14
Section 2.14. Capital Adequacy......................................14
SECTION 3. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND
NOTATIONS...............................................15
Section 3.1. Commitment Fee........................................15
Section 3.2. Agent's Fees..........................................15
Section 3.3. Letter of Credit Fees.................................15
Section 3.4. Audit Fees............................................15
Section 3.5. Voluntary Prepayments.................................16
Section 3.6. Mandatory Prepayments Upon Borrowing Base Deficiency..16
Section 3.7. Terminations..........................................16
Section 3.8. Place and Application.................................17
Section 3.9. Notations and Requests................................19
SECTION 4. THE COLLATERAL............................................19
Section 4.1. Collateral............................................19
Section 4.2. Further Assurances....................................19
SECTION 5. REPRESENTATIONS AND WARRANTIES............................20
Section 5.1. Acme Group's Organization, Licenses and
Authorizations......................................20
Section 5.2. Acme Group's Power and Authority......................20
Section 5.3. Subsidiaries..........................................20
Section 5.4. Good Title............................................21
Section 5.5. Regulation U..........................................21
Section 5.6. Financial Reports.....................................21
Section 5.7. Litigation; No Labor Controversies....................21
Section 5.8. Approvals.............................................22
Section 5.9. Affiliates............................................22
Section 5.10. ERISA.................................................22
Section 5.11. Government Regulation.................................22
Section 5.12. Environmental Requirements............................23
Section 5.13. Reliance..............................................23
Section 5.14. No Burdensome Restrictions; Compliance with
Agreements..........................................23
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 6. CONDITIONS PRECEDENT......................................23
Section 6.1. All Advances..........................................23
Section 6.2. Initial Advance.......................................24
SECTION 7. COVENANTS.................................................26
Section 7.1. Maintenance of Business and Compliance with Laws.......26
Section 7.2. Maintenance of Property................................26
Section 7.3. Taxes and Assessments..................................26
Section 7.4. Insurance..............................................26
Section 7.5. Financial Reports and Rights of Inspection.............27
Section 7.6. Intentionally Omitted..................................29
Section 7.7. Consolidated Tangible Net Worth........................29
Section 7.8. Leverage...............................................29
Section 7.9. Cash Flow Coverage Ratio...............................29
Section 7.10. Liens..................................................30
Section 7.11. Indebtedness...........................................30
Section 7.12. Acquisitions, Investments, Loans, Advances
and Guaranties.......................................31
Section 7.13. Dividends and Certain Other Restricted Payments........33
(a) Restricted Equity Payments.............................33
(b) Restricted Debt Payments...............................33
(c) Exceptions.............................................33
Section 7.14. Mergers, Consolidations, Leases and Sales..............34
Section 7.15. Maintenance of Subsidiaries............................34
Section 7.16. ERISA..................................................35
Section 7.17. Burdensome Contracts with Affiliates...................35
Section 7.18 Change in Fiscal Year..................................35
Section 7.19. Change in the Nature of Business.......................35
Section 7.20. Changes to Senior Secured Term Loan Indenture..........36
Section 7.21. Compliance with Laws...................................36
SECTION 8. EVENTS OF DEFAULT AND REMEDIES............................36
SECTION 9. DEFINITIONS INTERPRETATIONS...............................39
Section 9.1. Definitions............................................39
Section 9.2. Interpretation.........................................56
SECTION 10. THE AGENT.................................................56
Section 10.1. Appointment and Authorization..........................56
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 10.2. Rights as a Lender.....................................57
Section 10.3. Standard of Care.......................................57
Section 10.4. Costs and Expenses.....................................58
Section 10.5. Indemnity..............................................58
Section 10.6. Conflict...............................................59
Section 10.7. Co-Agent...............................................59
SECTION 11. THE GUARANTEES............................................59
Section 11.1. The Guarantees.........................................59
Section 11.2. Guarantee Unconditional................................59
Section 11.3. Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances.................60
Section 11.4. Waivers................................................60
Section 11.5. Limit on Recovery......................................61
Section 11.6. Stay of Acceleration...................................61
SECTION 12. MISCELLANEOUS.............................................61
Section 12.1. Withholding Taxes......................................61
Section 12.2. Holidays...............................................62
Section 12.3. No Waiver, Cumulative Remedies.........................63
Section 12.4. Waivers, Modifications and Amendments..................63
Section 12.5. Costs and Expenses.....................................63
Section 12.6. Stamp Taxes............................................64
Section 12.7. Survival of Representations............................64
Section 12.8. Construction...........................................64
Section 12.9. Addresses for Notices..................................64
Section 12.10. Obligations Several....................................64
Section 12.11. Headings...............................................64
Section 12.12. Severability of Provisions.............................65
Section 12.13. Counterparts...........................................65
Section 12.14. Binding Nature and Governing Law.......................65
Section 12.15. Entire Understanding...................................65
Section 12.16. Extensions of the Commitments..........................65
Section 12.17. Participations.........................................66
Section 12.18. Assignment Agreements..................................66
Section 12.19. Confidentiality........................................67
Section 12.20. Terms of Collateral Documents not Superseded...........68
Section 12.21. Personal Jurisdiction..................................68
(a) Exclusive Jurisdiction.................................68
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
(b) Other Jurisdictions....................................68
Signature Page..................................................................69
EXHIBIT A -- Revolving Credit Note
EXHIBIT A-1 -- Swing Line Note
EXHIBIT B -- Notice of Participation in Letter of Credit
EXHIBIT C -- Security Agreement
EXHIBIT D -- Opinion of Counsel
EXHIBIT E -- Borrowing Base Certificate
EXHIBIT F -- Compliance Certificate
EXHIBIT G -- Assignment and Acceptance
SCHEDULE 1.5 -- Applications for Letters of Credit
SCHEDULE 5.3 -- Subsidiaries
SCHEDULE 5.4 -- Permitted Liens
SCHEDULE 7.11 -- Indebtedness
</TABLE>
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<PAGE> 7
ACME GROUP
CREDIT AGREEMENT
Harris Trust and Savings Bank
Chicago, Illinois
The First National Bank of Chicago
Chicago, Illinois
and their from time to time assigns
Gentlemen:
The undersigned, Acme Steel Company, a Delaware corporation ("Acme
Steel"), Acme Packaging Corporation, a Delaware corporation ("Acme Packaging"),
Alpha Tube Corporation, a Delaware corporation, ("Alpha Tube"), and Universal
Tool & Stamping Company, Inc., an Indiana corporation ("Universal Tool") (Acme
Steel, Acme Packaging, Alpha Tube and Universal Tool are being hereinafter
referred to collectively as the "Borrowers" and individually as a "Borrower")
refer to the Credit Agreement dated as of August 11, 1994, as amended and
currently in effect (the "Prior Credit Agreement") between the Borrowers and the
Lenders currently party thereto (the "Existing Lenders"). The Borrowers issued
to (i) each Existing Lender under the Prior Credit Agreement their revolving
credit notes dated March 21, 1997 payable to the order of the Existing Lenders
in the aggregate face principal amount of $80,000,000 (the "Prior Revolving
Credit Notes") to evidence the loans outstanding under the revolving credit
provided for under the Prior Credit Agreement and (ii) to Harris Trust and
Savings Bank ("Harris Bank") their swing line note dated October 15, 1997
payable to the order of Harris Bank in the face principal amount of $5,000,000
(the "Prior Swing Line Note") to evidence the loans outstanding under the swing
line provided under the Prior Credit Agreement (the Prior Revolving Credit Notes
and the Prior Swing Line Note being referred to collectively as the "Prior
Notes"). The Borrowers have requested that the Lenders modify the terms and
conditions applicable to the indebtedness evidenced by the Prior Notes (the
"Present Loans"), extend the maturity thereof and provide to the Borrowers a new
revolving credit facility (the "Revolving Credit") covering the Present Loans,
the Existing L/C and additional credit to be extended by the Lenders to the
Borrowers from time to time, all on and subject to the terms and conditions set
forth below. Accordingly, this Agreement is executed and delivered by the
Borrowers to the Lenders for the sake of convenience and clarity, to amend and
restate the Prior Credit Agreement and in doing so set forth and confirm the
terms and conditions applicable to such credit facilities and the covenants,
representations and warranties of the Borrowers to be
<PAGE> 8
made in connection therewith. The undersigned, Acme Metals Incorporated, a
Delaware corporation (the "Company"), executes and delivers this Agreement to
confirm certain of its agreements made in connection with the extension of such
credit to the Borrowers. Accordingly, upon the execution by the Borrowers, the
Company, the Agent and the Lenders in the spaces provided for that purpose
below, Sections 1 through 12 of the Prior Credit Agreement and the Exhibits and
Schedules thereto shall be amended and as so amended shall be restated in their
entirety as follows:
SECTION 1. THE CREDITS.
Section 1.1. Present Loans. The Borrowers acknowledge that they are
justly and truly indebted to the Existing Lenders on the Present Loans in the
principal amount of $3,000,000 plus accrued and unpaid interest thereon.
Substantially concurrently herewith, the Company is executing and delivering to
the Lenders the Revolving Credit Notes hereinafter identified and defined. Upon
satisfaction of the conditions precedent to effectiveness set forth in Section 6
hereof, (i) the Revolving Credit Notes issued under this Agreement shall
automatically, and without further action on the part of either the Lenders or
the Borrowers, be deemed to be issued in substitution and replacement for the
Prior Notes, and (ii) the existing L/C shall automatically, and without further
action on the part of either the Agent, the Lenders or the Borrowers, be deemed
Letters of Credit issued under this Agreement. The Present Loans shall, for all
purposes of this Agreement, be treated as though they constituted Loans under
this Agreement in an amount equal to the aggregate unpaid principal balance of
the Present Loans outstanding on the date the conditions precedent to
effectiveness set forth in Section 6 hereof have been satisfied or duly waived
in writing by the Required Lenders. Simultaneously with such satisfaction or
waiver of such conditions precedent, any commitments of the Departing Lenders
under the Prior Credit Agreement shall terminate and any commitments of the
Existing Lenders which are parties hereto as of the date hereof shall be
reallocated among the Lenders in accordance with, and as so reallocated shall
automatically be deemed to be, their Commitments hereunder.
Section 1.2. Revolving Credit. Subject to all of the terms and
conditions hereof, each Lender, by its acceptance hereof, severally agrees to
extend a Revolving Credit to the Borrowers in the amount of its commitment to
extend the Revolving Credit set forth on the applicable signature page hereof
(its "Commitment" and cumulatively for all the Lenders, the "Commitments")
(subject to any reductions thereof pursuant to the terms hereof) prior to the
Termination Date. Such Revolving Credit may be availed of by each Borrower in
its discretion from time to time, be repaid and used again, during the period
from the date hereof to and including the Termination Date. The Revolving
Credit, subject to all of the terms and conditions hereof, may be utilized by
any one or more of the Borrowers in the form of Revolving Loans, Swing Line
Loans and Letters of Credit, all as more fully hereinafter set forth; provided,
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<PAGE> 9
however, that the aggregate amount of the Revolving Loans, the Swing Line Loans
and the L/C Obligations outstanding at any one time from all the Borrowers taken
together shall not at any time exceed the lesser of the Commitments then in
effect or the Available Borrowing Base as then determined and computed for all
the Borrowers; provided further, however, that the aggregate amount outstanding
at any time on Revolving Loans and Swing Line Loans made to each Borrower, and
L/C Obligations in respect of Letters of Credit issued for such Borrower's sole
or joint account, shall not exceed such Borrower's Available Borrowing Base as
then determined and computed. For all purposes of this Agreement and except as
otherwise set forth in Section 3.1 hereof, where a determination of the unused
or available amount of the Commitments is necessary, the Revolving Loans, the
Swing Line Loans and the L/C Obligations shall all be deemed to utilize the
Commitments. The obligations of the Lenders hereunder are several and not joint
and no Lender shall under any circumstances be obligated to extend credit
hereunder in excess of its Commitment.
Section 1.3. Revolving Loans. Subject to all of the terms and
conditions hereof, the Revolving Credit may be availed of in the form of loans
(individually a "Revolving Loan" and collectively the "Revolving Loans"). Each
Borrowing of Revolving Loans shall be made ratably by the Lenders in accordance
with their Percentages. Each Borrowing of Revolving Loans shall be in a minimum
amount of $1,000,000 or such greater amount which is an integral multiple of
$500,000; provided, however, that (i) a Borrowing made to repay a Reimbursement
Obligation may be made in the amount thereof and (ii) a Borrowing of Revolving
Loans which bears interest with reference to the Adjusted LIBOR Rate shall be in
such greater amount as is required by Section 2 hereof. All Revolving Loans made
by a Lender to the Borrowers shall be evidenced by a single Revolving Credit
Note of the Borrowers, jointly and severally, (individually a "Revolving Credit
Note" and collectively the "Revolving Credit Notes") payable to the order of
such Lender in the amount of its Commitment, each Revolving Credit Note to be in
the form (with appropriate insertions) attached hereto as Exhibit A. Without
regard to the face principal amount of each Lender's Revolving Credit Note, the
actual principal amount at any time outstanding and owing by the Borrowers on
account thereof during the period ending on the Termination Date shall be the
sum of all Revolving Loans then or theretofore made thereon by such Lender to
the Borrowers less all payments actually received thereon during the same
period.
Section 1.4. The Swing Line.
(a) Swing Line Loans. Subject to all of the terms and conditions
hereof, Harris Trust and Savings Bank ("Harris Bank") agrees to make loans
("Swing Line Loans") to each Borrower under a swing line of credit ("Swing
Line"); provided, however, that the aggregate amount of Swing Line Loans at any
time outstanding to all Borrowers taken together shall not exceed the Swing Line
Commitment; provided further, however, that the aggregate amount of the
Revolving Loans, the Swing Line Loans and the L/C Obligations outstanding at any
one time
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<PAGE> 10
from all the Borrowers taken together shall not at any time exceed the lesser of
the Commitments then in effect or the Available Borrowing Base as then
determined and computed for all the Borrowers; provided still further, however,
that the aggregate amount outstanding at any time on Revolving Loans and Swing
Line Loans made to each Borrower, and L/C Obligations in respect of Letters of
Credit issued for such Borrower's sole or joint account, shall not exceed such
Borrower's Available Borrowing Base as then determined and computed. The Swing
Line Commitment shall be available to the Borrowers and may be availed of by
each Borrower from time to time and borrowings thereunder may be repaid and used
again during the period ending on the Termination Date. Without regard to the
face principal amount of the Swing Line Note, the actual principal amount at any
time outstanding and owing by the Borrowers on account of the Swing Line Note on
any date during the period ending on the Termination Date shall be the sum of
all Swing Line Loans then or theretofore made thereon through such date less all
payments actually received thereon through such date. Each Swing Line Loan shall
be due and payable on the last day of the Interest Period selected therefor.
(b) Minimum Borrowing Amount. Each Swing Line Loan shall be in an
amount not less than $250,000.
(c) Interest on Swing Line Loans. Each Swing Line Loan shall bear
interest (computed on the basis of a year of 360 days and actual days elapsed)
for the Interest Period selected by the Company (which is acting on behalf of
the Borrowers pursuant to Section 1.7 hereof) therefor at the Domestic Rate or
at Harris Banks Quoted Rate for such Interest Period, provided that if any Swing
Line Loan is not paid when due (whether by lapse of time, acceleration or
otherwise) such Swing Line Loan shall bear interest whether before or after
judgment, until payment in full thereof, (x) in the case of a Swing Line Loan
bearing interest with reference to Harris Bank's Quoted Rate, through the end of
the Interest Period then applicable thereto at the rate per annum determined by
adding 2% to Harris Bank's Quoted Rate and thereafter at the rate per annum
determined by adding 2% to the Domestic Rate as from time to time in effect and
(y) in the case of a Swing Line Loan bearing interest with reference to the
Domestic Rate, at the rate per annum determined by adding 2% to the Domestic
Rate as from time to time in effect. Interest on each Swing Line Loan shall be
due and payable on the last day of each Interest Period applicable thereto, and
interest after maturity (whether by lapse of time, acceleration or otherwise)
shall be due and payable upon demand.
(d) Requests for Swing Line Loans. The Company (which is acting on
behalf of the Borrowers pursuant to Section 1.7 hereof) shall give Harris Bank
prior notice (which may be written or oral) no later than 12:00 Noon (Chicago
time) on the date upon which any Swing Line Loan is to be made, specifying in
each case the Borrower to which the proceeds of such Loan are to be made, the
amount and date of such Swing Line Loan and the Interest Period selected
therefor. Within thirty (30) minutes after receiving such notice, Harris Bank
shall quote an
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<PAGE> 11
interest rate determined in its discretion to the Company at which Harris Bank
would be willing to make such Swing Line Loan available to the relevant Borrower
for such Interest Period (the rate so quoted for a given Interest Period being
herein referred to as "Harris Bank's Quoted Rate"). The Borrowers acknowledge
and agree that Harris Bank's Quoted Rate is given to the Company for immediate
and irrevocable acceptance, and if the Company does not so immediately accept
Harris Banks Quoted Rate for the full amount requested by the Company for such
Swing Line Loan, Harris Banks Quoted Rate shall be deemed immediately withdrawn
and such Swing Line Loan shall be made at the Domestic Rate. Subject to all of
the terms and conditions hereof, the proceeds of such Swing Line Loan shall be
made available to the relevant Borrower on the date so requested at the offices
of the Agent in Chicago, Illinois. Anything contained in the foregoing to the
contrary notwithstanding (i) the obligation of Harris Bank to make Swing Line
Loans shall be subject to all of the terms and conditions of this Agreement and
(ii) Harris Bank shall not be obligated to make more than one Swing Line Loan
during any one day.
(e) Refunding Loans. In its sole and absolute discretion, Harris Bank
may at any time, on behalf of the Borrowers (which hereby irrevocably authorize
Harris Bank to act on their behalf for such purpose), request each Lender to
make a Borrowing of Revolving Loans in an amount equal to such Lender's pro rata
share of the amount of the Swing Line Loans outstanding on the date such notice
is given. Borrowings of Revolving Loans under this Section 1.4(e) shall
initially bear interest at the Domestic Rate unless timely notice is given
pursuant to Section 2.4 hereof. Unless any of the conditions of Section 6 are
not fulfilled on such date, each Lender shall make its requested Revolving Loan
available to Harris Bank, in immediately available funds, at the principal
office of Harris Bank in Chicago, Illinois, before 11:00 a.m. (Chicago time) on
the Business Day following the day such notice is given. The proceeds of such
Revolving Loans shall be immediately applied to repay the outstanding Swing Line
Loans.
(f) Participations. If any Lender refuses or otherwise fails to make
a Revolving Loan when requested by Harris Bank pursuant to Section 1.4(e) above
(because the conditions in Section 6 are not satisfied or otherwise), such
Lender will, by the time and in the manner such Revolving Loan was to have been
funded to Harris Bank, purchase from Harris Bank an undivided participating
interest in the outstanding Swing Line Loans in an amount equal to its pro rata
share of the aggregate principal amount of Swing Line Loans that were to have
been repaid with such Revolving Loans. Each Lender that so purchases a
participation in a Swing Line Loan shall thereafter be entitled to receive its
pro rata share of each payment of principal received on the Swing Line Loan and
of interest received thereon accruing from the date such Lender funded to Harris
Bank its participation in such Loan. The obligation of the Lenders to Harris
Bank shall be absolute and unconditional and shall not be affected or impaired
by any Default or Event of Default which may then be continuing hereunder.
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<PAGE> 12
Section 1.5. Letters of Credit.
(a) General Terms. Subject to the terms and conditions hereof, as
part of the Revolving Credit, the Agent shall issue standby or commercial
letters of credit (each a "Letter of Credit") for the account of any one or more
of the Borrowers in U.S. Dollars in an aggregate undrawn face amount up to the
amount of the L/C Commitment; provided, however, that the aggregate L/C
Obligations at any time outstanding shall not exceed the difference between the
Commitments in effect at such time and the aggregate principal amount of
Revolving Credit Loans and Swing Line Loans then outstanding; provided further,
however, that the aggregate amount outstanding at any time on Revolving Loans
and Swing Line Loans made to each Borrower, and L/C Obligations in respect of
Letters of Credit issued for such Borrower's account, shall not exceed such
Borrower's Available Borrowing Base as then determined and computed. Each Letter
of Credit shall be issued by the Agent, but each Lender shall be obligated to
reimburse the Agent for its Percentage of the amount of each drawing thereunder
and, accordingly, the undrawn face amount of each Letter of Credit shall
constitute usage of the Commitment of each Lender pro rata in accordance with
each Lender's Percentage.
(b) Applications. At any time before the Termination Date, the Agent
shall, at the request of the Company (which is acting on behalf of the Borrowers
pursuant to Section 1.7 hereof), issue one or more Letters of Credit for the
account of any one or more of the Borrowers, in a form satisfactory to the
Agent, with expiration dates no later than the Termination Date, in an aggregate
face amount as set forth above, upon the receipt of an application for the
relevant Letter of Credit in the form customarily prescribed by the Agent for
the type of Letter of Credit, whether standby or commercial, duly executed by
each Borrower for whose account such Letter of Credit was issued (each an
"Application"). The current form of the Agent's Applications are attached as
Schedule 1.5 (Standby) and Schedule 1.5 (Commercial) hereto. The Agent shall
provide the Borrowers and each Lender with copies of any new form of Application
that may, from time to time, be adopted by the Agent. Notwithstanding anything
contained in any Application to the contrary (i) the Borrowers shall be jointly
and severally liable for all obligations in respect of each Letter of Credit,
(ii) the Acme Group's obligation to pay fees in connection with each Letter of
Credit shall be as exclusively set forth in Section 3.3 hereof, (iii) except
during the continuance of an Event of Default , the Agent will not call for the
funding by the Acme Group of any amount under a Letter of Credit, or any other
form of collateral security for the Acme Group's obligations in connection with
such Letter of Credit, before being presented with a drawing thereunder, and
(iv) if the Agent is not timely reimbursed for the amount of any drawing under a
Letter of Credit on the date such drawing is paid, the Borrowers' obligation to
reimburse the Agent for the amount of such drawing shall bear interest (which
the Borrowers hereby promise to pay) from and after the date such drawing is
paid at a rate per annum equal to the sum of 2% plus the Domestic Rate from time
to time in effect. The Agent will promptly notify the Lenders of each issuance
by it of a Letter of Credit. If the Agent issues
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<PAGE> 13
any Letters of Credit with expiration dates that are automatically extended
unless the Agent gives notice that the expiration date will not so extend beyond
its then scheduled expiration date, the Agent will give such notice of
non-renewal before the time necessary to prevent such automatic extension if
before such required notice date (i) the expiration date of such Letter of
Credit if so extended would be after the Termination Date, (ii) the Commitments
have been terminated or (iii) an Event of Default exists and any Lender has
given the Agent instructions not to so permit the extension of the expiration
date of such Letter of Credit. The Agent agrees to issue amendments to the
Letter(s) of Credit increasing the amount, or extending the expiration date,
thereof at the request of the Company subject to the conditions of Section 6 and
the other terms of this Section 1.5. Without limiting the generality of the
foregoing, the Agent's obligation to issue, amend or extend the expiration date
of a Letter of Credit is subject to the conditions of Section 6 and the other
terms of this Section 1.5 and the Agent will not issue, amend or extend the
expiration date of any Letter of Credit if any Lender notifies the Agent of any
failure to satisfy or otherwise comply with such conditions and terms and
directs the Agent not to take such action.
(c) The Reimbursement Obligation. Subject to Section 1.5(b) hereof,
the obligation of a Borrower to reimburse the Agent for all drawings under a
Letter of Credit issued for such Borrower's account (a "Reimbursement
Obligation") shall be governed by the Application related to such Letter of
Credit, except that reimbursement of each drawing shall be made in immediately
available funds at the Agent's principal office in Chicago, Illinois by no later
than 12:00 Noon (Chicago time) on the date when such drawing is paid or, if
drawing was paid after 11:30 a.m. (Chicago time), by the end of such day. If the
relevant Borrower does not make any such reimbursement payment on the date due
and the Participating Lenders fund their participations therein in the manner
set forth in Section 1.5(d) below, then all payments thereafter received by the
Agent in discharge of any of the relevant Reimbursement Obligations shall be
distributed in accordance with Section 1.5(d) below.
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<PAGE> 14
(d) The Participating Interests. Each Lender (other than the Lender
then acting as Agent in issuing Letters of Credit), by its acceptance hereof,
severally agrees to purchase from the Agent, and the Agent hereby agrees to sell
to each such Lender (a "Participating Lender"), an undivided percentage
participating interest (a "Participating Interest"), to the extent of its
Percentage, in each Letter of Credit issued by, and each Reimbursement
Obligation owed to, the Agent. Upon any failure by a Borrower to pay any
Reimbursement Obligation in respect of a Letter of Credit issued for such
Borrower's account at the time required on the date the related drawing is paid,
as set forth in Section 1.5(c) above, or if the Agent is required at any time to
return to a Borrower or to a trustee, receiver, liquidator, custodian or other
Person any portion of any payment of any Reimbursement Obligation, each
Participating Lender shall, not later than the Business Day it receives a
certificate in the form of Exhibit B hereto from the Agent to such effect, if
such certificate is received before 1:00 p.m. (Chicago time), or not later than
the following Business Day, if such certificate is received after such time, pay
to the Agent an amount equal to its Percentage of such unpaid or recaptured
Reimbursement Obligation together with interest on such amount accrued from the
date the related payment was made by the Agent to the date of such payment by
such Participating Lender at a rate per annum equal to (i) from the date the
related payment was made by the Agent to the date two (2) Business Days after
payment by such Participating Lender is due hereunder, the Federal Funds Rate
for each such day and (ii) from the date two (2) Business Days after the date
such payment is due from such Participating Lender to the date such payment is
made by such Participating Lender, the Domestic Rate in effect for each such
day. Each such Participating Lender shall thereafter be entitled to receive its
Percentage of each payment received in respect of the relevant Reimbursement
Obligation and of interest paid thereon, with the Agent retaining its Percentage
as a Lender hereunder.
The several obligations of the Participating Lenders to the Agent under
this Section 1.5 shall be absolute, irrevocable and unconditional under any and
all circumstances whatsoever (except, without limiting the Borrowers' joint and
several obligations under each Application for a Letter of Credit issued for any
Borrower's account, to the extent such Borrower is relieved from its obligation
to reimburse the Agent for a drawing under a Letter of Credit because of the
Agent's gross negligence or willful misconduct in determining that documents
received under the Letter of Credit comply with the terms thereof) and shall not
be subject to any set-off, counterclaim or defense to payment which any
Participating Lender may have or have had against any one or more of the
Borrowers, the Agent, any other Lender or any other Person whatsoever. Without
limiting the generality of the foregoing, such obligations shall not be affected
by any Default or Event of Default or by any reduction or termination of any
Commitment of any Lender, and each payment by a Participating Lender under this
Section 1.5 shall be made without any offset, abatement, withholding or
reduction whatsoever. The Agent shall be entitled to offset amounts received for
the account of a Lender under this Agreement against unpaid amounts due from
such Lender to the Agent hereunder (whether as fundings of
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<PAGE> 15
participations, indemnities or otherwise), but shall not be entitled to offset
against amounts owed to the Agent by any Lender arising outside this Agreement.
(e) Indemnification. Each Participating Lenders shall, to the extent
of their respective Percentages, indemnify the Agent (to the extent not
reimbursed by the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from the Agent's gross negligence or willful misconduct)
that the Agent may suffer or incur in connection with any Letter of Credit. The
obligations of the Participating Lenders under this Section 1.5(d) and all other
parts of this Section 1.5 shall survive termination of this Agreement and of all
other L/C Documents.
Section 1.6. Manner of Borrowing Loans. (a) Generally. The Company
(which is acting on behalf of the Borrowers pursuant to Section 1.7 hereof)
shall give the Agent notice (which may be written or oral, but if oral, promptly
confirmed in writing) by 10:00 a.m. (Chicago time) on any Business Day of each
request that any Borrowing of Revolving Loans, in each case specifying the
Borrower to which the proceeds of such Borrowing are to be disbursed, the amount
of each such Borrowing and the date such Borrowing is to be made (which date
shall be at least three Business Days subsequent to the date of such notice in
the case of any Borrowing of Revolving Loans constituting a LIBOR Portion). The
Agent shall notify each Lender of its receipt of each such notice by 12:00 Noon
(Chicago time) on the Business Day any Borrowing of Revolving Loans constituting
the Domestic Rate Portion is to be made and by 12:00 Noon (Chicago time) on the
Business Day it receives such a request for any Borrowing of Revolving Loans
constituting a LIBOR Portion. Each Revolving Loan from each Lender shall
initially constitute part of the Domestic Rate Portion except to the extent the
Company on behalf of the Borrowers has timely elected otherwise as provided in
Section 2 hereof. Not later than 2:00 p.m. (Chicago time) on the date specified
for any Borrowing of Revolving Loans to be made hereunder, such Lender shall
make the proceeds of its Revolving Loan comprising part of such Borrowing
available in immediately available funds to the Agent in Chicago. Subject to all
of the terms and conditions hereof, the proceeds of each Lender's Revolving Loan
shall be made available to the relevant Borrower at the office of the Agent in
Chicago and in funds there current by crediting such Borrower's general
operating account maintained with the Agent in Chicago, Illinois upon receipt by
the Agent from such Lender of the proceeds of such Revolving Loan.
(b) Reimbursement Obligation. In the event the Company fails to give
notice pursuant to Section 1.6(a) above of a Borrowing equal to the amount of a
Reimbursement Obligation and has not notified the Agent by 10:00 a.m. (Chicago
time) on the day such Reimbursement Obligation becomes due that it intends to
repay such Reimbursement Obligation through funds not borrowed under this
Agreement, the Company shall be deemed to have requested a Borrowing of
Revolving Loans constituting part of the Domestic Rate Portion on
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such day in the amount of the Reimbursement Obligation then due, subject to
Section 6.1 hereof, which Borrowing shall be applied to pay the Reimbursement
Obligation then due.
(c) Agent Reliance on Bank Funding. Unless the Agent shall have been
notified by a Lender before the date on which such Lender is scheduled to make
payment to the Agent of the proceeds of a Revolving Loan (which notice shall be
effective upon receipt) that such Lender does not intend to make such payment,
the Agent may assume that such Lender has made such payment when due and the
Agent may in reliance upon such assumption (but shall not be required to) make
available to the relevant Borrower the proceeds of the Revolving Loan to be made
by such Lender and, if any Lender has not in fact made such payment to the
Agent, such Lender shall, on demand, pay to the Agent the amount made available
to such Borrower attributable to such Lender together with interest thereon in
respect of each day during the period commencing on the date such amount was
made available to such Borrower and ending on (but excluding) the date such
Lender pays such amount to the Agent at a rate per annum equal to the Federal
Funds Rate. If such amount is not received from such Lender by the Agent
immediately upon demand, the Borrowers will, on demand, repay to the Agent the
proceeds of the Revolving Loan attributable to such Lender with interest thereon
at a rate per annum equal to the interest rate applicable to the relevant
Revolving Loan, but without such payment being considered a payment or
prepayment of a Revolving Loan under Section 2.8 hereof, so that the Borrowers
will have no liability under such Section with respect to such payment.
(a) Appointment. Each Borrower irrevocably appoints the Company as
its agent hereunder to make requests on such Borrower's behalf under Section 1
hereof for Borrowings to be made by such Borrower and for Letters of Credit to
be issued for such Borrower's account, to select on such Borrower's behalf the
interest rate to be applicable under Section 1.4(c) and Section 2 hereof to
Borrowings made by such Borrower and to take any other action contemplated by
the Loan Documents with respect to credit extended hereunder to such Borrower.
The Agent and the Lenders shall be entitled to conclusively presume that any
action by the Company under the Loan Documents is taken on behalf of any one or
more of the Borrowers whether or not the Company so indicates.
(b) Reliance. All requests for Borrowings and selection of interest
rates to be applicable thereto may be written or oral, including by telephone or
telecopy. The Acme Group agrees that the Agent may rely on any such notice given
by any person the Agent in good faith believes is an Authorized Representative
without the necessity of independent investigation (the Borrowers hereby
indemnifying the Agent and Lenders from any liability or loss ensuing from such
reliance), and in the event any such telephonic or other oral notice conflicts
with any written confirmation, such oral or telephonic notice shall govern if
the Agent has acted in reliance thereon.
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SECTION 2. INTEREST ON REVOLVING CREDIT NOTES.
Section 2.1. Options. Subject to all of the terms and conditions of
this Section 2, portions of the principal indebtedness evidenced by the
Revolving Credit Notes ("Portions") may, at the option of the Company (which is
acting on behalf of the Borrowers pursuant to Section 1.7 hereof), bear interest
with reference to the Domestic Rate (the "Domestic Rate Portion") or with
reference to the Adjusted LIBOR Rate ("LIBOR Portions"), and Portions may be
converted from time to time from one basis to the other. All of the indebtedness
evidenced by the Revolving Credit Notes which is not part of a LIBOR Portion
shall constitute a single Domestic Rate Portion. All of the indebtedness
evidenced by the Revolving Credit Notes which bears interest with reference to a
particular Adjusted LIBOR Rate for a particular Interest Period shall constitute
a single LIBOR Portion. Anything contained herein to the contrary
notwithstanding, there shall not be more than six LIBOR Portions applicable to
the Revolving Credit at any one time and each Lender shall have a ratable
interest in each Portion. The Borrowers promise to pay interest on each Portion
at the rates and times specified in this Section 2.
Section 2.2. Domestic Rate Portion. Each Domestic Rate Portion
shall bear interest (which the Borrowers promise to pay at the times herein
provided) at the rate per annum determined by adding the Applicable Margin to
the Domestic Rate as in effect from time to time, provided that if a Domestic
Rate Portion is not paid when due (whether by lapse of time, acceleration or
otherwise), such Portion shall bear interest (which the Borrowers promise to pay
at the times hereinafter provided), whether before or after judgment, and until
payment in full thereof, at the rate per annum determined by adding 2-1/2% to
the Domestic Rate as in effect from time to time. Interest on the Domestic Rate
Portions shall be payable on the last day of each calendar month (beginning
December 31, 1997) and at maturity of the Revolving Credit Notes and interest
after maturity shall be due and payable upon demand.
Section 2.3. LIBOR Portions. Each LIBOR Portion shall bear interest
(which the Borrowers promise to pay at the times herein provided) for each
Interest Period selected therefor at a rate per annum determined by adding the
Applicable Margin to the Adjusted LIBOR Rate for such Interest Period, provided
that if any LIBOR Portion is not paid when due (whether by lapse of time,
acceleration or otherwise), such Portion shall bear interest (which the
Borrowers promise to pay at the times hereinafter provided), whether before or
after judgment, and until payment in full thereof, through the end of the
Interest Period then applicable thereto at the rate per annum determined by
adding 2% to the interest rate otherwise applicable thereto, and effective at
the end of such Interest Period, such LIBOR Portion shall automatically be
converted into and added to the Domestic Rate Portion and shall thereafter bear
interest at the interest rate applicable to the Domestic Rate Portion after
default. Interest on each LIBOR Portion shall be due and payable on the last day
of each Interest Period applicable thereto (provided that if any Interest Period
is
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longer than three months, then interest on the LIBOR Portion having such
Interest Period shall be due and payable on the date occurring every three
months after the date such Interest Period began and on the last day of such
Interest Period), and interest after maturity shall be due and payable upon
demand. The Company, on behalf of the relevant Borrower, shall notify the Agent
on or before 10:00 a.m. (Chicago time) on the third Business Day preceding the
end of an Interest Period applicable to a LIBOR Portion whether such LIBOR
Portion is to continue as a LIBOR Portion, in which event the Company shall
notify the Agent of the new Interest Period selected therefor, and in the event
the Company shall fail to so notify the Agent, such LIBOR Portion shall
automatically be converted into and added to the Domestic Rate Portion as of and
on the last day of such Interest Period. The Agent shall promptly notify each
Lender of each notice received from the Company pursuant to the foregoing
provisions. Anything contained herein to the contrary notwithstanding, the
obligation of the Lenders to create, continue or effect by conversion any LIBOR
Portion shall be conditioned upon the fact that at the time no Default or Event
of Default shall have occurred and be continuing.
Section 2.4. Manner of Rate Selection. The Company, on behalf of
the relevant Borrower, shall notify the Agent by 10:00 a.m. (Chicago time) at
least three Business Days prior to the date upon which it requests that any
LIBOR Portion be created or that any part of the Domestic Rate Portion be
converted into a LIBOR Portion (such notice to specify in each instance the
amount thereof and the Interest Period selected therefor) and the Agent shall
advise each Lender of each such notice by 12:00 Noon (Chicago time) on the same
Business Day it receives such notice. If any request is made to convert a LIBOR
Portion into the Domestic Rate Portion, such conversion shall only be made so as
to become effective as of the last day of the Interest Period applicable
thereto. All requests for the creation, continuance or conversion of Portions
under this Agreement shall, subject to Section 2.6 hereof, be irrevocable.
Section 2.5. Change of Law. Notwithstanding any other provisions of
this Agreement or the Revolving Credit Notes, if at any time a Lender shall
determine in good faith that any change in applicable laws, treaties or
regulations or in the interpretation thereof makes it unlawful for such Lender
to create or continue to maintain LIBOR Portions, it shall promptly so notify
the Agent (which shall in turn promptly notify the Company and the other
Lenders) and the obligation of such Lender to create, continue or maintain any
LIBOR Portion under this Agreement shall terminate until it is no longer
unlawful for such Lender to create, continue or maintain LIBOR Portions. The
Borrowers on demand, shall, if the continued maintenance of a LIBOR Portion is
unlawful, thereupon prepay the outstanding principal amount of the LIBOR
Portions, together with all interest accrued thereon and all other amounts
payable to the affected Lenders with respect thereto under this Agreement;
provided, however, that the Company, on behalf of the relevant Borrower, may
instead elect to convert the principal amount of the affected LIBOR Portion into
the Domestic Rate Portion, subject to the terms and conditions of this
Agreement.
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Section 2.6. Unavailability of Deposits or Inability to Ascertain
the Adjusted LIBOR Rate. Notwithstanding any other provision of this Agreement
or the Revolving Credit Notes, if prior to the commencement of any Interest
Period, any Lender shall either (a) inform the Agent that such Lender has
determined that United States dollar deposits in the amount of any LIBOR Portion
scheduled to be outstanding during such Interest Period are not readily
available to such Lender in the offshore interbank market or (b) advise the
Agent that LIBOR as determined by the Agent will not adequately and fairly
reflect the cost to such Lender of funding its LIBOR Portion for such Interest
Period, the Agent shall promptly give notice thereof to the Company and each
other Lender and the obligations of the Lenders to create, continue or effect by
conversion any LIBOR Portion in such amount and for such Interest Period shall
terminate until United States dollar deposits in such amount and for the
Interest Period selected by the Company shall again be readily available in the
offshore interbank market.
Section 2.7. Taxes and Increased Costs. With respect to the LIBOR
Portions, if any Lender shall determine in good faith that any change in any
applicable law, treaty, regulation or guideline (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or any new
law, treaty, regulation or guideline, or any interpretation of any of the
foregoing by any governmental authority charged with the administration thereof
or any central bank or other fiscal, monetary or other authority having
jurisdiction over such Lender or its lending branch or the Portions contemplated
by this Agreement (whether or not having the force of law) shall:
(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in
or for the account of, or loans by, or any other acquisition of funds
or disbursements by, such Lender which is not in any instance already
accounted for in computing the Adjusted LIBOR Rate;
(ii) subject such Lender, the LIBOR Portions or a Revolving
Credit Note to the extent it evidences such Portions, to any tax
(including, without limitation, any United States interest
equalization tax or similar tax however named applicable to the
acquisition or holding of debt obligations and any interest or
penalties with respect thereto), duty, charge, stamp tax, fee,
deduction or withholding in respect of this Agreement, any LIBOR
Portion or a Revolving Credit Note to the extent it evidences such a
Portion, except such taxes as may be measured by the overall net
income or gross receipts of such Lender or its lending branches and
imposed by the jurisdiction, or any political subdivision or taxing
authority thereof, in which such Lender's principal executive office
or its lending branch is located;
(iii) change the basis of taxation of payments of principal and
interest due from any Borrower to such Lender hereunder or under a
Revolving Credit Note to the extent it
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evidences any LIBOR Portion (other than by a change in taxation of
the overall net income or gross receipts of such Lender); or
(iv) impose on such Lender any penalty with respect to the
foregoing or any other condition regarding this Agreement, its
disbursement, any LIBOR Portion or a Revolving Credit Note to the
extent it evidences any LIBOR Portion;
and such Lender shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to such
Lender of creating or maintaining any LIBOR Portion hereunder or to reduce the
amount of principal or interest received or receivable by such Lender, then the
Borrowers shall pay on demand to the Agent for the account of such Lender from
time to time as specified by such Lender such additional amounts as such Lender
shall reasonably determine are sufficient to compensate and indemnify it for
such increased cost or reduced amount. If a Lender makes such a claim for
compensation, it shall provide to the Company a certificate setting forth in
reasonable detail the computation of the increased cost or reduced amount as a
result of any event mentioned herein and such certificate shall be deemed prima
facie correct.
Section 2.8. Funding Indemnity. In the event any Lender shall incur
any loss, cost or expense (including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired or contracted to be acquired by such Lender to fund or
maintain its part of any LIBOR Portion or the relending or reinvesting of such
deposits or other funds or amounts paid or prepaid to such Lender but not
including a loss of profit), as a result of:
(i) any payment of a LIBOR Portion on a date other than the
last day of the then applicable Interest Period for any reason, whether
before or after default, and whether or not such payment is required by
any provisions of this Agreement; or
(ii) any failure by any Borrower to create, borrow, continue
or effect by conversion a LIBOR Portion on the date specified in a
notice given pursuant to this Agreement unless such failure results
from such Lender's inability or unwillingness pursuant to Sections 2.5
or 2.6 hereof to create, continue or effect by conversion such LIBOR
Portion;
then upon the demand of such Lender, the Borrowers shall pay on demand to the
Agent for the account of such Lender such amount as will reimburse such Lender
for such loss, cost or expense. If a Lender requests such a reimbursement, it
shall provide the Company with a certificate setting forth in reasonable detail
the computation of the loss, cost or expense giving rise to the request for
reimbursement and such certificate shall be deemed prima facie correct.
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<PAGE> 21
Section 2.9. Lending Branch. Each Lender may, at its option, elect
to make, fund or maintain its loans hereunder at the branches or offices
specified on the signature pages hereof or on any Assignment Agreement executed
and delivered pursuant to Section 12.18 hereof or at such other of its branches
or offices as such Lender may from time to time elect.
Section 2.10. Change of Lending Branch. Each Lender agrees that, as
promptly as practicable after it becomes aware of the occurrence of an event or
the existence of a condition that would cause it to be affected under Section
2.5, 2.6 or 2.7 hereof, such Lender will, after notice to the Company, use its
best efforts to create, fund or maintain the affected LIBOR Portion, through
another lending office of such Lender if as a result thereof the unlawfulness
which would otherwise require payment of such Portion pursuant to Section 2.5
hereof would cease to exist or the circumstances which would otherwise terminate
such Lender's obligation to create such Portion under Section 2.6 hereof would
cease to exist or the increased costs which would otherwise be required to be
paid in respect of such Portion pursuant to Section 2.7 hereof would be
materially reduced, and if, as determined by such Lender, in its sole
discretion, the creating, funding or maintaining of such Portion, as the case
may be, through such other lending office would not otherwise adversely affect
such Portion or such Lender. The Borrowers hereby agree to pay all reasonable
expenses incurred by each such Lender in utilizing another lending office
pursuant to this Section 2.10.
Section 2.11. Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
share of its Revolving Credit Notes in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder (including determinations under Sections 2.6, 2.7 and 2.8 hereof)
shall be made as if each such Lender had actually funded and maintained each
LIBOR Portion during each Interest Period applicable thereto through the
purchase of deposits in the offshore interbank market in the amount of its share
of such LIBOR Portion, having a maturity corresponding to such Interest Period
and bearing an interest rate equal to LIBOR for such Interest Period.
Section 2.12. Computation of Interest. All interest on the Notes and
unless otherwise stated herein, all fees, charges and commissions due hereunder,
shall be computed on the basis of a year of 360 days for the actual number of
days elapsed.
Section 2.13. Interest Rate and Exchange Rate Protection. Any one
or more of the Borrowers may hedge its interest rate risk, commodity price risk
and exchange rate risk through the use of one or more Hedging Arrangements for
time periods and with such parties (who need not be Lenders) as such Borrower
elects, with such Borrower's obligations to any such party who is a Lender in
connection with such Hedging Arrangements not to constitute usage of the
Commitment of such Lender. No Lender not a party to a Hedging Arrangement shall
participate
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in any risk in connection therewith; provided, however, that the Hedging
Liability shall be secured by the Collateral.
Section 2.14. Capital Adequacy. If any Lender shall determine that
any applicable law, rule or regulation regarding capital adequacy instituted
after the date hereof, or any change in the interpretation or administration of
any applicable law, rule or regulation regarding capital adequacy by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by such Lender (or its
lending office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's capital as a consequence of its obligations hereunder or the
Letters of Credit or credit extended by it hereunder to a level below that which
such Lender could have achieved but for such law, rule, regulation, change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time as specified by such Lender the Borrowers shall pay on demand such
additional amount or amounts as will compensate such Lender for such reduction.
A certificate of any Lender claiming compensation under this Section 2.14 and
setting forth the additional amount or amounts to be paid to it hereunder in
reasonable detail shall be prima facie evidence thereof. In determining such
amount, such Lender may use any reasonable averaging and attribution methods.
SECTION 3. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND NOTATIONS.
Section 3.1. Commitment Fee. For the period from the date hereof to
and including the Termination Date, the Borrowers shall pay to the Agent for the
account of the Lenders a commitment fee at the rate per annum (computed on the
basis of a year of 360 days for the actual number of days elapsed) equal to the
Applicable Margin for Commitment Fee in effect from time to time on the average
daily unused amount of the Commitments hereunder (whether or not available).
Such fee is payable in arrears on the last day of each calendar quarter
(commencing with the first of such dates after the date hereof) and on the
Termination Date. Solely for purposes of this Section 3.1 and determining each
Lender's pro rata share of the commitment fee, outstanding Swing Line Loans
shall be deemed to utilize Harris Bank's Commitment so that the unused portion
of each other Lender's Commitment remains the same whether or not Swing Line
Loans are outstanding.
Section 3.2. Agent's Fees. The Borrowers shall pay to the Agent for
its own use and benefit such fees as the Company and the Agent have mutually
agreed upon. The Borrowers shall pay to the Agent and the Co-Agent for their own
use and benefit such fees as the Company, the Agent and the Co-Agent have
mutually agreed upon (such fees to be divided between the Agent and Co-Agent as
they have mutually agreed).
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Section 3.3. Letter of Credit Fees. On the date of issuance or
extension, or increase in the amount, of any Letter of Credit pursuant to
Section 1.5 hereof, the Borrowers shall pay to the Agent for its own use and
benefit an issuance fee equal to 1/4 of 1% (0.25%) of the face amount of (or of
the increase in the face amount of) such Letter of Credit. Quarterly in arrears,
on the last day of each calendar quarter (commencing on the first of such dates
after the date hereof), the Borrowers shall pay to the Agent, for the ratable
benefit of the Lenders in accordance with their Percentages, a letter of credit
fee at a rate per annum equal to the Applicable Margin for LIBOR Portions in
effect during each day of such quarter applied to the daily average face amount
of Letters of Credit outstanding during such quarter. In addition, the Borrowers
shall pay to the Agent for its own use and benefit the Agent's standard drawing,
negotiation, amendment and other administrative fees for each Letter of Credit
(whether a Commercial Letter of Credit or Standby Letter of Credit). Such
standard fees referred to in the immediately preceding sentence may be
established by the Agent from time to time.
Section 3.4. Audit Fees. The Borrowers shall pay to the Agent for
its own use and benefit charges for audits of the Collateral by the Agent in
such amounts as the Agent may from time to time request (the Agent acknowledging
and agreeing that such charges shall be computed in the same manner as it at the
time customarily uses for the assessment of charges for similar collateral
audits actually performed by it); provided, however, that in the absence of any
Default or Event of Default, the Borrowers shall not be required to reimburse
the Agent for more than two such audits per year; further provided, however,
that if and so long as no Default or Event of Default shall occur or be
continuing and no amount is outstanding under the Revolving Credit, not more
than one such audit may be conducted in any period of twelve consecutive
calendar months. Without limiting the generality of the foregoing, the Required
Lenders may, at their expense, conduct up to two field audits per year in
addition to the audits performed by the Agent and referred to above.
Section 3.5. Voluntary Prepayments. Subject to the further
provisions of this Section 3.5, the Borrowers shall have the privilege of
prepaying the Revolving Credit Notes in whole or in part (but, if in part, then
in an amount not less than $1,000,000 or a whole multiple thereof) at any time
(except that each prepayment of a LIBOR Portion must be made on the last day of
its Interest Period) upon three Business Days' prior written notice from the
Company (which need not be joined in by any Borrower) to the Agent (such
notices, if received subsequent to 10:00 a.m. (Chicago time) on a given day, to
be treated as though received at the opening of business on the next Business
Day), which shall promptly so notify the Lenders, by paying to the Agent for the
account of the Lenders the principal amount to be prepaid and (i) all accrued
interest thereon to the date fixed for prepayment and (ii) if such a prepayment
prepays the Revolving Credit Notes in full, any commitment fees which have
accrued and are unpaid. The Borrowers may voluntarily prepay any Swing Line Loan
bearing interest at the Domestic Rate before its maturity at any time upon
notice to the Agent prior to 2:00 p.m. (Chicago time) on the
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date fixed for prepayment, each such prepayment to be made by the payment of the
principal amount to be prepaid and accrued interest thereon to the date of
prepayment; however, the Borrowers may not voluntarily prepay any Swing Line
Loan bearing interest at Harris Bank's Quoted Rate before its maturity.
Section 3.6. Mandatory Prepayments Upon Borrowing Base Deficiency.
In the event that the aggregate amount outstanding on the Revolving Loans and
Swing Line Loans to a Borrower, and the L/C Obligations in respect of Letters of
Credit issued for such Borrower's sole or joint account, shall at any time and
for any reason exceed such Borrower's Available Borrowing Base as then
determined and computed, the Borrowers shall immediately and without notice or
demand pay over the amount of the excess to the Agent to be applied as a
mandatory prepayment on the Revolving Credit Notes until such Revolving Loans
have been prepaid in full, then applied to the Swing Line Loans until payment in
full thereof and if L/C Obligations are outstanding, then and in any such event,
such remainder shall be paid over to the Agent to be applied against, or held as
collateral security for, as applicable, such L/C Obligations. Each such
repayment shall be accompanied by accrued interest on the amount prepaid to the
date of such prepayment together with any amount due the Lenders under Section
2.8 hereof.
Section 3.7. Terminations. (a) Voluntary. The Borrowers shall have
the privilege upon notice from the Company (which need not be joined in by any
Borrower) to the Agent (which shall promptly notify the Lenders) received on or
before 10:00 a.m. (Chicago time) at least five Business Days before the
Termination Date to ratably terminate the Commitments in whole or in part (but
if in part then in the amount of $5,000,000 or such greater amount which is an
integral multiple of $500,000).
(b) Mandatory. Upon the occurrence and during the continuation of an
Event of Default and so long as the Acme Group is required to make such payments
to the holders of the Senior Secured Term Loan Notes, not later than 120 days
after the last day of each fiscal year of the Company, the Acme Group shall pay
over to the Agent as and for a mandatory prepayment on the Obligations, which
shall reduce the Commitments by a like amount, an amount equal to the Required
Share of 25% of Excess Cash Flow (as defined in the Indenture for the Senior
Secured Term Loan Notes) for the most recently completed fiscal year (commencing
with the fiscal year ending on or about December 31, 1999). In addition, upon
the occurrence and during the continuation of an Event of Default and so long as
the Acme Group is required to make such payments to the holders of the Senior
Secured Term Loan Notes, the Acme Group shall pay over to the Agent as and for a
mandatory prepayment on the Obligations, which shall reduce the Commitments by a
like amount, an amount equal to the Required Share of 50% of all net proceeds
(net proceeds for such purposes to mean gross proceeds less reasonable
underwriting discounts and commissions and other reasonable costs directly
incurred and payable as a result thereof) received by any member of the Acme
Group or any Subsidiary from the public issuance
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and sale of equity securities of any series or class unrelated to the Phase II
Expansion. For purposes of this Section 3.7(b), the term "Required Share" shall
mean the percentage determined by dividing the Commitments by the sum of the
Commitments and the aggregate outstanding amount of the Senior Secured Term Loan
Notes.
(c) Generally. All partial terminations of the Commitments hereunder
shall automatically reduce the L/C Commitment and the Swing Line Commitment, in
each case as from time to time in effect hereunder, by the same percentage as
the percentage termination in the Commitments. Not later than the termination
date stated in such notice, there shall be made such payments to the Agent as
may be necessary to reduce the sum of the aggregate outstanding principal amount
of the Revolving Loans, Swing Line Loans and L/C Obligations to the amount to
which the Commitments have been reduced, together with (x) any amount due the
Lenders under Section 2.8 hereof and (y) in the case of a termination in whole,
all interest, fees and other amounts due on the Obligations. The foregoing to
the contrary notwithstanding, (i) no termination of the Revolving Credit may be
effected hereunder if as a result thereof the outstanding aggregate amount of
Letters of Credit would exceed the L/C Commitment as reduced by such
termination, (ii) no termination of the Revolving Credit may be effected
hereunder if as a result thereof the outstanding aggregate amount of Swing Line
Loans would exceed the Swing Line Commitment as reduced by such termination and
(iii) the Commitments may not be terminated below $100,000 except concurrently
with their termination in whole. No termination of the Commitments may be
reinstated.
Section 3.8. Place and Application. All payments of principal,
interest and fees shall be made to the Agent at its office 111 West Monroe
Street, Chicago, Illinois (or at such other place as the Agent may specify) in
immediately available and freely transferable funds at the place of payment. All
such payments shall be made without setoff or counterclaim and without reduction
for, and free from, any and all present or future taxes, levies, imposts,
duties, fees, charges, deductions, withholdings, restrictions or conditions of
any nature imposed by any government or political subdivision or taxing
authority thereof. Payments received by the Agent after 12:00 Noon (Chicago
time) shall be deemed received as of the opening of business on the next
Business Day. Except as herein provided, all payments shall be received by the
Agent for the ratable account of the Lenders and shall be promptly distributed
by the Agent to the Lenders in accordance with their Percentages. Unless the
Company otherwise directs, payments shall be deemed first applied to the
Domestic Rate Portion until payment in full thereof, with any balance applied to
the LIBOR Portions in the order in which their Interest Periods expire. Any
amount prepaid on the Revolving Credit Notes may, subject to all of the terms
and conditions hereof, be borrowed, repaid and borrowed again. All payments
(whether voluntary or required) shall be accompanied by any amount due the
Lenders under Section 2.8 hereof, but no acceptance of such a payment without
requiring payment of amounts due under Section 2.8 shall preclude a later demand
by the Lenders for any amount due them under Section 2.8 in respect of such
payment.
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Anything contained herein to the contrary notwithstanding, all payments
and collections received in respect of the Obligations and all proceeds of the
Collateral received, in each instance, by the Agent or any of the Lenders after
the occurrence of an Event of Default shall be remitted to the Agent and
distributed as follows:
(a) first, to the payment of any outstanding costs and
expenses incurred by the Agent in monitoring, verifying, protecting,
preserving or enforcing the Liens on the Collateral or by the Agent in
protecting, preserving or enforcing rights under the Loan Documents,
and in any event all costs and expenses of a character which the
Borrowers have agreed to pay under Section 12.5 hereof (such funds to
be retained by the Agent for its own account unless the Agent has
previously been reimbursed for such costs and expenses by the Lenders,
in which event such amounts shall be remitted to the Lenders to
reimburse them for payments theretofore made to the Agent);
(b) second, to the payment of any outstanding interest or
other fees or amounts due under the Notes and the other Loan Documents,
in each case other than for principal or in reimbursement or
collateralization of L/C Obligations, ratably as among the Agent and
the Lenders in accord with the amount of such interest and other fees
or amounts owing each;
(c) third, to the payment of the principal of the Notes and
any unpaid Reimbursement Obligations and to the Agent to be held as
collateral security for any other L/C Obligations (until the Agent is
holding an amount of cash equal to the then outstanding amount of all
such L/C Obligations), the aggregate amount paid to or held as
collateral security for the Lenders to be allocated pro rata as among
the Lenders in accordance with the then respective aggregate unpaid
principal balances of their Revolving Loans and interests in the
Letters of Credit;
(d) fourth, to the Agent and the Lenders ratably in
accordance with the amounts of any other indebtedness, obligations or
liabilities of the Acme Group owing to each of them and secured by the
Collateral Documents (other than those described in clause (e) below)
unless and until all such indebtedness, obligations and liabilities
have been fully paid and satisfied;
(e) fifth, to the payment of the Hedging Liability (if any),
pro rata as among the Lenders to whom such Hedging Liability is owed in
accordance with the then respective unpaid amounts of such Liability;
and
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(f) sixth, to the Company on behalf of the Acme Group (each
Borrower hereby agreeing that its recourse for its share of such
payment shall be to the Company and not the Agent or any Lender) or
whoever else may be lawfully entitled thereto.
In the event that the amount of any Hedging Liability is not fixed and
determined at the time any funds are to be allocated thereto pursuant to the
above provisions, such funds so allocated shall be held by the Agent as
collateral security until such Hedging Liability is fixed and determined and the
same shall then be applied to the Hedging Liability, with any surplus
reallocated among the Lenders to cover any deficiency which would not have
existed had the exact amount of the Hedging Liability been known at the time
such funds were originally distributed.
Section 3.9. Notations and Requests. All Borrowings made against
the Revolving Credit Notes, the Borrower which made such Borrowings, the status
of all amounts evidenced by the Revolving Credit Notes as constituting part of
the Domestic Rate Portion or a LIBOR Portion and the rates of interest and
Interest Periods applicable to such Portions shall be recorded by the Lenders on
their books or, at their option in any instance, endorsed on the reverse side of
the Revolving Credit Notes and the unpaid principal balances and status, rates
and Interest Periods so recorded or endorsed by the Lenders shall be prima facie
evidence in any court or other proceeding brought to enforce the Revolving
Credit Notes of the principal amount remaining unpaid thereon, the Borrower
which made the Borrowings evidenced thereby, the status of such Borrowings and
the interest rates and Interest Periods applicable thereto. Prior to any
negotiation of any Revolving Credit Note, the Lender holding such Revolving
Credit Note shall endorse thereon the status of all amounts evidenced thereby as
constituting part of a Domestic Rate Portion or LIBOR Portion and the rates of
interest and the Interest Periods applicable thereto.
SECTION 4. THE COLLATERAL.
Section 4.1. Collateral. The Notes and the other Obligations shall
be secured by valid and perfected first Liens on all inventory and accounts
receivable of the Borrowers, together with all instruments, chattel paper and
intangibles of the Borrowers related thereto, (the foregoing being hereinafter
referred to collectively as the "Collateral") pursuant to their separate
Security Agreements, one from each Borrower, dated as of June 30, 1995 (such
Security Agreements as the same may be modified, supplemented, amended or
restated from time to time being herein referred to collectively as the
"Security Agreements" and individually as a "Security Agreement").
Section 4.2. Further Assurances. The Acme Group agrees that it will
from time to time at the request of the Agent or the Required Lenders execute
and deliver such documents and do such acts and things as the Agent or the
Required Lenders may reasonably request in order to provide for or perfect such
Liens on the Collateral.
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SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Acme Group represents and warrants to the Lenders as follows:
Section 5.1. Acme Group's Organization, Licenses and
Authorizations. Each member of the Acme Group is duly organized and existing
under the laws of the state of its incorporation, and is duly licensed or
qualified to do business in each jurisdiction (a) where it maintains an office,
or (b) where the failure, either singly or in the aggregate, to be so licensed
or qualified would have a material adverse effect on its business, operations or
assets, and has all corporate power, and material licenses, franchises, permits
and other governmental authorizations and approvals necessary to carry on its
present business.
Section 5.2. Acme Group's Power and Authority. Each member of the
Acme Group has full right, power and authority to enter into this Agreement, to
make the borrowings herein provided for, to issue the Notes in evidence thereof,
to execute and deliver the Loan Documents executed by it and to perform each and
all of the matters and things herein and therein provided for. This Agreement,
the Notes and the other Loan Documents have been duly authorized, executed and
delivered by each member of the Acme Group which is a party thereto and
constitute valid and binding obligations of each member of the Acme Group which
is a party thereto enforceable in accordance with their terms, except as such
terms may be limited by bankruptcy, insolvency or similar laws and legal and
equitable principles affecting or limiting the enforcement of creditors' rights
generally. This Agreement and the other Loan Documents do not, nor will the
performance or observance by any member of the Acme Group of any of the matters
and things herein or therein provided for, contravene any provision of law or
any charter or by-law provision of any member of the Acme Group or contravene in
any material respect any material covenant, indenture or agreement of or
affecting any member of the Acme Group or any of its Properties.
Section 5.3. Subsidiaries. Schedule 5.3 (as updated from time to
time pursuant to Sections 7.5(a)(vi) and 7.12(g)) hereto identifies each
Subsidiary of each member of the Acme Group, the jurisdiction of its
incorporation or organization, as the case may be, the percentage of issued and
outstanding shares of each class of its capital stock or other equity interests
owned by such member of the Acme Group and its Subsidiaries and, if such
percentage is not 100% (excluding directors' qualifying shares as required by
law), a description of each class of its authorized capital stock and other
equity interests and the number of shares of each class issued and outstanding.
Each Subsidiary of each member of the Acme Group is duly incorporated and
existing in good standing as a corporation under the laws of the jurisdiction of
its incorporation, has all necessary corporate power to carry on its present
business, and is duly licensed or qualified and in good standing in each
jurisdiction in which the nature of the business transacted by it or the nature
of the Property owned or leased by it makes such licensing or qualification
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necessary and in which the failure to be so licensed or qualified would have a
material adverse effect on the financial condition, or the Property, business or
operations, of such Subsidiary. All of the issued and outstanding shares of
capital stock of each Subsidiary of each member of the Acme Group are validly
issued and outstanding and fully paid and nonassessable. All such shares owned
by a member of the Acme Group are owned beneficially, and of record, free of any
Lien, except for Liens on the capital stock of the Company's direct and indirect
Subsidiaries to secure its obligations in respect of the 1994 Notes, the Senior
Secured Term Loan Notes and the Additional Senior Debt and any Interest
Protection Agreement entered into with any lender under the Indenture for the
Senior Secured Term Loan Notes (or any Affiliate of any such lender).
Section 5.4. Good Title. Each member of the Acme Group has good and
defensible title to its assets as reflected on the consolidated balance sheet of
the Acme Group dated as of December 29, 1996 (except for sales by members of the
Acme Group in the ordinary course of their respective businesses), subject to no
Liens other than such thereof (i) as are permitted by Section 7.12 hereof and
(ii) as do not materially affect the value of such assets as reflected in such
financial statements and do not materially interfere with the use made and
proposed to be made of such assets by the Acme Group and its Subsidiaries.
Section 5.5. Regulation U. No member of the Acme Group is engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stocks (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System). No member of the Acme Group will use the proceeds
of any Loan or Letter of Credit in a manner that violates any provision of
Regulation U or X of the Board of Governors of the Federal Reserve System.
Section 5.6. Financial Reports. The annual report of the Company
and its Subsidiaries for the year ended December 29, 1996, including
consolidated balance sheets as of December 29, 1996 and a consolidated statement
of cash flows for the year then ended, prepared by the Company and certified by
Price Waterhouse, and the interim consolidated and consolidating balance sheets
of the Company and its Subsidiaries as at September 28, 1997 and consolidated
and consolidating statements of cash flows for the nine months then ended
prepared by the Company and heretofore furnished to the Lenders, all as
heretofore presented to the Lenders, fairly present the financial condition of
the Company and its Subsidiaries as at said dates and the results of operations
for the periods covered thereby. Since September 28, 1997, there has been no
material adverse change in the condition, financial or otherwise, or business
prospects of any member of the Acme Group. As of the date hereof, no member of
the Acme Group has any contingent liabilities which are material to it other
than as indicated on said financial statements or in the Prospectus.
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Except to the extent set forth in the Prospectus, there is no litigation or
governmental proceeding pending, nor to the best knowledge of any member of the
Acme Group threatened, against any member of the Acme Group or any of their
respective Subsidiaries which if adversely determined would result in any
material adverse change in the financial condition or Properties, business or
operations of any member of the Acme Group. All federal income tax returns
applicable to the Acme Group have been filed when due (after giving effect to
any lawful extensions); and except to the extent set forth in the Prospectus, no
material objections to or controversies in respect of the United States federal
income tax returns of any member of the Acme Group are pending or, to the best
knowledge of any member of the Acme Group threatened.
(b) There are no labor controversies pending or, to the knowledge of
any member of the Acme Group threatened, against any member of the Acme Group or
any of their respective Subsidiaries which could (insofar as any member of the
Acme Group may reasonably foresee) materially adversely affect the business,
operations, property or financial or other condition of any member of the Acme
Group.
Section 5.8. Approvals. No authorization, consent, license,
exemption, filing or registration with any court or governmental department,
agency or instrumentality, is necessary to the valid execution and delivery of,
or presently necessary to the performance by any member of the Acme Group of
this Agreement or any other Loan Document to which it is a party, except for
such thereof as have been obtained and are in full force and effect.
Section 5.9. Affiliates. No member of the Acme Group is a party to
any contracts or agreements with any of its Affiliates (excluding other members
of the Acme Group and Wabush) on terms and conditions which are less favorable
in any material respect to such member than would be usual and customary in
similar contracts or agreements between persons, firms or corporations not
affiliated with each other.
Section 5.10. ERISA. Each member of the Acme Group and its ERISA
Affiliates are in compliance in all material respects with the IRC and ERISA to
the extent applicable to them and have received no notice to the contrary from
the Internal Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation ("PBGC"). No member of the Acme Group nor any ERISA
Affiliate has (i) failed to make a required contribution or payment of a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) or (ii) made a
complete or partial withdrawal under Sections 4203 or 4205 of ERISA from a
multiemployer plan. No member of the Acme Group nor any ERISA Affiliate
maintains or contributes to any employee welfare benefit plan within the meaning
of Section 3(1) of ERISA which provides benefits to employees after termination
of employment (other than as required under Section 601 of ERISA) which could
result in a material obligation to pay money, except such as were recorded as a
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result of the Acme Group's adoption of Financial Accounting Standard No. 106
("Accounting for Post retirement Benefits Other Than Pensions").
Section 5.11. Government Regulation. No member of the Acme Group nor
any of their respective Subsidiaries is an "investment company" nor a company
"controlled" by an "investment company organized or otherwise created under the
laws of the United States or of a State" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 5.12. Environmental Requirements. Except as set forth in the
Prospectus, the Acme Group and its Subsidiaries are in compliance in all
material respects with all applicable state and federal environmental, health
and safety statutes and regulations, including, without limitation, regulations
promulgated under the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
ss.ss.6901 et seq. and, to the best knowledge of the Acme Group, have not
acquired, incurred or assumed, directly or indirectly, any material contingent
liability in connection with the release of any toxic or hazardous waste or
substance (including petroleum) into the environment. No member of the Acme
Group nor any of their respective Subsidiaries is the subject of any material
evaluation, investigation, action or other proceeding under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.ss.9601
et seq.
Section 5.13. Reliance. No written information, exhibit or report
furnished by or on behalf of any member of the Acme Group to the Agent or any
Lender in connection with this Agreement or any other Loan Document contains any
material misstatement of fact or, when taken as a whole, omits to state a
material fact or any fact necessary to make the statements contained therein not
misleading.
No member of the Acme Group nor any of their respective Subsidiaries is (a)
party or subject to any law, regulation, rule or order, or any Contractual
Obligation that (individually or in the aggregate) materially adversely affects,
or would reasonably be expected to so affect, the business, operations,
Property, condition (financial or otherwise) or prospects of any member of the
Acme Group or (b) in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement to
which it is a party, which default materially adversely affects, or would
reasonably be expected to affect, the business, operations, Property or
financial or other condition of any member of the Acme Group.
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SECTION 6. CONDITIONS PRECEDENT.
Section 6.1. All Advances. The obligation of the Lenders to make
any Loan or other financial accommodation to a Borrower hereunder (including the
first such accommodation) shall also be subject to the conditions precedent that
as of the time of the making of each such Loan or other accommodation hereunder:
(a) each of the representations and warranties set forth herein
and in the other Loan Documents shall be and remain true and correct
in all material respects as of said time, except to the extent the
same expressly relate to an earlier date;
(b) the Acme Group shall be in compliance with all of the terms
and conditions hereof and of the other Loan Documents, and no Default
or Event of Default shall have occurred and be continuing;
(c) after giving effect to such extension of credit to the
relevant Borrower, (i) the aggregate principal amount of all Revolving
Loans, Swing Line Loans and L/C Obligations shall not exceed the
lesser of (x) the Commitments then in effect and (y) the Available
Borrowing Base of all the Borrowers as then determined and computed
and (ii) the aggregate principal amount of the Revolving Loans and
Swing Line Loans made to such Borrower and the L/C Obligations in
respect of Letters of Credit issued for such Borrower's account shall
not exceed such Borrower's Available Borrowing Base as then determined
and computed;
(d) such extension of credit shall not violate any order,
judgment or decree of any court or other authority or any provision of
law or regulation applicable to the Agent or any Lender (including,
without limitation, Regulation U of the Board of Governors of the
Federal Reserve System) as then in effect; and
(e) in the case of the issuance of any Letter of Credit, the
Agent shall have received a properly completed Application therefor
and, in the case of an extension or increase in the amount of the
Letter of Credit, the Agent shall have received a written request
therefor, in a form acceptable to the Agent, with such Application or
written request, in each case to be accompanied by the fees required
by this Agreement.
Any request made by the Acme Group to the Agent for credit hereunder shall be
deemed to constitute a representation and warranty that the foregoing statements
are true and correct.
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Section 6.2. Initial Advance. At or prior to the time of the initial
Loan or other financial accommodation to any Borrower hereunder, the following
conditions precedent shall also have been satisfied:
(a) the Agent shall have received the following for the account
of the Lenders (each to be properly executed and completed) and the
same shall have been approved as to form and substance by all of the
Lenders:
(i) the Revolving Credit Notes and the Swing Line Note;
(ii) a First Supplement to Security Agreement for each
Borrower substantially in the form of Exhibit C hereto and any
UCC financing statements requested by the Agent in connection
therewith;
(iii) copies (executed or certified as may be appropriate)
of resolutions of the Board of Directors of each member of the
Acme Group authorizing the execution, delivery and performance of
the Loan Documents to which it is a party and all other documents
relating thereto;
(iv) an incumbency certificate containing the name, title
and genuine signature of each member of the Acme Group's
Authorized Representatives;
(v) a good standing certificate for each member of the Acme
Group, dated as of a date no earlier than thirty days prior to
the date hereof, from the appropriate governmental offices in the
jurisdiction of its incorporation;
(vi) articles of incorporation and by-laws for each member
of the Acme Group certified by such member's corporate Secretary
or other appropriate officer;
(vii) evidence of the maintenance of insurance by the Acme
Group as required hereby or by the Collateral Documents;
(viii) the Intercreditor Agreement; and
(ix) copies of the Indentures and all other instruments and
documents evidencing or setting forth terms and conditions
applicable to the Senior Notes; and
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(b) the UCC financing statements (if any) requested in connection with
the Security Agreements shall have been duly filed in the manner required
by law so as to reflect the security interest granted by the Security
Agreements, to the extent such perfection can be effected by the filing of
UCC financing statements;
(c) the Lenders shall have received a certificate in substantially the
form of Exhibit E setting forth the computation of the Available Borrowing
Base of each Borrower as of such time;
(d) the Agent and the Lenders shall have received evidence in form and
substance satisfactory to them that the Company shall have received
proceeds of the financings described in the Prospectus (other than the
credit available hereunder);
(e) the indebtedness of the Company under or in connection with that
certain Term Loan Agreement dated as of August 4, 1994 between the Company
and Harris Trust and Savings Bank shall have been paid in full;
(f) all of those certain 13-1/2% Senior Secured Discount Notes of the
Company, dated August 11, 1994 and due August 1, 2004 (the "1994 13-1/2%
Notes"), which have been tendered in the Tender Offer shall have been paid
in full;
(g) all of those certain 12-1/2% Senior Secured Notes of the Company,
dated August 11, 1994 and due August 1, 2002 (the "1994 12-1/2% Notes"),
which have been tendered in the Tender Offer shall have been paid in full;
and
(h) all legal matters incident to the transactions contemplated hereby
shall be acceptable to the Lenders and their counsel and the Agent shall
have received for the account of the Lenders the favorable written opinion
of in-house general counsel to the Acme Group in substantially the form of
Exhibit D hereto and otherwise in form and substance satisfactory to the
Lenders and their counsel.
SECTION 7. COVENANTS.
The Acme Group agrees that, so long as any credit is available to or in use
by or any amount is owing by the Borrowers hereunder, except to the extent
compliance in any case or cases is waived in writing by the Required Lenders:
Section 7.1. Maintenance of Business and Compliance with Laws. The Acme
Group will, and will cause each Subsidiary to, preserve and keep in force and
effect, its corporate existence and all material leases, licenses and permits
necessary to the proper conduct of its and
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<PAGE> 35
their respective businesses. The Acme Group shall comply with all laws, orders,
regulations and ordinances of any federal, foreign, state or local governmental
authority (including, without limitation, all laws regarding public health or
welfare, environmental protection, water or air pollution, composition of
products, underground storage tanks, toxic substances or chemicals, solid and
special wastes, hazardous wastes, substances materials or chemicals, waste,
used, or recycled oil, asbestos, occupational health and safety, nuisances,
trespass and negligence), except for such laws, orders, regulations and
ordinances the violation of which would not, in the aggregate, have a material
adverse effect on any member of the Acme Group's financial condition, results of
operations or business or the Acme Group's ability to perform its obligations
hereunder or in connection herewith. The Lenders shall not assume or be deemed
to assume any responsibility, liability or obligations with respect to
compliance with any federal, state, or local environmental law, rule,
regulation, order, permit, license, ordinance, judgment or decree.
Section 7.2. Maintenance of Property. The Acme Group will maintain,
preserve and keep its plant, Properties and equipment in good repair, working
order and condition (ordinary wear and tear excepted), will from time to time
make all needful and proper repairs, renewals, replacements, additions and
betterments thereto so that at all times the overall efficiency thereof shall be
preserved and maintained, and will cause each Subsidiary so to do in respect of
its plant, Properties and equipment.
Section 7.3. Taxes and Assessments. The Acme Group will duly pay and
discharge, and will cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees and governmental charges upon or against the Acme Group
or any Subsidiary or against their respective Properties, in each case before
the same become delinquent and before penalties accrue thereon, unless and to
the extent that the same are being contested in good faith and by appropriate
proceedings which prevent enforcement of the matter under contest and adequate
reserves are provided therefor.
Section 7.4. Insurance. The Acme Group will insure and keep insured, and
will cause each Subsidiary to insure and keep insured, with good and responsible
insurance companies, all insurable Property owned by it which is of a character
usually insured by companies similarly situated and in amounts usually insured
by companies similarly situated and operating like Properties; and the Acme
Group will insure, and cause each Subsidiary to insure, such other hazards and
risks (including employers' and public and product liability risks) with good
and responsible insurance companies as and to the extent usually insured by
companies similarly situated and conducting similar businesses. The Acme Group
shall in any event maintain insurance on the Collateral to the extent required
by the Collateral Documents. The Acme Group will upon request of the Agent
furnish a certificate setting forth in summary form the nature and extent of the
insurance maintained pursuant to this Section 7.4.
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<PAGE> 36
Section 7.5. Financial Reports and Rights of Inspection. (a) The Acme Group
will, and will cause each Subsidiary to, maintain internal accounting controls
which provide reasonable assurance that (w) transactions are executed in
accordance with management's authorization, (x) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (y) access to its assets is permitted only in
accordance with management's authorization and (z) the reported accountability
for its assets is compared with existing assets at reasonable intervals with
GAAP, and will furnish to the Agent and each Lender such information respecting
the business, financial condition, assets and liabilities (whether absolute or
contingent) of the Acme Group and its Subsidiaries as the Agent or such Lender
may reasonably request; and without any request, will furnish to the Agent
(which shall promptly provide copies to the Lenders):
(i) within sixty (60) days after the end of each of the first
three quarterly fiscal periods of the Company, a copy of the Company's
Form 10-Q Report filed with the SEC;
(ii) within sixty (60) days after the end of each of the four
quarterly fiscal periods of the Company (but within one hundred twenty
(120) days after the end of the last such period in each fiscal year),
the consolidated and consolidating balance sheet of the Acme Group and
its Subsidiaries as of the end of such quarterly period and a related
consolidated and consolidating statements of income, retained earnings
and cash flows of the Acme Group and its Subsidiaries for such
quarterly fiscal period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly period, all of which shall
be prepared by the Company and certified by the Chief Financial
Officer of the Company as being prepared, to the best of his
knowledge, in accordance with GAAP (except for footnotes and other
related disclosures);
(iii) within one hundred twenty (120) days after the end of each
fiscal year of the Company, a copy of the Company's Form 10-K Report
filed with the SEC, including a copy of the annual report of the Acme
Group and its Subsidiaries for such year with accompanying financial
statements, prepared by the Company and certified by Price Waterhouse
or any other independent public accountants of recognized standing
selected by the Company and satisfactory to the Required Lenders, in
accordance with GAAP;
(iv) as soon as available and in any event within twenty (20)
days after the end of each fiscal month, a Borrowing Base certificate
in substantially the form of Exhibit E hereto showing the computation
of the Available Borrowing Base for each Borrower as of the close of
such month and certified as true and correct by the Chief Financial
Officer or Treasurer of the Company;
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(v) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which the Company
sends to its shareholders, and copies of all other regular, periodic
and special reports and all registration statements which the Company
files with the SEC or any successor thereto, or with any national
securities exchange; and
(vi) an updated Schedule 5.3 along with the financial statements
delivered under subsection (ii) above for any calendar quarter during
which there is a change in any of the facts specified in Schedule 5.3
hereto, as then most recently updated.
(b) Each Report required by Section 7.5(a)(ii) shall be accompanied by a
certificate in the form attached hereto as Exhibit F signed on behalf of the
Acme Group by the Chief Financial Officer or Treasurer of the Company setting
forth compliance in reasonable detail with Sections 7.7, 7.8, 7.9 and 7.13
hereof and stating that no Default or Event of Default exists hereunder as of
the date of such certificate, or if such Default or Event of Default exists the
nature thereof shall be specified. Each audit report called for by Section
7.5(a)(iii) hereof shall be accompanied by a statement of the accountants
certifying such statements to the effect that in the course of their audit
(conducted in accordance with generally accepted auditing standards) they have
obtained no knowledge that a Default or Event of Default has occurred hereunder
or, if they have obtained any such knowledge, describing the same. In the event
the Company is no longer required to file Form 10-Q and 10-K Reports with the
SEC, the Company need not furnish such Reports to the Agent, but shall
nonetheless provide the Agent the financial statements previously contained in
such Reports by the times required by subsections (a)(i) and (iii) above.
(c) The Acme Group will promptly (and in any event within five Business
Days after knowledge thereof shall have come to the attention of any responsible
officer of the Company) give written notice to the Agent:
(i) of the occurrence of any Change of Control,
(ii) of any Default or Event of Default,
(iii) of any threatened or pending litigation, governmental proceeding
or labor dispute against any member of the Acme Group or any of its
respective Subsidiaries which is reasonably likely to be adversely
determined and if so adversely determined, would materially adversely
affect the business, Properties, condition (financial or otherwise) or
prospects of any member of the Acme Group;
(iv) of any material development in any such litigation, proceeding or
dispute of the type described in the immediately preceding clause (iii)
(whether or not previously
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disclosed to the Lenders pursuant to the terms hereof) which in any case
has a reasonable possibility of an effect with the result described in such
clause;
(v) of any default in the payment of rent due under any material lease
necessary to the proper conduct of the business of any member of the Acme
Group or any of their respective Subsidiaries or any action to terminate
any such lease or of the receipt of any notice of any alleged breach of the
terms of any such lease; and
(vi) of the receipt of any notice of any alleged breach of the terms
of, or default under, any Contractual Obligation and of any notice of
alleged material noncompliance with any laws or regulations of the type
described in Section 5.14 hereof.
(d) Upon reasonable notice from the Agent, the Acme Group will permit the
Agent, the Lenders and their representatives during normal business hours to
visit and inspect any of the Properties of the Acme Group and its Subsidiaries,
to examine all of their books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants (and by this provision the Acme Group authorizes such
accountants to discuss with the Lenders (and such Persons as any Lender may
designate) the finances and affairs of the Acme Group and its Subsidiaries) all
at such reasonable times and as often as may be reasonably requested.
Section 7.6. Intentionally Omitted.
Section 7.7. Consolidated Tangible Net Worth. The Acme Group will at all
times maintain a Consolidated Tangible Net Worth of not less than (a)
$180,000,000 during the period from the date hereof through December 25, 1999,
(b) $190,000,000 during the period from December 26, 1999 through December 30,
2000 and (c) $200,000,000 on December 31, 2000 and at all times thereafter.
Section 7.8. Leverage. The Acme Group will at all times maintain a
Consolidated Leverage Ratio of not more than 0.75 to 1.0.
Section 7.9. Cash Flow Coverage Ratio. The Acme Group will at the end of
each fiscal quarter ending during the periods set forth below maintain its
Consolidated Cash Flow Coverage Ratio for the four most recently completed
fiscal quarters (but through December 26, 1998, cumulatively for all fiscal
quarters completed on or after March 29, 1998) at not less than:
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<TABLE>
<CAPTION>
CONSOLIDATED CASH FLOW COVERAGE
FROM AND INCLUDING TO AND INCLUDING RATIO SHALL NOT BE LESS THAN:
<S> <C> <C>
03/29/98 12/26/98 0.75 to 1.0
12/27/98 12/25/99 1.25 to 1.0
12/26/99 12/30/00 1.50 to 1.0
12/31/00 all times thereafter 2.00 to 1.0
</TABLE>
Section 7.10. Liens. The Acme Group will not, and will not permit any
Subsidiary to, pledge, mortgage or otherwise encumber or subject to, or permit
to exist upon or be subjected to, any Lien upon, any Property of any kind or
character at any time owned by the Acme Group or any Subsidiary; provided,
however, that nothing contained in this Section shall operate to prevent:
(a) the Permitted Liens;
(b) Liens arising out of judgments or awards against the Acme Group or
any Subsidiary with respect to which the Acme Group or such Subsidiary
shall be prosecuting an appeal or proceeding for review and with respect to
which it shall have obtained a stay of execution pending such appeal or
proceeding for review; provided that the aggregate amount of liabilities
(including interest and penalties, if any) of the Acme Group and its
Subsidiaries secured by such Liens shall not exceed $500,000 at any one
time outstanding; and
(c) the pledge of cash free of any other Lien or restriction as to its
use for the purpose of securing the obligations permitted by Section
7.11(d) hereof.
Section 7.11. Indebtedness. The Acme Group will not, and will not permit
any Subsidiary to, issue, incur, assume, create or have outstanding any
Indebtedness for Borrowed Money; provided, however, that the foregoing
provisions shall not restrict nor operate to prevent:
(a) the Permitted Indebtedness;
(b) the obligations listed and described on Schedule 7.11 hereto;
(c) guarantees permitted by Section 7.12 hereof;
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(d) obligations in respect of letters of credit issued by any Lender
for the account of any member of the Acme Group, provided the aggregate
undrawn face amount of all such letters of credit does not exceed
$15,000,000 at any one time outstanding and such letters of credit are
secured pursuant to Section 7.10(c) hereof; and
(e) indebtedness not otherwise permitted by this Section aggregating
not more than $30,000,000 at any one time outstanding.
Section 7.12. Acquisitions, Investments, Loans, Advances and Guaranties.
The Acme Group will not, and will not permit any Subsidiary to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances to, any
other person, firm or corporation or acquire all or any substantial part of the
assets or business of any other person, firm or corporation, or be or become
liable as endorser, guarantor, surety or otherwise for any debt, obligation or
undertaking of any other person, firm or corporation or otherwise agree to
provide funds for payment of the obligations of another, or supply funds thereto
or invest therein or otherwise assure a creditor of another against loss or
apply for or become liable to the issuer of a letter of credit which supports an
obligation of another or subordinate any claim or demand it may have to the
claim or demand of any other person, firm or corporation; provided, however,
that the foregoing provisions shall not apply to nor operate to prevent:
(a) the Permitted Investments;
(b) endorsements for collection or deposit of commercial paper
received in the ordinary course of business;
(c) liabilities in respect of the Letters of Credit;
(d) the guarantees set forth in Section 11 hereof;
(e) guarantees by the Acme Group and its Subsidiaries of the 1994
Notes, the Senior Notes, the Additional Senior Debt and any Interest
Protection Agreement entered into with any lender under the Indenture for
the Senior Secured Term Loan Notes (or any Affiliate of any such lender);
(f) equity investments as of the date hereof in the present
Subsidiaries;
(g) acquisitions of all or substantially all of the assets or business
of any other Person or division thereof, or all or any part of the Voting
Stock of or other equity interest in any Person (including as such an
acquisition, any action to participate as a joint
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<PAGE> 41
venturer in any joint venture or as a partner in any partnership), in each
case if and so long as (i) no Default or Event of Default exists or would
exist after giving effect to such acquisition, (ii) the Board of Directors
or other governing body of such Person whose Property or Voting Stock or
other equity interest is being so acquired has approved the terms of such
acquisition, (iii) the Company shall have delivered to the Lenders an
updated Schedule 5.3 to reflect any new Subsidiary resulting from such
acquisition, (iv) at the time of each such acquisition and immediately
after giving effect thereto, the aggregate amount expended by the Acme
Group and its Subsidiaries as consideration for such acquisition (and in
any event including as such, any Indebtedness for Borrowed Money assumed or
incurred as a result of such acquisition), when taken together with the
aggregate amount expended as consideration for all other acquisitions
permitted solely by this Section 7.12(g) and all investments in Persons
(other than Subsidiaries) permitted solely by subsection (h) below, in each
case on a cumulative basis after the date hereof, does not exceed
$15,000,000, and (v) the Company can demonstrate that on a pro forma basis
(including financial projections prepared by the Company) after giving
effect to the subject acquisition that the Acme Group will continue to
comply with the all of the terms and conditions of the Loan Documents;
(h) equity investments by the Company in, and loans and advances by
the Company to, any Subsidiary (or an entity which, following and as a
result of such investment, loan or advance, becomes a Subsidiary of the
Company) or any other Person in which the Company has already acquired any
Voting Stock or other equity interest in compliance with the provisions of
subsection (g) above, provided in each case that (i) a Subsidiary that only
becomes a Subsidiary through such investment, loan or advance and any other
Person in which the Company acquires any Voting Stock or other equity
interest only through such investment, loan or advance in each case must
comply with the provisions of subsection (g) above and (ii) at the time of
each such investment in, or loan or advance to, any Person other than a
Subsidiary (each, a "Minority Investment"), the aggregate amount of
Minority Investments, when taken together with the aggregate amount
expended for all acquisitions permitted solely by subsection (g) above, in
each case on a cumulative basis after the date hereof, does not exceed
$15,000,000;
(i) loans and advances by (A) Subsidiaries to the Company of their
surplus cash which are repayable on demand and advanced to the Company as
part of the centralized cash management system of the Acme Group in the
ordinary course of its business as presently conducted, the proceeds of
which are used by the Company to make Permitted Investments for the benefit
of such lending Subsidiary, (B) any Borrower to any other Borrower so long
as such loans and advances are evidenced by a note which is pledged to the
Agent for the benefit of the Lenders and (C) Subsidiaries to the Borrower
to the extent permitted by Section 7.13(c) hereof;
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(j) investments, directly or indirectly, by Acme Steel in Wabush;
(k) investments represented by accounts receivable created or acquired
in the ordinary course of business;
(l) advances to employees, officers and directors in the ordinary
course of business; and
(m) investments under or pursuant to Interest Protection Agreements.
In determining the amount of investments, loans, advances and guaranties
permitted under this Section 7.12, investments shall always be taken at the
original cost thereof, regardless of any subsequent appreciation or depreciation
therein; loans and advances shall be taken at the principal amount thereof then
remaining unpaid; and guaranties shall be taken at the amount of the obligations
guaranteed thereby.
Section 7.13. Dividends and Certain Other Restricted Payments.
(a) Restricted Equity Payments. Except as set forth in subsection (c)
below, the Acme Group will not, and will not permit any Subsidiary to, (i)
declare or pay any dividends on or make any other distributions in respect
of any series or class of its capital stock (other than dividends payable
solely in its capital stock) or (ii) directly or indirectly or through any
Subsidiary purchase, redeem or otherwise acquire or retire any of its
capital stock (other than redemptions by the Company for not more than
$120,000 in the aggregate on a cumulative basis relating to the preferred
share purchase rights declared by the Company on July 15, 1994 and the
Company's currently outstanding Junior Participating Preferred Stock,
Series A) or any warrants, options or other rights to acquire any such
capital stock (all of the foregoing non-excepted declarations, payments,
distributions, purchases, redemptions, acquisitions and retirements by each
member of the Acme Group and each of its Subsidiaries being referred to
collectively herein as "Restricted Equity Payments").
(b) Restricted Debt Payments. Except as set forth in subsection (c)
below, the Borrowers will not, and will not permit any of their respective
subsidiaries to, make any payment or other distribution on or in respect of
any intercompany loans or advances from the Company (in each case whether
for principal or interest or otherwise) or otherwise acquire or retire any
of such loans or advances (all of the foregoing payments, distributions,
acquisitions and retirements by each Borrower and each of its Subsidiaries
being referred to collectively herein as "Restricted Debt Payments")
(Restricted Equity Payments and Restricted Debt Payments being referred to
collectively herein as "Restricted Payments"). The parties hereto
acknowledge and agree that this subsection (b) shall in no event apply to
nor operate to prevent any similar payment,
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distribution, acquisition or retirement by the Company. The parties hereto
further acknowledge and agree that this subsection (b) shall in no event
apply to nor operate to prevent any Borrower's repayment of loans and
advances made by another Borrower to it to the extent such loans and
advances are permitted by Section 7.12(i)(B) hereof.
(c) Exceptions. Notwithstanding anything in this Section of the
contrary, each Borrower may make Restricted Payments to the Company if at
the time each such Restricted Payment is made and immediately after giving
effect thereto, (i) no Event of Default or (if arising under Sections
8.1(a) or 8.1(n) hereof or as a result of noncompliance with any of
Sections 7.7, 7.8 or 7.9 hereof) Default occurs or is continuing and (ii)
the aggregate amount of Restricted Payments by such Borrower in any single
fiscal year of the Company does not at any time exceed the greater of (A)
the aggregate amount of regularly scheduled (not accelerated) payments of
principal, interest and (at the rate in effect as of the date hereof)
regularly accruing agent's administrative fees on the Senior Secured Term
Loan Notes during such year and (B) the Maximum Permitted Amount for such
Borrower for such year. For purposes hereof, the term "Maximum Permitted
Amount" shall mean for any Borrower with respect to any fiscal year of the
Company, (a) that portion of EBITDA for such year derived from income of
such Borrower less (b) Maintenance Capital Expenditures of such Borrower
during the same such year plus (c) (to the extent not already included in
such EBITDA) all amounts received by such Borrower during such year as
liquidated damages under Acme Steel's principal contract with its general
contractor for engineering, procurement and construction related to the
Modernization Project.
Section 7.14. Mergers, Consolidations, Leases and Sales. The Acme Group
will not, and will not permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any
substantial part of its Property, assets or business, or in any event sell or
discount (with or without recourse) any of its notes or accounts receivable (it
being understood that the write down of accounts receivable in the ordinary
course of settling disputes with respect thereto shall not be considered the
discounting of accounts receivable for purposes hereof); provided, however, that
this Section shall not prohibit:
(a) any Subsidiary (other than any Borrower) from merging into the
Company or any Wholly-Owned Subsidiary if the Company or such Wholly-Owned
Subsidiary is the surviving corporation, provided that no Subsidiary
incorporated in the United
States shall merge into or consolidate with a foreign Subsidiary unless the
United States Subsidiary shall be the survivor;
(b) any Subsidiary (other than any Borrower) from selling,
transferring or leasing all or any part of its assets and Properties to the
Company or any Wholly-Owned Subsidiary of such Subsidiary, provided that no
Subsidiary incorporated in the United
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States shall sell, lease or transfer all or substantially all of its assets
to a foreign Subsidiary; and
(c) the sale of Universal Tool so long as (i) no Default or Event of
Default occurs or is created as a result of such sale and (ii) the cash
proceeds of such sale are not less than $7,000,000.
The term "substantial" as used herein shall mean the sale, lease, transfer or
other disposition in any fiscal year of Properties, assets or business having a
value of 5% of more of Consolidated Tangible Net Worth, and for the purpose
hereof the sale, lease or other disposition by any Subsidiary of assets shall be
deemed to have been made by the Company.
Section 7.15. Maintenance of Subsidiaries. The Acme Group will not assign,
sell or transfer, or permit any Subsidiary to issue, assign, sell or transfer,
any shares of capital stock of a Subsidiary; provided that the foregoing shall
not operate to prevent:
(a) the sale, assignment or transfer of any shares of stock of a
Subsidiary (other than a Borrower) if (x) simultaneously therewith, the
entire capital stock and all indebtedness of such Subsidiary at the time
owned by the Company and all Subsidiaries shall be sold, transferred or
disposed of as an entirety, and (y) either (i) such sale shall not
constitute a sale of a substantial part of the Properties and assets of the
Company (as the term "substantial" is defined in Section 7.14 hereof) or
(ii) such sale is permitted under Section 7.14(c) hereof;
(b) the issuance, sale and transfer to any person of any shares of
capital stock of a Subsidiary solely for the purpose of qualifying, and to
the extent legally necessary to qualify, such person as a Director of such
Subsidiary; and
(c) the pledge of the capital stock of the Company's direct and
indirect Subsidiaries to secure their respective obligations in respect of
the 1994 Notes, the Senior Notes, the Additional Senior Debt and any
Interest Protection Agreement entered into with any lender under the
Indenture for the Senior Secured Term Loan Notes (or any Affiliate of any
such lender).
Section 7.16. ERISA. The Acme Group will, and will cause each ERISA
Affiliate to, promptly pay and discharge all obligations and liabilities arising
under ERISA of a character which if unpaid or unperformed would result in the
imposition of a Lien against any of their respective Properties or assets or a
material obligation to pay money (including, but not limited to any liability to
a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA), will promptly
notify the Lenders when the Acme Group becomes aware of the occurrence of any
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Reportable Event (as defined in Section 4043 of ERISA) which could result in the
termination by the Pension Benefit Guaranty Corporation ("PBGC") of any employee
benefit plan covering any officers or employees of the Acme Group or any ERISA
Affiliate, any benefits of which are, or are required to be, guaranteed by the
PBGC (a "Plan") or of receipt of any notice from the PBGC of its intention to
seek termination of any such Plan or appointment of a trustee therefor. The Acme
Group will, and will cause each ERISA Affiliate to, notify the Lender of its or
any ERISA Affiliate's intention to terminate any Plan and will not, and will not
permit any ERISA Affiliate to, terminate any such Plan, the termination of which
will result in a material liability to the Acme Group or any ERISA Affiliate,
unless the Acme Group and its ERISA Affiliates shall be in compliance with all
of the terms and conditions of this Agreement after giving effect to any
estimated liability to the PBGC (as determined by the Plan's independent
actuaries) resulting from such termination or withdrawal.
Section 7.17. Burdensome Contracts with Affiliates. The Acme Group will
not, and will not permit any Subsidiary to, enter into any contract, agreement
or business arrangement with any of its Affiliates (excluding other members of
the Acme Group and Wabush) on terms and conditions which are less favorable to
any member of the Acme Group or any of their respective Subsidiaries than would
be usual and customary in similar contracts, agreements or business arrangements
between Persons not affiliated with each other.
Section 7.18 Change in Fiscal Year. The Acme Group will not change its
fiscal year from its current basis.
Section 7.19. Change in the Nature of Business. The Acme Group will not,
and will not permit any Subsidiary to, engage in any business or activity if as
a result the general nature of the business of any member of the Acme Group or
any of their respective Subsidiaries would be changed in any material respect
from the general nature of the business engaged in by such member of the Acme
Group or such Subsidiary on the date of this Agreement.
Section 7.20. Changes to Senior Secured Term Loan Indenture. The Company
shall not, without the prior written consent of the Agent and the Co-Agent,
amend or modify, or permit the amendment or modification of, any provision of
the Indenture for the Senior Secured Term Loan Notes or any similar agreement in
each case governing, affecting or otherwise relating to the payment or
prepayment (including out of cash flow) of principal of the Senior Secured Term
Loan Notes in such a manner as would make such provision more burdensome in any
material respect on any member of the Acme Group or any Subsidiary.
Section 7.21. Compliance with Laws. The Acme Group shall, and shall cause
each Subsidiary to, comply in all respects with the requirements of all federal,
state and local laws, rules, regulations, ordinances and orders applicable to or
pertaining to their Properties or
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business operations, noncompliance with which could have a material adverse
effect on the financial condition, Properties, business or operations of any
member of the Acme Group or any of their respective Subsidiaries or could result
in a Lien upon any of their Property.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
Section 8.1. Any one or more of the following shall constitute an
Event of Default hereunder:
(a) default for a period of five days in the payment when due of all
or any part of the principal of or interest on any Note (whether at the
stated maturity thereof or at any other time provided for in this
Agreement) or of any Reimbursement Obligation or of any fee or other amount
payable hereunder or under any other Loan Document;
(b) default in the observance or performance of any covenant set forth
in Sections 7.5(c), 7.13, 7.14, 7.15 or 7.16 hereof or of any provision in
any Loan Document dealing with the use, disposition or remittance of the
proceeds of Collateral or requiring the maintenance of insurance thereon;
(c) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within thirty
days after the earlier of (i) the date on which such failure shall first
become known to any officer of the Company or (ii) written notice thereof
to the Acme Group by the Agent;
(d) any representation or warranty made herein or in any of the other
Loan Document or in any certificate furnished to the Agent or the Lenders
pursuant hereto or thereto or in connection with any transaction
contemplated hereby or thereby proves untrue in any material respect as of
the date of the issuance or making thereof, and shall not be made good
within thirty days after written notice thereof to the Company by the
Agent;
(e) any event occurs or condition exists (other than those described
in subsections (a) through (d) above) which is specified as an event of
default under any of the other Loan Documents, or any of the Loan Documents
shall for any reason not be or shall cease to be in full force and effect,
or any of the Loan Documents is declared to be null and void, or any of the
Collateral Documents shall for any reason fail to create a valid and
perfected first priority Lien in favor of the Agent in any Collateral
purported to be covered thereby except as expressly permitted by the terms
thereof;
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(f) default shall occur under any evidence of Indebtedness for
Borrowed Money aggregating in excess of $5,000,000 issued, assumed or
guaranteed by the Acme Group or any member thereof or any Subsidiary or
under any indenture, agreement or other instrument under which the same may
be issued, and such default shall continue for a period of time sufficient
to permit the acceleration of the maturity of any such Indebtedness for
Borrowed Money (whether or not such maturity is in fact accelerated) or any
such Indebtedness for Borrowed Money shall not be paid when due (whether by
demand, lapse of time, acceleration or otherwise);
(g) any Borrower shall make any payment or other distribution on or in
respect of its guaranty of the Senior Notes or otherwise acquire or retire
any of the Senior Notes;
(h) any judgment or judgments, writ or writs or warrant or warrants of
attachment, or any similar process or processes in an aggregate amount in
excess of $500,000 and which is not fully covered by insurance from any
insurer who has acknowledged its liability thereon shall be entered or
filed against the Acme Group or any Subsidiary or against any of the
Property or assets of either and remains undischarged, unvacated, unbonded
or unstayed for a period of sixty days;
(i) an event occurs or condition exists which is specified as an event
of default in any of the Collateral Documents;
(j) any party obligated on any guarantee of any Obligations shall
purport to disavow, revoke, repudiate or terminate such guarantee;
(k) any party to the Intercreditor Agreement shall purport to disavow,
revoke, repudiate or terminate such Agreement;
(l) a Change of Control occurs;
(m) any member of the Acme Group or any Subsidiary shall (i) have
entered involuntarily against it an order for relief under the United
States Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of
its Property, (v) institute any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code, as amended,
to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts
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under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, or (vi) fail
to contest in good faith any appointment or proceeding described in Section
8.1(n) hereof;
(n) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for any member of the Acme Group or any
Subsidiary or any substantial part of any of their Property, or a
proceeding described in Section 8.1(m)(v) shall be instituted against any
member of the Acme Group or any Subsidiary, and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a
period of sixty days.
Section 8.2. When any Event of Default described in subsections
8.1(a) to 8.1(l), both inclusive, has occurred and is continuing, the Agent
shall, upon request of all the Lenders in the case of subsection 8.1(l) and
otherwise upon request of the Required Lenders, and by notice to the Company,
take any or all of the following actions:
(a) terminate the obligation of the Lenders to extend any further
credit hereunder on the date (which may be the date thereof) stated in such
notice; and
(b) declare the principal of and the accrued interest on the Notes to
be forthwith due and payable and thereupon the Notes, including both
principal and interest, and all fees, charges, commissions and other
Obligations payable hereunder, shall be and become immediately due and
payable without further demand, presentment, protest or notice of any kind.
Section 8.3. When any Event of Default described in subsection
8.1(m) or 8.1(n) has occurred and is continuing, then the unpaid balance of the
Notes, including both principal and interest, and all fees, charges, commissions
and other Obligations payable hereunder, shall immediately become due and
payable without presentment, demand, protest or notice of any kind, and the
obligation of the Lenders to extend further credit pursuant to any of the terms
hereof shall immediately terminate.
Section 8.4. If and when (x) any Event of Default, other than an
Event of Default described in subsections (m) or (n) of Section 8.1, has
occurred and is continuing, the Acme Group shall, upon demand of the Agent, and
(y) any Event of Default described in subsections (m) or (n) of Section 8.1 has
occurred or (z) any Letter of Credit is outstanding on the Termination Date
(whether or not any Event of Default has occurred), the Borrowers shall, without
notice or demand from the Agent, immediately pay to the Agent the full amount of
each Letter of Credit, the Borrowers agreeing to immediately make each such
payment and
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acknowledging and agreeing the Agent would not have an adequate remedy at law
for failure of the Borrowers to honor any such demand and that the Agent shall
have the right to require the Borrowers to specifically perform such undertaking
whether or not any draws had been made under the Letters of Credit.
SECTION 9. DEFINITIONS INTERPRETATIONS.
Section 9.1. Definitions. The following terms when used
herein have the following meaning;
"Acme Group" shall mean, the Borrowers and the Company, collectively, and,
also, each individually, with all promises and covenants (including promises to
pay) and representations and warranties of and by the Acme Group made in the
Loan Documents or any other instruments or documents delivered pursuant thereto
to be and constitute the joint and several promises, covenants, representations
and warranties of and by each and all of such corporations. The phrase "any
member of the Acme Group" and derivatives thereof appearing in the Loan
Documents shall be deemed a reference to any or all of the corporations
comprising the Acme Group (as applicable), and without limiting the generality
of the foregoing, the term "Acme Group" as used in the Loan Documents shall be
deemed a reference to any one or more of such corporations whether or not such
phrase or any derivative thereof is used in conjunction with such term.
"Acquired Indebtedness" means (i) with respect to any Person that becomes a
Subsidiary of the Company (or is merged into the Company or any of its
Subsidiaries) after the date hereof, Indebtedness for Borrowed Money of, or
preferred stock issued by, such Person or any of its Subsidiaries existing at
the time such Person becomes a Subsidiary of the Company (or is merged into the
Company or any of its Subsidiaries), whether or not such Indebtedness was
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary of the Company (or being merged into the Company or any of its
Subsidiaries) and (ii) with respect to the Company or any of its Subsidiaries,
any Indebtedness for Borrowed Money assumed by the Company or any of its
Subsidiaries in connection with the acquisition of any assets from another
Person (other than the Company or any of Subsidiaries), whether or not such
Indebtedness was incurred by such Person in connection with, or in contemplation
of, such acquisition.
"Additional Senior Debt" shall mean to the extent permitted by Section 7.11
hereof, the additional indebtedness of the Company for borrowed money identified
and defined as "Additional Senior Debt" in the Indenture for the Senior Secured
Term Loan Notes.
"Adjusted LIBOR Rate" shall mean a rate per annum determined pursuant to
the following formula:
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Adjusted LIBOR Rate = LIBOR
-----------------------
100%-Reserve Percentage
"Reserve Percentage" shall mean, for the purpose of computing the Adjusted LIBOR
Rate, the maximum rate of all reserve requirements (including, without
limitation, any marginal emergency, supplemental or other special reserves)
imposed by the Board of Governors of the Federal Reserve System (or any
successor) under Regulation D on Eurocurrency liabilities (as such term is
defined in Regulation D) for the applicable Interest Period as of the first day
of such Interest Period, but subject to any amendments to such reserve
requirement by such Board or its successor, and taking into account any
transitional adjustments thereto becoming effective during such Interest Period.
"LIBOR" means, for each Interest Period, (a) the LIBOR Index Rate for such
Interest Period, if such rate is available, and (b) if the LIBOR Index Rate
cannot be determined, the arithmetic average of the rate of interest per annum
(rounded upwards, if necessary, to nearest 1/100 of 1%) at which deposits in
U.S. dollars in immediately available funds are offered to the Agent at 11:00
a.m. (London, England time) two (2) Business Days before the beginning of such
Interest Period by major banks in the interbank eurodollar market for a period
equal to such Interest Period and in an amount equal or comparable to the
principal amount of the Eurodollar Loan scheduled to be made by the Agent as
part of such Borrowing. "LIBOR Index Rate" means, for any Interest Period, the
rate per annum (rounded upwards, if necessary, to the next higher one
hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a
period equal to such Interest Period, which appears on the Telerate Page 3750 as
of 11:00 a.m. (London, England time) on the day two Business Days before the
commencement of such Interest Period. "Telerate Page 3750" means the display
designated as "Page 3750" on the Telerate Service (or such other page as may
replace Page 3750 on that service or such other service as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for U.S.
Dollar deposits).
"Affiliate" shall mean any person, firm, corporation or entity (herein
collectively called a "Person") directly or indirectly controlling or controlled
by, or under direct or indirect common control with, another Person. A Person
shall be deemed to control another Person for the purposes of this definition if
such first Person possesses, directly or indirectly, the power to direct, or
cause the direction of, the management and policies of the second Person,
whether through the ownership of voting securities, common directors, trustees
or officers, by contract or otherwise.
"Agent" shall mean Harris Trust and Savings Bank and any successor
thereto appointed pursuant to Section 10.1 hereof.
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"Applicable Margin" with respect to the Loans and the commitment fee
payable under Section 3.1 hereof shall initially mean the following:
Applicable Margin for
Domestic Rate Portion: 1.25%
Applicable Margin for
LIBOR Portions: 2.25%
Applicable Margin for
Commitment Fee: 0.50%
provided, however, that such Applicable Margins shall be subject to quarterly
adjustment as follows:
<TABLE>
<CAPTION>
If the Consolidated Leverage Applicable Applicable Applicable Margin
Ratio as ofthe close of any Margin for LIBOR Margin for Domestic for the Commitment
fiscal quarter is: Portions shall be: Rate Portions shall be: Fee shall be:
===========================================================================================================
<S> <C> <C> <C>
Greater than or equal to 70% 2.25% 1.25% 0.50%
Greater than or equal to 60%
but less than 70% 2.00% 1.00% 0.50%
Greater than or equal to 50%
but less than 60% 1.75% 0.75% 0.375%
Less than 50% 1.50% 0.50% 0.375%
</TABLE>
On the date that is ten (10) days after the date on which the Acme
Group delivers to the Lenders the quarterly financial statements pursuant to
Sections 7.5(a)(ii) hereof for a given fiscal quarter (commencing with the
fiscal quarter ending March 29, 1998) and the compliance certificate required
for such period pursuant to Section 7.5 hereof, the Agent shall determine
whether such financial information indicates such a change in the Consolidated
Leverage Ratio (the Consolidated Leverage Ratio to be computed as of the close
of such fiscal quarter (such date that is ten days after the date on which the
Acme Group delivers such compliance certificate being hereinafter referred to as
a "Test Date")) as would justify a change in the Applicable Margins and shall
then notify the Acme Group and the Lenders of such determination and of any
change in the Applicable Margins resulting therefrom. Any change in the
Applicable Margins shall be effective as of the related Test Date and with such
new Applicable Margins to continue in effect until the effectiveness of the next
redetermination thereof. Any determination by the Agent of the Consolidated
Leverage Ratio shall be conclusive and binding upon the Acme Group provided that
it has been made reasonably and in good faith. Anything contained herein to the
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contrary notwithstanding, the Applicable Margins shall be the highest Margins
set forth herein during the continuance of: (x) any Event of Default, (y) any
Default (whether or not any grace period applicable thereto has passed) in the
payment of any principal or interest on any Note or any fee or other amount
payable by the Acme Group hereunder or (z) any Default by the Acme Group in
supplying the financial statements required by Sections 7.5(a)(ii) hereof or the
compliance certificate required by Section 7.5(b) hereof, in each case by the
deadlines expressed in such Sections.
"Assignment Agreement" means an Assignment and Acceptance entered into
by a Lender and an assignee in accordance with Section 12.18 hereof
substantially in the form of Exhibit G hereto.
"Authorized Representative" means those persons shown on the list of
individuals provided by the Company pursuant to Section 6.2(a) hereof or on any
update of any such list provided by any member of the Acme Group to the Agent,
or any further or different individuals so named by the Chief Financial Officer
or the Treasurer of the Company in a written notice to the Agent.
"Available Borrowing Base" shall mean, as of any time and for any
Borrower for which the same is to be determined, the amount (if any) by which
such Borrower's Borrowing Base exceeds such Borrower's Hedging Liability.
"Borrowers" is defined in the introductory paragraph hereof, with (i)
the term "Borrowers" to mean the Borrowers, collectively, and, also, each
individually, and (ii) all promises and covenants (including promises to pay)
and representations and warranties of and by the Borrowers made in the Loan
Documents or any instruments or documents delivered pursuant thereto to be and
constitute the joint and several promises, covenants, representations and
warranties of and by each and all of such corporations. The term "Borrower"
appearing in such singular form shall be deemed a reference to any of the
Borrowers unless the context in which such term is used shall otherwise require.
"Borrowing" shall mean the total of Revolving Loans of a single type of
Portion made to a given Borrower by all the Lenders on a single date, and if
such Loans are to be part of a LIBOR Portion, for a single Interest Period.
Borrowings of Revolving Loans are made and maintained ratably from each of the
Lenders according to their Percentages.
"Borrowing Base" shall mean, as of any time and for any Borrower for
which the same is to be determined, the sum of the following values or amounts,
as the case may be:
(a) 85% of the unpaid amount of Eligible Receivables of such Borrower;
plus
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(b) 50% of the loan value (determined as set forth in the definition
of Eligible Inventory in this Section 9) of Eligible Inventory of such
Borrower;
provided, however, that at no time shall the Borrowing Base attributable to
Eligible Inventory of the Borrowers, taken together, exceed 50% of the
Commitments then in effect. The Borrowing Base shall be computed only as against
and on so much of the Eligible Receivables and Eligible Inventory as are
included in the applicable Borrowing Base certificate submitted pursuant to
Section 7.5(a)(iv) hereof.
"Business Day" shall mean any day (other than a Saturday or Sunday) on
which banks are generally open for business in Chicago, Illinois and, when used
with respect to LIBOR Portions, a day on which banks are also dealing in United
States Dollar deposits in London, England and Nassau, Bahamas.
"Capital Lease" means any lease of Property (whether real or personal)
which in accordance with GAAP is required to be capitalized on the balance sheet
of the lessee.
"Capitalized Lease Obligation" means the amount of the liability shown
on the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
"Cash Interest Expense" shall mean with reference to any period, all
accrued and currently payable cash interest charges (including imputed interest
on Capitalized Lease Obligations) with respect to all Indebtedness for Borrowed
Money during such period.
"Change of Control" means (i) any sale, lease or other transfer (in one
transaction or a series of related transactions) by the Company or any of its
Subsidiaries of all or substantially all of the consolidated assets of the
Company to any Person (other than a Borrower); (ii) a "Person" or "Group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (other than the Company)) becomes the "Beneficial Owner"
(as defined in Rule 13d3 under such Act) of Voting Stock of the Company
representing 40% or more of the voting power of such Voting Stock; (iii)
Continuing Directors cease to constitute at least a majority of the Board of
Directors of any member of the Acme Group; (iv) the stockholders of any member
of the Acme Group approve any plan or proposal for the liquidation or
dissolution of any member of the Acme Group; or (v) any Borrower shall cease to
constitute a WhollyOwned Subsidiary. For purposes hereof, the term "Continuing
Director" means with respect to any member of the Acme Group, a director who
either was a member of the Board of Directors of such member on the date hereof
or who became a director of such member subsequent to such date and whose
election, or nomination for election by such member's stockholders, was duly
approved by a majority of the Continuing Directors then on the Board of
Directors of such member, either by a specific vote or by approval of the proxy
statement issued
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by such member on behalf of the entire Board of Directors of
such member in which such individual is named as nominee for director.
"Co-Agent" means The First National Bank of Chicago.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all Properties, rights, interests and privileges
from time to time subject to the Liens granted to the Agent by the Collateral
Documents.
"Collateral Documents" means the Security Agreements and other security
agreements, pledge agreements, assignments, financing statements and other
documents as shall from time to time secure or relate to the Notes or any other
Obligations.
"Commercial Letter of Credit" means a Letter of Credit that finances a
commercial transaction by paying part or all of the purchase price for goods
against delivery of a document of title covering such goods and any other
required documentation.
"Commitments" means the commitments of the Lenders to make financial
accommodations under the Revolving Credit in the amounts set forth opposite
their signatures hereto under the heading "Revolving Credit Commitment" and
opposite their signatures on Assignment Agreements delivered pursuant to Section
12.18 hereof under the heading "Commitment", as such amounts may be reduced
pursuant hereto.
"Commodity Agreement" means any option or futures contract or similar
agreement or arrangement designed to protect a Person against fluctuations in
commodity prices.
"Consolidated Cash Flow Coverage Ratio" means, with respect to any
period for which the same is to be determined, the ratio of (x) EBITDA for such
period to (y) the sum of (i) Cash Interest Expense during such period plus (ii)
20% of the average daily principal amount outstanding on the Revolving Credit
(both in the form of Revolving Loans and L/C Obligations) and the Swing Line
during such period plus (iii) all regularly scheduled (not accelerated)
principal payments during such period with respect to Indebtedness for Borrowed
Money.
"Consolidated Leverage Ratio" means, as of any time the same is to be
computed, the ratio of (i) Indebtedness for Borrowed Money to (ii) Total
Capitalization.
"Consolidated Net Income" for any period shall mean the net income of
the Acme Group for such period as computed on a consolidated basis in accordance
with GAAP, but in any event excluding (i) any extraordinary gain or loss,
together with any related provision for taxes on any
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such extraordinary gain or loss, realized during such period and (ii) any
non-cash item of non-operating income or non-operating expense during such
period.
"Consolidated Tangible Net Worth" shall mean, as of any time the same
is to be determined, (a) Shareholder's Equity less (b) the aggregate book value
of all assets which would be classified as intangible assets under GAAP,
including, without limitation, goodwill, patents, trademarks, trade names,
copyrights and franchises plus (c) (to the extent otherwise deducted in
computing such Consolidated Tangible Net Worth) deferred charges (including,
without limitation, unamortized debt discount and expense, deferred taxes,
organization costs and deferred research and development expense); provided,
however, that the effects on retained earnings arising from the application of
Financial Accounting Standard Number 87 ("Accounting for Pensions") shall be
excluded from such determination.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its Property is bound.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect a Person
against fluctuations in currency values.
"Departing Lenders" means those Existing Lenders which are not parties
to this Agreement as of the date hereof.
"Domestic Rate" means a fluctuating interest rate per annum equal at
all times to the greater of:
(a) the rate of interest announced by the Agent from time to
time as its prime commercial rate as in effect on such day, with any
change in such rate resulting from a change in said prime commercial
rate to be effective as to the Acme Group as of the date of the
relevant change in said prime commercial rate; or
(b) the sum of (x) the rate determined by the Agent to be the
average (rounded upwards, if necessary, to the next higher 1/100 of 1%
of the rates per annum quoted to the Agent at approximately 10:00 a.m.
Chicago time (or as soon thereafter as is practicable) on such day (or,
if such day is not a Business Day, on the immediately preceding
Business Day) by two or more Federal funds brokers selected by the
Agent for the sale to the Agent at face value of Federal funds in the
secondary market in an amount equal or comparable to the principal
amount owed to the Lenders for which such rate is being determined,
plus (y) 1/2 of 1%.
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"EBITDA" shall mean, with reference to any period, Consolidated Net
Income for such period plus (without duplication) all amounts to the extent (if
any) deducted in arriving at such Consolidated Net Income in respect of (i) Net
Interest Expense, (ii) income taxes as defined and classified in accordance with
GAAP for such period, (iii) depreciation of fixed assets and (iv) amortization
of intangibles (other than debt issuance costs such as financing fees and
expenses).
"Eligible Inventory" shall mean, with respect to any Borrower, all
inventory as to which such Borrower has title, provided that such inventory:
(a) is not obsolete and is of merchantable quality;
(b) is finished product inventory in respect of which no
further manufacturing, processing or other work has to be done thereon
(other than packaging or crating for shipment or distribution) or raw
material inventory or work in process inventory consisting of ingots,
slabs, billets, bands and coils;
(c) has been identified to the Agent on the Borrowing Base
certificate submitted by the Company pursuant to Section 7.5(a)(iv)
hereof; and
(d) is subject to a perfected, first priority Lien in favor
of the Agent and is free and clear of any other Lien.
Any inventory which is at any time Eligible Inventory and which subsequently
fails to meet any of the foregoing requirements shall forthwith cease to be
Eligible Inventory. The loan value of any Eligible Inventory shall be the lesser
of (i) the greater of (x) the amount thereof stated on the books of the relevant
Borrower or (y) the amount thereof computed using the first-in-first-out method
of valuation in accordance with GAAP or (ii) the price or prices for such
Eligible Inventory which the relevant Borrower is then receiving for or on
account of the most recent bona fide sales thereof by such Borrower.
"Eligible Receivables" shall mean with reference to any Borrower, those
accounts receivable of such Borrower representing sums due for goods which have
been sold and shipped which, when scheduled to the Agent on any Borrowing Base
certificate submitted by the Company pursuant to Section 7.5(a)(iv) hereof and
at all times thereafter, the Agent, in its reasonable credit judgment, deems to
be Eligible Receivables. No account receivable shall in any event be an Eligible
Receivable if:
(a) it is either (a) due or unpaid more than ninety days
after the earlier of (x) the date of the original invoice issued by or
on behalf of such Borrower with respect to
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the sale giving rise thereto or (y) the date of shipment of the goods
subject to such invoice or (b) with respect to account debtors to whom
such Borrower in the normal course of its business extends sixty day
terms, it is due or unpaid more than sixty days after the due date of
the original invoice issued by such Borrower with respect to the sale
giving rise thereto; or
(b) it arises out of a sale not made in the ordinary course
of such Borrower's business or made to any member of the Acme Group or
to a Person, firm or corporation which is an Affiliate of any such
member; or
(c) any warranty contained in this Agreement or in any
Borrowing Base certificate with respect to such account receivable has
been breached in any material respect; or
(d) it is subject to any known offset, counterclaim or other
defense with respect thereto (provided that such account receivable
shall be ineligible by reason of this clause (d) only to the extent of
such offset, counterclaim or other defense); or
(e) the account debtor has filed a petition for bankruptcy or
any other petition for relief under the Bankruptcy Code of 1978 as
amended from time to time or any successor statute thereto, made an
assignment for the benefit of creditors, or if any petition of other
application for relief under the Bankruptcy Code has been filed against
the account debtor, or if the account debtor has failed, suspended its
business operations, become insolvent, or suffered a receiver or a
trustee to be appointed for any of its assets or affairs; or
(f) it is owing from an account debtor who is also a creditor
or supplier of any member of the Acme Group, in which case such account
receivable shall be ineligible to the extent of the Acme Group's
indebtedness to such creditor or supplier;
(g) the sale is to an account debtor outside the United
States or Canada;
(h) the sale is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase
or return basis; or
(i) the Agent reasonably believes that collection of such
account receivable may not be paid by reason of the account debtor's
financial inability to pay; or
(j) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless such Borrower
assigns its right to payment of
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such accounts receivable to the Agent on behalf of the Lenders
pursuant to the Assignment of Claims Act of 1940, as amended, (31
U.S.C. ss.ss.3727 et seq.); or
(k) the goods, the sale of which have given rise to such
account receivable, have not been shipped and delivered to and accepted
by the account debtor or the services, the performance of which has
given rise to such account receivable, have not been performed by such
Borrower and accepted by the account debtor; or
(l) it is owing by an account debtor who shall have failed to
pay in full any invoices evidencing any accounts receivable prior to
the times specified in subpart (a) above of this definition, if the
aggregate of all such amounts remaining unpaid at any time shall exceed
an amount equal to fifteen percent (15%) of the aggregate of all
accounts receivable of such account debtor owing to such Borrower at
such time; or
(m) it is not subject to a perfected, first priority Lien in
favor of the Agent or is subject to any other Lien.
Any account receivable which is at any time an Eligible Account and which
subsequently fails to meet any of the foregoing requirements shall forthwith
cease to be an Eligible Account.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean any (i) corporation which is a member of
the same controlled group of corporations (within the meaning of Section 414(b)
of the IRC) as any member of the Acme Group, (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the IRC) with any member of the Acme Group, and (iii)
member of the same affiliated service group (within the meaning of Section
414(m) of the IRC) as any member of the Acme Group, any corporation described in
clause (i) above or any partnership or trade or business described in clause
(ii) above.
"Event of Default" shall mean any event or condition specified as such
in Section 8.1 hereof and "Default" shall mean any event or condition which with
the lapse of time, the giving of notice or both would constitute an Event of
Default.
"Existing L/C" means that certain standby letter of credit issued by
Harris Bank on or about July 9, 1997 bearing number SPL 35971 to SMS
Schloemann-Siemag AG in the amount of $3,000,000.
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"Existing Lenders" is defined in the introductory paragraph of this
Agreement.
"Federal Funds Rate" means the fluctuating interest rate per annum
described in part (x) of clause (b) of the definition of Domestic Rate.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Acme Group and its Subsidiaries on a basis
consistent with the preparation of the Company's most recent financial
statements furnished to the Lenders pursuant to Section 7.5 hereof.
"Guarantors" shall mean each member of the Acme Group and "Guarantor"
shall mean any of the Guarantors.
"Harris Bank" is defined in the introductory paragraph hereof.
"Hedging Arrangements" shall mean Currency Agreements, Commodity
Agreements and Interest Protection Agreements.
"Hedging Liability" shall mean the liability of the Borrowers to the
Lenders or any of them in respect of the Hedging Arrangements. Unless and until
the amount of the Hedging Liability is fixed and determined, the Hedging
Liability shall be deemed to be 4% per annum of the notional amount of the hedge
from the date of computation to the date the hedge expires.
"Indebtedness for Borrowed Money" shall mean for the Acme Group and its
Subsidiaries the sum of (i) all indebtedness of each member of the Acme Group
and each of its Subsidiaries for borrowed money, whether current or funded, or
secured or unsecured, (ii) all obligations of each member of the Acme Group and
each of its Subsidiaries evidenced by a bond, debenture, note or other similar
instrument, (iii) all obligations of each member of the Acme Group and each of
its Subsidiaries to pay the deferred and unpaid purchase price of Property or
services, which purchase price is due more than six months after the date of
placing such Property in service or taking delivery and title thereto or the
completion of such services, (iv) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to Property
acquired by any member of the Acme Group or any of their respective Subsidiaries
(even though the rights and remedies of the seller or lender under such
agreement in the event of a default are limited to repossession or sale of such
Property), (v) all indebtedness secured by a purchase money mortgage or other
Lien to secure all or part of the purchase price of Property subject to such
mortgage or Lien, (vi) all obligations under leases which shall have been or
must be, in accordance with GAAP, recorded as Capital Leases in respect of which
any member of the Acme Group or any of their respective Subsidiaries is liable
as lessee, (vii) any liability in respect of banker's acceptances or letters of
credit, (viii) any indebtedness whether or
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not assumed, secured by Liens on Property acquired by any member of the Acme
Group or any of their respective Subsidiaries at the time of acquisition thereof
and (ix) all indebtedness referred to in clause (i), (ii), (iii), (iv), (v),
(vi), (vii) or (viii) above which is directly or indirectly guaranteed by any
member of the Acme Group or any of their Subsidiaries or which any of the
foregoing have agreed (contingently or otherwise) to purchase or otherwise
acquire or in respect of which any of them have otherwise assured a creditor
against loss; provided, however, that the term "Indebtedness for Borrowed Money"
shall not include (A) ordinary trade payables, (B) indebtedness evidenced by the
1994 Notes to the extent such indebtedness has been defeased on terms and
conditions satisfactory to the Agent and the Co-Agent and (C) deferred payment
obligations (except to the extent supported by a Letter of Credit) of the
Company or any of its Subsidiaries in connection with the Company's or Acme
Steel's contracts with Raytheon Engineers & Constructors, Incorporated and SMS
Schloemann-Siemag AG in an aggregate amount not to exceed $6,000,000.
"Indentures" shall mean, collectively, the credit agreement under which
the Senior Secured Term Loan Notes are issued and the indenture under which the
Senior Unsecured Notes are issued.
"Intercreditor Agreement" means that certain Amended and Restated
Intercreditor Agreement by and between the Agent, State Street Bank and Trust
Company, the Company and Acme Steel dated as of December 18, 1997 as the same
may from time to time be amended or modified.
"Interest Period" shall mean (i) with respect to any Swing Line Loan,
the period commencing on the date such Swing Line Loan is made and ending 1-7
days thereafter as selected by the Company in its notice as provided herein and
(ii) with respect to any LIBOR Portion:
(a) initially, the period commencing on, as the case may be,
the creation or conversion date with respect to such LIBOR Portion and
ending one, two, three or six months thereafter as selected by the
Company in its notice as provided herein; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such LIBOR Portion and
ending one, two, three or six months thereafter as selected by the
Company in its notice as provided herein;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
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(i) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be
to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) no Interest Period may extend beyond the final maturity date
of the relevant Notes; and
(iii) the interest rate to be applicable to each Portion for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if there is no numerically
corresponding day in the month in which an Interest Period is to end, then such
Interest Period shall end on the last Business Day of such month.
"Interest Protection Agreement" means any interest rate swap agreement,
interest rate collar agreement, option or future contract or other similar
agreement or arrangement designed to protect a Person against fluctuations in
interest rates.
"IRC" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"L/C Commitment" shall mean $10,000,000 as reduced pursuant to Section
3.7 hereof.
"L/C Documents" means the Letters of Credit, any draft or other
document presented in connection with a drawing thereunder, the Applications and
this Agreement.
"L/C Obligations" means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"Lenders" shall mean Harris Trust and Savings Bank, The First National
Bank of Chicago, and all other lenders becoming parties hereto pursuant to
Section 12.18 hereof.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind or nature in respect of any Property, including the
interest of a vendor or lessor under any conditional sale, Capital Lease or
other title retention arrangement.
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"Loan Documents" shall mean this Agreement, the Notes, the L/C
Documents and the Collateral Documents and each other instrument or document to
be delivered hereunder or thereunder or otherwise in connection therewith.
"Loans" means and includes Revolving Loans and the Swing Line Loans
unless the context shall otherwise require.
"Maintenance Capital Expenditures" for any Person and for any period,
shall mean capital expenditures of such Person during such period as defined and
classified in accordance with GAAP consistently applied to the extent expended
for maintenance or repair of existing plant, Properties and equipment.
"Modernization Project" shall mean the construction of a new continuous
thin slab caster/hot strip mill complex at Acme Steel's Riverdale, Illinois
facility as more particularly described in the Form S-1 Registration Statement
filed by the Company with the SEC on June 10, 1994 as amended.
"Net Interest Expense" shall mean with reference to any period, all
interest charges net of interest income in accordance with GAAP plus (without
duplication) imputed interest on Capitalized Lease Obligations during such
period.
"1994 Indentures" means, collectively the indenture under which the
1994 13-1/2% Notes were issued and the indenture under which the 1994 12-1/2%
Notes were issued.
"1994 Notes" shall mean, collectively, the 1994 13-1/2% Notes and the
1994 12-1/2% Notes.
"Notes" means and includes Revolving Credit Notes and the Swing Line
Note unless the context shall otherwise require.
"Obligations" shall mean any and all indebtedness, obligations and
liabilities of the Acme Group and any of them to the Lenders and any of them or
the Agent now or hereafter arising hereunder or under any of the other Loan
Documents or in connection with Hedging Arrangements.
"Percentage" means, for each Lender, the percentage of the Commitments
represented by such Lender's Commitment or, if the Commitments have been
terminated, the percentage held by such Lender (including through participation
interests in L/C Obligations) of the aggregate principal amount of all
outstanding Obligations.
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"Permitted Indebtedness" means (i) Indebtedness for Borrowed Money
outstanding as of the date hereof to the extent appropriately disclosed in the
most recent financial statements referred to in Section 5.6 hereof; (ii)
indebtedness of the Borrowers on the Notes; (iii) indebtedness of the Company on
the 1994 Notes and the Senior Notes and Refinancing Indebtedness in respect of
the on the 1994 Notes and the Senior Notes; (iv) guarantees by Subsidiaries of
the Company of the on the 1994 Notes and the Senior Notes and Refinancing
Indebtedness in respect of the on the 1994 Notes and the Senior Notes; (v)
indebtedness in respect of obligations of the Company and its Subsidiaries to
the trustees under the 1994 Indentures and to the collateral agent under the
"Security Documents" identified and defined in the Indentures; (vi) intercompany
debt obligations (including intercompany notes) of Subsidiaries to the Company;
(vii) intercompany debt obligations (including intercompany notes) of the
Company to its Subsidiaries arising from loans and advances in connection with
its centralized cash management system permitted by Section 7.12(i) hereof or as
otherwise permitted in this Agreement; and (viii) indebtedness of the Company
and its Subsidiaries (including guarantees thereof) under any Hedging
Arrangements.
"Permitted Investments" means (i) obligations of or guaranteed by the
United States government, its agencies or government-sponsored enterprises; (ii)
short-term commercial bank and corporate obligations that have received the
highest rating from two of the following rating organizations: Standard & Poor's
Corporation ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps
Credit Rating Co., Fitch Investor Service, Inc., IBCA Ltd. and Thomson Bankwatch
Inc.; (iii) money market preferred stocks which, at the date of acquisition are
accorded ratings of at least A- or A3 by S&P or Moody's, respectively; (iv)
tax-exempt obligations that are accorded ratings of at least A- or A3 (or
equivalent short-term ratings) by S&P or Moody's, respectively, at the time of
purchase; (v) master repurchase agreements with foreign or domestic banks having
a capital and surplus of not less than $250,000,000 or primary dealers so long
as such agreements are collateralized with obligations of the United States
government or its agencies at a ratio of 102%, or with other collateral rated at
least AA or Aa2 by S&P or Moody's, respectively, at a ratio of 103% and, in
either case, marked-to-market weekly and so long as such securities shall be
held by a third-party agent; (vi) guaranteed investment contracts and/or
agreements of a bank, insurance company or other institution whose unsecured,
uninsured and unguaranteed obligations (or claims-paying ability) have at the
time of purchase ratings of AAA or Aaa by S&P or Moody's, respectively; (vii)
time deposits with, and certificates of deposit and banker's acceptances issued
by, any bank having capital surplus and undivided profits aggregating at least
$50,000,000; and (viii) money market funds, the portfolio of which is limited to
investments described in clauses (i) through (vii) above. In no event shall any
of the Permitted Investments described in clauses (i) through (vi) above have a
final maturity more than one year from the date of purchase.
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"Permitted Liens" means (i)(x) with respect to Property other than
Collateral, Liens existing on the date hereof to the extent described on
Schedule 5.4 hereto and (y) with respect to Collateral, Liens existing on the
date hereof to the extent specifically permitted in the appropriate Collateral
Documents; (ii) Liens on (x) the capital stock of the direct and indirect
Subsidiaries of the Company and (y) the real property, equipment, intellectual
property and related intangibles of Acme Steel, in each case to secure such
entity's obligations in respect of the 1994 Notes, the Senior Secured Term Loan
Notes, the Additional Senior Debt and any Interest Protection Agreement entered
into with any lender under the Indenture for the Senior Secured Term Loan Notes
(or any Affiliate of any such lender); (iii) Liens securing Refinancing
Indebtedness used to refund, refinance or extend indebtedness referred to in the
preceding clause (ii), provided that any such Lien does not extend to or cover
any Property, shares or debt other than the Property, shares or debt securing
the indebtedness so refunded, refinanced or extended and provided further that
the holder of such Lien agrees in form and substance reasonably satisfactory to
the Required Lenders to be bound by the Intercreditor Agreement to the same
extent as if such holder were originally a party thereto; (iv) Liens securing
indebtedness collateralized by Property of, or any shares of stock of or debt
of, any corporation existing at the time such corporation becomes a Subsidiary
of the Company or at the time such corporation is merged into the Company or any
of its Subsidiaries, provided that such Liens are not created in connection
with, or in contemplation of, such corporation becoming a Subsidiary of the
Company or merging into the Company or any of its Subsidiaries, provided further
that at the time such Acquired Indebtedness is incurred by the Company or such
Subsidiary, as the case may be, no Default or Event of Default shall have
occurred or be continuing and that the Acquired Indebtedness could have been
incurred pursuant to Section 7.11 hereof; (v) Liens securing Refinancing
Indebtedness used to refund, refinance or extend indebtedness referred to in the
preceding clause (iv), provided that any such Lien does not extend to or cover
any Property, shares or debt other than the Property, shares or debt securing
the indebtedness so refunded, refinanced or extended; (vi) Liens other than on
Collateral in favor of the Company or any of its Subsidiaries; (vii) Liens on
Property (other than Collateral) of the Company or any of its Subsidiaries
acquired after the date hereof in favor of governmental bodies to secure
progress or advance payments relating to such Property; (viii) Liens on Property
(other than the Collateral) of the Company or any of its Subsidiaries acquired
after the date hereof securing industrial revenue or pollution control or other
tax exempt bonds issued in connection with the acquisition or refinancing of
such Property to the extent the incurrence of such indebtedness is permitted
pursuant to Section 7.11 hereof; (ix) Liens to secure certain indebtedness that
is otherwise permitted under this Agreement and that is used to finance the cost
of Property of the Company or any of its Subsidiaries acquired after the date
hereof, provided that (a) any such Lien is created solely for the purpose of
securing the indebtedness representing, or incurred to finance, refinance or
refund, the cost (including sales and excise taxes, installation and delivery
charges and other direct costs of, and other direct expenses paid or charged in
connection with, such purchase or construction) of such Property, (b) the
principal amount of the indebtedness secured by such Lien does not exceed 100%
of such cost, (c) the indebtedness
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secured by such Lien is incurred by the Company or its Subsidiary within ninety
days of the acquisition of such Property by the Company or its Subsidiary, as
the case may be and (d) such Lien does not extend to or cover any Property other
than such item of Property and any improvements on such item; (x) statutory
liens or landlords', carriers', warehousemen's, mechanics', suppliers',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business and with respect to amounts not yet delinquent or being contested in
good faith by appropriate proceedings, if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor and, with respect to any such Liens arising in respect of any of
the Collateral, only to the extent specifically permitted under the provisions
of the relevant Collateral Document; (xi) Liens on the Collateral securing the
Obligations; (xii) easements, restrictions, reservations or rights of others for
right-of-way, sewers, electric lines, telegraph and telephone lines and other
similar purposes and other similar charges or encumbrances not interfering in
any material respect with the conduct of the business of the Company or any of
its Subsidiaries or, in the case of such Liens which affect the Collateral, to
the extent permitted by the relevant Collateral Document; and (xiii) Liens on
assets (other than accounts receivable and inventory) as securing obligations
otherwise permitted under this Agreement the aggregate principal amount of which
does not exceed $2,000,000 outstanding at any one time.
"Person" shall mean any person, firm, corporation or other entity.
"Phase II Expansion" shall mean the expansion of Acme Steel's
facilities in Riverdale, Illinois to more fully utilize the available capacity
of Acme Steel's existing hot mill, which expansion may involve the addition of
an electric arc furnace, a second caster, a second tunnel furnace and related
machinery and equipment.
"Prior Credit Agreement" is defined in the introductory paragraph
hereof.
"Property" shall mean, as to any Person, all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent balance sheet of such Person and its subsidiaries
under GAAP.
"Prospectus" shall mean the Offering Memorandum dated December 16,
1997 for the Company's offering of the Senior Unsecured Notes.
"Refinancing Indebtedness" means indebtedness that refunds, refinances
or extends any Indebtedness for Borrowed Money of the Acme Group outstanding on
the date hereof or other such Indebtedness for Borrowed Money permitted to be
incurred by the Acme Group pursuant to the terms of this Agreement, but only to
the extent that (i) the Refinancing Indebtedness is subordinated to the
Obligations to the same extent as such Indebtedness for Borrowed Money
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being refunded, refinanced or extended, if at all, (ii) the Refinancing
Indebtedness is scheduled to mature no earlier than such Indebtedness for
Borrowed Money being refunded, refinanced or extended, (iii) the portion, if
any, of the Refinancing Indebtedness that is scheduled to mature on or prior to
the Termination Date has a weighted average life to maturity at the time such
Refinancing Indebtedness is incurred that is equal to or greater than the
weighted average life to maturity of the portion of such Indebtedness for
Borrowed Money being refunded, refinanced or extended that is scheduled to
mature on or prior to the Termination Date, (iv) such Refinancing Indebtedness
is in an aggregate principal amount that is equal to or less than the sum of (a)
the aggregate principal amount then outstanding under such Indebtedness for
Borrowed Money being refunded, refinanced or extended, (b) the amount of accrued
and unpaid interest, if any, on such Indebtedness for Borrowed Money being
refunded, refinanced or extended and (c) the amount of customary fees, expenses
and costs related to the incurrence of such Refinancing Indebtedness, and (v) in
addition to the foregoing, Refinancing Indebtedness in respect of the Senior
Notes is permitted by, and governed by the terms and conditions no more
burdensome on the Acme Group and its Subsidiaries than the terms and conditions
contained in, the Indentures.
"Required Lenders" shall mean at any time Lenders whose Commitments
aggregate 66-2/3% or more of the total Commitments or if at the time no
Commitments are outstanding, Lenders holding 66-2/3% or more of the aggregate
outstanding principal balance of the Revolving Credit Notes and the credit risk
with respect to the Letters of Credit.
"Restricted Payments" is defined in Section 7.13 hereof.
"Revolving Credit" is defined in the introductory paragraph hereof.
"Revolving Credit Notes" shall mean the Revolving Credit Notes
(including notes issued pursuant to Section 12.18 hereof) and "Revolving Credit
Note" shall mean any of the Revolving Credit Notes.
"SEC" means the Securities and Exchange Commission.
"Security Agreement" is defined in Section 4.1 hereof.
"Senior Notes" shall mean the Senior Secured Term Loan Notes and the
Senior Unsecured Notes. The use of the term "Senior" in describing any aspect of
the Senior Notes is for convenience of reference only and is not intended to
have any substantive effect.
"Senior Secured Term Loan Notes" shall mean the term loan notes issued
in an original aggregate principal amount of $175,000,000 by the Company as
described in the Prospectus pursuant to the terms of the Indenture relating
thereto.
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"Senior Unsecured Notes" shall mean the 10-7/8% Senior Notes Due 2007
issued in an original aggregate principal amount of $200,000,000 by the Company
as described in the Prospectus.
"Shareholder's Equity" means, as of any date the same is to be
determined, the total shareholder's equity (including capital stock, additional
paid-in-capital and retained earnings after deducting treasury stock, but
excluding minority interests in Subsidiaries) which would appear on a balance
sheet of the Acme Group and its Subsidiaries determined on a consolidated basis
in accordance with GAAP, provided that the foregoing calculation shall be
increased by up to $9,000,000 of after-tax costs related to business process
re-engineering (as defined in EITF No. 97-13) incurred by the Company to the
extent such costs are expensed in the Company's 1997 fiscal year.
"Standby Letter of Credit" shall mean any letter of credit which is not
a Commercial Letter of Credit.
The term "subsidiary" shall mean, as to any particular parent
corporation, any other corporation at least 51% of the outstanding Voting Stock
of which is at the time directly or indirectly owned by such parent corporation
or by any one or more other corporations or other entities which are themselves
subsidiaries of such parent corporation. The term "Subsidiary" shall mean, when
used with reference to the Company or the Acme Group, a subsidiary of,
respectively, the Company or any member of the Acme Group.
"Swing Line Commitment" means the commitment of Harris Bank to make
Swing Line Loans in the amount of $5,000,000.
"Swing Line Note" means the promissory note of the Borrowers payable
jointly and severally to the order of Harris Bank in the principal amount of its
Swing Line Commitment and otherwise in the form of Exhibit A-1 hereto.
"Swing Line Loans" is defined in Section 1.4(a) hereof.
"Tender Offer" shall have the same meaning herein as such term has in
the Prospectus.
"Termination Date" shall mean January 2, 2001 or such earlier date on
which the Commitments are terminated in whole pursuant to Sections 3.7, 8.2 or
8.3 hereof or such later date to which the Commitments are extended pursuant to
Section 12.16 hereof.
"Total Capitalization" means, as of any time the same is to be
determined, the sum of (i) Indebtedness for Borrowed Money and (ii)
Shareholder's Equity.
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"Voting Stock" of any Person means capital stock of any class or
classes (however designated) having ordinary power for the election of directors
of such Person, other than stock having such power only by reason of the
happening of a contingency.
"Wabush" means the entity called Wabush Mines, a Canadian joint
venture, including Wabush Iron Co. Ltd., an Ohio corporation and one of the
joint venturers of Wabush Mines, which is engaged in the mining, beneficiation
and pelletizing of iron ore or any successor to either such entity, any entity
of approximate equivalent value substituted therefor or any investment of
approximately equivalent value and purpose.
"Wholly-Owned Subsidiary" means a Subsidiary of which all of the
issued and outstanding shares of capital stock (other than directors' qualifying
shares as required by law) or other equity interests are owned by the Company
and/or one or more wholly-owned subsidiaries within the meaning of this
definition.
Section 9.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The words
"hereof", "herein", and "hereunder" and words of like import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All references to time of day herein are references
to Chicago, Illinois time unless otherwise specifically provided. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, it shall be done in
accordance with GAAP except where such principles are inconsistent with the
specific provisions of this Agreement.
SECTION 10. THE AGENT.
Section 10.1. Appointment and Authorization. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers hereunder and under the other Loan Documents as are
designated to the Agent by the terms hereof and thereof together with such
powers as are reasonably incidental thereto. The Agent may resign at any time by
sending twenty (20) days prior written notice to the Acme Group and the Lenders
and may be removed by the Required Lenders upon twenty (20) days prior written
notice to the Acme Group and the Lenders. In the event of any such resignation
or removal, the Required Lenders may appoint a new agent after consultation with
the Acme Group (which nonetheless shall be bound by the decision of the Required
Lenders in their sole discretion), which shall succeed to all the rights, powers
and duties of the Agent hereunder and under the other Loan Documents. Any
resigning or removed Agent shall be entitled to the benefit of all the
protective provisions hereof with respect to its acts as an agent hereunder, but
no successor Agent shall in any event be liable or responsible for any actions
of its predecessor. If the Agent
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resigns or is removed and no successor is appointed, the rights and obligations
of such Agent shall be automatically assumed by the Required Lenders and (i) the
Acme Group shall be directed to make all payments due each Lender hereunder
directly to such Lender and (ii) the Agent's rights in the Collateral Documents
shall be assigned without representation, recourse or warranty to the Lenders as
their interests may appear.
Section 10.2. Rights as a Lender. The Agent has and reserves all of
the rights, powers and duties hereunder and under its Notes and the Applications
and Collateral Documents as any Lender may have and may exercise the same as
though it was not the Agent and the terms "Lender" or "Lenders" as used herein
and in all of such documents shall, unless the context otherwise expressly
indicates, include the Agent in its individual capacity as Lender.
Section 10.3. Standard of Care. The Lenders acknowledge that they
have received and approved copies of the Collateral Documents and such other
information and documents concerning the transactions contemplated and financed
hereby as they have requested to receive and/or review. The Agent makes no
representations or warranties of any kind or character to the Lenders with
respect to the validity, enforceability, genuineness, perfection, value, worth
or collectibility hereof or of the Notes, the Applications, the Letters of
Credit or the Collateral Documents or of the Liens provided for thereby or of
any other documents called for hereby or thereby or of the Collateral. The Agent
shall not incur any liability under or in respect of this Agreement, the
Applications, the Letters of Credit or the Collateral Documents by acting upon
any notice, certificate, warranty, instruction or statement (oral or written) of
anyone (including anyone in good faith believed by it to be authorized to act on
behalf of the Acme Group), unless it has actual knowledge of the untruthfulness
of same. The Agent may execute any of its duties hereunder by or through
representatives, employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders for the default or misconduct of any such
representatives, employees, agents or attorneys-in-fact selected with reasonable
care. The Agent shall be entitled to advice of counsel concerning all matters
pertaining to the agency hereby created and its duties hereunder, and shall
incur no liability to anyone and be fully protected in acting upon the advice of
such counsel. The Agent shall be entitled to assume that no Default or Event of
Default exists unless notified to the contrary by a Lender and if the Agent is
notified by any Lender of the occurrence of a Default or an Event of Default it
shall promptly notify all of the Lenders. The Agent shall in all events be fully
protected in acting or failing to act in accord with the instructions of the
Required Lenders. Upon the occurrence of an Event of Default hereunder, the
Agent shall take such action with respect to the enforcement of its Liens on the
Collateral and the preservation and protection thereof as it shall be directed
to take by the Required Lenders but, unless and until the Required Lenders have
given such direction, the Agent shall take or refrain from taking such actions
as the Agent directs it to take or refrain from taking as being appropriate and
in the best interest of all Lenders and the Agent shall take or refrain from
taking such actions as the Agent determines are appropriate and in the best
interest of all Lenders.
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Notwithstanding anything to the contrary contained herein or in any Collateral
Document, unless and until all Lenders otherwise agree in writing, the Agent
shall not enforce its Lien on any of the Collateral constituting real property
and the Agent shall not give the Acme Group the notice specified in the first
sentence of Section 5(a) of the Security Agreement unless and until all of the
Lenders have instructed it to enforce such Lien or give such notice, as the case
may be. The Agent shall in all cases be fully justified in failing or refusing
to act hereunder unless it shall be indemnified to its reasonable satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. The Agent may
treat the owner of any Note as the holder thereof until written notice of
transfer shall have been filed with it signed by such owner in form satisfactory
to the Agent. Each Lender acknowledges that it has independently and without
reliance on the Agent or any other Lender and based upon such information,
investigations and inquiries as it deems appropriate made its own credit
analysis and decision to extend credit to the Acme Group. It shall be the
responsibility of each Lender to keep itself informed as to the creditworthiness
of the Acme Group and the Subsidiaries and the Agent shall have no liability to
any Lender with respect thereto, provided, however, that the Agent shall deliver
to any Lender copies of any document hereunder required to be delivered to the
Agent upon request by such Lender. The Agent need not verify the worth or
existence of the Collateral and may rely exclusively on reports of the Acme
Group in computing the Borrowing Base. The Agent shall handle all matters
concerning the Obligations, including the Collateral Documents and the
Collateral, in accordance with the usual practices of each in managing similar
affairs in the ordinary course of business, but neither the Agent nor any
director, officer, employee, agent or representative thereof (including any
security trustee therefor) shall in any event be liable for any clerical errors
or errors in judgment, inadvertence or oversight, or for action taken or omitted
to be taken by it or them hereunder or under the Collateral Documents or in
connection herewith or therewith except for its or their own gross negligence or
willful misconduct.
Section 10.4. Costs and Expenses. Each Lender agrees to reimburse
the Agent for all field audits conducted by the Agent (unless promptly
reimbursed for same by the Acme Group after making the request of the Acme Group
for the payment thereof), and agrees to reimburse the Agent for all other
reasonable out-of-pocket costs and expenses (including without limitation
attorneys' fees) suffered or incurred by the Agent or any security trustee in
performing its duties hereunder and under the Applications, the Letters of
Credit and the Collateral Documents, or in the exercise of any right or power
imposed or conferred upon the Agent hereby or thereby, to the extent that the
Agent is not promptly reimbursed for same by the Acme Group after making request
of the Acme Group for payment thereof, or out of the Collateral and promptly
notifies the Lenders as to the existence of such costs and expenses, all such
costs and expenses to be borne by the Lenders ratably in accordance with the
amounts of their respective Commitments. If any Lender fails to reimburse the
Agent for its share of any such costs and expenses, such costs and
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expenses shall be paid pro rata by the remaining Lenders, but without in any
manner releasing the defaulting Lender from its liability hereunder.
Section 10.5. Indemnity. The Lenders shall ratably indemnify and
hold the Agent, and its directors, officers, employees, agents, representatives
or attorneys-in-fact (including as such any security trustee therefor), harmless
from and against any liabilities, losses, costs or expenses suffered or incurred
by it hereunder or under the Applications, the Letters of Credit or the
Collateral Documents or in connection with the transactions contemplated hereby
or thereby, regardless of when asserted or arising, except to the extent it is
promptly reimbursed for the same by the Acme Group or out of the Collateral and
except to the extent that any event giving rise to a claim was caused by the
gross negligence or willful misconduct of the party seeking to be indemnified.
If any Lender defaults in its obligations hereunder, its share of the
obligations shall be paid pro rata by the remaining Lenders, but without in any
manner releasing the defaulting Lender from its liability hereunder.
Section 10.6. Conflict. In the event of a conflict between the
provisions of this Section 10 and the provisions of any Collateral Document
regarding the rights, duties and obligations of the Agent, the provisions of
this Section 10 shall govern.
Section 10.7. Co-Agent. There shall be no rights, obligations or
liabilities, afforded to or imposed upon the Co-Agent by virtue of its status
as such under this Agreement.
SECTION 11. THE GUARANTEES.
Section 11.1. The Guarantees. To induce the Lenders to provide the
credits described herein and in consideration of benefits expected to accrue to
each Guarantor by reason of the Commitments and for other good and valuable
consideration, receipt of which is hereby acknowledged, the Company and each
Borrower (individually a "Guarantor" and collectively the "Guarantors") hereby
unconditionally and irrevocably guarantee jointly and severally to the Agent,
the Lenders, and each other holder of any of the Obligations, the due and
punctual payment of all present and future indebtedness of the Borrowers
evidenced by or arising out of the Loan Documents, including, but not limited
to, the due and punctual payment of principal of and interest on the Note and
the due and punctual payment of all other Obligations now or hereafter owed by
the Borrowers under the Loan Documents as and when the same shall become due and
payable, whether at stated maturity, by acceleration or otherwise, according to
the terms hereof and thereof. In case of failure by the Borrowers punctually to
pay any indebtedness or other Obligations guaranteed hereby, each Guarantor
hereby unconditionally agrees jointly and severally to make such payment or to
cause such payment to be made punctually as and when the same shall become due
and payable, whether at stated maturity, by acceleration or otherwise, and as if
such payment were made by the Borrowers.
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Section 11.2. Guarantee Unconditional. The obligations of each
Guarantor as a guarantor under this Section 11 shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any Borrower or of any other
Guarantor under this Agreement or any other Loan Document or by
operation of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement or any other Loan Document;
(c) any change in the corporate existence, structure or
ownership of, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting, the Borrowers, any other Guarantor, or
any of their respective assets, or any resulting release or discharge
of any obligation of any Borrower or of any other Guarantor contained
in any Loan Document;
(d) the existence of any claim, set-off or other rights which
the Guarantor may have at any time against the Agent, any Lender or any
other Person, whether or not arising in connection herewith;
(e) any failure to assert, or any assertion of, any claim or
demand or any exercise of, or failure to exercise, any rights or
remedies against any Borrower, any other Guarantor or any other Person
or Property;
(f) any application of any sums by whomsoever paid or
howsoever realized to any obligation of any Borrower, regardless of
what obligations of the Borrowers remain unpaid;
(g) any invalidity or unenforceability relating to or against
any Borrower or any other Guarantor for any reason of this Agreement or
of any other Loan Document or any provision of applicable law or
regulation purporting to prohibit the payment by the Borrowers or any
other Guarantor of the principal of or interest on any Note or any
other amount payable by them under the Loan Documents; or
(h) any other act or omission to act or delay of any kind by
the Agent, any Lender or any other Person or any other circumstance
whatsoever that might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the obligations of the
Guarantors under this Section 11.
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.Each Guarantor's obligations under this Section 11 shall remain in full force
and effect until the Commitments are terminated and the principal of and
interest on the Note and all other amounts payable by the Borrowers under this
Agreement and all other Loan Documents shall have been paid in full. If at any
time any payment of the principal of or interest on any Note or any other amount
payable by the Borrowers under the Loan Documents is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of any Borrower or of any Guarantor, or otherwise, each Guarantor's obligations
under this Section 11 with respect to such payment shall be reinstated at such
time as though such payment had become due but had not been made at such time.
Section 11.4. Waivers. (a) General. Each Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by the Agent, any Lender or any other Person against the Borrowers,
another Guarantor or any other Person.
(b) Subrogation and Contribution. Each Guarantor hereby irrevocably
waives any claim or other right it may now or hereafter acquire against the
Borrowers or any other Guarantor that arises from the existence, payment,
performance or enforcement of such Guarantor's obligations under this Section 11
or any other Loan Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, or any
right to participate in any claim or remedy of the Agent, any Lender or any
other holder of any of the Obligations against the Borrowers or any other
Guarantor whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Borrowers or any other Guarantor directly or
indirectly, in cash or other Property or by set-off or in any other manner,
payment or security on account of such claim or other right.
Section 11.5. Limit on Recovery. Notwithstanding any other provision
hereof, the right of recovery against each Guarantor under this Section 11 shall
not exceed $1.00 less than the amount which would render such Guarantor's
obligations under this Section 11 void or voidable under applicable law,
including without limitation fraudulent conveyance law.
Section 11.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrowers under this Agreement or any other
Loan Document is stayed upon the insolvency, bankruptcy or reorganization of any
of the Borrowers, all such amounts otherwise subject to acceleration under the
terms of this Agreement or the other Loan Documents shall nonetheless be payable
jointly and severally by the Guarantors hereunder forthwith on demand by the
Agent made at the request of the Required Lenders.
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SECTION 12. MISCELLANEOUS.
Section 12.1. Withholding Taxes. (a) Payments Free of Withholding.
Except as otherwise required by law and subject to Section 12.1(b) hereof, each
payment by each Borrower and each Guarantor under this Agreement or the other
Loan Documents shall be made without withholding for or on account of any
present or future taxes (other than overall net income taxes on the recipient)
imposed by or within the jurisdiction in which such Borrower or such Guarantor
is domiciled, any jurisdiction from which such Borrower or such Guarantor makes
any payment, or (in each case) any political subdivision or taxing authority
thereof or therein. If any such withholding is so required, the Borrower or
relevant Guarantor shall make the withholding, pay the amount withheld to the
appropriate governmental authority before penalties attach thereto or interest
accrues thereon and forthwith pay such additional amount as may be necessary to
ensure that the net amount actually received by each Lender and the Agent free
and clear of such taxes (including such taxes on such additional amount) is
equal to the amount which that Lender or the Agent (as the case may be) would
have received had such withholding not been made. If the Agent or any Lender
pays any amount in respect of any such taxes, penalties or interest the
Borrowers shall reimburse the Agent or that Lender for that payment on demand in
the currency in which such payment was made. If the Borrowers or any Guarantor
pays any such taxes, penalties or interest, it shall deliver official tax
receipts evidencing that payment or certified copies thereof to the Lender or
Agent on whose account such withholding was made (with a copy to the Agent if
not the recipient of the original) on or before the thirtieth day after payment.
If any Lender or the Agent determines it has received or been granted a credit
against or relief or remission for, or repayment of, any taxes paid or payable
by it because of any taxes, penalties or interest paid by the Borrowers or any
Guarantor and evidenced by such a tax receipt, such Lender or Agent shall, to
the extent it can do so without prejudice to the retention of the amount of such
credit, relief, remission or repayment, pay to the Borrowers or such Guarantor
as applicable, such amount as such Lender or Agent determines is attributable to
such deduction or withholding and which will leave such Lender or Agent (after
such payment) in no better or worse position than it would have been in if the
Borrower had not been required to make such deduction or withholding. Nothing in
this Agreement shall interfere with the right of each Lender and the Agent to
arrange its tax affairs in whatever manner it thinks fit nor oblige any Lender
or the Agent to disclose any information relating to its tax affairs or any
computations in connection with such taxes.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrowers and the Agent on or before the earlier of the date the
initial Borrowing is made hereunder and thirty (30) days after the date hereof,
two duly completed and signed copies of either Form 1001 (relating to such
Lender and entitling it to a complete exemption from withholding under the Code
on all amounts to be received by such Lender, including fees, pursuant to the
Loan
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Documents and the Loans) or Form 4224 (relating to all amounts to be received by
such Lender, including fees, pursuant to the Loan Documents and the Loans) of
the United States Internal Revenue Service. Thereafter and from time to time,
each Lender shall submit to the Company and the Agent such additional duly
completed and signed copies of one or the other of such Forms (or such successor
forms as shall be adopted from time to time by the relevant United States taxing
authorities) as may be (i) requested by the Company in a written notice,
directly or through the Agent, to such Lender and (ii) required under
then-current United States law or regulations to avoid or reduce United States
withholding taxes on payments in respect of all amounts to be received by such
Lender, including fees, pursuant to the Loan Documents or the Loans.
(c) Inability of Lender to Submit Forms. If any Lender determines, as
a result of any change in applicable law, regulation or treaty, or in any
official application or interpretation thereof, that it is unable to submit to
the Borrowers or Agent any form or certificate that such Lender is obligated to
submit pursuant to subsection (b) of this Section 12.1 or that such Lender is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise becomes ineffective or inaccurate,
such Lender shall promptly notify the Company and the Agent of such fact and the
Lender shall to that extent not be obligated to provide any such form or
certificate and will be entitled to withdraw or cancel any affected form or
certificate, as applicable.
Section 12.2. Holidays. If any payment of principal or interest on
any of the Notes or any fees shall fall due on a Saturday, Sunday or on another
day which is a legal holiday for lenders in the States of Illinois, (i) interest
at the rates such Notes bear for the period prior to maturity shall continue to
accrue on such principal from the stated due date thereof to and including the
next succeeding Business Day and (ii) such principal, interest and fees shall be
payable on such succeeding Business Day.
Section 12.3. No Waiver, Cumulative Remedies. No delay or failure on
the part of any Lender in the exercise of any power or right shall operate as a
waiver thereof, nor as an acquiescence in any default nor preclude any other or
further exercise of any power or right, or the exercise of any other power or
right, and the rights and remedies hereunder of the Lenders are cumulative to,
and not exclusive of, any rights or remedies which any of them would otherwise
have.
Section 12.4. Waivers, Modifications and Amendments. Any provision
hereof or of the Notes or the Collateral Documents may be amended, modified,
waived or released and any Default or Event of Default and its consequences may
be rescinded and annulled upon the written consent of the Required Lenders;
provided, however, that without the written consent of each Lender no such
amendment, modification or waiver shall increase the amount or extend the
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terms of such Lender's Commitment (or, if relevant, Swing Line Commitment) or
reduce the interest rate applicable to or extend the maturity of its Note or
reduce the amount of the principal, interest, fees or other amounts to which it
is entitled hereunder or release any guaranty of any Obligations or release all
or any substantial (in value) part of the collateral security afforded by the
Collateral Documents (except in connection with a sale or other disposition
required to be effected by the provisions hereof or of the Collateral Documents)
or change the amount of indebtedness permitted by Section 7.11(e) hereof or
change this Section or change the definition of "Required Lenders" or change the
number of Lenders required to take any action hereunder or under the Collateral
Documents; provided, further, however, that no such consent shall be required
for the release of Universal Tool's guaranty of the Obligations and the release
of the Collateral pledged by Universal Tool, in each case, in connection with
the sale of Universal Tool pursuant to Section 7.14(c) hereof. No amendment,
modification or waiver of the Agents' protective provisions shall be effective
without the prior written consent of the Agent. The Agent shall not modify
reserves against the Borrowing Base or the eligibility of any Collateral for
inclusion in the Borrowing Base in each case if such action would increase the
Borrowing Base unless such action is taken with the consent of the Required
Lenders.
Section 12.5. Costs and Expenses. The Acme Group agrees to pay on
demand all reasonable out-of-pocket costs and expenses of the Agent and the
Co-Agent in connection with the negotiation, preparation, execution, delivery,
recording or filing or release of the Loan Documents or in connection with any
consents hereunder or thereunder or waivers or amendments hereto or thereto,
including the reasonable fees and the out-of-pocket expenses of counsel for the
Agent with respect to all of the foregoing, and all recording, filing, title
insurance or other fees, costs and taxes incident to perfecting a Lien upon the
collateral security for the Notes and the other Obligations, and all reasonable
costs and expenses (including reasonable attorneys' fees) incurred by the Agent,
the Lenders or any other holders of a Note in connection with a default or the
enforcement of the Loan Documents, and all costs, fees and taxes of the types
enumerated above incurred in supplementing (and recording or filing supplements
to) the Collateral Documents in connection with assignments contemplated by
Section 12.18 hereof (collectively, "Security Assignment Costs") if counsel to
the Agent believes such supplements to be appropriate or desirable. The
Borrowers agree to indemnify and save the Lenders, the Agent and any security
trustee for the Agent or the Lenders harmless from any and all liabilities,
losses, costs and expenses incurred by the Lenders or the Agent in connection
with any action, suit or proceeding brought against the Agent, any security
trustee or any Lender by any person which arises out of the transactions
contemplated or financed by any of the Loan Documents or out of any action or
inaction by the Agent, any security trustee or any Lender thereunder, including
without limitation those caused by the negligence of any party but except for
such thereof as is caused by the gross negligence or willful misconduct of the
party indemnified and except for costs or liabilities incurred in suits which
are exclusively among the Lenders or the Lenders and
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the Agent. The provisions of this Section 12.5 and the protective provisions of
Section 2 hereof shall survive payment of the Revolving Credit Notes.
Section 12.6. Stamp Taxes. The Borrowers agree that they will pay
any documentary, stamp or similar taxes payable in respect to any Loan Document
or any Letter of Credit, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit to it is then in use or available.
Section 12.7. Survival of Representations. All representations and
warranties made herein or in the Applications or the other Loan Documents or in
certificates given pursuant hereto or thereto shall survive the execution and
delivery of this Agreement and the other Loan Documents, and shall continue in
full force and effect with respect to the date as of which they were made as
long as any credit is in use or available hereunder.
Section 12.8. Construction. The parties hereto acknowledge and agree
that this Agreement shall not be construed more favorably in favor of one than
the other based upon which party drafted the same, it being acknowledged that
all parties hereto contributed substantially to the negotiation and preparation
of this Agreement.
Section 12.9. Addresses for Notices. Unless specifically provided
otherwise hereunder, all communications provided for herein shall be in writing
and shall be deemed to have been given or made when served personally or three
days after being deposited in the United States mail addressed, if to the Acme
Group, at c/o Acme Metals Incorporated, 13500 South Perry Avenue, Riverdale,
Illinois 60627, Attention: Treasurer, if to the Agent at 111 West Monroe Street,
Chicago, Illinois, 60690, Attention: Mr. Richard H. Robb, if to the Lenders at
their addresses as shown on the signature pages hereof or on any Assignment
Agreement, or at such other address as shall be designated by any party hereto
in a written notice given to each party pursuant to this Section 12.9.
Section 12.10. Obligations Several. The obligations of the Lenders
hereunder are several and not joint. Nothing contained in this Agreement and no
action taken by the Lenders pursuant hereto shall be deemed to constitute the
Lenders a partnership, association, joint venture or other entity.
Section 12.11. Headings. Article and Section headings used in this
Agreement are for convenience of reference only and are not a part of this
Agreement for any other purpose.
Section 12.12. Severability of Provisions. Any provision of this
Agreement which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
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enforceability of such provision in any other jurisdiction. All rights, remedies
and powers provided in this Agreement and other Loan Documents may be exercised
only to the extent that the exercise thereof does not violate any applicable
mandatory provisions of law, and all the provisions of this Agreement and other
Loan Documents are intended to be subject to all applicable mandatory provisions
of law which may be controlling and to be limited to the extent necessary so
that they will not render this Agreement or other Loan Documents invalid or
unenforceable.
Section 12.13. Counterparts. This Agreement may be executed in any
number of counterparts, and by different parties hereto on separate
counterparts, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
Section 12.14. Binding Nature and Governing Law. This Agreement shall
be binding upon the Acme Group and its successors and assigns, and shall inure
to the benefit of the Lenders and the benefit of their successors and assigns,
including any subsequent holder of an interest of the Notes. This Agreement and
the rights and duties of the parties hereto shall be construed and determined in
accordance with, and shall be governed by the internal laws of the State of
Illinois without regard to principles of conflicts of law. The Acme Group may
not assign its rights hereunder without the written consent of the Lenders.
Section 12.15. Entire Understanding. This Agreement, together with
the other Loan Documents, constitute the entire understanding of the parties
with respect to the subject matter hereof and any prior agreements, whether
written or oral, with respect thereto are superseded hereby.
Section 12.16. Extensions of the Commitments. Not less than 60 days
or more than 120 days prior to the one-year, two-year and three-year
anniversaries of the date hereof, the Company (acting on behalf of the Borrowers
pursuant to Section 1.7 hereof) may advise the Agent in writing of its desire to
extend the Termination Date for an additional 12 months (but not beyond January
2, 2003) and the Agent shall promptly notify the Lenders of each such request;
provided not more than one such request for the extension of the Termination
Date may be made in any one calendar year. In the event that the Lenders are
agreeable to such extension (it being understood that any Lender may accept or
decline such a request in its sole discretion), the Acme Group, the Lenders and
the Agent shall enter into such documents as the Agent may reasonably deem
necessary or appropriate to reflect such extension and to assure that all
extensions of credit pursuant to the Commitments and the Swing Line Commitment
as so extended are secured by the Liens created by the Collateral Documents in
favor of the Agent, all costs and expenses incurred by the Agent in connection
therewith to be paid by the Borrowers. In the event that some, but not all, of
the Lenders are agreeable to an extension, the Company may (provided that no
Default or Event of Default has occurred and is then continuing) terminate the
Commitment (and, if relevant, the Swing Line Commitment) of the Lender or
Lenders declining to extend and repay all borrowings outstanding against the
Revolving Credit Note (and, if relevant, the Swing Line Note) held by such
Lender or Lenders and upon such repayment the Commitment (and, if
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relevant, the Swing Line Commitment) of such Lender or Lenders shall be canceled
or, at the option of the Company, the Acme Group may obtain a new Lender or
Lenders reasonably acceptable to the Agent and the Required Lenders to replace
the Commitment (and, if relevant, the Swing Line Commitment) of the Lender or
Lenders declining to extend and in such event the Commitment (and, if relevant,
the Swing Line Commitment) of the Lender or Lenders not desiring to extend shall
be canceled. In the event a Lender elects not to extend, all amounts outstanding
under its Revolving Credit Note (and, if relevant, its Swing Line Note) shall be
paid to it no later than the then current Termination Date to which it has
agreed. The Acme Group, the Agent and the new Lender shall thereupon execute
such instruments and documents as shall in the opinion of the Agent be
reasonably necessary or appropriate to substitute the new approved Lender under
the Revolving Credit and, if relevant, the Swing Line (including without
limitation the issuance of a new Revolving Credit Note (and, if relevant, Swing
Line Note) to the substitute Lender, the execution of an amendment making the
new Lender a party hereto and such amendments to the Collateral Documents as may
be necessary or appropriate to assure the credit extended by the new Lender is
secured and/or supported by the Collateral Documents). The new Lender shall make
an initial Revolving Loan under its Revolving Credit Note in the amount
necessary to retire the indebtedness evidenced by the Revolving Credit Note held
by the declining Lender (and, if relevant, make an initial Swing Line Loan under
its Swing Line in the amount necessary to retire the indebtedness evidenced by
the Swing Line Note held by the declining Lender) and all reasonable expenses of
the Agent incurred in connection with the foregoing shall be paid by the Acme
Group.
Section 12.17. Participations. Any Lender may grant participations in
its extensions of credit hereunder to any other bank or other lending
institution (a "Participant") provided that (i) no Participant shall thereby
acquire any direct rights under this Agreement, (ii) no Lender shall agree with
a Participant not to exercise any of its rights hereunder without the consent of
such Participant except for rights which under the terms hereof may only be
exercised by all Lenders, (iii) no sale of a participation in extensions of
credit shall in any manner relieve the selling Lender of its obligations
hereunder and (iv) the Acme Group shall not be responsible for the costs
incurred by any Lender in connection with such participations.
Section 12.18. Assignment Agreements. Each Lender may, from time to
time upon at least five Business Days' notice to the Agent, assign to other
financial institutions all or part of its rights and obligations under this
Agreement (including without limitation the indebtedness evidenced by the Notes
then owned by such assigning Lender, together with an equivalent proportion of
its obligation to make loans and advances and participate in Letters of Credit
hereunder) pursuant to an Assignment Agreement; provided, however, that (i)
except with
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respect to the Swing Line Loans which must be assigned in whole, each such
assignment shall be of a constant, and not a varying, percentage of the
assigning Lender's rights and obligations under this Agreement and the
assignment shall cover the same percentage of such Lender's Commitment,
Revolving Loans, Revolving Credit Note and interests in Letters of Credit; (ii)
unless the Agent otherwise consents, each such assignment (determined as of the
effective date of the relevant Assignment Agreement) shall in no event be in an
aggregate amount of less than $5,000,000 and shall be in integral multiples of
$1,000,000; (iii) unless the Company otherwise consents, each Lender (other than
the Lenders party hereto as of the date hereof) shall maintain for its own
account at least 50% of its original Commitment; (iv) the Agent and the Company
(which is acting on its own behalf and pursuant to Section 1.7 hereof on behalf
of the Borrowers as well) must each consent, which consent shall not be
unreasonably withheld and shall be evidenced by execution of a counterpart of
the relevant Assignment Agreement in the space provided thereon for such
acceptance, to each such assignment by a party which was not an original
signatory of this Agreement (it being understood and agreed the Company may
condition its acceptance of an assignment on payment by the assigning or
assignee Lender of the Security Assignment Costs referred to in Section 12.5
hereof) and (v) the assigning Lender (other than the Lenders party hereto as of
the date hereof) must pay to the Agent a processing and recordation fee of
$3,000 and any reasonable out-of-pocket attorney's fees incurred by the Agent in
connection with such Assignment Agreement. Upon the execution of each Assignment
Agreement by the assigning Lender thereunder, the assignee lender thereunder,
the Company and the Agent and payment to such assigning Lender by such assignee
lender of the purchase price for the portion of the indebtedness of the Acme
Group being acquired by it, (i) such assignee lender shall thereupon become a
"Lender" for all purposes of this Agreement and the other Loan Documents (and,
if relevant, shall be deemed to be Harris Bank for purposes of Swing Line Loans)
with a Commitment (and, if relevant, a Swing Line Commitment) in the amount set
forth in such Assignment Agreement and with all the rights, powers and
obligations afforded a Lender hereunder, (ii) such assigning Lender shall have
no further liability for funding the portion of its Commitment (and, if
relevant, Swing Line Commitment) assumed by such other Lender and (iii) the
address for notices to such assignee Lender shall be as specified in the
Assignment Agreement executed by it. Concurrently with the execution and
delivery of such Assignment Agreement, the Borrowers shall execute and deliver a
Revolving Credit Note (and, if relevant, a Swing Line Note) to the assignee
Lender in the amount of its Commitment (and, if relevant, Swing Line Commitment)
and a new Revolving Credit Note to the assigning Lender in the amount of its
Commitment after giving effect to the reduction occasioned by such assignment,
all such Revolving Credit Notes to constitute "Revolving Credit Notes" for all
purposes of the Loan Documents and such new Swing Line Note to constitute the
"Swing Line Note" for all purposes of the Loan Documents. Upon completion of the
foregoing, the assigning Lender shall surrender to the Company its old Revolving
Credit Note (and, if relevant, Swing Line Note).
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Section 12.19. Confidentiality. The Agent and each Lender shall hold
in confidence any material nonpublic information delivered or made available to
them by the Company or any Subsidiary. The foregoing to the contrary
notwithstanding, nothing herein shall prevent any Lender from disclosing any
information delivered or made available to it by the Company or any Subsidiary
(i) to any other Lender, (ii) to any other Person if reasonably incidental to
the administration of the credit contemplated hereby, (iii) upon the order of
any court or administrative agency, (iv) upon the request or demand of any
regulatory agency or authority, (v) which has been publicly disclosed other than
as a result of a disclosure by the Agent or any Lender which is not permitted by
this Agreement, (vi) in connection with any litigation to which the Agent, any
Lender, or any of their respective Affiliates may be a party, along with the
Company, any Subsidiary or any of their respective Affiliates, (vii) to the
extent reasonably required in connection with the exercise of any right or
remedy under this Agreement, the other Loan Documents or otherwise, (viii) to
such Lender's legal counsel and financial consultants and independent auditors,
and (ix) to any actual or proposed participant or assignee of all or part of its
rights under the credit contemplated hereby provided such participant or
assignee agrees in writing to be bound by the duty of confidentiality under this
Section to the same extent as if it were a Lender hereunder.
Section 12.20. Terms of Collateral Documents not Superseded. Nothing
contained herein shall be deemed or construed to permit any act or omission
which is prohibited by the terms of any Collateral Document, the covenants and
agreements contained herein being in addition to and not in substitution for the
covenants and agreements contained in the Collateral Documents.
Section 12.21. PERSONAL JURISDICTION.
(a) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (b), THE
AGENT, THE LENDERS AND THE ACME GROUP AGREE THAT ALL DISPUTES AMONG THEM ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL
COURTS LOCATED IN COOK COUNTY, ILLINOIS, BUT EACH OF THE AGENT, THE LENDERS AND
THE ACME GROUP ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY, ILLINOIS. THE ACME GROUP WAIVES
IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE.
(b) OTHER JURISDICTIONS. THE ACME GROUP AGREES THAT THE AGENT, AND
EACH OF THE LENDERS SHALL HAVE THE RIGHT TO PROCEED AGAINST THE ACME GROUP OR
ITS PROPERTY ("PROPERTY") IN A COURT IN ANY LOCATION TO ENABLE THE AGENT OR ANY
LENDER TO REALIZE ON PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF THE AGENT OR ANY LENDER.
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TO REALIZE ON PROPERTY, OR THE ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED
IN FAVOR OF THE AGENT OR ANY LENDER.
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Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of this 18th day of December, 1997.
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<PAGE> 84
ACME STEEL COMPANY
By
James W. Hoekwater
Its Treasurer
ACME PACKAGING CORPORATION
By
James W. Hoekwater
Its Treasurer
ALPHA TUBE CORPORATION
By
James W. Hoekwater
Its Treasurer
UNIVERSAL TOOL & STAMPING COMPANY, INC.
By
James W. Hoekwater
Its Treasurer
ACME METALS INCORPORATED
By
James W. Hoekwater
Its Treasurer
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<PAGE> 85
Accepted and Agreed to at Chicago, Illinois as of the day and year last
above written.
Each of the Lenders hereby agrees with each other Lender that if it
should receive or obtain any payment (whether by voluntary payment, by
realization upon collateral, by the exercise of rights of setoff or banker's
lien, by counterclaim or cross action, or by the enforcement of any rights under
the Credit Agreement, the Revolving Credit Notes or the Collateral Documents or
otherwise) in respect of the Obligations, in a greater amount than such Lender
would have received had such payment been made to the Agent and been distributed
among the Lenders as contemplated by Section 3.8 hereof, then in that event the
Lender receiving such disproportionate payment shall purchase for cash without
recourse from the other Lenders an interest in the Obligations owed to such
Lenders in such amount as shall result in a distribution of such payment as
contemplated by Section 3.8 hereof. In the event any payment made to a Lender
and shared with the other Lenders pursuant to the provisions hereof is ever
recovered from such Lender, the Lenders receiving a portion of such payment
hereunder shall restore the same to the payor Lender, but without interest. In
the event any amount paid to the Agent under the Applications shall ever be
recovered from the Agent, each Lender shall reimburse the Agent for its pro rata
share of the amount so recovered.
Amount and Percentage of Commitment:
HARRIS TRUST AND SAVINGS BANK,
individually and as Agent
$40,000,000
(50%)
By
Its Vice President
111 West Monroe Street
Chicago, Illinois 60690
Attention: Richard H. Robb
LIBOR Funding Office:
Nassau Branch
c/o 111 West Monroe Street
Chicago, Illinois 60690
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<PAGE> 86
Amount and Percentage of Commitment:
THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Co-Agent
$40,000,000
(50%)
By
Its Vice President
One First National Plaza, Suite 0088
Chicago, Illinois 60670
Attention: Krys J. Szremski
LIBOR Funding Office:
One First National Plaza, Suite 0088
Chicago, Illinois 60670
Attention: Kathie Blomquist
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<PAGE> 87
EXHIBIT A
ACME GROUP
REVOLVING CREDIT NOTE
Chicago, Illinois
$
--------------------- -----------, ----
On the Termination Date, for value received, the undersigned, Acme
Steel Company, a Delaware corporation ("Acme Steel"), Acme Packaging
Corporation, a Delaware corporation ("Acme Packaging"), Alpha Tube Corporation,
a Delaware corporation, ("Alpha Tube"), and Universal Tool & Stamping Company,
Inc., an Indiana corporation ("Universal Tool") (Acme Steel, Acme Packaging,
Alpha Tube and Universal Tool are being hereinafter referred to collectively as
the "Borrowers") hereby jointly and severally promise to pay to the order of
________________________________________________ (the "Lender"), at the
principal office of Harris Trust and Savings Bank in Chicago, Illinois, the
principal sum of (i) _________________________________________ Dollars
($_________), or (ii) such lesser amount as may at the time of the maturity
hereof, whether by acceleration or otherwise, be the aggregate unpaid principal
amount of all loans owing from the Acme Group to the Lender under the Revolving
Credit provided for in the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate
Portion" and "LIBOR Portions" as such terms are defined in that certain Amended
and Restated Credit Agreement dated as of December 18, 1997 by and among the
Borrowers, Acme Metals Incorporated, Harris Trust and Savings Bank individually
and as Agent and the other Lenders which are now or may from time to time
hereafter become parties thereto (said Credit Agreement, as the same may from
time to time be modified, amended or restated being referred to herein as the
"Credit Agreement") made and to be made to the Borrowers by the Lender under the
Revolving Credit provided for under the Credit Agreement, and the Borrowers
hereby jointly and severally promise to pay interest at the office specified
above on each loan evidenced hereby at the rates and times specified therefor in
the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Borrowers against this Note, the Borrower to
which such loan was made, any repayment of principal hereon, the status of each
such loan from time to time as part of the Domestic Rate Portion or a LIBOR
Portion and the interest rates and interest periods applicable thereto shall be
endorsed by the holder hereof on the reverse side of this Note or recorded on
the books and records of the holder hereof (provided that such entries shall be
endorsed on the reverse side hereof prior to any negotiation hereof) and the
Borrowers agree that in any action or
<PAGE> 88
proceeding instituted to collect or enforce collection of this Note, the entries
so endorsed on the reverse side hereof or recorded on the books and records of
the Lender shall be prima facie evidence of the unpaid balance of this Note, the
Borrower to which such loan was made, the status of each loan from time to time
as part of a Domestic Rate Portion or a LIBOR Portion and the interest rates and
interest periods applicable thereto.
This Note is issued by the Borrowers under the terms and provisions of
the Credit Agreement and is secured by the Collateral Documents, and this Note
and the holder hereof are entitled to all of the benefits and security provided
for thereby or referred to therein, to which reference is hereby made for a
statement thereof. This Note may be declared to be, or be and become, due prior
to its expressed maturity, voluntary prepayments may be made hereon, and certain
prepayments are required to be made hereon, all in the events, on the terms and
with the effects provided in the Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings herein as such terms have
in the Credit Agreement.
This Note shall be construed in accordance with, and governed by, the
internal laws of the State of Illinois without regard to principles of conflicts
of law.
The Borrowers hereby jointly and severally promise to pay all costs and
expenses (including attorneys' fees) suffered or incurred by the holder hereof
in collecting this Note or enforcing any rights in any collateral therefor. The
Borrowers hereby waive presentment for payment and demand.
ACME STEEL COMPANY
By
Its Treasurer
ACME PACKAGING CORPORATION
By
Its Treasurer
ALPHA TUBE CORPORATION
By
Its Treasurer
UNIVERSAL TOOL & STAMPING COMPANY, INC.
By
Its Treasurer
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<PAGE> 89
EXHIBIT A-1
ACME GROUP
SWING LINE NOTE
Chicago, Illinois
$5,000,000.00 _______________
On the Termination Date, for value received, the undersigned, Acme
Steel Company, a Delaware corporation ("Acme Steel"), Acme Packaging
Corporation, a Delaware corporation ("Acme Packaging"), Alpha Tube Corporation,
a Delaware corporation, ("Alpha Tube"), and Universal Tool & Stamping Company,
Inc., an Indiana corporation ("Universal Tool") (Acme Steel, Acme Packaging,
Alpha Tube and Universal Tool are being hereinafter referred to collectively as
the "Borrowers") hereby jointly and severally promise to pay to the order of
Harris Trust and Savings Bank (the "Lender"), at the principal office of Harris
Trust and Savings Bank in Chicago, Illinois, the principal sum of (i) Five
Million and 00/100 Dollars ($5,000,000.00), or (ii) such lesser amount as may at
the time of the maturity hereof, whether by acceleration or otherwise, be the
aggregate unpaid principal amount of all Swing Line Loans owing from the
Borrowers to the Lender under the Swing Line Commitment provided for in the
Credit Agreement hereinafter mentioned.
This Note evidences Swing Line Loans made and to be made to the
Borrowers by the Lender under the Swing Line Commitment provided for under that
certain Amended and Restated Credit Agreement dated as of December 18, 1997, by
and among the Borrowers, Acme Metals Incorporated, Harris Trust and Savings
Bank, individually and as Agent thereunder, and the other Lenders which are now
or may from time to time hereafter become parties thereto (said Credit
Agreement, as the same may from time to time be modified, amended or restated
being referred to herein as the "Credit Agreement"), and the Borrowers hereby
jointly and severally promise to pay interest at the office described above on
each Swing Line Loan evidenced hereby at the rates and at the times and in the
manner specified therefor in the Credit Agreement.
Each Swing Line Loan made under the Swing Line Commitment provided for
in the Credit Agreement by the Lender to the Borrowers against this Note, any
repayment of principal hereon and the interest rates applicable thereto shall be
endorsed by the holder hereof on a schedule to this Note or recorded on the
books and records of the holder hereof (provided that such entries shall be
endorsed on a schedule to this Note prior to any negotiation hereof). The
Borrowers agree that in any action or proceeding instituted to collect or
enforce collection of this Note, the entries so endorsed a schedule to this Note
or recorded on the books and records of the
<PAGE> 90
holder hereof shall be prima facie evidence of the unpaid principal balance of
this Note and the interest rates applicable thereto.
This Note is issued by the Borrowers under the terms and provisions of
the Credit Agreement and is secured by the Collateral Documents, and this Note
and the holder hereof are entitled to all of the benefits and security provided
for thereby or referred to therein, to which reference is hereby made for a
statement thereof. This Note may be declared to be, or be and become, due prior
to its expressed maturity, voluntary prepayments may be made hereon, and certain
prepayments are required to be made hereon, all in the events, on the terms and
with the effects provided in the Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings herein as such terms have
in the Credit Agreement.
This Note shall be construed in accordance with, and governed by, the
internal laws of the State of Illinois without regard to principles of conflict
of law.
The Borrowers hereby jointly and severally promise to pay all
reasonable costs and expenses (including attorneys' fees) suffered or incurred
by the holder hereof in collecting this Note or enforcing any rights in any
collateral therefor. The Borrowers hereby waive presentment for payment and
demand.
ACME STEEL COMPANY
By
Its Treasurer
ACME PACKAGING CORPORATION
By
Its Treasurer
ALPHA TUBE CORPORATION
By
Its Treasurer
UNIVERSAL TOOL & STAMPING COMPANY, INC.
By
Its Treasurer
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<PAGE> 91
EXHIBIT B
NOTICE OF PAYMENT REQUEST
[Date]
[Name of Lender]
[Address]
Attention:
Reference is made to the Amended and Restated Credit Agreement, dated
as of December 18, 1997 among Acme Group, the Lenders named therein, and Harris
Trust and Savings Bank, as Agent (the "Credit Agreement"). Capitalized terms
used herein and not defined herein have the meanings assigned to them in the
Credit Agreement. [THE BORROWER HAS FAILED TO PAY ITS REIMBURSEMENT OBLIGATION
IN THE AMOUNT OF $__________. YOUR PERCENTAGE OF THE UNPAID REIMBURSEMENT
OBLIGATION IS $___________] OR [HARRIS TRUST AND SAVINGS BANK HAS BEEN REQUIRED
TO RETURN A PAYMENT BY THE BORROWER OF A REIMBURSEMENT OBLIGATION IN THE AMOUNT
OF $__________. YOUR PERCENTAGE OF THE RETURNED REIMBURSEMENT OBLIGATIONS IS
$____________].
Very truly yours,
HARRIS TRUST AND SAVINGS BANK
By
Its
--------------------------
<PAGE> 92
EXHIBIT C
[FILL IN NAME OF DEBTOR]
FIRST SUPPLEMENT TO SECURITY AGREEMENT
This First Supplement to Security Agreement dated as of December 18,
1997 by and between ____________________________________, a _________________
corporation (the "Debtor"), and Harris Trust and Savings Bank, an Illinois
banking corporation ("Harris Bank"), acting as agent hereunder for the Lenders
hereinafter identified and defined (Harris Bank acting as such agent and any
successor or successors to Harris Bank acting in such capacity being hereinafter
referred to as the "Agent");
W I T N E S S E T H T H A T:
WHEREAS, the Debtor did heretofore execute and deliver to the Agent
that certain Security Agreement dated as of June 30, 1995 (the "Security
Agreement") in order to grant to the Agent a lien on and continuing security
interest in the properties, rights, interests and privileges therein described
(the "Collateral") as collateral security for, among other things, all
indebtedness, obligations and liabilities of the Borrowers, or any of them, to
the Lenders, or any of them, evidenced by the Original Revolving Credit Notes
(as hereinafter defined) as more fully described in the Security Agreement; and
WHEREAS, the Security Agreement secures, among other things, advances
from time to time made by the Lenders to the Borrowers under a revolving credit
facility available under and pursuant to a certain Credit Agreement dated as of
August 11, 1994 between the Borrowers and the Agent, as heretofore amended (such
Credit Agreement, as so amended, being hereinafter referred to as "Credit
Agreement"); and
WHEREAS, pursuant to the Credit Agreement (i) the Lenders have
committed, subject to certain terms and conditions, to extend a revolving credit
in the form of loans and letters of credit to the Borrowers, all of which are
evidenced by those certain Revolving Credit Notes dated March 21, 1997 (the
"Original Revolving Credit Notes") of the Borrowers payable to the order of the
Lenders in the aggregate face principal amount of $80,000,000 and (ii) Harris
Bank committed, subject to certain terms and conditions, to extend a swing line
facility in the form of loans to the Borrowers, all of which are evidenced by a
Swing Line Note dated October 15, 1997 (the "Original Swing Line Note") of the
Borrowers payable to the order of Harris Bank in the face principal amount of
$5,000,000 (the Original Revolving Credit Notes and the Original Swing Line Note
being referred to herein collectively as the "Original Notes");
<PAGE> 93
WHEREAS, concurrently herewith the Borrowers and the Agent are entering
into an Amended and Restated Credit Agreement (the "Restated Credit Agreement")
to amend and restate the terms of the Credit Agreement; and
WHEREAS, all indebtedness of the Borrowers (i) under the revolving
credit provided for by the Restated Credit Agreement will be evidenced by
Revolving Credit Notes of even date herewith payable to the order of the Lenders
in the aggregate face principal amount of $80,000,000 (the "New Revolving Credit
Notes") and will be issued in substitution and replacement for the Original
Revolving Credit Notes and (ii) under the swing line provided for by the
Restated Credit Agreement will be evidenced by a Swing Line Note of even date
herewith payable to the order of Harris Bank in the face principal amount of
$5,000,000 (the "New Swing Line Note") and will be issued in substitution and
replacement for the Original Swing Line Note; and
WHEREAS, as a condition precedent to the effectiveness of the Restated
Credit Agreement, the Lenders require that the Debtor confirm and assure that
the Collateral is and remains collateral security for, among other things, any
and all indebtedness, obligations and liabilities of the Borrowers to the
Lenders, or any of them, evidenced by the New Revolving Credit Notes and the New
Swing Line Note (the New Revolving Credit Notes and the New Swing Line Note, and
any and all notes issued in substitution or replacement therefor, as the same
may be modified or amended from time to time, being referred to herein
collectively as the "Notes" and individually as a "Note"); and
NOW, THEREFORE, in consideration of the execution and delivery by the
Agent and the Lenders of the Restated Credit Agreement, and other good and
valuable consideration, receipt whereof is hereby acknowledged, the Debtor
hereby covenants and agrees with, and represents and warrants to, the Agent as
follows:
1. In order to secure the payment and performance of (i) any and all
indebtedness, obligations and liabilities of the Borrowers and any of them to
the Agent and the Lenders and any of them which indebtedness, obligations and
liabilities arise under or in connection with or are evidenced by (v) the
Restated Credit Agreement or (w) the Notes of the Borrowers heretofore or
hereafter issued under the Restated Credit Agreement or (x) the Letters of
Credit and applications for the Letters of Credit, including as such without
limitation the obligations of the Borrowers to reimburse the Agent and the
Lenders for the amount of all drawings on all Letters of Credit issued for the
account of any one or more of the Borrowers pursuant to the Credit Agreement, or
(y) any of the Collateral Documents or (z) any agreements with any one or more
of the Lenders with respect to any Hedging Liability, in each case whether now
existing or hereafter arising (and whether arising before or after the filing of
a petition in bankruptcy), due or to become due (including, without limitation,
the payment of interest and other amounts which
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<PAGE> 94
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. ss.362(a)), direct or indirect, absolute or contingent, and howsoever
evidenced, held or acquired and (ii) any and all expenses and charges, legal or
otherwise, suffered or incurred by the Agent and the Lenders and any of them in
collecting or enforcing any of such indebtedness, obligations and liabilities or
in realizing on or protecting or preserving any security therefor, including,
without limitation, the lien and security interest granted hereby (all of such
indebtedness, obligations and liabilities referred to in clauses (i) and (ii)
being hereinafter collectively referred to as the "New Obligations"), the Debtor
hereby grants to the Agent a continuing first priority security interest in, and
acknowledges and agrees that the Agent has and shall continue to have a
continuing first priority security interest in, any and all of the Debtor's
Collateral under the Security Agreement. The foregoing grant of a lien and
security interest is in addition to and supplemental of and not in substitution
for the grants already made under the Security Agreement. This Supplement
confirms and assures the liens and continuing security interests heretofore
granted in favor of the Agent under the Security Agreement, and nothing
contained herein shall in any manner impair the priority of such liens and
security interests.
2. Without limiting the foregoing, the Debtor hereby agrees that,
notwithstanding the execution and delivery hereof, (i) all rights and remedies
of the Agent under the Security Agreement and (ii) all obligations of the Debtor
thereunder are, and as amended hereby shall remain, in full force and effect for
the benefit and security of all the Secured Obligations (including without
limitation the New Obligations).
3. The Debtor hereby repeats and reaffirms all covenants,
agreements, representations and warranties contained in the Security Agreement
as supplemented hereby, each and all of which covenants, agreements,
representations and warranties are and shall remain applicable to the Collateral
and all the Secured Obligations (including without limitation the New
Obligations).
4. All references in the Security Agreement to the Credit Agreement
and the Original Notes shall be deemed references, respectively, to the Restated
Credit Agreement and the Notes (as defined herein); and the term "Secured
Obligations" as used in the Security Agreement shall include all of the New
Obligations. All of the provisions, stipulations, powers and covenants contained
in the Security Agreement shall stand and remain unchanged and in full force and
effect except to the extent specifically modified hereby and shall be applicable
to all the Collateral and all the Secured Obligations (including without
limitation the New Obligations).
5. In order to induce the Lenders to extend credit to the Borrowers
under the Restated Credit Agreement and to accept this Supplement, the Debtor
hereby represents and
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<PAGE> 95
warrants to the Lenders and the Agent that as of the date hereof and as of the
time that this Supplement becomes effective, each of the representations and
warranties set forth in the Security Agreement as supplemented hereby are and
shall be and remain true and correct in all material respects and no Event of
Default under the Security Agreement as supplemented hereby, or any other event
which with the lapse of time, the giving of notice or both would constitute such
an Event of Default, shall have occurred and be continuing.
6. This Supplement may be executed in any number of counterparts and
by different parties hereto on separate counterparts, each of which when so
executed shall be an original but all of which to constitute one and the same
instrument. All capitalized terms used herein without definition shall have the
same meaning herein as such terms have in the Security Agreement. Except as
specifically amended and modified hereby, all of the terms and conditions of the
Security Agreement shall stand and remain unchanged and in full force and
effect. No reference to this Supplement need be made in any note, instrument or
other document making reference to the Security Agreement, any reference to the
Security Agreement in any of such to be deemed to be a reference to the Security
Agreement as supplemented hereby. This instrument shall be construed and
governed by and in accordance with the internal laws of the State of Illinois.
[DEBTOR]
By
Its
---------------------------------
Accepted and agreed to in Chicago, Illinois as of the day and date
first above written.
HARRIS TRUST AND SAVINGS BANK, as Agent
By
Its
---------------------------------
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<PAGE> 96
EXHIBIT D
FORM OF OPINION OF COUNSEL
__________________, 199__
Harris Trust and Savings Bank, individually and as Agent
Chicago, Illinois
The First National Bank of Chicago, individually and as Co-Agent
Chicago, Illinois
and the other Lenders party to the Credit Agreement referred to below
Gentlemen:
We have served as counsel to Acme Steel Company, a Delaware corporation
("Acme Steel"), Acme Packaging Corporation, a Delaware corporation ("Acme
Packaging"), Alpha Tube Corporation, a Delaware corporation ("Alpha Tube"),
Universal Tool & Stamping Company, Inc., an Indiana corporation ("Universal
Tool") (Acme Steel, Acme Packaging, Alpha Tube and Universal Tool being herein
referred to collectively as the "Borrowers") and Acme Metals Incorporated, a
Delaware corporation (the "Company") (the Borrowers and the Company being herein
referred to collectively as the "Acme Group"), in connection with a revolving
credit facility being made available by you to the Borrowers. This opinion is
delivered to you at the request of the Company and the Borrowers pursuant to
Section 6.2(h) of the Credit Agreement referred to below.
As such counsel, we have supervised the taking of the corporate
proceedings necessary to authorize the execution and delivery of, and have
examined executed originals of, the Loan Documents described on Exhibit A
attached hereto. We have also examined and are familiar with:
(i) A copy of the articles of incorporation of each member of
the Acme Group, each certified as of ______________, 19___ by the
Secretary of the State of incorporation of such member;
<PAGE> 97
(ii) Certificates dated as of a date no earlier than ___ days
prior to the date hereof from the Secretary of the States of
incorporation of each member of the Acme Group and in each other state
where any member of the Acme Group is licensed or qualified to do
business, as to the good standing of such member in those states;
(iii) A copy of the by-laws of each member of the Acme Group
certified by the Secretary of such member as being the by-laws of such
member in effect at all times since ____________, 19___;
(iv) Copies of certain resolutions adopted by the board of
directors [AND THE STOCKHOLDERS] of each member of the Acme Group,
certified by the Secretary of such member of the Acme Group; and
(v) [IDENTIFY ANY OTHER MATTERS OR ITEMS PERTAINING TO
ORGANIZATION, AUTHORITY AND GOOD STANDING;]
and we have also examined such other instruments and records and inquired into
such other factual matters and matters of law as we deem necessary or pertinent
to the formulation of the opinions hereinafter expressed. As to questions of
fact relevant to the opinions stated herein, we have relied upon information
obtained from the officers of the members of the Acme Group and other sources
believed by us responsible, and, with your permission, we have assumed, without
independent investigation, the accuracy of such information.
In rendering the opinions expressed below, we have examined originals,
or copies of originals certified to our satisfaction, of such agreements,
documents, certificates and other statements of government officials and
corporate officers and such other papers and evidence as we have deemed relevant
and necessary as a basis for these opinions. We have assumed the genuineness of
all signatures (other than those of the members of the Acme Group), the
authenticity of all documents submitted to us as originals and the conformity
with the original documents of any copies thereof submitted to us for our
examination.
Based upon the foregoing, we are of the opinion that:
1. Each member of the Acme Group is a corporation duly organized and
validly existing and in good standing under the laws of its state of
incorporation with full and adequate corporate power and authority to carry on
its business as now conducted and is duly licensed or qualified and in good
standing in each jurisdiction wherein the conduct of its business or the assets
and Properties owned or leased by it require such licensing or qualification.
-2-
<PAGE> 98
2. Each Borrower has full right, power and authority to borrow from
you, to mortgage, pledge, assign and otherwise encumber its assets and
properties as collateral security for such borrowings, to execute and deliver
the Loan Documents executed by it and to observe and perform all the matters and
things therein provided for. The execution and delivery of the Loan Documents
executed by the Borrowers does not, nor will the observance or performance of
any of the matters or things therein provided for, contravene any provision of
law or of the articles of incorporation, charter or by-laws of any of the
Borrowers (there being no other agreements under which any of the Borrowers are
organized) or, to the best of our knowledge after due inquiry, of any covenant,
indenture or agreement binding upon or affecting any of the Borrowers or any of
their respective properties or assets.
3. The Company has full right, power and authority to guarantee all
of the indebtedness, obligations and liabilities of the Borrowers to you, to
execute and deliver the Loan Documents executed by it and to observe and perform
all the matters and things therein provided for. The execution and delivery of
the Loan Documents executed by the Company does not, nor will the observance or
performance of any of the matters or things therein provided for, contravene any
provision of law or of the articles of incorporation, charter or by-laws of the
Company (there being no other agreements under which the Company is organized)
or, to the best of our knowledge after due inquiry, of any covenant, indenture
or agreement binding upon or affecting the Company or any of its properties or
assets.
4. The Loan Documents executed by the Acme Group have been duly
authorized by all necessary corporate action (no stockholder approval being
required), have been executed and delivered by the proper officers of each
member of the Acme Group and constitute valid and binding agreements of each
member of the Acme Group enforceable against them in accordance with their
respective terms, except as such terms may be limited by bankruptcy, insolvency
or similar laws and legal or equitable principles affecting or limiting the
enforcement of creditors' rights generally.
5. No order, authorization, consent, license or exemption of, or
filing or registration with, any court or governmental department, agency,
instrumentality or regulatory body, whether local, state or federal, is or will
be required in connection with the lawful execution and delivery of the Loan
Documents or the observance and performance by each member of the Acme Group of
any of the terms thereof.
5. To the best of our knowledge after due inquiry, there is no
action, suit, proceeding or investigation at law or in equity before or by any
court or public body pending or threatened against or affecting any member of
the Acme Group or any of their respective assets and properties which, if
adversely determined, could result in any material adverse change in the
properties, business, operations or financial condition of any member of the
Acme Group or in
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<PAGE> 99
the value of the collateral security for your loans and other credit
accommodations to the Borrowers.
Our opinions expressed above are limited to the laws of the State of
Illinois, the corporate laws of the States of Delaware and Indiana and the
federal laws of the United States of America.
Respectfully submitted,
-4-
<PAGE> 100
EXHIBIT A
(a) Amended and Restated Credit Agreement by and between the Acme
Group, Harris Trust and Savings Bank ("Harris"), individually and as agent
(Harris acting in its capacity as agent being herein referred to as the "Agent")
and The First National Bank of Chicago ("First Chicago");
(b) Revolving Credit Note of the Borrowers payable to the order of
Harris in the principal sum of $40,000,000;
(c) Revolving Credit Note of the Borrowers payable to the order of
First Chicago in the principal sum of $40,000,000;
(d) First Supplement to Security Agreement from Acme Steel to the
Agent;
(e) ________ (__________) UCC Financing Statements executed by Acme
Steel, as debtor, in favor of the Agent, as secured party, and to be filed in
the office of the ____________ Secretary of State and to be recorded as a
fixture filing in the mortgage records of the Recorder's Office of _____________
County, __________________, respectively;
(f) First Supplement to Security Agreement from Acme Packaging to the
Agent;
(g) ________ (__________) UCC Financing Statements executed by Acme
Packaging, as debtor, in favor of the Agent, as secured party, and to be filed
in the office of the ____________ Secretary of State and to be recorded as a
fixture filing in the mortgage records of the Recorder's Office of _____________
County, __________________, respectively;
(h) First Supplement to Security Agreement from Alpha Tube to the
Agent;
(i) ________ (__________) UCC Financing Statements executed by Alpha
Tube, as debtor, in favor of the Agent, as secured party, and to be filed in the
office of the ____________ Secretary of State and to be recorded as a fixture
filing in the mortgage records of the Recorder's Office of _____________ County,
__________________, respectively;
(j) First Supplement to Security Agreement from Universal Tool to the
Agent;
(k) ________ (__________) UCC Financing Statements executed by
Universal Tool, as debtor, in favor of the Agent, as secured party, and to be
filed in the office of the ____________ Secretary of State and to be recorded as
a fixture filing in the mortgage records of the Recorder's Office of
_____________ County, __________________, respectively.
The foregoing documents are herein collectively referred to as the
"Loan Documents".
<PAGE> 101
EXHIBIT E
ACME GROUP
BORROWING BASE CERTIFICATE
TO: Harris Trust and Savings Bank as Agent under, and the Lenders party
to, the Credit Agreement described below
Pursuant to the terms of the Amended and Restated Credit Agreement
dated as of December 18, 1997 among us (the "Credit Agreement"), we submit this
Borrowing Base Certificate to you and certify that the information set forth
below and on any attachments to this Certificate is true, correct and complete
as of the date of this Certificate. Any capitalized terms used herein without
definition shall have the same meanings as such terms have in the Credit
Agreement.
I. BORROWING BASE - ACME STEEL COMPANY
A. ACCOUNTS IN BORROWING BASE
1. Gross accounts _________________
A1
2. Ineligible accounts identified
in Credit Agreement _________________
A2
3. Eligible Receivables
(line A1 minus line A2) _________________
A3
4. Eligible Receivable in Borrowing
Base (line A3 x .85) _________________
A4
<PAGE> 102
B. INVENTORY IN BORROWING BASE
1. Gross Inventory _________________
B1
2. Ineligible inventory identified
in Credit Agreement _________________
B2
3. Eligible Inventory*
(line B1 minus line B2) _________________
B3
4. Eligible Inventory in Borrowing
Base (line B3 x .50) _________________
B4
C. BORROWING BASE - ACME STEEL COMPANY
1. Borrowing Base
(sum of lines A4 and B4) _________________
C1
2. Hedging Liability as defined _________________
C2
3. Available Borrowing Base (line _________________
C1 minus line C2)) C3
D. ADVANCES/AVAILABILITY (SHORTFALL) - ACME STEEL COMPANY
1. Revolving Loans _________________
D1
2. Swing Line Loans _________________
D2
3. Letters of Credit _________________
D3
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<PAGE> 103
4. Total Advances (sum of
line D1, D2 and D3) _________________
D4
5. Availability (Shortfall)
(line C3 minus line D4) _________________
D5
II. BORROWING BASE - ACME PACKAGING CORPORATION
A. ACCOUNTS IN BORROWING BASE
1. Gross accounts _________________
A1
2. Ineligible accounts identified
in Credit Agreement _________________
A2
3. Eligible Receivables
(line A1 minus line A2) _________________
A3
4. Eligible Receivable in Borrowing
Base (line A3 x .85) _________________
A4
B. INVENTORY IN BORROWING BASE
1. Gross Inventory _________________
B1
2. Ineligible inventory identified
in Credit Agreement _________________
B2
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<PAGE> 104
3. Eligible Inventory*
(line B1 minus line B2) _________________
B3
4. Eligible Inventory in Borrowing
Base (line B3 x .50) _________________
B4
C. BORROWING BASE - ACME PACKAGING CORPORATION
1. Borrowing Base
(sum of lines A4 and B4) _________________
C1
2. Hedging Liability as defined _________________
C2
3. Available Borrowing Base (line
C1 minus line C2)) _________________
C3
D. ADVANCES/AVAILABILITY (SHORTFALL) - ACME PACKAGING CORPORATION
1. Revolving Loans _________________
D1
2. Letters of Credit _________________
D2
3. Total Advances (sum of
line D1 and D2) _________________
D3
4. Availability (Shortfall)
(line C3 minus line D3) ________________
D4
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<PAGE> 105
III. BORROWING BASE - ALPHA TUBE CORPORATION
A. ACCOUNTS IN BORROWING BASE
1. Gross accounts _________________
A1
2. Ineligible accounts identified
in Credit Agreement _________________
A2
3. Eligible Receivables
(line A1 minus line A2) _________________
A3
4. Eligible Receivable in Borrowing
Base (line A3 x .85) _________________
A4
B. INVENTORY IN BORROWING BASE
1. Gross Inventory _________________
B1
2. Ineligible inventory identified
in Credit Agreement _________________
B2
3. Eligible Inventory*
(line B1 minus line B2) _________________
B3
4. Eligible Inventory in Borrowing
Base (line B3 x .50) _________________
B4
C. BORROWING BASE - ALPHA TUBE CORPORATION
1. Borrowing Base
(sum of lines A4 and B4) _________________
C1
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<PAGE> 106
2. Hedging Liability as defined _________________
C2
3. Available Borrowing Base (line
C1 minus line C2)) _________________
C3
D. ADVANCES/AVAILABILITY (SHORTFALL) - ALPHA TUBE CORPORATION
1. Revolving Loans _________________
D1
2. Letters of Credit _________________
D2
3. Total Advances (sum of
line D1 and D2) _________________
D3
4. Availability (Shortfall)
(line C3 minus line D3) ________________
D4
IV. BORROWING BASE - UNIVERSAL TOOL & STAMPING COMPANY, INC.
A. ACCOUNTS IN BORROWING BASE
1. Gross accounts _________________
A1
2. Ineligible accounts identified
in Credit Agreement _________________
A2
3. Eligible Receivables
(line A1 minus line A2) _________________
A3
4. Eligible Receivable in Borrowing
Base (line A3 x .85) _________________
A4
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<PAGE> 107
B. INVENTORY IN BORROWING BASE
1. Gross Inventory _________________
B1
2. Ineligible inventory identified
in Credit Agreement _________________
B2
3. Eligible Inventory*
(line B1 minus line B2) _________________
B3
4. Eligible Inventory in Borrowing
Base (line B3 x .50) _________________
B4
C. BORROWING BASE - UNIVERSAL TOOL & STAMPING COMPANY, INC.
1. Borrowing Base
(sum of lines A4 and B4) _________________
C1
2. Hedging Liability as defined _________________
C2
3. Available Borrowing Base (line
C1 minus line C2)) _________________
C3
D. ADVANCES/AVAILABILITY (SHORTFALL)-UNIVERSAL TOOL & STAMPING
COMPANY, INC.
1. Revolving Loans _________________
D1
2. Letters of Credit _________________
D2
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<PAGE> 108
3. Total Advances (sum of
line D1 and D2) _________________
D3
4. Availability (Shortfall)
(line C3 minus line D3) ________________
D4
V. INVENTORY CAP ADJUSTMENT
A. AGGREGATE BORROWING BASE
1. Acme Steel Company
(line IC1) _________________
A1
2. Acme Packaging Corporation
(line IIC1) _________________
A2
3. Alpha Tube Corporation
(line IIIC1) _________________
A3
4. Universal Tool & Stamping
Company, Inc. (line IVC1) _________________
A4
5. Aggregate Borrowing Base
(sum of lines A1, A2, A3 and A4) _________________
A5
-8-
<PAGE> 109
B. AGGREGATE ELIGIBLE INVENTORY
1. Acme Steel Company
(line IB3) _______________
B1
2. Acme Packaging Corporation
(line IIB3) _______________
B2
3. Alpha Tube Corporation
(line IIB3) _______________
B3
4. Universal Tool & Stamping
Company, Inc. (line IVB3) _______________
B4
5. Aggregate Eligible Inventory
(sum of lines B1, B2, B3 and B4) _______________
B5
C. DEDUCTION FOR INVENTORY CAP (IF ANY)
1. Inventory Cap (50% of Commitments) ______________
C1
2. Aggregate Eligible Inventory less
Inventory Cap (line B5 minus line C1) ______________
C2
*If the amount shown on Line VC2 is positive, deduct a pro rata share of the
amount shown one line VC2 from each Borrower's Eligible Inventory
Dated as of this ____ day of ______________, 19___.
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<PAGE> 110
ACME METALS INCORPORATED
By
Its
---------------------------------
-10-
<PAGE> 111
EXHIBIT F
ACME GROUP
COMPLIANCE CERTIFICATE
FOR THE MONTH ENDING __________
To: Harris Trust and Savings Bank
as Agent under, and the Lenders
party to the Credit Agreement
described below
This Compliance Certificate is furnished to the Lenders pursuant to the
requirements of Section 7.5 of the Amended and Restated Credit Agreement dated
as of December 18, 1997, by and between Acme Steel Company, a Delaware
corporation ("Acme Steel"), Acme Packaging Corporation, a Delaware corporation
("Acme Packaging"), Alpha Tube Corporation, a Delaware corporation, ("Alpha
Tube"), and Universal Tool & Stamping Company, Inc., an Indiana corporation
("Universal Tool") (Acme Steel, Acme Packaging, Alpha Tube and Universal Tool
are being hereinafter referred to collectively as the "Borrowers") and Acme
Metals Incorporated (the "Company", the Borrowers and the Company being referred
to collectively as the "Acme Group"), Harris Trust and Savings Bank as agent
thereunder (the "Agent") and the Lenders named therein (the "Credit Agreement").
Unless otherwise defined herein, the terms used in this Compliance Certificate
have the meanings ascribed thereto in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ______________ of the Company;
2. We have reviewed the terms of the Credit Agreement and we have
made, or have caused to be made under our supervision, a detailed review of the
transactions and conditions of the Acme Group during the accounting period
covered by the financial statements being furnished concurrently with this
Certificate;
3. The examinations described in paragraph 2 did not disclose, and
we have no knowledge of, the existence of any condition or the occurrence of any
event which constitutes a Default or an Event of Default at any time during or
at the end of the accounting period covered by the accompanying financial
statements or as of the date of this Certificate, except as set forth
immediately below;
<PAGE> 112
4. The financial statements required by Section 7.5 of the Credit
Agreement and being furnished to you concurrently with this Certificate are
true, correct and complete as of the dates and for the periods covered thereby;
and
5. Schedule I attached hereto sets forth financial data and
computations evidencing the Acme Group's compliance with certain covenants of
the Credit Agreement, all of which data and computations are true, complete and
correct and have been made in accordance with the relevant Sections of the
Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Acme Group has taken, is taking,
or proposes to take with respect to each such condition or event:
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
The foregoing certifications, together with the computations set forth
in Schedule I attached hereto and the financial statements furnished
concurrently with this Certificate in support hereof, are made and delivered as
of this ______ day of _______________, 19___.
By:
------------------------------
Title:
---------------------------
---------------------------------
(Type or Print Name)
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<PAGE> 113
SCHEDULE I
ACME GROUP
COMPLIANCE CALCULATIONS
FOR DECEMBER 18, 1997 AMENDED AND RESTATED CREDIT AGREEMENT
CALCULATIONS AS OF _______________, 19__
===============================================================================
A. CONSOLIDATED TANGIBLE NET WORTH (SECTION 7.7)
1. Shareholder's Equity
--------------
2. Intangible Assets (enter total on
Line 2 and show break-down below)
--------------
(a) Goodwill ___________
(b) Deferred charges ___________
(c) Other intangible assets ___________
3. Line 1 minus Line 2
("Consolidated Tangible Net Worth")
-------------
4. As listed in Section 7.7, for the date
of this Certificate, Consolidated Tangible
Net Worth must not be less than
$
------------
5. Acme Group is in compliance?
(Circle yes or no)
Yes/No
------
B. LEVERAGE RATIO (SECTION 7.8)
1. Indebtedness for Borrowed Money (enter total on
Line 1 and show breakdown below)
$
------------
<PAGE> 114
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
(e) Acme Metal ___________
2. Shareholder's Equity
as defined _____________
3. Sum of Lines 1 and Line 2
("Total Capitalization")
$____________
4. Ratio of Indebtedness for Borrowed
Money (Line 1) to Total Capitalization
(Line 3) ("Leverage Ratio")
:1
5. As listed in Section 7.8,
the Leverage Ratio shall not
be greater than 0.75:1
6. Acme Group is in compliance? (Circle yes or no)
Yes/No
------
C. CASH FLOW COVERAGE RATIO (SECTION 7.9)
1. Consolidated Net Income
as defined ______________
2. Amounts deducted in arriving
at Consolidated Net Income
in respect of
(a) Net Interest Expense ______________
(b) Income taxes as defined and
classified in accordance
with GAAP ______________
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<PAGE> 115
(c) Depreciation of fixed assets _____________
(d) Amortization of
intangibles (other than
debt issuance costs) _____________
3. Sum of Lines 1, 2(a), 2(b),
2(c) and 2(d) ("EBITDA")
______________
4. Cash Interest Expense _____________
5. Average daily principal amount
outstanding on the Revolving
Credit and Swing Line _____________
6. 20% of Line 8 amount _____________
7. Regularly scheduled principal
payments on Indebtedness for
Borrowed Money _____________
8. Sum of Lines 4, 6 and 7
_______
9. Ratio of Line 3 to Line 8 ("Cash
Flow Coverage Ratio")
:1
10. As listed in Section 7.9 the
Consolidated Cash Flow Coverage
Ratio must not be less than
:1
11. Acme Group is in compliance?
(Circle yes or no)
Yes/No
------
-3-
<PAGE> 116
D. DIVIDENDS AND CERTAIN OTHER RESTRICTED PAYMENTS (SECTION 7.13)
1. Check either (a) or (b)
(a) The Acme Group has not made any Restricted Equity
Payments (as defined in Section 7.13) during the
period covered by this Certificate
___________
1(a)
(b) The Acme Group has made Restricted Equity Payments
during the period covered by this Certificate
___________
1(b)
(i) Enter the aggregate amount of
such Restricted Equity Payments
$___________
made by each Borrower
1(b)(i)
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
2. Check either (a) or (b)
(a) The Borrowers have not made any Restricted Debt
Payments (as defined in Section 7.13) during the
period covered by this Certificate
___________
2(a)
(b) The Borrowers have made Restricted
-4-
<PAGE> 117
Debt Payments
during the period covered by this Certificate
___________
2(b)
(i) Enter the aggregate amount of
such Restricted Debt Payments
$___________
made by each Borrower
2(b)(i)
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
3. If Line 1(b) or Line 2(b) is checked, complete the following:
(a) At the time such Restricted Equity or Debt Payments
were made and after giving effect thereto, no Default
or Event of Default had occurred or is continuing
(Check either True or False) ___________
___________ True *False
(b) The portion of EBITDA for the subject fiscal year
derived from income of the Borrowers (enter total on
Line 3(b) and show break-down below)
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
-5-
<PAGE> 118
(c) Maintenance Capital Expenditures and construction
contract liquidated damages of the Borrowers during
such year (enter total on Line 3(c) and show
break-down below)
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
(d) Sum of Lines 3(b) and 3(c)
for each Borrower
(for each Borrower, the
"Maximum Permitted Amount")
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
(e) Aggregate amount of the
Restricted Payments for each
Borrower (Line 1(b)(i) plus
Line 2(b)(i) for each Borrower)
does not exceed the greater of (A)
the aggregate amount of regularly
scheduled payments on the Senior
Secured Term Note (enter such amount
to the right) and (B) the Maximum
$___________
Permitted Amount for such Borrower (shown on Line
3(d)).
(Check either True or False) ___________
___________
True *False
* If this item is checked, the Acme Group has defaulted in its observance
of the covenant set forth in Section 7.13 and triggered an Event of
Default under Section 10.1(b).
-6-
<PAGE> 119
EXHIBIT G
ASSIGNMENT AND ACCEPTANCE
Dated _____________, 19_____
Reference is made to the Amended and Restated Credit Agreement dated as
of December 18, 1997 (the "Credit Agreement") among the Acme Group, the Lenders
(as defined in the Credit Agreement) and Harris Trust and Savings Bank, as Agent
for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used
herein with the same meaning.
________________________________________________ (the "Assignor") and
_________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a _______% interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor's Commitment as in effect on the Effective
Date and the Revolving Loans, if any, owing to the Assignor on the Effective
Date and the Assignor's Percentage of any outstanding L/C Obligations, if any.
2. The Assignor (i) represents and warrants that as of the date
hereof (A) its Commitment is $____________, (B) the aggregate outstanding
principal amount of Revolving Loans made by it under the Credit Agreement that
have not been repaid is $____________ and a description of the interest rates
and interest periods for such Revolving Loans is attached as Schedule 1 hereto,
and (C) the aggregate principal amount of Assignor's outstanding L/C Obligations
is $___________; (ii) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim, lien, or encumbrance of any
kind; (iii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or any
other instrument or document furnished pursuant thereto; and (iv) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower, the Company, or any Guarantor or the
performance or observance by any Borrower, the Company, or any Guarantor of any
of their respective obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
<PAGE> 120
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to in Sections 7.5(a)(i) and (ii) thereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) appoints and
authorizes the Agent to take such action as Agent on its behalf and to exercise
such powers under the Credit Agreement as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(iv) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (v) specifies as its lending offices (and
address for notices) the offices set forth beneath its name on the signature
pages hereof.
4. As consideration for the assignment and sale contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the date hereof in
Federal funds an amount equal to $________________1*. It is understood that
commitment and/or Letter of Credit fees accrued to the date hereof with respect
to the interest assigned hereby are for the account of the Assignor and such
fees accruing from and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the account of such other
party to the extent of such other party's interest therein and shall promptly
pay the same to such other party.
5. The effective date for this Assignment and Acceptance shall be
_____________, 19___(the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Company for its
acceptance and to the Agent for acceptance and recording by the Agent.
6. Upon such acceptance and recording, as of the Effective Date, (i)
the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
- ---------------------
* Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula
rather than as a fixed sum.
-2-
<PAGE> 121
7. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments under the Credit Agreement in respect of
the interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
8. In accordance with Section 12.18 of the Credit Agreement, the
Assignor and the Assignee request and direct that the Agent prepare and cause
the Borrowers to execute and deliver to the Assignee a Revolving Credit Note
payable to the Assignee in the amount of its Commitment and a new Revolving
Credit Note to the Assignor in the amount of its Commitment after giving effect
to the assignment hereunder.
9. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Illinois.
[ASSIGNOR LENDER]
By:
Title:
[ASSIGNEE LENDER]
By:
Title:
Lending Office (and
address for notices):
LIBOR Funding Office:
Accepted and consented this
____ day of ___________, 19__
ACME METALS INCORPORATED
-3-
<PAGE> 122
By:
--------------------------------------
Title:
[NOT REQUIRED FOR INITIAL SYNDICATION]
Accepted and consented to by the Agent this
_______ day of ___________, 19__
[AGENT]
By
--------------------------------------
Title:
-4-
<PAGE> 123
SCHEDULE I
Type of Last day of
Principal Amount Revolving Loan Interest Rate Interest Period
- ---------------- -------------- ------------- ---------------
<PAGE> 124
SCHEDULE 5.3
THE SUBSIDIARIES
<TABLE>
<CAPTION>
JURISDICTION OF PERCENTAGE OWNER
NAME INCORPORATION OWNERSHIP
<S> <C>
Acme Steel Company Delaware 100% Acme Metals Incorporated
Acme Packaging Corporation Delaware 100% Acme Metals Incorporated
Alpha Tube Corporation Delaware 100% Acme Packaging Corporation
Universal Tool & Stamping Indiana 100% Acme Packaging Corporation
Company, Inc.
Alabama Metallurgical Washington 100% Acme Steel Company
Corporation
Alta Slitting Corporation Delaware 100% Acme Packaging Corporation
Acme Steel Company Barbados 100% Acme Packaging Corporation
International, Inc.
</TABLE>
<PAGE> 125
SCHEDULE 5.4
PERMITTED LIENS
<PAGE> 126
SCHEDULE 7.11
ACME METALS
SCHEDULE OF INDEBTEDNESS
12/15/97
------------------------
(in thousands)
<TABLE>
Long term debt Borrower Comments
- -------------- -------- --------
<S> <C> <C> <C>
Note payable, 6.5% to 6.75% due 1998-2008 $ 6,00 Acme Metals
Environmental Improvement Bond 7.95% due 2025 11,345 Acme Metals
Environmental Improvement Bond 7.90% due 2024 8,585 Acme Metals
-------
Subtotal long term debt $25,930
-------
Capital leases
- --------------
Lease agreement for computer equipment
Term of 48 months beginning 1/1/97 1,170 Acme Metals Subleased to Acme Steel
and Acme Packaging.
Lease agreement for plastic strapping lines
Term of 96 months effective date to be
determined 5,280 Acme Metals Subleased to Acme Packaging.
Other agreements
- ----------------
SMS Deferred Payment Agreement 5,798 Acme Steel
Hedging contracts 1,102 Acme Steel Purchases of Canadian dollars
relating to iron ore and related
freight with Wabush.
-------
Total Indebtedness $39,280
=======
</TABLE>
<PAGE> 1
EXHIBIT 10.14
ACME GROUP
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
Harris Trust and Savings Bank
Chicago, Illinois
The First National Bank of Chicago
Chicago, Illinois
Mercantile Bank National Association
St. Louis, Missouri
The Bank of Nova Scotia
Atlanta, Georgia
General Electric Capital Corporation
Stamford, Connecticut
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and Restated Credit
Agreement dated as of December 18, 1997 (the "Credit Agreement") between the
undersigned, Acme Steel Company, a Delaware corporation ("Acme Steel"), Acme
Packaging Corporation, a Delaware corporation ("Acme Packaging"), Alpha Tube
Corporation, a Delaware corporation ("Alpha Tube"), and Universal Tool &
Stamping Company, Inc., an Indiana corporation ("Universal Tool") (Acme Steel,
Acme Packaging, Alpha Tube and Universal Tool are being hereinafter referred to
collectively as the "Borrowers" and individually as a "Borrower") and you (the
"Lenders"). All capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Credit Agreement.
The Borrowers have requested that the Lenders make certain amendments
to the Credit Agreement, and the Lenders are willing to do so under the terms
and conditions set forth in this Amendment.
1. AMENDMENTS.
Upon the satisfaction of the conditions precedent set forth in Section
2 hereof, the Credit Agreement shall be and hereby is amended (effective as of
December 18, 1997) as follows:
<PAGE> 2
(a) Sections 1.2, 1.4(a), 1.5(a), 3.6, 6.1(c), 6.2(c) and
7.5(a)(iv) of the Credit Agreement shall be amended by deleting the
phrase "Available Borrowing Base" wherever appearing therein and
substituting therefor the phrase "Borrowing Base".
(b) Section 5.4 of the Credit Agreement shall be amended
by deleting the phrase "Section 7.12" appearing therein and
substituting therefor the phrase "Section 7.10".
(c) Section 9.1 of the Credit Agreement shall be amended
by deleting the definition of the term "Available Borrowing Base".
(d) Page 2 of Exhibit E to the Credit Agreement shall be
amended and as so amended shall be restated in its entirety to read as
set forth on Annex A to this Amendment.
(e) Page 9 of Schedule 5.4 to the Credit Agreement shall
be amended and as so amended shall be restated in its entirety to read
as set forth on Annex B to this Amendment.
2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
(a) The Borrowers and the Lenders shall have executed and
delivered this Amendment.
(b) The Lenders shall have received copies (executed or
certified, as may be appropriate) of all legal documents or
proceedings taken in connection with the execution and delivery of
this Amendment to the extent the Lenders or their counsel may
reasonably request.
(c) Legal matters incident to the execution and delivery
of this Amendment shall be satisfactory to the Lenders and their
counsel.
3. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment,
the Borrowers hereby represent to the Lenders that as of the date hereof, the
representations and warranties set forth in Section 5 of the Credit Agreement
are and shall be and remain true and correct (except
-2-
<PAGE> 3
that the representations contained in Section 5.6 shall be deemed to refer to
the most recent financial statements of the Company delivered to the Lenders)
and the Borrowers are in full compliance with all of the terms and conditions
of the Credit Agreement and no Default or Event of Default has occurred and is
continuing under the Credit Agreement or shall result after giving effect to
this Amendment.
4. MISCELLANEOUS.
(a) Except as specifically amended herein, the Credit Agreement
shall continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
or any other instrument or document executed in connection therewith, or in any
certificate, letter or communication issued or made pursuant to or with respect
to the Credit Agreement, any reference in any of such items to the Credit
Agreement being sufficient to refer to the Credit Agreement as amended hereby.
(b) The Borrowers agree to pay on demand all costs and expenses of
or incurred by the Agent in connection with the negotiation, preparation,
execution and delivery of this Amendment, including the fees and expenses of
counsel for the Agent.
(c) This Amendment may be executed in any number of counterparts,
and by the different parties on different counterpart signature pages, all of
which taken together shall constitute one and the same agreement. Any of the
parties hereto may execute this Amendment by signing any such counterpart and
each of such counterparts shall for all purposes be deemed to be an original.
This Amendment shall be governed by the internal laws of the State of Illinois.
Dated as of this 18th day of March, 1998 (but effective as of December
18, 1997).
ACME STEEL COMPANY
By
Its
----------------------------------
ACME PACKAGING CORPORATION
By
Its
----------------------------------
-3-
<PAGE> 4
ALPHA TUBE CORPORATION
By
Its
----------------------------------
UNIVERSAL TOOL & STAMPING COMPANY, INC.
By
Its
----------------------------------
ACME METALS INCORPORATED
By
Its
----------------------------------
-4-
<PAGE> 5
Accepted and agreed to as of the date and year last above written.
HARRIS TRUST AND SAVINGS BANK
By
Its Vice PRESIDENT
THE FIRST NATIONAL BANK OF CHICAGO
By
Its
----------------------------------
MERCANTILE BANK NATIONAL ASSOCIATION
By
Its
----------------------------------
THE BANK OF NOVA SCOTIA
By
Its
----------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By
Its
----------------------------------
-5-
<PAGE> 1
EXHIBIT 10.3
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
CREDIT AGREEMENT
among
ACME METALS INCORPORATED,
VARIOUS LENDERS,
BANKERS TRUST COMPANY,
as Administrative Agent,
and
MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agent and Arranger
---------------------------------------
Dated as of December 18, 1997
---------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.01 The Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Minimum Amount of Each Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.09 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 Replacement of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. Fees; Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.02 Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.02 Mandatory Repayments and Commitment Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 4. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.01 Execution of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.02 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.03 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.04 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.05 Corporate Documents; Proceedings; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.06 Tax Sharing Agreements; Existing Indebtedness Agreements . . . . . . . . . . . . . . . . . . . . . . . . 2
4.07 New Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.08 Existing Senior Secured Notes Tender Offer, Existing Senior Secured Notes Consents; Existing
Senior Secured Notes Indenture Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.09 Bank Refinancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.10 Working Capital Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.11 Adverse Change, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.13 Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.14 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.15 Subsidiaries Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.16 Mortgages; Title Insurance; Survey; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.17 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.18 Financial Statements; Pro Forma Financial Statements, Projections . . . . . . . . . . . . . . . . . . . 2
4.19 Solvency Certificate; Environmental Analyses; Insurance Certificates . . . . . . . . . . . . . . . . . 2
4.20 Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.21 No Default; Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 5. Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.01 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.02 Corporate and Other Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.04 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.05 Financial Statements; Financial Condition; Undisclosed Liabilities; Projections; etc. . . . . . . . . 3
5.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.07 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.11 The Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.12 Representations and Warranties in the Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.13 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.14 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.16 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.17 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.18 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.21 Patents, Licenses, Franchises and Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.22 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.23 Existing Senior Secured Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.24 Issuance of the New Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.25 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 6. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.02 Books, Records, Inspections and Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.05 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.06 Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.08 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.09 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.11 Additional Security; Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 7. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . . . . . . . . . . . . . . . . . . . . . . 3
7.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
</TABLE>
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7.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.05 Advances, Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.07 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.08 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.09 Consolidated Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.10 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.11 Minimum Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.12 Consolidated Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.13 Limitation on Payments of Certain Indebtedness; Modifications of Certain Indebtedness;
Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc. . . . . 4
7.14 Limitation on Certain Restrictions on Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.15 Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.16 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.17 Limitation on Creation of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 8. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8.04 Default Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8.06 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8.07 Subsidiaries Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8.08 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8.09 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 9. Definitions and Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
9.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 10. The Administrative Agent and the Syndication Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10.03 Lack of Reliance on the Administrative Agent and the Syndication Agent . . . . . . . . . . . . . . . . 4
10.04 Certain Rights of the Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10.07 The Administrative Agent and the Syndication Agent in their Individual Capacity . . . . . . . . . . . . 4
10.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10.09 Resignation by the Administrative Agent and the Syndication Agent . . . . . . . . . . . . . . . . . . . 4
SECTION 11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
11.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
11.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
11.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>
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11.04 Benefit of Agreement; Assignments; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.07 Calculations; Computations; Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 5
11.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.12 Amendment or Waiver; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.15 Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SCHEDULE 1.01(a) Commitments
SCHEDULE 1.01(b) Bank Addresses
SCHEDULE 5.09 Certain Tax Matters
SCHEDULE 5.10 Plans
SCHEDULE 5.11 Real Properties
SCHEDULE 5.14 Capitalization
SCHEDULE 5.15 Subsidiaries
SCHEDULE 5.19 Certain Environmental Matters
SCHEDULE 5.22 Existing Indebtedness
SCHEDULE 5.25 Insurance
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.05 Existing Investments
SCHEDULE 7.06 Certain Transactions with Affiliates
SCHEDULE 9.01 Certain Take-or-Pay Obligations
</TABLE>
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EXHIBIT A Notice of Borrowing
EXHIBIT B Note
EXHIBIT C Section 3.04(b)(ii) Certificate
EXHIBIT D-1 Opinion of Ungaretti & Harris, Special Counsel to the Credit Parties
EXHIBIT D-2 Opinion of Edward P. Weber, Esq., General Counsel to the Borrower
EXHIBIT E Officers' Certificate
EXHIBIT F Collateral Agency Agreement
EXHIBIT G Pledge Agreement
EXHIBIT H Security Agreement
EXHIBIT I Subsidiaries Guaranty
EXHIBIT J Solvency Certificate
EXHIBIT K Assignment and Assumption Agreement
</TABLE>
<PAGE> 7
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
CREDIT AGREEMENT, dated as of December 18, 1997, among ACME METALS
INCORPORATED, a Delaware corporation (the "Borrower"), the Lenders party hereto
from time to time, BANKERS TRUST COMPANY, as Administrative Agent, and MORGAN
STANLEY SENIOR FUNDING, INC., as Syndication Agent and Arranger (all
capitalized terms used herein and defined in Section 9 are used herein as
therein defined).
W I T N E S S E T H:
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Lenders are willing to make available to the Borrower the credit
facility provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitment. Subject to and upon the terms and conditions set forth
herein, each Lender severally agrees to make a term loan (each a "Loan" and,
collectively, the "Loans") to the Borrower, which Loans (i) only may be
incurred by the Borrower pursuant to a single drawing to be made on the
Effective Date, (ii) shall, at the option of the Borrower, be incurred and
maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
provided that (A) except as otherwise specifically provided in Section 1.10(b),
all Loans comprising the same Borrowing shall at all times be of the same Type
and (B) unless the Syndication Agent has determined (and has notified the
Borrower) that the Syndication Date has occurred (at which time this clause (B)
shall no longer be applicable), no more than three Borrowings of Loans to be
maintained as Eurodollar Loans may be incurred prior to the 90th day after
the Effective Date (each of which Borrowings of Eurodollar Loans may only have
an Interest Period of one month, and the first of which Borrowings may only be
made on the Effective Date or on or prior to the sixth Business Day after the
Effective Date, the second of which Borrowings may only be made on the last day
of the Interest Period of the first such Borrowing and the third of which
Borrowings may only be made on the last day of the Interest Period of the
second such Borrowing) and (iii) shall be made by each Lender in that aggregate
principal amount which equals the Commitment of such Lender on the Effective
Date as such Commitment is set forth on Schedule 1.01(a) (before giving effect
to the termination thereof on such date pursuant to Section 2.02(b)). Once
repaid, Loans incurred hereunder may not be reborrowed.
1.02 Minimum Amount of Each Borrowing. The aggregate principal amount of each
Borrowing of Loans shall not be less than the Minimum Borrowing Amount. More
than one Borrowing may occur on the same date, but at no time shall there be
outstanding more than five Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. When the Borrower desires to incur the Loans
hereunder, the Borrower shall give the Administrative Agent at the Notice
Office at least three Business Days' prior notice thereof in the case of the
incurrence of Eurodollar Loans or at least one Business Day's prior notice
thereof in the case of the incurrence of Base Rate Loans, provided that any
such notice shall be deemed to have been given on a certain day only if given
before 11:00 A.M. (New York time) on such day. Such notice (the "Notice of
Borrowing"), except as otherwise expressly provided in Section 1.10, shall be
irrevocable and shall be given by the Borrower in writing in the form of
Exhibit A, appropriately completed to specify the aggregate principal amount of
the Loans to be incurred on the Effective Date (which shall be a Business Day)
and whether such Loans are to be incurred as Base Rate Loans or Eurodollar
Loans. The Administrative Agent shall promptly give
<PAGE> 8
each Lender notice of such proposed Borrowing, of such Lender's proportionate
share thereof and of the other matters required by the immediately preceding
sentence to be specified in the Notice of Borrowing.
1.04 Disbursement of Funds. No later than 12:00 Noon (New York time) on the
Effective Date, each Lender will make available its pro rata portion
(determined in accordance with Section 1.07) of the Borrowing requested to be
made on such date. All such amounts will be made available in Dollars and in
immediately available funds at the Payment Office, and the Administrative Agent
will make available to the Borrower at the Payment Office the aggregate of the
amounts so made available by the Lenders. Unless the Administrative Agent
shall have been notified by any Lender prior to the Effective Date that such
Lender does not intend to make available to the Administrative Agent such
Lender's portion of the Borrowing to be made on such date, the Administrative
Agent may assume that such Lender has made such amount available to the
Administrative Agent on such date and the Administrative Agent shall, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender, the Administrative Agent shall be entitled
to recover such corresponding amount on demand from such Lender. The
Administrative Agent also shall be entitled to recover on demand from such
Lender interest on such corresponding amount in respect of each day from the
date such corresponding amount was made available by the Administrative Agent
to the Borrower until the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to the overnight Federal Funds
Rate. Nothing in this Section 1.04 shall be deemed to relieve any Lender from
its obligation to make its Loan hereunder or to prejudice any rights which the
Borrower may have against any Lender as a result of any failure by such Lender
to make its Loan hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of, and
interest on, the Loan made by each Lender shall be evidenced by a promissory
note duly executed and delivered by the Borrower substantially in the form of
Exhibit B, with blanks appropriately completed in conformity herewith (each a
"Note" and, collectively, the "Notes"). The Note issued to each Lender shall
(i) be executed by the Borrower, (ii) be payable to such Lender or its
registered assigns and be dated the Effective Date (or, if issued after the
Effective Date, be dated the date of the issuance thereof), (iii) be in a
stated principal amount equal to the Loan made by such Lender on the Effective
Date (or, if issued after the Effective Date, be in a stated principal amount
equal to the outstanding principal amount of the Loan of such Lender at such
time) and be payable in the outstanding principal amount of the Loan evidenced
thereby, (iv) mature on the Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 3.01, and mandatory repayment as
provided in Section 3.02, and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(b) Each Lender will note on its internal records the amount of the Loan made
by it and each payment in respect thereof and will prior to any transfer of its
Note endorse on the reverse side thereof the outstanding principal amount of
the Loan evidenced thereby. Failure to make any such notation or any error in
such notation shall not affect the Borrower's obligations in respect of such
Loan.
1.06 Conversions. The Borrower shall have the option to convert, on any
Business Day occurring after the Effective Date, all or a portion equal to at
least the Minimum Borrowing Amount of the outstanding principal amount of Loans
made pursuant to one or more Borrowings of one or more Types of Loans into a
Borrowing of another Type of Loan, provided that, (i) except as otherwise
provided in Section 1.10(b), Eurodollar Loans may be converted into Base Rate
Loans only on the last day of an Interest Period applicable to the Eurodollar
Loans being converted and no such partial conversion of Eurodollar Loans shall
reduce the outstanding principal amount of such Eurodollar Loans made pursuant
to a single Borrowing to less than the Minimum Borrowing Amount, (ii) Base
<PAGE> 9
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
Rate Loans may only be converted into Eurodollar Loans if no Default or Event
of Default is in existence on the date of the conversion, (iii) unless the
Syndication Agent has determined (and has notified the Borrower) that the
Syndication Date has occurred (at which time this clause (iii) shall no longer
be applicable), prior to the 90th day after the Effective Date, conversions of
Base Rate Loans into Eurodollar Loans may only be made if any such conversion
is effective on the first day of the first, second or third Interest Period
referred to in clause (B) of Section 1.01(ii) and so long as such conversion
does not result in a greater number of Borrowings of Eurodollar Loans prior to
the 90th day after the Effective Date as are permitted under such Section
1.01(ii) and (iv) no conversion pursuant to this Section 1.06 shall result in a
greater number of Borrowings of Eurodollar Loans than is permitted under
Section 1.02. Each such conversion shall be effected by the Borrower by giving
the Administrative Agent at the Notice Office prior to 11:00 A.M. (New York
time) at least three Business Days' prior notice (each a "Notice of
Conversion") specifying the Loans to be so converted, the Borrowing or
Borrowings pursuant to which such Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Lender prompt notice of any such proposed
conversion. Upon any such conversion the proceeds thereof will be deemed to be
applied directly on the day of such conversion to prepay the outstanding
principal amount of the Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Loans under this Agreement shall
be incurred from the Lenders pro rata on the basis of their Commitments. It is
understood that no Lender shall be responsible for any default by any other
Lender of its obligation to make its Loan hereunder and that each Lender shall
be obligated to make the Loan provided to be made by it hereunder, regardless
of the failure of any other Lender to make its Loan hereunder.
1.08 Interest.
(a) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Base Rate Loan from the date of
Borrowing thereof until the earlier of (i) the maturity
thereof (whether by acceleration or otherwise) and (ii) the
conversion of such Base Rate Loan to a Eurodollar Loan
pursuant to Section 1.06 at a rate per annum which shall be
equal to the sum of the Applicable Base Rate Margin plus the
Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date of
Borrowing thereof until the earlier of (i) the maturity
thereof (whether by acceleration or otherwise) and (ii) the
conversion of such Eurodollar Loan to a Base Rate Loan
pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a
rate per annum which shall, during each Interest Period
applicable thereto, be equal to the sum of the Applicable
Eurodollar Rate Margin plus the Eurodollar Rate for such
Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount
payable hereunder shall, in each case, bear interest at a rate
per annum equal to the greater of (x) the rate which is 2% in
excess of the rate then borne by such Loans and (y) the rate
which is 2% in excess of the rate otherwise applicable to Base
Rate Loans from time to time. Interest which accrues under
this Section 1.08(c) shall be payable on demand.
<PAGE> 10
(d) Accrued (and theretofore unpaid) interest shall be payable (i)
in respect of each Base Rate Loan, quarterly in arrears on
each Quarterly Payment Date, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period
applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month
intervals after the first day of such Interest Period and
(iii) in respect of each Loan, on any repayment or prepayment
(on the amount repaid or prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on
demand.
(e) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest
Period applicable to Eurodollar Loans and shall promptly
notify the Borrower and the Lenders thereof. Each such
determination shall, absent manifest error, be final and
conclusive and binding on all parties hereto.
1.09 Interest Periods. At the time the Borrower gives the Notice of Borrowing
or any Notice of Conversion in respect of the incurrence of, or the conversion
into, any Eurodollar Loan (in the case of the initial Interest Period
applicable thereto) or on the third Business Day prior to the expiration of an
Interest Period applicable to such Eurodollar Loan (in the case of any
subsequent Interest Period), the Borrower shall have the right to elect, by
giving the Administrative Agent notice thereof, the interest period (each an
"Interest Period") applicable to such Eurodollar Loan, which Interest Period
shall, at the option of the Borrower (but otherwise subject to the limitation
set forth in clause (B) of the proviso in Section 1.01(ii)), be a one, two,
three or six-month period, provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan
(including the date of any conversion thereto from a Base Rate
Loan) and each Interest Period occurring thereafter in respect
of such Eurodollar Loan shall commence on the day on which the
next preceding Interest Period applicable thereto expires;
(iii) if any Interest Period for a Eurodollar Loan begins on a day
for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such
Interest Period shall end on the last Business Day of such
calendar month;
(iv) if any Interest Period for a Eurodollar Loan would otherwise
expire on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day,
provided, however, that if any Interest Period for a
Eurodollar Loan would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(v) no Interest Period may be selected at any time when a Default
or an Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of Eurodollar
Loans shall be selected which extends beyond the Maturity
Date; and
(vii) no Interest Period in respect of any Borrowing of Eurodollar
Loans shall be selected which extends beyond any date upon
which a mandatory repayment of Loans will be required to be
made under Section 3.02(a), if the aggregate principal amount
of Eurodollar Loans which have Interest Periods which will
expire after such date will be in excess of the aggregate
principal amount of Loans then outstanding less the aggregate
amount of such required repayment.
If upon the expiration of any Interest Period applicable to a Borrowing of
Eurodollar Loans, the Borrower has failed to elect, or is not permitted to
elect, a new Interest Period to be applicable to such Eurodollar Loans as
provided above, the Borrower shall be deemed to have elected to convert such
Eurodollar Loans into Base Rate Loans effective as of the expiration date of
such current Interest Period.
<PAGE> 11
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CONFORMED AS EXECUTED]
1.10 Increased Costs, Illegality, etc. (a) In the event that any Lender
shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto but, with respect to
clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the
interbank Eurodollar market, adequate and fair means do not
exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder
with respect to any Eurodollar Loan because of (x) any change
since the date of this Agreement in any applicable law or
governmental (including any NAIC) rule, regulation, order,
guideline or request (whether or not having the force of law)
or in the interpretation or administration thereof, and
including the introduction of any new law or governmental
(including any NAIC) rule, regulation, order, guideline or
request, such as, for example, but not limited to: (A) a
change in the basis of taxation of payment to any Lender of
the principal of or interest on the Notes or any other amounts
payable hereunder (except for changes in the rate of tax on,
or determined by reference to, the net income or profits of
such Lender pursuant to the laws of the jurisdiction in which
such Lender is organized or in which such Lender's principal
office or applicable lending office is located or any
subdivision thereof or therein) or (B) a change in official
reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the
computation of the Eurodollar Rate and/or (y) other
circumstances since the date of this Agreement affecting such
Lender, the interbank Eurodollar market or the position of
such Lender in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental
(including any NAIC) rule, regulation or order, (y) impossible
by compliance by any Lender in good faith with any
governmental (including any NAIC) request (whether or not
having force of law) or (z) impracticable as a result of a
contingency occurring after the date of this Agreement which
materially and adversely affects the interbank Eurodollar
market; then, and in any such event, such Lender (or the
Administrative Agent, in the case of clause (i) above) shall
promptly give notice (by telephone promptly confirmed in
writing) to the Borrower and, except in the case of clause (i)
above, to the Administrative Agent of such determination
(which notice the Administrative Agent shall promptly transmit
to each of the other Lenders). Thereafter (x) in the case of
clause (i) above, Eurodollar Loans shall no longer be
available until such time as the Administrative Agent notifies
the Borrower and the Lenders that the circumstances giving
rise to such notice by the Administrative Agent no longer
exist, and the Notice of Borrowing or any Notice of Conversion
given by the Borrower with respect to Eurodollar Loans which
have not yet been incurred (including by way of conversion)
shall be deemed rescinded by the Borrower, (y) in the case of
clause (ii) above, the Borrower shall pay to such Lender, upon
such Lender's written request therefor, such additional
amounts (in the form of an increased rate of, or a different
method of calculating, interest or otherwise as such Lender in
its sole discretion shall
<PAGE> 12
determine) as shall be required to compensate such Lender for
such increased costs or reductions in amounts received or
receivable hereunder
(a) Written notice as to the additional amounts owed to such
Lender, showing in reasonable detail the basis for the
calculation thereof, submitted to the Borrower by such Lender
shall, absent manifest error, be final and conclusive and
binding on all the parties hereto) and (z) in the case of
clause (iii) above, the Borrower shall take one of the actions
specified in Section 1.10(b) as promptly as possible and, in
any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the
Borrower may (and in the case of a Eurodollar Loan affected by
the circumstances described in Section 1.10(a)(iii) shall)
either (x) if the affected Eurodollar Loan is then being made
initially or pursuant to a conversion, cancel such Borrowing
by giving the Administrative Agent telephonic notice
(confirmed in writing) on the same date that the Borrower was
notified by the affected Lender or the Administrative Agent
pursuant to Section 1.10(a)(ii) or (iii) or (y) if the
affected Eurodollar Loan is then outstanding, upon at least
three Business Days' written notice to the Administrative
Agent, require the affected Lender to convert such Eurodollar
Loan into a Base Rate Loan, provided that, if more than one
Lender is affected at any time, then all affected Lenders must
be treated the same pursuant to this Section 1.10(b).
(c) If any Lender determines that after the date of this Agreement
the introduction of or any change in any applicable law or
governmental (including any NAIC) rule, regulation, order,
guideline, directive or request (whether or not having the
force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental
authority (including the NAIC), central bank or comparable
agency, will have the effect of increasing the amount of
capital required or expected to be maintained by such Lender
or any corporation controlling such Lender based on the
existence of such Lender's Commitments hereunder or its
obligations hereunder, then the Borrower shall pay to such
Lender, upon its written demand therefor, such additional
amounts as shall be required to compensate such Lender or such
other corporation for the increased cost to such Lender or
such other corporation or the reduction in the rate of return
to such Lender or such other corporation as a result of such
increase of capital. In determining such additional amounts,
each Lender will act reasonably and in good faith and will use
averaging and attribution methods which are reasonable,
provided that such Lender's determination of compensation
owing under this Section 1.10(c) shall, absent manifest error,
be final and conclusive and binding on all the parties hereto.
Each Lender, upon determining that any additional amounts will
be payable pursuant to this Section 1.10(c), will give prompt
written notice thereof to the Borrower, which notice shall
show in reasonable detail the basis for calculation of such
additional amounts.
1.11 Compensation. The Borrower shall compensate each Lender, upon its
written request (which request shall set forth in reasonable detail the basis
for requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Lender to fund its Eurodollar Loans but excluding loss
of anticipated profits) which such Lender may sustain: (i) if for any reason
(other than a default by such Lender or the Administrative Agent) a Borrowing
of Eurodollar Loans does not occur on a date specified therefor in the Notice
of Borrowing or in a Notice of Conversion (whether or not withdrawn by the
Borrower or deemed withdrawn pursuant to Section 1.10(a)); (ii) if any
repayment (including any repayment made pursuant to Section 3.01, Section 3.02
or as a result of an acceleration of the Loans pursuant to Section 8) or
conversion of any of its Eurodollar Loans occurs on a date which is not the
last day of an
<PAGE> 13
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EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
Interest Period with respect thereto; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of (x) any other default by the
Borrower to repay such Lender's Loans when required by the terms of this
Agreement or the Note held by such Lender or (y) any election made pursuant to
Section 1.10(b).
1.12 Change of Lending Office. Each Lender agrees that upon the occurrence of
any event giving rise to the operation of Section 1.10(a)(ii) or (iii), Section
1.10(c) or Section 3.04 with respect to such Lender, it will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Lender) to designate another lending office for any Loans affected by
such event, provided that such designation is made on such terms that such
Lender and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of such Section. Nothing in this Section 1.12 shall
affect or postpone any of the obligations of the Borrower or the right of any
Lender provided in Sections 1.10 and 3.04.
1.13 Replacement of Lenders. (x) Upon the occurrence of an event giving rise
to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c) or Section
3.04 with respect to any Lender which results in such Lender charging to the
Borrower increased costs in excess of those being generally charged by the
other Lenders or (y) in the case of a refusal by a Lender to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Lenders as (and to the
extent) provided in Section 11.12(b), the Borrower shall have the right, if no
Default or Event of Default then exists (or, in the case of preceding clause
(y), no Default or Event of Default will exist immediately after giving effect
to such replacement), to replace such Lender (the "Replaced Lender") with one
or more other Eligible Transferees (collectively, the "Replacement Lender"),
each of whom shall be required to be reasonably acceptable to the
Administrative Agent, provided that (i) at the time of any replacement pursuant
to this Section 1.13, the Replacement Lender shall enter into one or more
Assignment and Assumption Agreements pursuant to Section 11.04(b) (and with all
fees payable pursuant to said Section 11.04(b) to be paid by the Replacement
Lender) pursuant to which the Replacement Lender shall acquire the outstanding
Loan of the Replaced Lender and, in connection therewith, shall pay to the
Replaced Lender in respect thereof an amount equal to the sum of (I) an amount
equal to the principal of, and all accrued interest on, the outstanding Loan of
the Replaced Lender and (II) an amount equal to all accrued, but theretofore
unpaid, Fees, if any, owing to the Replaced Lender pursuant to Section 2.01 and
(ii) all obligations of the Borrower due and owing to the Replaced Lender at
such time (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Lender concurrently with
such replacement. Upon the execution of the respective Assignment and
Assumption Agreement, the payment of amounts referred to in clauses (i) and
(ii) above and, if so requested by the Replacement Lender, delivery to the
Replacement Lender of the appropriate Note executed by the Borrower, the
Replacement Lender shall become a Lender hereunder and the Replaced Lender
shall cease to constitute a Lender hereunder, except with respect to
indemnification provisions under this Agreement (including, without limitation,
Sections 1.10, 1.11, 3.04, 10.06 and 11.01), which shall survive as to such
Replaced Lender.
<PAGE> 14
SECTION 2. Fees; Termination of Commitments.
2.01 Fees. The Borrower agrees to pay to the Agents, for their own account,
such fees as have been agreed to in a separate letter agreement, dated November
19, 1997, among the Borrower and the Agents in accordance with the terms
thereof.
2.02 Termination of Commitments.
(a) The Total Commitment (and the Commitment of each Lender) shall
terminate in its entirety on March 1, 1998 unless the
Effective Date has occurred on or before such date.
(b) In addition, the Total Commitment (and the Commitment of each
Lender) shall terminate in its entirety on the Effective Date
(after giving effect to the incurrence of the Loans on such
date) or at 5:00 p.m. (New York time) on such date to the
extent no Loans are incurred on such date).
SECTION 3. Prepayments; Payments; Taxes.
3.01 Voluntary Prepayments.
(a) The Borrower shall have the right to prepay the Loans, without
premium (except as provided below) or penalty, in whole or in
part at any time and from time to time on the following terms
and conditions: (i) the Borrower shall give the Administrative
Agent prior to 12:00 Noon (New York time) at the Notice Office
(x) at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of its intent
to prepay Base Rate Loans and (y) at least three Business
Days' prior written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay Eurodollar
Loans, the principal amount of such prepayment and the Types
of Loans to be prepaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made,
which notice the Administrative Agent shall promptly transmit
to each of the Lenders; (ii) each partial prepayment of Loans
pursuant to this Section 3.01(a) shall be in an aggregate
principal amount of at least $1,000,000, provided that if any
partial prepayment of Eurodollar Loans made pursuant to any
Borrowing shall reduce the outstanding principal amount of
Eurodollar Loans made pursuant to such Borrowing to an amount
less than the Minimum Borrowing Amount, then such Borrowing
may not be continued as a Borrowing of Eurodollar Loans and
any election of an Interest Period with respect thereto given
by the Borrower shall have no force or effect; (iii) each
prepayment pursuant to this Section 3.01(a) in respect of any
Loans made pursuant to a Borrowing shall be applied pro rata
among such Loans; (iv) each voluntary prepayment of Loans
pursuant to this Section 3.01(a) shall be applied to reduce
the then remaining Scheduled Repayments of Loans on a pro rata
basis (based upon the then remaining unpaid principal amounts
of such Scheduled Repayments after giving effect to all prior
reductions thereto); and (v) in the case of any voluntary
prepayment of Loans pursuant to this Section 3.01(a) (x) made
on or prior to December 31, 1998, such prepayment shall be in
an amount equal to the product of (A) the principal amount
specified pursuant to clause (i) of this Section 3.01(a)
multiplied by (B) 101.5% and (y) made on and after January 1,
1999 and on or before June 30, 1999, such prepayment shall be
in an amount equal to the product of (A) the principal amount
specified pursuant to clause (i) of this Section 3.01(a)
multiplied by (B) 101%.
(b) In the event of a refusal by a Lender to consent to certain
proposed changes, waivers, discharges or terminations with
respect to this Agreement which have been approved by the
Required Lenders as (and to the extent) provided in Section
11.12(b), the Borrower may, upon five Business Days' prior
written notice to the Administrative
<PAGE> 15
[CONFORMED COPY WITH
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CONFORMED AS EXECUTED]
Agent at the Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Lenders) repay
the outstanding Loan of, together with accrued and unpaid
interest, Fees and other amounts owing to, such Lender in
accordance with, and subject to the requirements of, said
Section 11.12(b) so long as the consents, if any, required
under Section 11.12(b) in connection with the repayment
pursuant to this clause (b) have been obtained. Each
voluntary prepayment of Loans pursuant to this Section 3.01(b)
shall be applied to reduce the then remaining Scheduled
Repayments of Loans on a pro rata basis (based upon the then
remaining unpaid principal amounts of such Scheduled
Repayments after giving effect to all prior reductions
thereto).
3.02 Mandatory Repayments and Commitment Reductions.
(a) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each date set forth below, the Borrower shall
be required to repay that principal amount of Loans, to the
extent then outstanding, as is set forth opposite such date
below (each such repayment, as the same may be reduced as
provided in Sections 3.01(a), 3.01(b) and 3.02(g), a
"Scheduled Repayment"):
<TABLE>
<CAPTION>
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
March 1, 1998 $250,000
June 1, 1998 $250,000
September 1, 1998 $250,000
December 1, 1998 $250,000
March 1, 1999 $250,000
June 1, 1999 $250,000
September 1, 1999 $250,000
December 1, 1999 $250,000
March 1, 2000 $250,000
June 1, 2000 $250,000
September 1, 2000 $250,000
December 1, 2000 $250,000
March 1, 2001 $250,000
June 1, 2001 $250,000
September 1, 2001 $250,000
December 1, 2001 $250,000
March 1, 2002 $250,000
June 1, 2002 $250,000
September 1, 2002 $250,000
December 1, 2002 $250,000
March 1, 2003 $250,000
June 1, 2003 $250,000
September 1, 2003 $250,000
December 1, 2003 $250,000
March 1, 2004 $21,125,000
June 1, 2004 $21,125,000
September 1, 2004 $21,125,000
December 1, 2004 $21,125,000
March 1, 2005 $21,125,000
June 1, 2005 $21,125,000
September 1, 2005 $21,125,000
Maturity Date $21,125,000
</TABLE>
<PAGE> 16
(b) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each date on or after the Effective Date upon
which the Borrower or any of its Subsidiaries receives any
cash proceeds from any capital contribution or any sale or
issuance of its equity (other than cash proceeds received (i)
from the issuance by the Borrower of shares of its common
stock so long as (x) no Default or Event of Default then
exists and (y) such cash proceeds are used, or the Borrower or
Acme Steel has adopted and begun the implementation of a plan
for the use of such cash proceeds, within six months following
receipt of same to fund the Phase II Expansion, (ii) from
equity contributions to any Subsidiary of the Borrower to the
extent made by the Borrower or another Subsidiary of the
Borrower, (iii) from the issuance by the Borrower of shares of
its common stock (including as a result of the exercise of any
options with regard thereto), or options to purchase shares of
its common stock, to officers, directors and employees of the
Borrower and its Subsidiaries or (iv) from the issuance by the
Borrower of shares of its common stock (including as a result
of the exercise of any options with regard thereto), or
options to purchase shares of its common stock, to the extent
such proceeds are promptly used by the Borrower to fund one or
more of its pension plans), an amount equal to 50% of the Net
Equity Proceeds of such capital contribution or sale or
issuance of equity shall be applied as a mandatory repayment
of principal of outstanding Loans in accordance with the
requirements of Sections 3.02(g) and (h).
(c) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each date on or after the Effective Date upon
which the Borrower or any of its Subsidiaries receives any
cash proceeds from any incurrence by the Borrower or any of
its Subsidiaries of Indebtedness for borrowed money (other
than Indebtedness for borrowed money permitted to be incurred
pursuant to Section 7.04 as such Section is in effect on the
Effective Date (other than Indebtedness incurred pursuant to
Section 7.04(xii) the proceeds of which shall be applied as
provided below in this Section 3.02(c))), an amount equal to
100% of the Net Debt Proceeds of the respective incurrence of
Indebtedness for borrowed money shall be applied as a
mandatory repayment of principal of outstanding Loans in
accordance with the requirements of Sections 3.02(g) and (h).
(d) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each date on or after the Effective Date upon
which the Borrower or any of its Subsidiaries receives any
cash proceeds from any Asset Sale, an amount equal to 100% of
the Net Sale Proceeds from such Asset Sale shall be applied as
a
<PAGE> 17
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EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
mandatory repayment of principal of outstanding Loans in
accordance with the requirements of Sections 3.02(g) and (h);
provided that with respect to no more than $5,000,000 in the
aggregate of cash proceeds from Asset Sales in any fiscal year
of the Borrower, such Net Sale Proceeds therefrom shall not be
required to be so applied on such date so long as (i) no
Default or Event of Default then exists, (ii) the Borrower
delivers a certificate to the Administrative Agent on or prior
to such date stating that such Net Sale Proceeds shall be used
to purchase assets (other than current assets) used or useful
in the business of the Borrower and its Subsidiaries within
360 days following the date of such Asset Sale (which
certificate shall set forth the estimates of the proceeds to
be so expended) (it being understood that to the extent
Collateral is sold pursuant to such Asset Sale, the assets so
reinvested in also shall be property that constitutes
Collateral under the respective Security Documents) and (iii)
such Net Sale Proceeds are deposited on such date in a
Restricted Collateral Account, and provided further, that if
all or any portion of such Net Sale Proceeds not required to
be applied to the repayment of outstanding Loans are not so
reinvested in replacement assets within such 360 day period,
such remaining portion shall be applied on the last day of
such period as a mandatory repayment of principal of
outstanding Loans as provided above in this Section 3.02(d)
without regard to the immediately preceding proviso.
Notwithstanding anything to the contrary contained above in
this Section 3.02(d), until such time as all Existing Senior
Secured Notes either have been repaid in full or have been
defeased in accordance with the terms thereof, all Net Sale
Proceeds from any Asset Sale shall be deposited and applied in
the manner provided in the Collateral Agency Agreement and the
Existing Senior Secured Note Indentures.
(e) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each Excess Cash Payment Date, an amount
equal to 75% of the Excess Cash Flow of the Borrower for the
relevant Excess Cash Payment Period shall be applied as a
mandatory repayment of principal of outstanding Loans in
accordance with the requirements of Sections 3.02(g) and (h).
(f) In addition to any other mandatory repayments pursuant to this
Section 3.02, on each date on or after the Effective Date upon
which the Borrower or any of its Subsidiaries receives any
cash proceeds from any Recovery Event, an amount equal to 100%
of the Net Insurance Proceeds from such Recovery Event shall
be applied as a mandatory repayment of principal of
outstanding Loans in accordance with the requirements of
Sections 3.02(g) and (h), provided that so long as no Default
or Event of Default then exists, such Net Insurance Proceeds
shall not be required to be so applied on such date to the
extent that the Borrower has delivered a certificate to the
Administrative Agent on or prior to such date stating that
such Net Insurance Proceeds shall be used to replace or
restore any properties or assets in respect of which such Net
Insurance Proceeds were paid within 360 days following the
date of the receipt of such Net Insurance Proceeds (which
certificate shall set forth the estimates of the proceeds to
be so expended) and such Net Insurance Proceeds are deposited
on such date in a Restricted Collateral Account, and provided
further, that if all or any portion of such Net Insurance
Proceeds not required to be applied to the repayment of
outstanding Loans pursuant to the immediately preceding
proviso are not so used within 360 days after the date of the
receipt of such Net Insurance Proceeds, such remaining
<PAGE> 18
portion shall be applied on the last day of such period as a
mandatory repayment of principal of outstanding Loans as
provided above in this Section 3.02(f) without regard to the
immediately preceding proviso. Notwithstanding anything to
the contrary contained above in this Section 3.02(f), until
such time as all Existing Senior Secured Notes either have
been repaid in full or have been defeased in accordance with
the terms thereof, all Net Insurance Proceeds from any
Recovery Event shall be deposited and applied in the manner
provided in the Collateral Agency Agreement and the Existing
Senior Secured Note Indentures.
(g) Each amount required to be applied to repay outstanding Loans
pursuant to Sections 3.02(b), (c), (d), (e) and (f) shall be
applied to reduce the then remaining Scheduled Repayments on a
pro rata basis (based upon the then remaining unpaid principal
amounts of such Scheduled Repayments after giving effect to
all prior reductions thereto).
(h) With respect to each repayment of Loans required by this
Section 3.02, the Borrower may designate the Types of Loans
which are to be repaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made,
provided that: (i) repayments of Eurodollar Loans pursuant to
this Section 3.02 may only be made on the last day of an
Interest Period applicable thereto unless all Eurodollar Loans
with Interest Periods ending on such date of required
repayment and all Base Rate Loans have been paid in full; (ii)
if any repayment of Eurodollar Loans made pursuant to a single
Borrowing shall reduce the outstanding Eurodollar Loans made
pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount, such Borrowing shall be converted at the end
of the then current Interest Period into a Borrowing of Base
Rate Loans; and (iii) each repayment of any Loans made
pursuant to a Borrowing shall be applied pro rata among such
Loans. In the absence of a designation by the Borrower as
described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its sole
discretion.
(i) Notwithstanding anything to the contrary contained in
this Agreement or in any other Credit Document, (i)
all then outstanding Loans shall be repaid in full on
the Maturity Date and (ii) all then outstanding Loans
shall be repaid in full on the date on which a Change
of Control occurs.
3.03 Method and Place of Payment. Except as otherwise specifically provided
herein, all payments under this Agreement or under any Note shall be made to
the Administrative Agent for the account of the Lender or Lenders entitled
thereto not later than 12:00 Noon (New York time) on the date when due and
shall be made in Dollars in immediately available funds at the Payment Office.
Whenever any payment to be made hereunder or under any Note shall be stated to
be due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate during such
extension.
3.04 Net Payments.
(a) All payments made by the Borrower hereunder or under any Note
will be made without setoff, counterclaim or other defense.
Except as provided in Section 3.04(b), all such payments will
be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein
<PAGE> 19
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EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
with respect to such payments (but excluding, except as
provided in the second succeeding sentence, any tax imposed on
or measured by the net income or profits of a Lender pursuant
to the laws of the jurisdiction in which it is organized or
the jurisdiction in which the principal office or applicable
lending office of such Lender is located or any subdivision
thereof or therein) and all interest, penalties or similar
liabilities with respect to such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges (all such
non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges being referred to collectively as "Taxes").
If any Taxes are so levied or imposed, the Borrower agrees to
pay the full amount of such Taxes, and such additional amounts
as may be necessary so that every payment of all amounts due
under this Agreement or under any Note, after withholding or
deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note. If any
amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each
Lender, upon the written request of such Lender, for taxes
imposed on or measured by the net income or profits of such
Lender pursuant to the laws of the jurisdiction in which such
Lender is organized or in which the principal office or
applicable lending office of such Lender is located or under
the laws of any political subdivision or taxing authority of
any such jurisdiction in which such Lender is organized or in
which the principal office or applicable lending office of
such Lender is located and for any withholding of taxes as
such Lender shall determine are payable by, or withheld from,
such Lender, in respect of such amounts so paid to or on
behalf of such Lender pursuant to the preceding sentence and
in respect of any amounts paid to or on behalf of such Lender
pursuant to this sentence. The Borrower will furnish to the
Administrative Agent within 45 days after the date the payment
of any Taxes is due pursuant to applicable law certified
copies of tax receipts evidencing such payment by the
Borrower. The Borrower agrees to indemnify and hold harmless
each Lender, and reimburse such Lender upon its written
request, for the amount of any Taxes so levied or imposed and
paid by such Lender.
(b) Each Lender that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for U.S.
federal income tax purposes agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Effective
Date, or in the case of a Lender that is an assignee or
transferee of an interest under this Agreement pursuant to
Section 1.13 or 11.04 (unless the respective Lender was
already a Lender hereunder immediately prior to such
assignment or transfer), on the date of such assignment or
transfer to such Lender, (i) two accurate and complete
original signed copies of Internal Revenue Service Form 4224
or 1001 (or successor forms) certifying to such Lender's
entitlement as of such date to a complete exemption from
United States withholding tax with respect to payments to be
made under this Agreement and under any Note, or (ii) if the
Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 (or successor forms)
pursuant to clause (i) above, (x) a certificate substantially
in the form of Exhibit C (any such certificate, a "Section
3.04(b)(ii) Certificate") and (y) two accurate and complete
original signed copies of Internal Revenue Service Form W-8
(or successor form) certifying to such Lender's entitlement to
a complete exemption
<PAGE> 20
from United States withholding tax with respect to payments of
interest to be made under this Agreement and under any Note.
In addition, each Lender agrees that from time to time after
the Effective Date, whenever a lapse in time or change in
circumstances renders the previous certification obsolete or
inaccurate in any material respect, such Lender will promptly
deliver to the Borrower and the Administrative Agent two new
accurate and complete original signed copies of Internal
Revenue Service Form 4224 or 1001 (or successor forms), or
Form W-8 (or successor form) and a Section 3.04(b)(ii)
Certificate, as the case may be, and such other forms as may
be required in order to confirm or establish the entitlement
of such Lender to a continued exemption from or reduction in
United States withholding tax with respect to payments under
this Agreement and any Note, or such Lender shall immediately
notify the Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate, in which
case such Lender shall not be required to deliver any such
Form or Certificate pursuant to this Section 3.04(b).
Notwithstanding anything to the contrary contained in Section
3.04(a), but subject to Section 11.04(b) and the immediately
succeeding sentence, (x) the Borrower shall be entitled, to
the extent it is required to do so by law, to deduct or
withhold income or similar taxes imposed by the United States
(or any political subdivision or taxing authority thereof or
therein) from interest, Fees or other amounts payable
hereunder for the account of any Lender which is not a United
States person (as such term is defined in Section 7701(a)(30)
of the Code) for U.S. Federal income tax purposes to the
extent that such Lender has not provided to the Borrower U.S.
Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the
Borrower shall not be obligated pursuant to Section 3.04(a)
hereof to gross-up payments to be made to a Lender in respect
of income or similar taxes imposed by the United States if (I)
such Lender has not provided to the Borrower the Internal
Revenue Service Forms required to be provided to the Borrower
pursuant to this Section 3.04(b) or (II) in the case of a
payment, other than interest, to a Lender described in clause
(ii) above, to the extent that such Forms do not establish a
complete exemption from withholding of such taxes.
Notwithstanding anything to the contrary contained in the
preceding sentence or elsewhere in this Section 3.04 and
except as set forth in Section 11.04(b), the Borrower agrees
to pay any additional amounts and to indemnify each Lender in
the manner set forth in Section 3.04(a) (without regard to the
identity of the jurisdiction requiring the deduction or
withholding) in respect of any Taxes deducted or withheld by
it as described in the immediately preceding sentence as a
result of any changes that are effective after the Effective
Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of such
Taxes.
SECTION 4. Conditions Precedent. The occurrence of the Effective Date and the
obligation of each Lender to make its Loan hereunder on the Effective Date are
subject to the satisfaction of the following conditions:
4.01 Execution of Agreement. On or prior to the Effective Date, this
Agreement shall have been executed and delivered in accordance with Section
11.10.
<PAGE> 21
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
4.02 Notes. On the Effective Date, there shall have been delivered to the
Administrative Agent for the account of each of the Lenders the appropriate
Note executed by the Borrower, in the amount, maturity and as otherwise
provided herein.
4.03 Officer's Certificate. On the Effective Date, the Administrative Agent
shall have received a certificate, dated the Effective Date and signed on
behalf of the Borrower by the Chairman of the Board, the President, the Chief
Financial Officer, the Treasurer or any Vice President of the Borrower,
certifying on behalf of the Borrower that all of the conditions set forth in
Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.21 have been satisfied on
such date.
4.04 Opinions of Counsel. On the Effective Date, the Administrative Agent
shall have received from (i) Ungaretti & Harris, special counsel to the Credit
Parties, an opinion addressed to the Administrative Agent, the Syndication
Agent, the Collateral Agent and each of the Lenders and dated the Effective
Date covering the matters set forth in Exhibit D-1 and such other matters
incident to the transaction contemplated herein as any Agent may reasonably
request, and (ii) Edward P. Weber, Jr., Esq., general counsel to the Borrower,
an opinion addressed to the Administrative Agent, the Syndication Agent, the
Collateral Agent and each of the Lenders and dated the Effective Date, covering
the matters set forth in Exhibit D-2 and such other matters incident to the
transaction contemplated herein as any Agent may reasonably request.
4.05 Corporate Documents; Proceedings; etc.
(a) On the Effective Date, the Administrative Agent shall have
received a certificate from each Credit Party, dated the
Effective Date, signed by the Chairman of the Board, the
President, the Chief Financial Officer, the Treasurer or any
Vice President of such Credit Party, and attested to by the
Secretary or any Assistant Secretary of such Credit Party, in
the form of Exhibit E with appropriate insertions, together
with copies of the certificate of incorporation (or equivalent
organizational document) and by-laws of such Credit Party and
the resolutions of such Credit Party referred to in such
certificate, and the foregoing shall be in form and substance
reasonably acceptable to the Agents.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by
this Agreement and the other Documents shall be reasonably
satisfactory in form and substance to the Agents, and the
Administrative Agent shall have received all information and
copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing
certificates and bring-down telegrams or facsimiles, if any,
which any Agent reasonably may have requested in connection
therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
4.06 Tax Sharing Agreements; Existing Indebtedness Agreements. On or prior to
the Effective Date, there shall have been delivered to the Administrative Agent
true and correct copies of the following documents:
(i) all tax sharing, tax allocation, tax indemnity and
other similar agreements entered into by the Borrower
or any of its Subsidiaries (collectively, the "Tax
Sharing Agreements"); and
<PAGE> 22
(ii) all agreements evidencing or relating to any material
Indebtedness of the Borrower or any of its
Subsidiaries which is to remain outstanding after
giving effect to the incurrence of the Loans on the
Effective Date (collectively, the "Existing
Indebtedness Agreements").
4.07 New Senior Notes.
(a) On the Effective Date, (i) the Borrower shall have received
gross cash proceeds of $198,000,000 from the issuance by it of
the New Senior Notes and (ii) the Borrower shall have utilized
the full amount of the net cash proceeds received from the
issuance of the New Senior Notes to make payments owing in
connection with the Transaction prior to utilizing any
proceeds of the Loans for such purpose.
(b) On or prior to the Effective Date, there shall have been
delivered to the Administrative Agent true and correct copies
of the New Senior Note Documents, and all of the terms and
conditions of the New Senior Note Documents (including,
without limitation, amortization, maturities, interest rates,
covenants, defaults, remedies and sinking fund provisions)
shall be in substantial conformity with the description
thereof in the New Senior Note Offering Memorandum, and with
such other terms as are reasonably acceptable to the Agents.
4.08 Existing Senior Secured Notes Tender Offer, Existing Senior Secured
Notes Consents; Existing Senior Secured Notes Indenture Supplements.
(a) On the Effective Date, the Borrower shall have accepted for
payment all Existing 12-1/2% Senior Secured Notes and all
Existing 13-1/2% Senior Secured Discount Notes issued by it,
in each case to the extent tendered and not withdrawn pursuant
to the Existing Senior Secured Notes Tender Offer, and each of
the conditions to such purchase as set forth in the Existing
Senior Secured Notes Tender Offer Documents either shall have
been (i) satisfied or (ii) waived with the consent of the
Agents (it being understood that in any event at least 75% of
the aggregate outstanding principal amount of each of the
Existing 12-1/2% Senior Secured Notes and the Existing 13-1/2%
Senior Secured Discount Notes shall have been tendered and
purchased pursuant to the Existing Senior Secured Notes Tender
Offer). All terms and conditions of the Existing Senior
Secured Notes Tender Offer shall be in substantial conformity
with the Existing Senior Secured Notes Tender Offer Documents
dated November 13, 1997 and the Existing Senior Secured Notes
Tender Offer shall be effected in compliance with the Existing
Senior Secured Notes Tender Offer Documents (except to the
extent waived as described above) and all applicable laws
(including, without limitation, Federal and state securities
laws).
(b) (i) On the Effective Date, in the event that 100% of the
Existing 12-1/2% Senior Secured Notes have not been
accepted for payment by the Borrower pursuant to the
Existing Senior Secured Notes Tender Offer, the
Borrower shall have received sufficient Existing
12-1/2% Senior Secured Note Consents pursuant to the
Existing Senior Secured Notes Consent Solicitation to
authorize the execution and delivery of the Existing
12-1/2% Senior Secured Note Indenture Supplement (the
terms of which shall conform to the description
thereof set forth in the Existing Senior Secured
Notes Tender Offer Documents described above) and the
Existing 12-1/2% Senior Secured Note Indenture
Supplement shall have been duly executed and
delivered by the Borrower and the Existing 12-1/2%
Senior Secured Note Indenture Trustee and all
conditions to the effectiveness thereof shall have
been satisfied.
<PAGE> 23
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
(ii) On the Effective Date, in the event that 100% of the
Existing 13-1/2% Senior Secured Discount Notes have
not been accepted for payment by the Borrower
pursuant to the Existing Senior Secured Notes Tender
Offer, the Borrower shall have received sufficient
Existing 13-1/2% Senior Secured Discount Note
Consents pursuant to the Existing Senior Secured
Notes Consent Solicitation to authorize the execution
and delivery of the Existing 13-1/2% Senior Secured
Discount Note Indenture Supplement (the terms of
which shall conform to the description thereof in the
Existing Senior Secured Notes Tender Offer Documents
described above) and the Existing 13-1/2% Senior
Secured Discount Note Indenture Supplement shall have
been duly executed and delivered by the Borrower and
the Existing 13-1/2% Senior Secured Discount Note
Indenture Trustee and all conditions to the
effectiveness thereof shall have been satisfied.
(iii) On the Effective Date, in the event that 100% of each
of the Existing 12-1/2% Senior Secured Notes and the
Existing 13-1/2% Senior Secured Discount Notes have
not been accepted for payment by the Borrower
pursuant to the Existing Senior Secured Notes Tender
Offer, the collateral agent for the holders of the
Existing Senior Secured Notes, the Borrower, certain
other Credit Parties and the Collateral Agent shall
have entered into the Collateral Agency Agreement in
the form of Exhibit F (as amended, modified or
supplemented from time to time, the "Collateral
Agency Agreement").
(c) On the Effective Date, there shall have been delivered to the
Administrative Agent true and correct copies of all Existing
Senior Secured Notes Tender Offer Documents and Existing
Senior Secured Notes Consent Solicitation Documents (including
executed versions of each Existing Senior Secured Note
Indenture Supplement). The Administrative Agent shall have
received evidence in form, scope and substance satisfactory to
it that the matters set forth in this Section 4.08 have been
satisfied at such time.
4.09 Bank Refinancing. On the Effective Date, the Bank Refinancing shall
have been consummated. The Administrative Agent shall have received copies of
all documents executed in connection with the Bank Refinancing, all of which
shall be in full force and effect and in form and substance reasonably
satisfactory to the Agents.
4.10 Working Capital Facility. On the Effective Date, (i) the Working
Capital Facility shall have been amended and restated on terms and conditions,
and pursuant to documentation, reasonably satisfactory to the Agents and the
Required Lenders, (ii) the Administrative Agent shall have received true and
correct copies of the Working Capital Facility, as so amended and restated,
(iii) the Working Capital Facility, as so amended and restated, shall be in
full force and effect and no default or event of default shall exist thereunder
and (iv) the Borrower shall have used a portion of the proceeds of the Loans
and/or the New Senior Notes to repay outstanding loans under the Working
Capital Facility (it being understood and agreed that no more than $20,000,000
of such loans may be outstanding on the Effective Date after giving effect to
any repayment thereof on such date).
4.11 Adverse Change, etc.
(a) Since September 28, 1997, nothing shall have occurred (and
neither the Agents nor the Lenders shall have become aware of
any facts or conditions not previously
<PAGE> 24
known) which the Agents or the Required Lenders shall
reasonably determine (x) has had, or could reasonably be
expected to have, a material adverse effect on the rights or
remedies of the Lenders or any Agent or on the ability of any
Credit Party to perform its obligations to them hereunder or
under any other Credit Document or (y) has had, or could
reasonably be expected to have, a material adverse effect on
the Transaction or on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a
whole.
(b) On or prior to the Effective Date, all necessary governmental
(domestic and foreign) and third party approvals and/or
consents in connection with the Transaction and the other
transactions contemplated by the Documents and otherwise
referred to herein or therein shall have been obtained and
remain in effect, and all applicable waiting periods with
respect thereto shall have expired without any action being
taken by any competent authority which restrains, prevents or
imposes materially adverse conditions upon the consummation of
the Transaction or the other transactions contemplated by the
Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order,
injunction or other restraint issued or filed or a hearing
seeking injunctive relief or other restraint pending or
notified prohibiting or imposing materially adverse conditions
upon the consummation of the Transaction or the other
transactions contemplated by the Documents or otherwise
required herein or therein.
4.12 Litigation. On the Effective Date, there shall be no actions, suits or
proceedings pending or threatened (i) with respect to the Transaction, this
Agreement or any other Document or (ii) which the Agents or the Required
Lenders shall reasonably determine could reasonably be expected to have a
material adverse effect on (a) the Transaction or on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole, (b) the rights or
remedies of the Lenders or any Agent hereunder or under any other Credit
Document or (c) the ability of any Credit Party to perform its respective
obligations to the Lenders or any Agent hereunder or under any other Credit
Document.
4.13 Pledge Agreement. On the Effective Date, each Credit Party shall have
duly authorized, executed and delivered the Pledge Agreement in the form of
Exhibit G (as amended, modified or supplemented from time to time, the "Pledge
Agreement") and the collateral agent under the Collateral Agency Agreement
shall have possession of all of the Pledged Stock, if any, referred to in the
Pledge Agreement and then owned by such Credit Party, together with executed
and undated stock powers, and the Administrative Agent shall have received
written confirmation from such collateral agent that it in fact has possession
of all such Pledged Stock.
4.14 Security Agreement. On the Effective Date, Acme Steel shall have duly
authorized, executed and delivered the Security Agreement in the form of
Exhibit H (as modified, supplemented or amended from time to time, the
"Security Agreement") covering all of Acme Steel's present and future Security
Agreement Collateral, together with:
(i) proper Financing Statements (Form UCC-1 or the
equivalent) fully executed for filing under the UCC
or other appropriate filing offices of each
jurisdiction as may be necessary or, in the
reasonable opinion of the Collateral Agent, desirable
to perfect the security interests purported to be
created by the Security Agreement;
(ii) certified copies of Requests for Information or
Copies (Form UCC-11), or equivalent reports, listing
all effective financing statements that name the
Borrower or any of its Subsidiaries as debtor (none
of which shall cover the Collateral except to the
extent evidencing Permitted Liens or in respect of
<PAGE> 25
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
which the Collateral Agent shall have received
termination statements (Form UCC-3 or the equivalent)
as shall be required by local law fully executed for
filing);
(iii) evidence of the completion of all other recordings
and filings of, or with respect to, the Security
Agreement as may be necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect
the security interests intended to be created by the
Security Agreement; and
(iv) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable
to perfect and protect the security interests
purported to be created by the Security Agreement
have been taken.
4.15 Subsidiaries Guaranty. On the Effective Date, each Subsidiary Guarantor
shall have duly authorized, executed and delivered the Subsidiaries Guaranty in
the form of Exhibit I (as amended, modified or supplemented from time to time,
the "Subsidiaries Guaranty").
4.16 Mortgages; Title Insurance; Survey; etc. On the Effective Date, the
Collateral Agent shall have received:
(i) fully executed counterparts of a Mortgage, in form
and substance reasonably satisfactory to the Agents,
which Mortgage shall cover the Mortgaged Properties
owned by Acme Steel on the Effective Date as
designated on Schedule 5.11, together with evidence
that counterparts of such Mortgage have been
delivered to the title insurance company insuring the
Lien of such Mortgage for recording in all places to
the extent necessary or, in the reasonable opinion of
the Collateral Agent, desirable, to effectively
create a valid and enforceable mortgage lien on each
such Mortgaged Property in favor of the Collateral
Agent (or such other trustee as may be required or
desired under local law) for the benefit of the
Secured Creditors;
(ii) a mortgagee title insurance policy (or a binding
commitment with respect thereto) (each, a "Mortgage
Policy") on the Mortgaged Properties issued by a
title insurer reasonably satisfactory to the Agents
in amounts satisfactory to the Agents assuring the
Collateral Agent that the Mortgage on such Mortgaged
Properties are valid and enforceable mortgage liens
on the respective Mortgaged Properties, free and
clear of all defects and encumbrances except
Permitted Encumbrances and such Mortgage Policy shall
otherwise be in form and substance reasonably
satisfactory to the Agents; and
(iii) a recent survey, in form and substance reasonably
satisfactory to the Agents, of Acme Steel's new
continuous slab facility, certified by a licensed
professional surveyor reasonably satisfactory to the
Agents, and existing surveys of Acme Steel's other
Mortgaged Properties, certified by the surveyor who
originally prepared such surveys.
4.17 Notice of Borrowing. On or prior to the Effective Date, the
Administrative Agent shall have received the Notice of Borrowing meeting the
requirements of Section 1.03.
4.18 Financial Statements; Pro Forma Financial Statements, Projections. On or
prior to the Effective Date, the Agents shall have received true and correct
copies of the historical financial statements, the pro forma financial
statements and the Projections referred to in Sections 5.05(a) and (d), which
<PAGE> 26
historical financial statements, pro forma financial statements and Projections
shall be in form and substance reasonably satisfactory to the Agents.
4.19 Solvency Certificate; Environmental Analyses; Insurance Certificates.
On or prior to the Effective Date, the Administrative Agent shall have
received:
(i) a solvency certificate from the Chief Financial
Officer of the Borrower in the form of Exhibit J;
(ii) environmental and hazardous substance assessments and
analyses with respect to the Real Property of the
Borrower and its Subsidiaries in scope, and in form
and substance, reasonably satisfactory to the Agents;
and
(iii) certificates of insurance complying with the
requirements of Section 6.03 for the business and
properties of the Borrower and its Subsidiaries, in
form and substance reasonably satisfactory to the
Agents and naming the Collateral Agent as an
additional insured and, with respect to the Security
Agreement Collateral and the Mortgaged Properties, as
loss payee, and stating that such insurance shall not
be canceled without at least 30 days prior written
notice by the insurer to the Collateral Agent (or
such shorter period of time as a particular insurance
company generally provides).
4.20 Fees, etc. On the Effective Date, the Borrower shall have paid to the
Agents all costs, fees and expenses (including, without limitation, legal fees
and expenses) payable to the Agents to the extent then due.
4.21 No Default; Representations and Warranties. On the Effective Date and
also after giving effect to the incurrence of the Loans on such date (i) there
shall exist no Default or Event of Default and (ii) all representations and
warranties contained herein and in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of such date (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date).
The occurrence of the Effective Date and the incurrence by the Borrower of the
Loans hereunder on such date shall constitute a representation and warranty by
the Borrower to each of the Agents and each of the Lenders that all the
conditions specified in this Section 4 exist as of that time. All of the
Notes, certificates, legal opinions and other documents and papers referred to
in this Section 4, unless otherwise specified, shall be delivered to the
Administrative Agent at the Notice Office for the account of each of the
Lenders and, except for the Notes, in sufficient counterparts or copies for
each of the Lenders and shall be in form and substance reasonably satisfactory
to the Agents and the Required Lenders.
SECTION 5. Representations, Warranties and Agreements. In order to induce the
Lenders to enter into this Agreement and to make the Loans hereunder, the
Borrower makes the following representations, warranties and agreements, in
each case, after giving effect to the Transaction, all of which shall survive
the execution and delivery of this Agreement and the Notes and the making of
the Loans, and with the occurrence of the Effective Date and incurrence by the
Borrower of the Loans hereunder on such date being deemed to constitute a
representation and warranty by the Borrower that the matters specified in this
Section 5 are true and correct in all material respects on and as of the
Effective Date (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).
<PAGE> 27
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
5.01 Corporate Status. Each of the Borrower and each of its Subsidiaries (i)
is a duly organized and validly existing corporation in good standing under the
laws of the jurisdiction of its organization, (ii) has the corporate power and
authority to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage and (iii) is duly qualified and
is authorized to do business and is in good standing in each jurisdiction where
the ownership, leasing or operation of its property or the conduct of its
business requires such qualifications except for failures to be so qualified
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower
and its Subsidiaries taken as a whole.
5.02 Corporate and Other Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Documents to which it is party and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of each of such Documents. Each Credit Party has duly executed and
delivered each of the Documents to which it is party, and each of such
Documents constitutes its legal, valid and binding obligation enforceable in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law).
5.03 No Violation. Neither the execution, delivery or performance by any
Credit Party of the Documents to which it is a party, nor compliance by it with
the terms and provisions thereof, (i) will contravene any provision of any law,
statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Security
Documents) upon any of the property or assets of the Borrower or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
credit agreement or loan agreement, or any other material agreement, contract
or instrument, to which the Borrower or any of its Subsidiaries is a party or
by which it or any of its property or assets is bound or to which it may be
subject or (iii) will violate any provision of the certificate of incorporation
or by-laws (or equivalent organizational documents) of the Borrower or any of
its Subsidiaries.
5.04 Approvals. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except for those that
have otherwise been obtained or made on or prior to the Effective Date and
which remain in full force and effect on the Effective Date), or exemption by,
any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Document or (ii) the legality, validity,
binding effect or enforceability of any such Document.
5.05 Financial Statements; Financial Condition; Undisclosed Liabilities;
Projections; etc.
(a) The consolidated balance sheets of the Borrower for the fiscal
year and nine-month period ended on December 29, 1996 and
September 28, 1997 and the related consolidated statements of
income, cash flows and shareholders' equity of the Borrower
for the fiscal year or nine-month period, as the case may be,
ended on such dates, copies of which have been furnished to
the Agents prior to the Effective Date, present fairly in all
material respects the consolidated financial position of the
Borrower at the dates of such balance sheets and the
consolidated results of the
<PAGE> 28
operations of the Borrower for the periods covered thereby.
All of the foregoing historical financial statements have been
prepared in accordance with generally accepted accounting
principles consistently applied. The pro forma consolidated
balance sheet of the Borrower as of September 28, 1997 after
giving effect to the Transaction and the financing therefor, a
copy of which has been furnished to the Lenders prior to the
Effective Date, presents fairly in all material respects the
pro forma consolidated financial position of the Borrower as
of September 28, 1997. After giving effect to the Transaction
(but for this purpose assuming that the Transaction and the
related financing had occurred prior to September 28, 1997),
since September 28, 1997, there has been no material adverse
change in the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole.
(b) On and as of the Effective Date and after giving effect to the
Transaction and to all Indebtedness (including the Loans)
being incurred or assumed and Liens created by the Credit
Parties in connection therewith (x) the sum of the assets, at
a fair valuation, of each of the Borrower on a stand-alone
basis and of the Borrower and its Subsidiaries taken as a
whole will exceed its debts; (y) each of the Borrower on a
stand-alone basis and the Borrower and its Subsidiaries taken
as a whole has not incurred and does not intend to incur, and
does not believe that it will incur, debts beyond its ability
to pay such debts as such debts mature; and (z) each of the
Borrower on a stand alone basis and the Borrower and its
Subsidiaries taken as a whole will have sufficient capital
with which to conduct its business. For purposes of this
Section 5.05(b), "debt" means any liability on a claim, and
"claim" means (i) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured, or unsecured or (ii) right to an equitable
remedy for breach of performance if such breach gives rise to
a payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured. The amount of
contingent liabilities at any time shall be computed as the
amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can
reasonably be expected to become an actual or matured
liability.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 5.05(a) or as set forth in
Schedules 5.09 and 5.19, there are no liabilities or
obligations with respect to the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due)
which, either individually or in aggregate, could reasonably
be expected to be material to the Borrower and its
Subsidiaries taken as a whole. Except as set forth in
Schedules 5.09 and 5.19, the Borrower does not know of any
basis for the assertion against it or any of its Subsidiaries
of any liability or obligation of any nature whatsoever that
is not fully disclosed in the financial statements delivered
pursuant to Section 5.05(a) which, either individually or in
the aggregate, could reasonably be expected to be material to
the Borrower and its Subsidiaries taken as a whole.
(d) The Projections delivered to the Agents and the Lenders prior
to the Effective Date have been prepared in good faith and are
based on reasonable assumptions, and there are no statements
or conclusions in the Projections which are based upon or
include information known to the Borrower to be misleading in
any material respect or which fail to take into account
material information known to the Borrower regarding the
matters reported therein. The Borrower believes that the
Projections are reasonable and attainable, it being recognized
by the Lenders, however, that projections as to future events
are not to be viewed as facts and that the actual results
during the period or periods covered by the Projections may
differ from the projected results and that the differences may
be material.
<PAGE> 29
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5.06 Litigation. There are no actions, suits or proceedings pending or, to
the best knowledge of the Borrower, threatened (i) with respect to the
Transaction or any Document, (ii) with respect to any material Indebtedness of
the Borrower or any of its Subsidiaries or (iii) that are reasonably likely to
materially and adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower
and its Subsidiaries taken as a whole.
5.07 True and Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of any Credit Party in writing to any Agent or any
Lender (including, without limitation, all information contained in the
Documents) for purposes of or in connection with this Agreement, the other
Credit Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of any Credit Party in writing to any Agent or any Lender will be, true
and accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact
necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was provided.
5.08 Use of Proceeds; Margin Regulations.
(a) All proceeds of the Loans will be used by the Borrower (i) to
finance, in part, the Bank Refinancing, the Existing Senior
Secured Notes Tender Offer, the Existing Senior Secured Notes
Consent Solicitation, and the repayment of outstanding loans
under the Working Capital Facility (it being understood and
agreed that no more than $20,000,000 of such loans may be
outstanding on the Effective Date after giving effect to any
repayment thereof on such date), (ii) to pay fees and expenses
related to the Transaction and (iii) to the extent that any
such proceeds remain after the application pursuant to the
preceding clauses (i) and (ii), for the Borrower's and its
Subsidiaries' working capital and general corporate purposes.
(b) No part of any Loans (or the proceeds thereof) will be used to
purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock. Neither
the making of any Loan nor the use of the proceeds thereof
will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
5.09 Tax Returns and Payments. Each of the Borrower and each of its
Subsidiaries has filed all federal and state income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and has
paid all taxes and assessments payable by it which have become due, except for
those contested in good faith and adequately disclosed and fully provided for
on the financial statements of the Borrower and its Subsidiaries in accordance
with generally accepted accounting principles. The Borrower and each of its
Subsidiaries have at all times paid, or have provided adequate reserves (in the
good faith judgment of the management of the Borrower) for the payment of, all
federal, state, local and foreign income taxes applicable for all prior fiscal
years and for the current fiscal year to date. Except as disclosed in Schedule
5.09, there is no material action, suit, proceeding, investigation, audit, or
claim now pending or, to the knowledge of the Borrower threatened, by any
authority regarding any taxes relating to the Borrower or any of its
Subsidiaries. Except as disclosed in Schedule 5.09, neither the Borrower nor
any of its Subsidiaries has entered into an agreement or waiver or been
requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of the Borrower or
any of its Subsidiaries, or is aware of any circumstances that would cause the
taxable years or other taxable periods of the Borrower or any of its
Subsidiaries not to be subject to the normally applicable statute of
limitations.
<PAGE> 30
5.10 Compliance with ERISA. Schedule 5.10 sets forth, as of the Effective
Date, each Plan. Each Plan and the Borrower and each of its Subsidiaries and
ERISA Affiliates are in compliance in all material respects with the Code and
ERISA to the extent applicable to them and neither the Borrower nor any of its
Subsidiaries nor any ERISA Affiliate has received notification to the contrary
from the Internal Revenue Service, the Department of Labor or the PBGC.
Neither the Borrower nor any of its Subsidiaries nor any ERISA Affiliate has
(i) failed to satisfy the minimum funding requirements under Section 412 of the
Code or Section 302 of ERISA, (ii) failed to make a required contribution or
payment to a "multiemployer plan" (as defined in Section 4001 (a)(3) of ERISA),
or (iii) made a complete or partial withdrawal under Sections 4203 or 4205 of
ERISA from a multiemployer plan. No Reportable Event has occurred which could
reasonably be expected to result in a material liability to the Borrower or any
of its Subsidiaries. No Plan has an Unfunded Current Liability which could
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole and using
actuarial assumptions and computation methods consistent with Part 1 of
subtitle E of Title IV or ERISA, neither the Borrower nor any of its
Subsidiaries or ERISA Affiliates would incur any liability to any Plans which
are multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the
event of a complete withdrawal therefrom, as of the close of the most recent
fiscal year of each such Plan ended prior to the Effective Date. Neither the
Borrower nor any of its Subsidiaries nor any ERISA Affiliate maintains or
contributes to any employee welfare benefit plan within the meaning of Section
3(1) of ERISA which provides benefits to employees after termination of
employment (other than as required under Section 601 of ERISA) which could
result in a material obligation of the Borrower or any of its Subsidiaries to
pay money, except such as were recorded as a result of the Borrower's adoption
of Financial Accounting Standard No. 106 ("Accounting for Postretirement
Benefits Other Than Pensions").
5.11 The Security Documents.
(a) The provisions of the Security Agreement are effective to
create in favor of the Collateral Agent for the benefit of the
Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of Acme Steel in the
Security Agreement Collateral described therein, and the
Collateral Agent, for the benefit of the Secured Creditors,
has a fully perfected first (after giving effect to the
provisions of the Collateral Agency Agreement) lien on, and
security interest in, all right, title and interest of Acme
Steel in all of the Security Agreement Collateral described
therein, subject to no other Liens other than Permitted Liens.
The recordation of the Assignment of Security Interest in U.S.
Patents and Trademarks in the form attached to the Security
Agreement in the United States Patent and Trademark Office,
together with filings on Form UCC-1 made pursuant to the
Security Agreement, will create, as may be perfected by such
filing and recordation, a perfected security interest in the
United States trademarks and patents covered by the Security
Agreement.
(b) The security interests created in favor of the Collateral
Agent, as pledgee, for the benefit of the Secured Creditors,
under the Pledge Agreement constitute first priority perfected
(after giving effect to the provisions of the Collateral
Agency Agreement) security interests in the Pledged Securities
described in the Pledge Agreement, subject to no security
interests of any other Person (other than the pari passu lien
of the holders of the Existing Senior Secured Notes). No
filings or recordings are required to perfect (or maintain the
perfection or priority of) the security interests created in
the Pledged Securities under the Pledge Agreement.
<PAGE> 31
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(c) The Mortgages create, for the obligations purported to be
secured thereby, a valid and enforceable perfected first
priority (after giving effect to the provisions of the
Collateral Agency Agreement) security interest in and mortgage
lien on all of the Mortgaged Properties in favor of the
Collateral Agent (or such other trustee as may be required or
desired under local law) for the benefit of the Secured
Creditors, superior to and prior to the rights of all third
persons (except that the security interest and mortgage lien
created in the Mortgaged Properties may be subject to the
Permitted Encumbrances related thereto) and subject to no
other Liens (other than Permitted Liens). Schedule 5.11
contains a true and complete list of each parcel of Real
Property owned or leased by the Borrower and its Subsidiaries
on the Effective Date, and the type of interest therein held
by the Borrower or such Subsidiary. The Borrower and each of
its Subsidiaries have good and marketable title to all fee-
owned Real Property and valid leasehold title to all
Leaseholds, in each case free and clear of all Liens other
than Permitted Liens.
(d) Notwithstanding anything to the contrary contained in this
Section 5.11 or elsewhere in this Agreement, until such time
as all Existing Senior Secured Notes have been paid in full or
defeased in accordance with the terms thereof, the holders
thereof may have a pari passu Lien on the Collateral in
accordance with the terms of the Collateral Agency Agreement.
5.12 Representations and Warranties in the Documents. All representations and
warranties set forth in the other Documents were true and correct in all
material respects at the time as of which such representations and warranties
were made (or deemed made) and shall be true and correct in all material
respects on and as of the Effective Date as if such representations and
warranties were made on and as of such date, unless stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date.
5.13 Properties. The Borrower and each of its Subsidiaries have good and
marketable title to all material properties owned by them, including all
property reflected in the balance sheets referred to in Section 5.05(a) (except
as sold or otherwise disposed of since the date of such balance sheet in the
ordinary course of business or as permitted by the terms of this Agreement),
free and clear of all Liens, other than Permitted Liens.
5.14 Capitalization. The authorized capital stock of the Borrower consists of
(i) 20,000,000 shares of common stock, $1.00 par value per share and (ii)
2,000,000 shares of preferred stock, $1.00 par value per share, of which no
shares of such preferred stock are issued and outstanding. All outstanding
shares of common stock of the Borrower have been duly and validly issued and
are fully paid and non-assessable. The Borrower does not have outstanding any
securities convertible into or exchangeable for its capital stock or
outstanding any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreement providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating
to, its capital stock except as set forth on Schedule 5.14.
5.15 Subsidiaries. The Borrower has no Subsidiaries other than those
Subsidiaries listed on Schedule 5.15. Schedule 5.15 correctly sets forth the
percentage ownership (direct or indirect) of the Borrower in each class of
capital stock or other equity of each of its Subsidiaries and also identifies
the direct owner thereof.
<PAGE> 32
5.16 Compliance with Statutes, etc. Each of the Borrower and each of its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the
ownership of its property (excluding applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls which is the
subject of the representations and warranties set forth in Section 5.19),
except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole.
5.17 Investment Company Act. Neither the Borrower nor any of its Subsidiaries
is an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
5.18 Public Utility Holding Company Act. Neither the Borrower nor any of its
Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
5.19 Environmental Matters.
(a) Except as set forth on Schedule 5.19, the Borrower and each of
its Subsidiaries have complied with, and are in compliance
with, all applicable Environmental Laws and the requirements
of any permits issued under such Environmental Laws. There
are no pending or, to the best knowledge of the Borrower,
threatened Environmental Claims against the Borrower or any of
its Subsidiaries (including any such claim arising out of the
ownership, lease or operation by the Borrower or any of its
Subsidiaries of any Real Property no longer owned, leased or
operated by the Borrower or any of its Subsidiaries) or any
Real Property owned, leased or operated by the Borrower or any
of its Subsidiaries. Except as set forth on Schedule 5.19,
there are no facts, circumstances, conditions or occurrences
with respect to the business or operations of the Borrower or
any of its Subsidiaries, or any Real Property owned, leased or
operated by the Borrower or any of its Subsidiaries (including
any Real Property formerly owned, leased or operated by the
Borrower or any of its Subsidiaries but no longer owned,
leased or operated by the Borrower or any of its Subsidiaries)
that could be expected (i) to form the basis of an
Environmental Claim against the Borrower or any of its
Subsidiaries or any Real Property owned, leased or operated by
the Borrower or any of its Subsidiaries or (ii) to cause any
Real Property owned, leased or operated by the Borrower or any
of its Subsidiaries to be subject to any restrictions on the
ownership, occupancy or transferability of such Real Property
by the Borrower or any of its Subsidiaries under any
applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real
Property owned, leased or operated by the Borrower or any of
its Subsidiaries where such generation, use, treatment or
storage has violated or could reasonably be expected to
violate any Environmental Law. Hazardous Materials have not
at any time been Released on or from any Real Property owned,
leased or operated by the Borrower or any of its Subsidiaries
where such Release has violated or could reasonably be
expected to violate any applicable Environmental Law.
(c) Notwithstanding anything to the contrary in this Section 5.19,
the representations made in this Section 5.19 shall not be
untrue unless the effect of any or all violations, claims,
restrictions, failures and noncompliances of the types
described above in this
<PAGE> 33
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CONFORMED AS EXECUTED]
Section 5.19 could reasonably be expected to, either
individually or in the aggregate, have a material adverse
effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole.
5.20 Labor Relations. Neither the Borrower nor any of its Subsidiaries is
engaged in any unfair labor practice that could reasonably be expected to have
a material adverse effect on the Borrower and its Subsidiaries taken as a
whole. There is (i) no unfair labor practice complaint pending against the
Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower,
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage pending against
the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries and (iii)
no union representation question exists with respect to the employees of the
Borrower or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries
taken as a whole.
5.21 Patents, Licenses, Franchises and Formulas. Each of the Borrower and
each of its Subsidiaries owns or has the right to use all the patents,
trademarks, permits, service marks, trade names, copyrights, licenses,
franchises, proprietary information (including but not limited to rights in
computer programs and databases) and formulas, or rights with respect to the
foregoing, and has obtained assignments of all leases and other rights of
whatever nature, necessary for the present conduct of its business, without any
known conflict with the rights of others which, or the failure to obtain which,
as the case may be, could reasonably be expected to result in a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
5.22 Indebtedness. Schedule 5.22 sets forth a true and complete list of all
Indebtedness (including Contingent Obligations) of the Borrower and its
Subsidiaries as of the Effective Date and which is to remain outstanding after
giving effect to the Transaction (excluding the Loans, any Existing Senior
Secured Notes that have not been tendered pursuant to the Existing Senior
Secured Note Tender Offers, the Working Capital Facility and the New Senior
Notes, the "Existing Indebtedness"), in each case showing the aggregate
principal amount thereof and the name of the respective borrower and any Credit
Party or any of its Subsidiaries which directly or indirectly guarantees such
debt.
5.23 Existing Senior Secured Notes. At the time of consummation thereof, the
Existing Senior Secured Notes Tender Offer and the Existing Senior Secured
Notes Consent Solicitation shall have been consummated in accordance with the
terms of the respective Documents therefor (subject to any waivers permitted
under Section 4.08) and all applicable laws. At the time of consummation
thereof, all consents and approvals of, and filings and registrations with, and
all other actions in respect of, all governmental agencies, authorities or
instrumentalities required in order to make or consummate the Existing Senior
Secured Notes Tender Offer and the Existing Secured Senior Notes Consent
Solicitation shall have been obtained, given, filed or taken or waived and are
or will be in full force and effect (or effective judicial relief with respect
thereto has been obtained). All applicable waiting periods with respect
thereto have or, prior to the time when required, will have, expired without,
in all such cases, any action being taken by any competent authority which
<PAGE> 34
restrains, prevents, or imposes material adverse conditions upon the Existing
Secured Senior Notes Tender Offer or the Existing Senior Secured Notes Consent
Solicitation. Additionally, there shall not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the
Existing Secured Senior Notes Tender Offer or the Existing Senior Secured Notes
Consent Solicitation, or the performance by the Borrower and its Subsidiaries
of their obligations under the respective Documents therefore and all
applicable laws.
5.24 Issuance of the New Senior Notes. At the time of the issuance thereof,
the New Senior Notes shall have been issued in accordance with the terms of the
New Senior Note Documents and all applicable laws. At the time of the issuance
thereof, all consents, approvals of and permits for, and filings and
registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required in order to issue the New
Senior Notes have been (or will, within the time frame required, be) obtained,
given, filed or taken and are or will be in full force and effect (or effective
judicial relief with respect thereto has been obtained). Additionally, there
does not exist any judgment, order or injunction prohibiting or imposing
material adverse conditions upon the issuance of the New Senior Notes or the
performance by the Borrower or any of its Subsidiaries of their obligations
under the New Senior Note Documents. All actions taken by the Borrower or any
of its Subsidiaries pursuant to or in furtherance of the issuance of New Senior
Notes have been taken in compliance with the New Senior Note Documents and all
applicable laws.
5.25 Insurance. Schedule 5.25 sets forth a true and complete listing of all
insurance maintained by the Borrower and its Subsidiaries, and with the amounts
insured (and any deductibles) set forth therein.
SECTION 6. Affirmative Covenants. The Borrower hereby covenants and agrees
that on and after the Effective Date and until the Loans and Notes, together
with interest, Fees and all other Obligations incurred hereunder and
thereunder, are paid in full:
<PAGE> 35
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6.01 Information Covenants. The Borrower will furnish to the Agents (and the
Administrative Agent will promptly forward same to each Lender):
(a) Quarterly Financial Statements. As soon as same are available
but, in any event, no later than 60 days after the close of
each of the first three quarterly accounting periods in each
fiscal year of the Borrower (commencing with its quarterly
accounting period ending closest to March 31, 1998), the
consolidated and consolidating balance sheets of the Borrower
and its Subsidiaries as at the end of such quarterly
accounting period and the related consolidated and
consolidating statements of income and retained earnings and
statement of cash flows for such quarterly accounting period
and for the elapsed portion of the fiscal year ended with the
last day of such quarterly accounting period, in each case
setting forth comparative figures for the related periods in
the prior fiscal year, all of which shall be certified by the
Chief Financial Officer of the Borrower as being prepared, to
the best of such officer's knowledge, in accordance with GAAP,
subject to normal year-end audit adjustments and the absence
of footnotes.
(b) Annual Financial Statements. As soon as same are available
but, in any event, no later than 120 days after the close of
each fiscal year of the Borrower (commencing with its fiscal
year ending closest to December 31, 1997), (i) the
consolidated and consolidating balance sheets of the Borrower
and its Subsidiaries as at the end of such fiscal year and the
related consolidated and consolidating statements of income
and retained earnings and statement of cash flows for such
fiscal year setting forth comparative figures for the
preceding fiscal year and (x) in the case of the consolidated
financial statements, certified by Price Waterhouse LLP or
such other independent certified public accountants of
recognized national standing reasonably acceptable to the
Agents, together with a report of such accounting firm stating
that in the course of its regular audit of the financial
statements of the Borrower and its Subsidiaries, which audit
was conducted in accordance with generally accepted auditing
standards, such accounting firm obtained no knowledge of any
Default or an Event of Default relating to accounting matters
which has occurred and is continuing or, if in the opinion of
such accounting firm such a Default or Event of Default has
occurred and is continuing, a statement as to the nature
thereof and (y) in the case of the consolidating financial
statements, certified by the Chief Financial Officer of the
Borrower, and (ii) management's discussion and analysis of the
material operational and financial developments during such
fiscal year.
(c) Operating Plans. No later than 60 days following the first
day of each fiscal year of the Borrower (commencing with the
fiscal year of the Borrower beginning closest to January 1,
1999), an operating plan in form reasonably satisfactory to
the Agents (including statements of income and sources and
uses of cash and balance sheets) prepared by the Borrower (i)
for each of the four fiscal quarters of such fiscal year
prepared in detail and (ii) for each of the immediately three
succeeding fiscal years prepared in summary form, in each case
setting forth, with appropriate discussion, the principal
assumptions upon which such operating plan is based.
<PAGE> 36
(d) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 6.01(a) and (b),
a certificate of the Chief Financial Officer of the Borrower
to the effect that, to the best of such officer's knowledge,
no Default or Event of Default has occurred and is continuing
or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which
certificate shall (x) set forth in reasonable detail the
calculations required to establish (A) whether the Borrower
and its Subsidiaries were in compliance with the provisions of
Sections 3.02(d), 3.02(f), 7.04 and 7.07 through 7.12,
inclusive, at the end of such fiscal quarter or year, as the
case may be, and (B) the Applicable Base Rate Margin and the
Applicable Eurodollar Rate Margin for the Applicable Margin
Period commencing with the date of the delivery of such
financial statements and (y) if delivered with the financial
statements required by Section 6.01(b), set forth in
reasonable detail the amount of (and the calculations required
to establish the amount of) Excess Cash Flow of the Borrower
for the respective Excess Cash Payment Period.
(e) Notice of Default or Litigation. Promptly upon, and in any
event within five Business Days after, any executive,
principal or senior officer of the Borrower obtains knowledge
thereof, notice of (i) the occurrence of any event which
constitutes a Default or an Event of Default and (ii) any
litigation or governmental investigation or proceeding pending
(x) against the Borrower or any of its Subsidiaries which
could reasonably be expected to materially and adversely
affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole, (y)
with respect to any material Indebtedness of the Borrower or
any of its Subsidiaries or (z) with respect to the Transaction
or any Document.
(f) Other Reports and Filings. Promptly after the filing or
delivery thereof, copies of all financial information, proxy
materials and reports, if any, which the Borrower or any of
its Subsidiaries shall publicly file with the Securities and
Exchange Commission or any successor thereto (the "SEC") or
deliver to holders of its material Indebtedness (including, in
any event, the Working Capital Facility and the New Senior
Notes) pursuant to the terms of the documentation governing
such Indebtedness (or any trustee, agent or other
representative therefor).
(g) Environmental Matters. Promptly after any executive,
principal or senior officer of the Borrower obtains knowledge
thereof, notice of one or more of the following environmental
matters, unless such environmental matters could not,
individually or when aggregated with all other such
environmental matters, be reasonably expected to materially
and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a
whole:
(i) any pending or threatened Environmental Claim against
the Borrower or any of its Subsidiaries or any Real
Property owned, leased or operated by the Borrower or
any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any
Real Property owned, leased or operated by the
Borrower or any of its Subsidiaries that (a) results
in noncompliance by the Borrower or any of its
Subsidiaries with any applicable Environmental Law or
(b) could be expected to form the basis of an
Environmental Claim against the Borrower or any of
its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property
owned, leased or operated by the Borrower or any of
its Subsidiaries that could be expected to cause such
Real Property to be subject to any restrictions on
the ownership, occupancy, use or transferability by
the Borrower or any of its Subsidiaries of such Real
Property under any Environmental Law; and
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(iv) the taking of any removal or remedial action in
response to the actual or alleged presence of any
Hazardous Material on any Real Property owned, leased
or operated by the Borrower or any of its
Subsidiaries as required by any Environmental Law or
any governmental or other administrative agency;
provided, that in any event the Borrower shall
deliver to each Agent all material notices received
by the Borrower or any of its Subsidiaries from any
government or governmental agency under, or pursuant
to, CERCLA which identify the Borrower or any of its
Subsidiaries as potentially responsible parties for
remediation costs or which otherwise notify the
Borrower or any of its Subsidiaries of potential
liability under CERCLA.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower's or such Subsidiary's response thereto.
(h) Other Information. From time to time, such other information or documents
(financial or otherwise) with respect to the Borrower or any of its
Subsidiaries as any Agent or any Lender (through any Agent) may reasonably
request.
6.02 Books, Records, Inspections and Annual Meetings.
(a) The Borrower will, and will cause each of its Subsidiaries to,
keep proper books of record and accounts in which full, true
and correct entries in conformity with generally accepted
accounting principles and all requirements of law shall be
made of all dealings and transactions in relation to its
business and activities. The Borrower will, and will cause
each of its Subsidiaries to, permit officers and designated
representatives of any Agent to visit and inspect, under
guidance of officers of the Borrower or such Subsidiary, any
of the properties of the Borrower or such Subsidiary, and to
examine the books of account of the Borrower or such
Subsidiary and discuss the affairs, finances and accounts of
the Borrower or such Subsidiary with, and be advised as to the
same by, its and their officers and independent accountants,
all upon reasonable prior notice and at such reasonable times
and intervals and to such reasonable extent as such Agent may
reasonably request.
(b) At such dates to be mutually agreed upon between the Agents
and the Borrower but, in no event, less than once in each
fiscal year of the Borrower, the Borrower shall, at the
request of the Agents, hold a meeting with all of the Lenders
at which meeting shall be reviewed the financial results of
the Borrower and its Subsidiaries for the previous fiscal year
and the operating plan presented for the current fiscal year
of the Borrower.
<PAGE> 38
6.03 Maintenance of Property; Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries to,
(i) keep all property necessary to the business of the
Borrower and its Subsidiaries in good working order and
condition, ordinary wear and tear excepted, (ii) maintain
insurance on all such property in at least such amounts and
against at least such risks as is consistent and in accordance
with industry practice for companies similarly situated owning
similar properties in the same general areas in which the
Borrower or any of its Subsidiaries operates, and (iii)
furnish to the Agents, upon written request, full information
as to the insurance carried. At any time that insurance at or
above the levels described on Schedule 5.25 is not being
maintained by the Borrower or any Subsidiary of the Borrower,
the Borrower will, or will cause one of its Subsidiaries to,
promptly notify the Agents in writing and, if thereafter
reasonably requested by any Agent or the Required Lenders to
do so, the Borrower or any such Subsidiary, as the case may
be, shall obtain such insurance at such levels and coverage
which are at least as great as to the extent such insurance is
reasonably available at a reasonable expense.
(b) The Borrower will, and will cause each of its Subsidiaries to,
at all times keep the Collateral insured in favor of the
Collateral Agent, and all policies (including Mortgage
Policies) or certificates (or certified copies thereof) with
respect to such insurance (and any other insurance maintained
by the Borrower and/or such Subsidiaries) (i) shall be
endorsed to the Administrative Agent's satisfaction for the
benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as loss payee (in
respect of any Collateral only) and/or additional insured, as
appropriate), (ii) shall state that such insurance policies
shall not be canceled without at least 30 days' prior written
notice thereof by the respective insurer to the Collateral
Agent (or such shorter period of time as a particular
insurance company policy generally provides), (iii) shall
provide that the respective insurers irrevocably waive any and
all rights of subrogation with respect to the Collateral Agent
and the Secured Creditors, (iv) shall contain the standard
non-contributing mortgage clause endorsement in favor of the
Collateral Agent with respect to hazard liability insurance
and (v) shall be deposited with the Collateral Agent.
(c) If the Borrower or any of its Subsidiaries shall fail to
insure its property in accordance with this Section 6.03, or
if the Borrower or any of its Subsidiaries shall fail to so
endorse and deposit all policies or certificates with respect
thereto, the Collateral Agent shall have the right (but shall
be under no obligation) to procure such insurance and the
Borrower agrees to reimburse the Collateral Agent for all
reasonable costs and expenses of procuring such insurance.
6.04 Corporate Franchises. The Borrower will, and will cause each of its
Subsidiaries to, do or cause to be done, all things necessary to preserve and
keep in full force and effect its existence and its material rights,
franchises, licenses and patents; provided, however, that nothing in this
Section 6.04 shall prevent (i) sales of assets and other transactions by the
Borrower or any of its Subsidiaries in accordance with Section 7.02 or (ii) the
withdrawal by the Borrower or any of its Subsidiaries of its qualification as a
foreign corporation in any jurisdiction where such withdrawal, either
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower
and its Subsidiaries taken as a whole.
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6.05 Compliance with Statutes, etc. The Borrower will, and will cause each of
its Subsidiaries to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls), except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole.
6.06 Compliance with Environmental Laws.
(a) The Borrower will comply, and will cause each of its
Subsidiaries to comply, in all material respects with all
Environmental Laws applicable to the ownership or use of its
Real Property now or hereafter owned, leased or operated by
the Borrower or any of its Subsidiaries, will promptly pay or
cause to be paid all costs and expenses incurred in connection
with such compliance, and will keep or cause to be kept all
such Real Property free and clear of any Liens imposed
pursuant to such Environmental Laws. Neither the Borrower nor
any of its Subsidiaries will generate, use, treat, store,
Release or dispose of, or permit the generation, use,
treatment, storage, Release or disposal of Hazardous Materials
on any Real Property now or hereafter owned, leased or
operated by the Borrower or any of its Subsidiaries, or
transport or permit the transportation of Hazardous Materials
to or from any such Real Property, except for Hazardous
Materials generated, used, treated, stored, Released or
disposed of at any such Real Properties in compliance in all
material respects with all applicable Environmental Laws and
reasonably required in connection with the operation, use and
maintenance of the business or operations of the Borrower or
any of its Subsidiaries.
(b) (i) At any time that the Borrower gives notice to the
Lenders or the Agents pursuant to Section 6.01(g) or
(ii) upon the exercise of any of the remedies
pursuant to the last paragraph of Section 8, then at
the reasonable written request of any Agent or the
Required Lenders, the Borrower will provide, at the
sole expense of the Borrower, an environmental site
assessment report concerning any Real Property owned,
leased or operated by the Borrower or any of its
Subsidiaries, prepared by an environmental consulting
firm reasonably approved by the Agents, indicating
the presence or absence of Hazardous Materials and
the potential cost of any removal or remedial action
in connection with such Hazardous Materials on such
Real Property. If the Borrower fails to provide the
same within 90 days after such request was made, the
Administrative Agent may order the same, the cost of
which shall be borne by the Borrower, and the
Borrower shall grant and hereby grants to the
Administrative Agent and the Lenders and their agents
access to such Real Property and specifically grants
the Administrative Agent and the Lenders an
irrevocable non-exclusive license, subject to the
rights of tenants, to undertake such an assessment at
any reasonable time upon reasonable notice to the
Borrower, all at the sole and reasonable expense of
the Borrower.
<PAGE> 40
6.07 ERISA. The Borrower will, and will cause each of its Subsidiaries and
ERISA Affiliates to, promptly pay and discharge all obligations and liabilities
arising under ERISA of a character which if unpaid or unperformed could
reasonably be expected to result in the imposition of a Lien against any of
their respective properties or assets or a material obligation to pay money
(including, but not limited to, any liability to a multiemployer plan as
defined in Section 4001(a)(3) of ERISA), and will promptly notify the Agents
when the Borrower, a Subsidiary of the Borrower or an ERISA Affiliate (i) knows
or has reason to know of the occurrence of a Reportable Event, (ii) that a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA is subject to the advance reporting requirement of
PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1)
thereof), and an event described in subsection .66 of PBGC Regulation Section
4043 is reasonably expected to occur with respect to such Plan within the
following 30 days, (iii) that a Plan has been terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA or (iv) that
proceedings have been instituted to terminate or appoint a trustee to
administer a Plan which is subject to Title IV or ERISA.
6.08 End of Fiscal Years; Fiscal Quarters. The Borrower will cause (i) each
of its, and each of its Subsidiaries', fiscal years to end on the last Sunday
in December, and (ii) each of its, and each of its Subsidiaries', fiscal
quarters to end on dates which are consistent with a fiscal year end as
described in preceding clause (i).
6.09 Performance of Obligations. The Borrower will, and will cause each of
its Subsidiaries to, perform all of its obligations under the terms of each
mortgage, indenture, security agreement, loan agreement or credit agreement and
each other material agreement, contract, lease or instrument by which it is
bound, except such non-performances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
6.10 Payment of Taxes. The Borrower will pay and discharge, and will cause
each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits,
or upon any properties belonging to it, prior to the date on which penalties
attach thereto, and all lawful claims for sums that have become due and payable
which, if unpaid, might become a Lien not otherwise permitted under Section
7.01(i); provided, that neither the Borrower nor any of its Subsidiaries shall
be required to pay any such tax, assessment, charge, levy or claim which is
being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with generally accepted
accounting principles.
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6.11 Additional Security; Further Assurances.
(a) (i) In the event that the Borrower at any time acquires
assets after the Effective Date (other than (x) the
capital stock of any Subsidiary of the Borrower and
(y) assets subject to a Lien permitted under Sections
7.01(vii) and (viii)) with a fair market value of
$2,500,000 or more, the Borrower will, and (ii) the
Borrower will cause Acme Steel and each of the other
Granting Credit Parties to, in each case, grant to
the Collateral Agent security interests and mortgages
in such assets and properties of the Borrower, Acme
Steel and such other Granting Credit Parties, as
applicable, as are not covered by the original
Security Documents but are otherwise of a type
covered by the original Security Documents, and as
may be reasonably requested from time to time by any
Agent (collectively, the "Additional Security
Documents"). All such security interests and
mortgages shall be granted pursuant to documentation
reasonably satisfactory in form and substance to the
Agents and shall constitute valid and enforceable
perfected security interests and mortgages superior
to and prior to the rights of all third Persons and
subject to no other Liens except for Permitted Liens.
The Additional Security Documents or instruments
related thereto shall have been duly recorded or
filed in such manner and in such places as are
required by law to establish, perfect, preserve and
protect the Liens in favor of the Collateral Agent
required to be granted pursuant to the Additional
Security Documents and all taxes, fees and other
charges payable in connection therewith shall have
been paid in full.
(b) The Borrower will, and will cause each of the other Credit
Parties to, at the expense of the Borrower, make, execute,
endorse, acknowledge, file and/or deliver to the Collateral
Agent from time to time such vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments
and take such further steps relating to the Collateral covered
by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, the Borrower will cause to be
delivered to the Collateral Agent such opinions of counsel,
title insurance and other related documents as may be
reasonably requested by the Collateral Agent to assure itself
that this Section 6.11 has been complied with.
(c) If any Agent or the Required Lenders reasonably determine that
they are required by law or regulation to have appraisals
prepared in respect of the Mortgaged Properties, the Borrower
will provide, at its own expense, to the Agents appraisals
which satisfy the applicable requirements of the Real Estate
Appraisal Reform Amendments of the Financial Institution
Reform, Recovery and Enforcement Act of 1989, as amended, and
which otherwise shall be in form and substance reasonably
satisfactory to the Agents.
(d) The Borrower agrees that each action required above by this
Section 6.11 shall be completed as soon as possible, but in no
event later than 90 days after such action is either requested
to be taken by any Agent or the Required Lenders or required
to be taken by the Borrower and/or its Subsidiaries pursuant
to the terms of this Section 6.11; provided that, in no event
will the Borrower or any of its Subsidiaries be required to
take any action, other than using its best efforts, to obtain
consents from third parties with respect to its compliance
with this Section 6.11.
<PAGE> 42
SECTION 7. Negative Covenants. The Borrower hereby covenants and agrees that
on and after the Effective Date and until the Loans and Notes, together with
interest, Fees and all other Obligations incurred hereunder and thereunder, are
paid in full:
7.01 Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real or personal, tangible or intangible) of
the Borrower or any of its Subsidiaries, whether now owned or hereafter
acquired, or sell any such property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable with recourse to the Borrower or any of
its Subsidiaries), or assign any right to receive income or permit the filing
of any financing statement under the UCC or any other similar notice of Lien
under any similar recording or notice statute; provided that the provisions of
this Section 7.01 shall not prevent the creation, incurrence, assumption or
existence of the following (Liens described below are herein referred to as
"Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due or Liens for taxes,
assessments or governmental charges or levies being
contested in good faith and by appropriate
proceedings for which adequate reserves have been
established in accordance with generally accepted
accounting principles;
(ii) Liens in respect of property or assets of the
Borrower or any of its Subsidiaries imposed by law,
which were incurred in the ordinary course of
business and do not secure Indebtedness for borrowed
money, such as carriers', warehousemen's,
materialmen's and mechanics' liens and other similar
Liens arising in the ordinary course of business, and
(x) which do not in the aggregate materially detract
from the value of the Borrower's or such Subsidiary's
property or assets or materially impair the use
thereof in the operation of the business of the
Borrower or such Subsidiary or (y) which are being
contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing the
forfeiture or sale of the property or assets subject
to any such Lien;
(iii) Liens in existence on the Effective Date (but not
securing the Existing Senior Secured Notes or the
Working Capital Facility) which are listed, and the
property subject thereto described, in Schedule 7.01,
but only to the respective date, if any, set forth in
such Schedule 7.01 for the removal, replacement and
termination of any such Liens, plus renewals,
replacements and extensions of such Liens to the
extent set forth on Schedule 7.01, provided that (x)
the aggregate principal amount of the Indebtedness,
if any, secured by such Liens does not increase from
that amount outstanding at the time of any such
renewal, replacement or extension plus the reasonable
costs associated with any such renewal, replacement
or extension and (y) any such renewal, replacement or
extension does not encumber any additional assets or
properties of the Borrower or any of its
Subsidiaries;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) leases or subleases granted to other Persons not
materially interfering with the conduct of the
business of the Borrower or any of its Subsidiaries;
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(vii) Liens upon assets of the Borrower or any of its
Subsidiaries acquired after the Effective Date and
subject to Capitalized Lease Obligations to the
extent such Capitalized Lease Obligations are
permitted by Section 7.04(iv), provided that (x) such
Liens only serve to secure the payment of
Indebtedness arising under such Capitalized Lease
Obligation and (y) the Lien encumbering the asset
giving rise to the Capitalized Lease Obligation does
not encumber any other asset of the Borrower or any
Subsidiary of the Borrower;
(viii) Liens placed upon equipment or machinery acquired or
constructed after the Effective Date and used in the
ordinary course of business of the Borrower or any of
its Subsidiaries at the time of the acquisition or
construction thereof by the Borrower or any such
Subsidiary or within 90 days thereafter to secure
Indebtedness incurred to pay all or a portion of the
purchase or construction price thereof or to secure
Indebtedness incurred solely for the purpose of
financing the acquisition or construction of any such
equipment or machinery or extensions, renewals or
replacements of any of the foregoing for the same or
a lesser amount, provided that (x) the aggregate
outstanding principal amount of all Indebtedness
secured by Liens permitted by this clause (viii),
when added to the aggregate outstanding principal
amount of all Indebtedness secured by Liens permitted
by clause (vii) of this Section 7.01, shall not at
any time exceed $35,000,000 and (y) in all events,
the Lien encumbering the equipment or machinery so
acquired or constructed does not encumber any other
asset of the Borrower or such Subsidiary (including
any Collateral);
(ix) easements, rights-of-way, restrictions, encroachments
and other similar charges or encumbrances, and minor
title deficiencies, in each case not securing
Indebtedness and not materially interfering with the
conduct of the business of the Borrower or any of its
Subsidiaries;
(x) Liens arising from precautionary UCC financing
statement filings regarding operating leases
permitted under Section 7.07;
(xi) Liens arising out of the existence of judgments or
awards in respect of which the Borrower or any of its
Subsidiaries shall in good faith be prosecuting an
appeal or proceedings for review in respect of which
there shall have been secured a subsisting stay of
execution pending such appeal or proceedings,
provided that the aggregate amount of any cash and
the fair market value of any property subject to such
Liens do not exceed $2,500,000 at any time
outstanding;
(xii) statutory and common law landlords' liens under
leases to which the Borrower or any of its
Subsidiaries is a party;
(xiii) (x) Liens (other than Liens imposed under ERISA)
incurred in the ordinary course of business in
connection with workers compensation claims,
unemployment insurance and social security benefits
and (y) Liens securing the performance of bids,
tenders, leases and contracts in the ordinary course
of business, statutory obligations, surety bonds,
performance bonds and other obligations of a like
nature incurred in the ordinary course of business
(exclusive of obligations in respect of the payment
for borrowed money);
(xiv) Liens on property or assets (other than Collateral)
of the Borrower or any of its Subsidiaries acquired
after the Effective Date in favor of governmental
bodies to secure progress or advance payments
relating to such property or assets;
<PAGE> 44
(xv) Liens on property or assets acquired after the
Effective Date pursuant to a Permitted Acquisition,
or on property or assets of a Subsidiary of the
Borrower in existence at the time such Subsidiary is
acquired after the Effective Date pursuant to a
Permitted Acquisition, provided that (x) any
Indebtedness that is secured by such Liens is
permitted to exist under Section 7.04(x), and (y)
such Liens are not incurred in connection with, or in
contemplation or anticipation of, such Permitted
Acquisition and do not attach to any other asset of
the Borrower or any of its Subsidiaries (including
any Collateral);
(xvi) Liens on accounts receivable and inventory of the
Borrower and the Subsidiary Guarantors securing
Indebtedness under the Working Capital Facility;
(xvii) so long as any Existing Senior Secured Notes remain
outstanding or until such time as the Existing Senior
Secured Notes have been defeased in accordance with
the terms thereof, Liens on the Collateral securing
the Existing Senior Secured Notes so long as such
Liens are pari passu with the Liens created in favor
of the Secured Creditors pursuant to the Security
Documents; and
(xviii) at any time after the defeasance of the Existing
Senior Secured Notes has been effected in accordance
with the terms thereof, Liens created on Cash
Equivalents or other Investments made as described in
Section 7.05(xiv) which have been deposited in order
to effect such defeasance.
In connection with the granting of Liens of the type described in clauses (vii)
and (viii) of this Section 7.01 by the Borrower or any of its Subsidiaries, the
Administrative Agent and the Collateral Agent shall be authorized to take any
actions deemed appropriate by it in connection therewith (including, without
limitation, by executing appropriate lien releases or lien subordination
agreements in favor of the holder or holders of such Liens, in either case
solely with respect to the item or items of equipment or other assets subject
to such Liens), and in connection with the granting of the leases to NACME
described in clause (ix) of Section 7.02, the Administrative Agent and the
Collateral Agent shall be authorized to enter into customary non-disturbance
and attornment agreements reasonably acceptable to them.
7.02 Consolidation, Merger, Purchase or Sale of Assets, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation,
or convey, sell, lease or otherwise dispose of all or any part of its property
or assets, or enter into any sale-leaseback transactions, or purchase or
otherwise acquire (in one or a series of related transactions) any part of the
property or assets (other than purchases or other acquisitions of inventory,
materials and equipment in the ordinary course of business) of any Person (or
agree to do any of the foregoing at any future time), except that:
(i) Capital Expenditures by the Borrower and its
Subsidiaries shall be permitted to the extent not in
violation of Section 7.08;
(ii) each of the Borrower and its Subsidiaries may make
sales of inventory in the ordinary course of
business;
(iii) each of the Borrower and its Subsidiaries may sell
obsolete or worn-out equipment or materials in the
ordinary course of business;
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(iv) the Borrower and its Subsidiaries may sell all of the
capital stock of, or all or substantially all of the
assets of, Universal Tool & Stamping, so long as (x)
no Default or Event of Default then exists or would
result therefrom, (y) such sale is in an arm's-length
transaction and the Borrower or the respective
Subsidiary receives at least fair market value (as
determined in good faith by the Borrower or such
Subsidiary, as the case may be), and (z) at least 50%
of the total consideration therefor received by the
Borrower and its Subsidiaries is cash and is paid at
the time of the closing of such sale;
(v) each of the Borrower and its Subsidiaries may sell
assets (other than the capital stock of any
Subsidiary Guarantor or any Mortgaged Property (other
than any immaterial portion of any Mortgaged Property
which is no longer useful in the operations of the
Borrower and its Subsidiaries and the sale of which
is otherwise permitted by this clause (v))), so long
as (w) no Default or Event of Default then exists or
would result therefrom, (x) each such sale is in an
arm's-length transaction and the Borrower or the
respective Subsidiary receives at least fair market
value (as determined in good faith by the Borrower or
such Subsidiary, as the case may be), (y) the total
consideration therefor received by the Borrower or
such Subsidiary is at least 85% cash and is paid at
the time of the closing of such sale, and (z) the
aggregate amount of the proceeds received from all
assets sold pursuant to this clause (v) shall not
exceed $5,000,000 in any fiscal year of the Borrower;
(vi) Investments may be made to the extent permitted by
Section 7.05;
(vii) each of the Borrower and its Subsidiaries may lease
(as lessee) real or personal property (so long as any
such lease does not create a Capitalized Lease
Obligation except to the extent permitted by Section
7.04(iv));
(viii) each of the Borrower and its Subsidiaries may sell or
discount, in each case without recourse and in the
ordinary course of business, accounts receivable
arising in the ordinary course of business, but only
in connection with the compromise or collection
thereof;
(ix) each of the Borrower and its Subsidiaries may grant
leases or subleases to other Persons not materially
interfering with the conduct of the business of the
Borrower or any of its Subsidiaries, provided that
each such lease or sublease relating to any Mortgaged
Property (other than the existing lease to NACME or
any extension or renewal thereof or any future lease
to NACME of the vacant land adjacent to the property
subject to such existing lease) shall expressly
provide that same shall be subject and subordinate to
the security interests created under the respective
Mortgage;
(x) any Subsidiary of the Borrower (x) may be merged,
consolidated or liquidated with or into the Borrower
so long as the Borrower is the surviving corporation
of such merger, consolidation or liquidation and (y)
may transfer all or any portion of its assets to the
Borrower, in each case so long as the Borrower takes
all of the actions required to be taken by it
pursuant to Section 6.12;
<PAGE> 46
(xi) any Subsidiary of the Borrower (x) may be merged,
consolidated or liquidated with or into any other
Subsidiary of the Borrower which is a Granting Credit
Party so long as such Granting Credit Party is the
surviving corporation of such merger, consolidation
or liquidation and (y) may transfer all or any
portion of its assets to any other Subsidiary of the
Borrower which is a Granting Credit Party, in each
case so long as such Granting Credit Party takes all
of the actions required to be taken by it pursuant to
Section 6.12;
(xii) any Subsidiary of the Borrower which is not a
Granting Credit Party (x) may be merged, consolidated
or liquidated with or into any Wholly-Owned
Subsidiary of the Borrower which is not a Granting
Credit Party and (y) may transfer all or any portion
of its assets to any Wholly-Owned Subsidiary of the
Borrower which is not a Granting Credit Party;
(xiii) each of the Borrower and the Subsidiary Guarantors
may acquire all or substantially all of the assets of
any Person (or all or substantially all of the assets
of a product line or division of any Person) or all
or any portion of the capital stock or other equity
interests of any Person (any such acquisition
permitted by this clause (xiii), a "Permitted
Acquisition"), so long as (i) no Default or Event of
Default then exists or would result therefrom, (ii)
each of the representations and warranties contained
in Section 5 shall be true and correct in all
material respects both before and after giving effect
to such Permitted Acquisition, (iii) any Liens or
Indebtedness assumed or issued in connection with
such acquisition are otherwise permitted under
Section 7.01 or 7.04, as the case may be, (iv) the
only consideration paid by the Borrower or any
Subsidiary Guarantor in connection with any Permitted
Acquisition consists solely of cash, common stock of
the Borrower and/or Qualified Preferred Stock of the
Borrower, (v) at least 5 Business Days prior to the
consummation of any Permitted Acquisition, the
Borrower shall have delivered to each of the Agents a
certificate of the Borrower's Chief Financial Officer
certifying (and showing the calculations therefor in
reasonable detail) that the Borrower and its
Subsidiaries would have been in compliance with the
financial covenants set forth in Sections 7.09, 7.10,
7.11 and 7.12 for the Test Period then most recently
ended prior to the date of the consummation of such
Permitted Acquisition, in each case with such
financial covenants to be determined on a pro forma
basis as if such Permitted Acquisition had been
consummated on the first day of such Test Period (and
assuming that any Indebtedness incurred, issued or
assumed in connection therewith had been incurred,
issued or assumed on the first day of, and had
remained outstanding throughout, such Test Period),
and (vi) the aggregate cash consideration paid in
connection with all such Permitted Acquisitions
(including, without limitation, any earn-out,
non-compete or deferred compensation arrangements,
the aggregate principal amount of any Indebtedness
assumed in connection therewith and the fair market
value of any capital stock of the Borrower issued in
connection therewith (as determined in good faith by
the Board of Directors of the Borrower)), when added
to the aggregate amount of Investments made pursuant
to Section 7.05(xv), does not exceed $15,000,000; and
<PAGE> 47
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
(xiv) the Borrower and its Subsidiaries may enter into
sale-leaseback transactions with respect to its
property or assets other than with respect to any
Collateral, so long as (i) no Default or Event of
Default then exists or would result therefrom, (ii)
each such sale-leaseback transaction is in an arm's
length transaction and the Borrower or the respective
Subsidiary receives at least fair market value (as
determined in good faith by the Borrower or such
Subsidiary, as the case may be) and (iii) the
aggregate amount of all such sale-leaseback
transactions permitted under this clause (xiv) shall
not exceed $15,000,000 in any fiscal year of the
Borrower.
To the extent the Required Lenders waive the provisions of this Section 7.02
with respect to the sale of any Collateral, or any Collateral is sold as
permitted by this Section 7.02 (other than to the Borrower or a Subsidiary
thereof), such Collateral shall be sold free and clear of the Liens created by
the Security Documents, and the Administrative Agent and the Collateral Agent
shall be authorized to take any actions deemed appropriate in order to effect
the foregoing.
7.03 Dividends. The Borrower will not, and will not permit any of its
Subsidiaries to, authorize, declare or pay any Dividends with respect to the
Borrower or any of its Subsidiaries, except that:
(i) any Subsidiary of the Borrower may pay cash Dividends
to the Borrower or any Wholly-Owned Subsidiary of the
Borrower;
(ii) any non-Wholly-Owned Subsidiary of the Borrower may
pay cash Dividends to its shareholders generally so
long as the Borrower or its respective Subsidiary
which owns the equity interest in the Subsidiary
paying such Dividends receives at least its
proportionate share thereof (based upon its relative
holding of the equity interest in the Subsidiary
paying such Dividends and taking into account the
relative preferences, if any, of the various classes
of equity interests of such Subsidiary); and
(iii) so long as no Default or Event of Default then exists
or would result therefrom, the Borrower may
repurchase outstanding shares of its common stock (or
options to purchase such common stock) following the
death, disability or termination of employment of
employees of the Borrower or any of its Subsidiaries,
provided that the aggregate amount of Dividends paid
by the Borrower pursuant to this clause (iii) shall
not exceed $500,000 in any fiscal year of the
Borrower.
7.04 Indebtedness. The Borrower will not, and will not permit any of its
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and
the other Credit Documents;
(ii) Existing Indebtedness outstanding on the Effective
Date and listed on Schedule 5.22, without giving
effect to any subsequent extension, renewal or
refinancing thereof except to the extent set forth on
Schedule 5.22, provided that the aggregate principal
amount of the Indebtedness to be extended, renewed or
refinanced does not increase from that amount
outstanding at the time of any such extension,
renewal or refinancing plus the reasonable costs
associated with any such extension, renewal or
refinancing;
<PAGE> 48
(iii) Indebtedness under Interest Rate Protection
Agreements entered into with respect to Indebtedness
permitted under this Section 7.04;
(iv) Indebtedness of the Borrower and its Subsidiaries
evidenced by Capitalized Lease Obligations to the
extent permitted pursuant to Section 7.08, provided
that in no event shall the aggregate principal amount
of Capitalized Lease Obligations permitted by this
clause (iv), when added to the aggregate outstanding
principal amount of all Indebtedness permitted by
clause (v) of this Section 7.04, exceed $35,000,000
at any time outstanding;
(v) Indebtedness subject to Liens permitted under
Sections 7.01(viii);
(vi) intercompany Indebtedness among the Borrower and its
Subsidiaries to the extent permitted by Section
7.05(ix);
(vii) Indebtedness of the Borrower and Acme Steel under the
New Senior Notes and the other New Senior Note
Documents in an aggregate principal amount not to
exceed $200,000,000 (as reduced by any repayments of
principal thereof);
(viii) Indebtedness of the Borrower and the Subsidiary
Guarantors under the Working Capital Facility in an
aggregate outstanding principal amount not to exceed
the lesser of (x) $80,000,000 at any time and (y) an
amount equal to the sum of 85% of the face value of
all "eligible receivables" of the Borrower and the
Subsidiary Guarantors party thereto plus 50% of the
lower of the fair market value or cost of their
"eligible inventory" (as such terms are defined for
purposes of the Working Capital Facility);
(ix) Indebtedness of the Borrower and the Subsidiary
Guarantors under the Existing Senior Secured Notes
and the other Existing Senior Secured Note Documents
in an aggregate principal amount not to exceed that
amount outstanding immediately after the consummation
of the Existing Senior Secured Notes Tender Offer (as
reduced by any repayments of principal thereof after
the Effective Date);
(x) Indebtedness of a Subsidiary acquired pursuant to a
Permitted Acquisition (or Indebtedness assumed at the
time of a Permitted Acquisition of an asset securing
such Indebtedness), provided that (x) such
Indebtedness was not incurred in connection with, or
in anticipation or contemplation of, such Permitted
Acquisition, (y) such Indebtedness does not
constitute debt for borrowed money (other than debt
for borrowed money incurred in connection with
industrial revenue or industrial development bond
financings), it being understood and agreed that
Capitalized Lease Obligations and purchase money
Indebtedness shall not constitute debt for borrowed
money for purposes of this clause (x), and (z) at the
time of such Permitted Acquisition such Indebtedness
does not exceed 10% of the total value of the assets
of the Subsidiary so acquired, or of the asset so
acquired, as the case may be;
(xi) Indebtedness under Other Hedging Agreements entered
into by the Borrower or any of its Subsidiaries in
the ordinary course of business and consistent with
past practices and providing protection against
fluctuations in currency values or commodity prices
in connection with the Borrower's or any of its
Subsidiaries' operations so long as management of the
Borrower or such Subsidiary, as the case may be, has
determined that the entering into of such Other
Hedging Agreements are bona fide hedging activities
and are not speculative in nature;
<PAGE> 49
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
(xii) with the prior written consent of the Required
Lenders (which consent may be granted or withheld in
their sole discretion), unsecured subordinated
Indebtedness of the Borrower (the "Subordinated
Notes"), so long as (i) at least 15 days prior to the
issuance thereof, the Borrower shall have delivered
to each of the Lenders substantially final drafts of
the documents pursuant to which the Subordinated
Notes are to be issued and with any changes thereto
made after the initial delivery of such documents to
be delivered to the Agents and with any significant
changes thereto made after such initial delivery to
be delivered to each of the Lenders at least five
days prior to the issuance of such new Subordinated
Notes, (ii) the final maturity date thereof is at
least one year beyond the Maturity Date, (iii) there
are no required amortization, mandatory redemption or
sinking fund provisions or similar provisions prior
to one year after the Maturity Date, (iv) all other
terms and conditions thereof (including, without
limitation, interest rates, covenants, defaults,
remedies and subordination provisions) are
satisfactory to the Required Lenders, (v) no Default
or Event of Default then exists or would result
therefrom; (vi) the Borrower shall have delivered to
each of the Agents and each of the Lenders a
certificate of the Borrower's Chief Financial Officer
certifying (and showing the calculations therefor in
reasonable detail) that the Borrower and its
Subsidiaries would have been in compliance with the
financial covenants set forth in Sections 7.09, 7.10,
7.11 and 7.12 for the Test Period then most recently
ended prior to the date of the issuance of the
Subordinated Notes, in each case with such financial
covenants to be determined on a pro forma basis as if
such Subordinated Notes had been issued, and the
proceeds therefrom had been applied, on the first day
of such Test Period (and assuming that such
Subordinated Notes had remained outstanding
throughout such Test Period) and (vii) the Net Debt
Proceeds therefrom are applied in accordance with
Section 3.02(c); and
(xiii) so long as no Default or Event of Default then exists
or would result therefrom, additional Indebtedness of
the Borrower and the Subsidiary Guarantors not
otherwise permitted pursuant to this Section 7.04 not
exceeding $50,000,000 in aggregate principal amount
at any time outstanding, provided that (x) such
Indebtedness may be designated by the Borrower as
"Additional Senior Debt" under the Security Documents
and the Subsidiaries Guaranty, (y) any such
Indebtedness must have a final maturity no earlier
than the Maturity Date and an average life no shorter
than the then remaining average life of the Loans and
(z) the documentation evidencing any such
Indebtedness shall not contain covenants, defaults or
other restrictions which, in the judgment of the
Agents, are more restrictive than those contained in
this Agreement.
7.05 Advances, Investments and Loans. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, lend money or credit
or make advances to any Person, or purchase or acquire any stock, obligations
or securities of, or any other interest in, or make any capital contribution
to, any other Person, or purchase or own a futures contract or otherwise become
liable for the purchase or sale of currency or other commodities at a future
date in the nature of a futures contract, or hold any cash or Cash Equivalents
(each of the foregoing an "Investment" and, collectively, "Investments"),
except that the following shall be permitted:
<PAGE> 50
(i) the Borrower and its Subsidiaries may acquire and
hold accounts receivables owing to any of them, if
created or acquired in the ordinary course of
business and payable or dischargeable in accordance
with customary trade terms of the Borrower or such
Subsidiary;
(ii) the Borrower and its Subsidiaries may acquire and
hold cash and Cash Equivalents;
(iii) the Borrower and its Subsidiaries may hold the
Investments held by them on the Effective Date and
described on Schedule 7.05, provided that any
additional Investments made with respect thereto
shall be permitted only if independently justified
under the other provisions of this Section 7.05;
(iv) the Borrower and its Subsidiaries may acquire and own
investments (including debt obligations) received in
connection with the bankruptcy or reorganization of
suppliers and customers and in good faith settlement
of delinquent obligations of, and other disputes
with, customers and suppliers arising in the ordinary
course of business;
(v) the Borrower and its Subsidiaries may make loans and
advances in the ordinary course of business to their
respective employees so long as the aggregate
principal amount thereof at any time outstanding
(determined without regard to any write-downs or
write-offs of such loans and advances) shall not
exceed $1,000,000;
(vi) the Borrower may acquire and hold obligations of one
or more officers or other employees of the Borrower
or any of its Subsidiaries in connection with such
officers' or employees' acquisition of shares of
common stock of the Borrower so long as no cash is
paid by the Borrower or any of its Subsidiaries to
such officers or employees in connection with the
acquisition of any such obligations;
(vii) the Borrower may enter into Interest Rate Protection
Agreements to the extent permitted by Section
7.04(iii);
(viii) the Borrower and the Subsidiary Guarantors may make
cash common equity contributions to the capital of
their respective Subsidiaries which are Subsidiary
Guarantors;
(ix) the Borrower and the Subsidiary Guarantors may make
intercompany loans and advances between or among one
another;
(x) the Borrower and its Subsidiaries may enter into
Other Hedging Agreements to the extent permitted by
Section 7.04(xi);
(xi) the Borrower and its Subsidiaries may acquire and
hold non-cash consideration issued by the purchaser
of assets in connection with a sale of such assets to
the extent permitted by Section 7.02(v);
(xii) so long as no Default or Event of Default then exists
or would result therefrom, Acme Steel may make cash
Investments, directly or indirectly, in Wabush
pursuant to the joint venture agreements with respect
thereto as in effect on the Effective Date;
(xiii) the Borrower and the Subsidiary Guarantors may make
Permitted Acquisitions to the extent permitted by
Section 7.02(xiii);
(xiv) Investments by the Borrower in securities issued
directly or indirectly and fully guaranteed or
insured by the United States government or any agency
or instrumentality thereof in such amounts as are
needed to, and that are deposited pursuant to the
requirements of the Existing Senior Secured Note
Indentures in order to, effect a defeasance of the
Existing Senior Secured Notes in accordance with the
terms thereof; and
<PAGE> 51
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
(xv) the Borrower and its Subsidiaries may make
Investments in Persons that are not Subsidiary
Guarantors and in which the Borrower or any of its
Subsidiaries already has an ownership interest so
long as the aggregate amount of all such Investments
made pursuant to this clause (xv), when added to the
aggregate amount of Permitted Acquisitions made
pursuant to Section 7.02 (xiii), shall not exceed
$15,000,000.
7.06 Transactions with Affiliates. The Borrower will not, and will not permit
any of its Subsidiaries to, enter into any transaction or series of related
transactions, whether or not in the ordinary course of business, with any
Affiliate of the Borrower or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would reasonably be obtained by
the Borrower or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that the following in
any event shall be permitted:
(i) Dividends may be paid to the extent provided in
Section 7.03;
(ii) loans may be made and other transactions may be
entered into by the Borrower and its Subsidiaries to
the extent permitted by Sections 7.02, 7.04 and 7.05;
and
(iii) customary fees may be paid to non-officer directors
of the Borrower and its Subsidiaries or as otherwise
described in Schedule 7.06.
7.07 Leases. The Borrower will not permit the aggregate payments (including,
without limitation, any property taxes paid as additional rent or lease
payments) made by the Borrower and its Subsidiaries on a consolidated basis
under any agreement to rent or lease any real or personal property entered into
on or after the Effective Date (or any extension or renewal thereof) (excluding
Capitalized Lease Obligations) to exceed $3,000,000 in any fiscal year of the
Borrower.
7.08 Capital Expenditures.
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, make any Capital Expenditures, except that
(i) during the period from the Effective Date through and
including the last day of the Borrower's fiscal year ending
closest to December 31, 1998, the Borrower and its
Subsidiaries may make Capital Expenditures in an aggregate
amount not to exceed $35,000,000 and (ii) during any fiscal
year of the Borrower set forth below (taken as one accounting
period), the Borrower and its Subsidiaries may make Capital
Expenditures so long as the aggregate amount of all such
Capital Expenditures does not exceed in any fiscal year of the
Borrower set forth below the amount set forth opposite such
fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Ending Closest To Amount
------------------ ---------- ------
<S> <C> <C>
December 31, 1999 $35,000,000
December 31, 2000 $35,000,000
December 31, 2001 $35,000,000
December 31, 2002 $35,000,000
December 31, 2003 $35,000,000
December 31, 2004 $35,000,000
December 31, 2005 $35,000,000
</TABLE>
<PAGE> 52
(b) In addition to the foregoing, in the event that the amount of
Capital Expenditures permitted to be made by the Borrower and
its Subsidiaries pursuant to clause (a) above in any fiscal
year of the Borrower (before giving effect to any increase in
such permitted Capital Expenditure amount pursuant to this
clause (b)) is greater than the amount of Capital Expenditures
actually made by the Borrower and its Subsidiaries during such
fiscal year, the lesser of (x) such excess and (y) 15% of the
applicable permitted scheduled Capital Expenditure amount as
set forth in such clause (a) above may be carried forward and
utilized to make Capital Expenditures in the immediately
succeeding fiscal year of the Borrower, provided that no
amounts once carried forward pursuant to this Section 7.08(b)
may be carried forward to any fiscal year thereafter and such
amounts may only be utilized after the Borrower and its
Subsidiaries have utilized in full the permitted Capital
Expenditure amount for such fiscal year as set forth in the
table in clause (a) above (without giving effect to any
increase in such amount by operation of this clause (b)).
(c) In addition to the foregoing, the Borrower and it Subsidiaries
may make Capital Expenditures with the amount of Net Sale
Proceeds received by the Borrower or any of its Subsidiaries
from any Asset Sale so long as such Net Sale Proceeds are
reinvested in assets (other than current assets) used or
useful in the business of the Borrower and its Subsidiaries
within 360 days following the date of such Asset Sale to the
extent such Net Sale Proceeds are not otherwise required to be
applied to repay outstanding Loans pursuant to Section
3.02(d).
(d) In addition to the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures with the amount of
Net Insurance Proceeds received by the Borrower or any of its
Subsidiaries from any Recovery Event so long as such Net
Insurance Proceeds are used to replace or restore any
properties or assets in respect of which such Net Insurance
Proceeds were paid within 360 days following the date of
receipt of such Net Insurance Proceeds from such Recovery
Event to the extent such Net Insurance Proceeds are not
otherwise required to be applied to repay outstanding Loans
pursuant to Section 3.02(f).
(e) In addition to the foregoing, the Borrower and the Subsidiary
Guarantors may make Capital Expenditures constituting
Permitted Acquisitions to the extent permitted by Section
7.02(xiii).
(f) In addition to the foregoing, Acme Steel may make Capital
Expenditures in connection with its blast furnace reline in an
aggregate amount not to exceed $40,000,000 so long as such
Capital Expenditures are made on or prior to the last day of
the Borrower's fiscal year ended closest to December 31, 2000.
(g) In addition to the foregoing, Acme Steel may make Capital
Expenditures in an aggregate amount not to exceed $200,000,000
(plus the cost of capitalized interest and other internally
capitalized costs) in connection with the Phase II Expansion.
(h) In addition to the foregoing, so long as no Default or Event
of Default then exists or would result therefrom, the Borrower
and its Subsidiaries may make Capital Expenditures in October
2002 in an aggregate amount not to exceed $15,000,000 to
purchase the property located in Walbridge, Ohio subject to an
existing Alpha Tube lease.
7.09 Consolidated Interest Coverage Ratio. The Borrower will not permit the
Consolidated Interest Coverage Ratio of the Borrower for any Test Period ending
on the last day of a fiscal quarter set forth below to be less than the ratio
set forth opposite such fiscal quarter below:
<PAGE> 53
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
<TABLE>
<CAPTION>
Fiscal Quarter Ending Closest To Ratio
-------------------------------- ---------
<S> <C>
June 30, 1998 1.00:1.00
September 30, 1998 1.15:1.00
December 31, 1998 1.40:1.00
March 31, 1999 1.40:1.00
June 30, 1999 1.40:1.00
September 30, 1999 1.40:1.00
December 31, 1999 1.75:1.00
March 31, 2000 1.75:1.00
June 30, 2000 1.75:1.00
September 30, 2000 1.75:1.00
December 31, 2000 2.00:1.00
March 31, 2001 2.00:1.00
June 30, 2001 2.00:1.00
September 30, 2001 2.00:1.00
December 31, 2001 2.25:1.00
March 31, 2002 2.25:1.00
June 30, 2002 2.25:1.00
September 30, 2002 2.25:1.00
December 31, 2002 2.50:1.00
March 31, 2003 2.50:1.00
June 30, 2003 2.50:1.00
September 30, 2003 2.50:1.00
December 31, 2003 2.75:1.00
March 31, 2004 2.75:1.00
June 30, 2004 2.75:1.00
September 30, 2004 2.75:1.00
December 31, 2004
and the last day of each
fiscal quarter thereafter 3.00:1.00
</TABLE>
<PAGE> 54
7.10 Maximum Leverage Ratio. The Borrower will not permit the Leverage Ratio
of the Borrower at any time during a period set forth below to be greater than
the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
The last day of the fiscal quarter ending closest to December 31, 1998
through and including the day before the last day of the fiscal
quarter ending closest to June 30, 1999 7.50:1.00
The last day of the fiscal quarter ending closest to June 30, 1999
through and including the day before the last day of the fiscal
quarter ending closest to December 31, 1999 6.50:1.00
The last day of the fiscal quarter ending closest to December 31, 1999
through and including the day before the last day of the fiscal
quarter ending closest to June 30, 2000 5.50:1.00
The last day of the fiscal quarter ending closest to June 30, 2000
through and including the day before the last day of the fiscal
quarter ending closest to December 31, 2000 5.25:1.00
The last day of the fiscal quarter ending closest to December 31, 2000
through and including the day before the last day of the fiscal
quarter ending closest to June 30, 2001 5.00:1.00
The last day of the fiscal quarter ending closest to June 30, 2001
through and including the day before the last day of the fiscal
quarter ending closest to December 31, 2001. 4.75:1.00
The last day of the fiscal quarter ending closest to December 31, 2001
through and including the day before the last day of the fiscal
quarter ending closest to June 30, 2002 4.50:1.00
The last day of the fiscal quarter ending closest to June 30, 2002
through and including the day before the last day of the fiscal
quarter ending closest to December 30, 2002 4.25:1.00
The last day of the fiscal quarter ending closest to December 31, 2002
through and including the day before the last day of the fiscal
quarter ending closest to June 30, 2003 4.00:1.00
The last day of the fiscal quarter ending closest to June 30, 2003
through and including the day before the last day of the fiscal
quarter ending closest to December 31, 2003 3.75:1.00
The last day of the fiscal quarter ending closest to December 31, 2003
and thereafter 3.50:1.00
</TABLE>
<PAGE> 55
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
7.11 Minimum Consolidated EBITDA. The Borrower will not permit Consolidated
EBITDA of the Borrower for any Test Period ending on the last day of a fiscal
quarter set forth below to be less than the amount set forth opposite such
fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Closest To Amount
-------------------------------- ------
<S> <C>
March 31, 1998 $ 5,000,000
June 30, 1998 $19,000,000
September 30, 1998 $35,000,000
December 31, 1998 $55,000,000
March 31, 1999 $55,000,000
June 30, 1999 $55,000,000
September 30, 1999 $55,000,000
December 31, 1999 $75,000,000
March 31, 2000 $75,000,000
June 30, 2000 $75,000,000
September 30, 2000 $75,000,000
December 31, 2000
and the last day of
each fiscal quarter
thereafter $80,000,000
</TABLE>
7.12 Consolidated Fixed Charge Coverage Ratio. The Borrower will not permit
the Consolidated Fixed Charge Coverage Ratio of the Borrower for any Test
Period ending on the last day of a fiscal quarter set forth below to be less
than the ratio set forth opposite such fiscal quarter below:
<PAGE> 56
<TABLE>
<CAPTION>
Fiscal Quarter Ending Closest To Ratio
-------------------------------- -----
<S> <C>
December 31, 1998 1.10:1.00
March 31, 1999 1.10:1.00
June 30, 1999 1.10:1.00
September 30, 1999 1.10:1.00
December 31, 1999 1.15:1.00
March 31, 2000 1.15:1.00
June 30, 2000 1.15:1.00
September 30, 2000 1.15:1.00
December 31, 2000
and the last day
each fiscal quarter thereafter 1.25:1.00
</TABLE>
7.13 Limitation on Payments of Certain Indebtedness; Modifications of Certain
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and
Certain Other Agreements; etc. The Borrower will not, and will not permit any
of its Subsidiaries to, (i) make (or give any notice in respect of) any
voluntary or optional payment or prepayment on or redemption or acquisition for
value of, or any prepayment or redemption as a result of any asset sale, change
of control or similar event of (including in each case, without limitation, by
way of depositing with the trustee with respect thereto or any other Person
money or securities before due for the purpose of paying when due) the New
Senior Notes, the Subordinated Notes, the Parallel Loan or the Environmental
Bonds, (ii) amend or modify, or permit the amendment or modification of, any
provision of the New Senior Note Documents or the Subordinated Note Documents,
(iii) amend or modify, or permit the amendment or modification of, any
provision of any Existing Senior Secured Note Documents other than pursuant to
the Existing Senior Secured Notes Consent Solicitation, (iv) amend or modify,
or permit the amendment or modification of, any provision of the Working
Capital Facility (including as a result of a refinancing or replacement
thereof), the Parallel Loan or the Environmental Bonds to the extent that same
could be adverse to the interests of the Lenders, it being understood and
agreed that, in any event, any amendment or modification which shortens the
maturity thereof, adversely changes the mandatory prepayments or repayments
thereof, increases the interest rate thereon, makes the financial maintenance
covenants contained therein more restrictive or otherwise adds new financial
maintenance covenants (whether constructed as a covenant or a default) shall
not be permitted, (v) amend, modify or change its certificate of incorporation
(including, without limitation, by the filing or modification of any
certificate of designation) or by-laws (or the equivalent organizational
documents) or any agreement entered into by it with respect to its capital
stock, or enter into any new agreement with respect to its capital stock,
unless such amendment, modification, change or other action contemplated by
this clause (v) could not reasonably be adverse to the interests of the Lenders
in any material respect, or (vi) amend, modify or change any provision of the
joint venture arrangements for Wabush, the Interlake Cross-Indemnification
Indemnity Agreement or any Tax Sharing Agreement (including the Interlake Tax
Indemnity Agreement), unless such amendment, modification or change could not
reasonably be expected to be adverse in any material respect to the interests
of the Lenders or the Borrower or any of its Subsidiaries.
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7.14 Limitation on Certain Restrictions on Subsidiaries. The Borrower will
not, and will not permit any of its 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 such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any
Subsidiary of the Borrower, or pay any Indebtedness owed to the Borrower or
any Subsidiary of the Borrower, (b) make loans or advances to the Borrower or
any Subsidiary of the Borrower or (c) transfer any of its properties or assets
to the Borrower or any Subsidiary of the Borrower, except for such encumbrances
or restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Credit Documents, (iii) the New Senior Note Documents,
(iv) the Working Capital Facility, (v) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of the
Borrower or any Subsidiary of the Borrower, (vi) customary provisions
restricting assignment of any licensing agreement or other contract entered
into by the Borrower or any Subsidiary of the Borrower in the ordinary course
of business and (vii) restrictions on the transfer of any asset subject to a
Lien permitted by Sections 7.01(vii), (viii) and (xv).
7.15 Limitation on Issuance of Capital Stock.
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, issue (i) any preferred stock other than
Qualified Preferred Stock of the Borrower (including any such
preferred stock issuable under the Borrower's Rights Agreement
as in effect on the Effective Date) or (ii) any redeemable
common stock (other than common stock that is redeemable at
the sole option of the Borrower or such Subsidiary).
(b) The Borrower will not permit any of its Subsidiaries to issue
any capital stock (including by way of sales of treasury
stock) or any options or warrants to purchase, or securities
convertible into, capital stock, except (i) for transfers and
replacements of then outstanding shares of capital stock, (ii)
for stock splits, stock dividends and issuances which do not
decrease the percentage ownership of the Borrower or any of
its Subsidiaries in any class of the capital stock of such
Subsidiary, (iii) to qualify directors to the extent required
by applicable law or (iv) for issuances by newly created or
acquired Subsidiaries in accordance with the terms of this
Agreement.
7.16 Business. The Borrower and its Subsidiaries will not engage in any
business other than the businesses engaged in by the Borrower and its
Subsidiaries as of the Effective Date and reasonable extensions thereof (it
being understood and agreed that any steel fabricating business shall be deemed
a reasonable extension of the Borrower's and its Subsidiaries' existing
businesses).
<PAGE> 58
7.17 Limitation on Creation of Subsidiaries. Notwithstanding anything to the
contrary contained in this Agreement, the Borrower will not, and will not
permit any of its Subsidiaries to, establish, create or acquire after the
Effective Date any Subsidiary, provided that the Borrower and its Wholly-Owned
Subsidiaries shall be permitted to establish or create Wholly-Owned
Subsidiaries so long as (i) the capital stock of each such new Wholly-Owned
Subsidiary is pledged pursuant to, and to the extent required by, the Pledge
Agreement and the certificates representing such stock, together with stock
powers duly executed in blank, are delivered to the Collateral Agent for the
benefit of the Secured Creditors, (ii) each such new Wholly-Owned Subsidiary
executes and delivers to the Collateral Agent a counterpart of the Subsidiaries
Guaranty, the Pledge Agreement and, in the case of a Wholly-Owned Subsidiary
that is a Granting Credit Party, the Security Agreement, and (iii) each such
new Wholly-Owned Subsidiary to the extent that same is a Granting Credit Party,
to the extent requested by the Collateral Agent or the Required Lenders, takes
all actions required pursuant to Section 6.12. In addition, each new
Wholly-Owned Subsidiary shall execute and deliver, or cause to be executed and
delivered, to the Administrative Agent all other relevant documentation of the
type described in Section 4 as such new Wholly-Owned Subsidiary would have had
to deliver if such new Wholly-Owned Subsidiary were a Credit Party on the
Effective Date.
SECTION 8. Events of Default. Upon the occurrence of any of the following
specified events (each an "Event of Default"):
8.01 Payments. The Borrower shall (i) default in the payment when due of any
principal of any Loan or any Note or (ii) default, and such default shall
continue unremedied for five or more days, in the payment when due of any
interest on any Loan or any Note or any Fees or any other amounts owing
hereunder or thereunder; or
8.02 Representations, etc. Any representation, warranty or statement made (or
deemed made) by any Credit Party herein or in any other Credit Document or in
any certificate delivered to the Administrative Agent or any Lender pursuant
hereto or thereto shall prove to be untrue in any material respect on the date
as of which made or deemed made; or
8.03 Covenants. Any Credit Party shall (i) default in the due performance or
observance by it of any term, covenant or agreement contained in Section
6.01(e)(i) or 6.08 or Section 7 or (ii) default in the due performance or
observance by it of any other term, covenant or agreement contained in this
Agreement or any other Credit Document (other than those set forth in Sections
8.01 and 8.02) and such default shall continue unremedied for a period of 30
days after written notice thereof to the defaulting party by the Administrative
Agent or the Required Lenders; or
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8.04 Default Under Other Agreements.
(i) The Borrower or any of its Subsidiaries shall (x)
default in any payment of any Indebtedness (other
than the Obligations) beyond the period of grace, if
any, provided in the instrument or agreement under
which such Indebtedness was created or (y) default in
the observance or performance of any agreement or
condition relating to any Indebtedness (other than
the Obligations) or contained in any instrument or
agreement evidencing, securing or relating thereto,
or any other event shall occur or condition exist,
the effect of which default or other event or
condition is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent
on behalf of such holder or holders) to cause
(determined without regard to whether any notice is
required), any such Indebtedness to become due prior
to its stated maturity, or (ii) any Indebtedness
(other than the Obligations) of the Borrower or any
of its Subsidiaries shall be declared to be (or shall
become) due and payable, or required to be prepaid
other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof,
provided that it shall not be a Default or an Event
of Default under this Section 8.04 unless the
aggregate principal amount of all Indebtedness as
described in preceding clauses (i) and (ii) is at
least $5,000,000; or
8.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries shall commence a
voluntary case concerning itself under Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto
(the "Bankruptcy Code"); or an involuntary case is commenced against the
Borrower or any of its Subsidiaries, and the petition is not controverted
within 10 days, or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of the Borrower or
any of its Subsidiaries, or the Borrower or any of its Subsidiaries commences
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Subsidiaries, or there is commenced against the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days, or the Borrower or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Borrower or any of its Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or the
Borrower or any of its Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by the Borrower or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
8.06 Security Documents. At any time after the execution and delivery
thereof, any of the Security Documents shall cease to be in full force and
effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral) in favor of the Collateral Agent,
superior to and prior to the rights of all third Persons (except as permitted
by Section 7.01), and subject to no other Liens (except as permitted by Section
7.01); or
<PAGE> 60
8.07 Subsidiaries Guaranty. At any time after the execution and delivery
thereof, the Subsidiaries Guaranty or any provision thereof shall cease to be
in full force or effect as to any Subsidiary Guarantor (except as a result of
any event described in clause (iv), (x), (xi) or (xii) of Section 7.02), or any
Subsidiary Guarantor or any Person acting by or on behalf of such Subsidiary
Guarantor shall deny or disaffirm such Subsidiary Guarantor's obligations under
the Subsidiaries Guaranty or any Subsidiary Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Subsidiaries Guaranty; or
8.08 Judgments. One or more judgments or decrees shall be entered against the
Borrower or any Subsidiary of the Borrower involving in the aggregate for the
Borrower and its Subsidiaries a liability (not paid or fully covered by a
reputable and solvent insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or stayed
or bonded pending appeal for any period of 30 consecutive days, and the
aggregate amount of all such judgments equals or exceeds $2,500,000; or
8.09 Change of Control. A Change of Control shall occur; then, and in any
such event, and at any time thereafter, if any Event of Default shall then be
continuing, the Administrative Agent, upon the written request of the Required
Lenders, shall by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Administrative Agent,
any Lender or the holder of any Note to enforce its claims against any Credit
Party (provided, that, if an Event of Default specified in Section 8.05 shall
occur with respect to the Borrower, the result which would occur upon the
giving of written notice by the Administrative Agent as specified in clauses
(i) and (ii) below shall occur automatically without the giving of any such
notice): (i) declare the Total Commitment terminated, whereupon the
Commitments of each Lender shall forthwith terminate immediately; (ii) declare
the principal of and any accrued interest in respect of all Loans and the Notes
and all Obligations owing hereunder and thereunder to be, whereupon the same
shall become, forthwith due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by each Credit Party;
and (iii) enforce, as Collateral Agent, all of the Liens and security interests
created pursuant to the Security Documents.
SECTION 9. Definitions and Accounting Terms.
9.01 Defined Terms. As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Acme Steel" shall mean Acme Steel Company, a Delaware corporation.
"Additional Security Documents" shall have the meaning provided in Section
6.11.
"Adjusted Consolidated Net Income" shall mean, for any period, Consolidated Net
Income for such period plus, without duplication, the sum of the amount of all
net non-cash charges (including, without limitation, depreciation,
amortization, deferred tax expense and non-cash interest expense) and net
non-cash losses which were included in arriving at Consolidated Net Income for
such period, less the amount of all net non-cash gains which were included in
arriving at Consolidated Net Income for such period.
"Administrative Agent" shall mean BTCo, in its capacity as Administrative Agent
for the Lenders hereunder, and shall include any successor to the
Administrative Agent appointed pursuant to Section 10.09.
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"Affiliate" shall mean, with respect to any Person, any other Person directly
or indirectly controlling (including, but not limited, to all directors and
officers of such Person), controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power (i) to vote 10% or
more of the securities having ordinary voting power for the election of
directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agent" shall mean and include the Administrative Agent and the Syndication
Agent.
"Agreement" shall mean this Credit Agreement, as modified, supplemented,
amended, restated (including any amendment and restatement hereof), extended,
renewed, refinanced or replaced from time to time.
"Alpha Tube" shall mean Alpha Tube Corporation, a Delaware corporation.
"Applicable Base Rate Margin" shall mean (i) for the period from the Effective
Date through but not including the first Start Date after the Effective Date,
1.75%, provided, however, if the Borrower's Consolidated EBITDA for the Test
Period ending closest to June 30, 1998 is less than $25,000,000, then the
Applicable Base Rate Margin from the date of delivery of the financial
statements pursuant to Section 6.01(b) in respect of such Test Period through
but not including the first Start Date shall instead be 2.000%, and (ii) from
and after any Start Date to and including the corresponding End Date, the
respective percentage per annum set forth in clause (A), (B), (C), (D), (E) or
(F) below if, but only if, as of the Test Date for such Start Date the
applicable condition set forth in clause (A), (B), (C), (D), (E) or (F) below,
as the case may be, is met:
(A) 2.250% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such
Test Date shall be greater than or equal to 6.50:1.00;
(B) 2.000% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 6.50:1.00 and greater than or equal to
5.50:1.00;
(C) 1.750% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 5.50:1.00 and greater than or equal to
5.00:1.00;
(D) 1.500% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 5.00:1.00 and greater than or equal to
4.50:1.00;
(E) 1.375% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 4.50:1.00 and greater than or equal to
4.00:1.00; and
(F) 1.250% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 4.00:1.00.
Notwithstanding anything to the contrary above in this definition, the
Applicable Base Rate Margin shall be 2.250% at all times when a Default or an
Event of Default shall exist.
<PAGE> 62
"Applicable Eurodollar Rate Margin" shall mean (i) for the period from the
Effective Date through but not including the first Start Date after the
Effective Date, 2.75%, provided, however, if the Borrower's Consolidated EBITDA
for the Test Period ending closest to June 30, 1998 is less than $25,000,000,
then the Applicable Eurodollar Rate Margin from the date of delivery of the
financial statements pursuant to Section 6.01(b) in respect of such Test Period
through but not including the first Start Date shall instead be 3.000%, and
(ii) from and after any Start Date to and including the corresponding End Date,
the respective percentage per annum set forth in clause (A), (B), (C), (D), (E)
or (F) below if, but only if, as of the Test Date for such Start Date the
applicable condition set forth in clause (A), (B), (C), (D), (E) or (F) below,
as the case may be, is met:
(A) 3.250% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such
Test Date shall be greater than or equal to 6.50:1.00;
(B) 3.000% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 6.50:1.00 and greater than or equal to
5.50:1.00;
(C) 2.750% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 5.50:1.00 and greater than or equal to
5.00:1.00;
(D) 2.500% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 5.00:1.00 and greater than or equal to
4.50:1.00;
(E) 2.375% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 4.50:1.00 and greater than or equal to
4.00:1.00; and
(F) 2.250% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 4.00:1.00.
Notwithstanding anything to the contrary above in this definition, the
Applicable Eurodollar Rate Margin shall be 3.250% at all times when a Default
or an Event of Default shall exist.
"Applicable Margin Period" shall mean each period which shall commence on a
date on which the financial statements are delivered pursuant to Section
6.01(a) or (b), as the case may be, and which shall end on the earlier of (i)
the date of the actual delivery of the next financial statements pursuant to
Section 6.01(a) or (b), as the case may be, and (ii) the latest date on which
the next financial statements are required to be delivered pursuant to Section
6.01(a) or (b), as the case may be, provided that the first Applicable Margin
Period shall commence with the delivery of the Borrower's financial statements
for the Test Period ending closest to December 31, 1998.
"Asset Sale" shall mean any sale, transfer or other disposition by the Borrower
or any of its Subsidiaries to any Person (including by way of redemption by
such Person) other than to the Borrower or a Wholly-Owned Subsidiary of the
Borrower of any asset (including, without limitation, any capital stock or
other securities of, or equity interests in, another Person) other than sales
of assets pursuant to Sections 7.02 (ii), (iii), (iv), (viii) and (ix).
"Assignment and Assumption Agreement" shall mean an Assignment and Assumption
Agreement substantially in the form of Exhibit K (appropriately completed).
"Bank Refinancing" shall mean the repayment in full of the Existing Term Loan
Agreement, together with all accrued interest, premiums, fees, commission and
expenses owing in connection therewith, and the termination of all commitments
thereunder.
"Bankruptcy Code" shall have the meaning provided in Section 8.05.
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"Base Rate" shall mean, at any time, the higher of (i) the Prime Lending Rate
and (ii) 1/2 of 1% in excess of the Federal Funds Rate.
"Base Rate Loan" shall mean each Loan designated or deemed designated as such
by the Borrower at the time of the incurrence thereof or conversion thereto.
"Borrower" shall have the meaning provided in the first paragraph of this
Agreement.
"Borrowing" shall mean (i) the incurrence of one Type of Loan from all the
Lenders on the Effective Date and (ii) thereafter, the conversion or
conversions of one or more Types of Loans into another Type of Loan on a given
date having (in each case) in the case of Eurodollar Loans the same Interest
Period, provided that Base Rate Loans incurred pursuant to Section 1.10(b)
shall be considered part of the related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company, in its individual capacity, and any
successor corporation thereto, by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as covered by clause
(ii) below, any day except Saturday, Sunday and any day which shall be in
Chicago, Illinois and New York City, New York, a legal holiday or a day on
which banking institutions are authorized or required by law or other
government action to close and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Loans, any day which is a Business Day described in clause (i) above
and which is also a day for trading by and between banks in the New York
interbank Eurodollar market.
"Capital Expenditures" shall mean, with respect to any Person, all expenditures
by such Person which should be capitalized in accordance with generally
accepted accounting principles and, without duplication, the amount of
Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" shall mean, with respect to any Person, all
rental obligations of such Person which, under generally accepted accounting
principles, are or will be required to be capitalized on the books of such
Person, in each case taken at the amount thereof accounted for as indebtedness
in accordance with such principles.
<PAGE> 64
"Cash Equivalents" shall mean (a)(i) obligations of or guaranteed by the U.S.
government, its agencies or government-sponsored enterprises, (ii) short-term
commercial bank and corporate obligations that have received the highest rating
from two of the following rating organizations: Standard & Poor's Ratings
Services ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps
Credit Rating Co., Fitch Investor Service, Inc., IBCA Ltd. and Thomson
Bankwatch, Inc., (iii) money market preferred stocks which, at the date of
acquisition, are accorded ratings of at least A- or A3 by S&P or Moody's,
respectively, (iv) tax-exempt obligations that are accorded ratings at the time
of purchase of at least A- or A3 (or equivalent short-term ratings) by S&P or
Moody's, respectively, (v) master repurchase agreements with foreign or
domestic banks having a capital and surplus of not less than $250,000,000 or
primary dealers so long as such agreements are collateralized with obligations
of the U.S. government or its agencies at a ratio of 102% or with other
collateral rated at least AA or Aa2 by S&P or Moody's, respectively, at a ratio
of 103% and, in either case, marked-to-market weekly and held by a third-party
agent, (vi) guaranteed investment contracts and/or agreements of a bank,
insurance company or other institution whose unsecured and unguaranteed
obligations (or claims-paying ability) have, at the time of purchase, ratings
of at least AAA or Aaa by S&P or Moody's, respectively, (vii) time deposits
with, and certificates of deposits and banker's acceptances issued by, any bank
having capital surplus and undivided profits aggregating at least $50,000,000,
and (viii) money market funds substantially all of whose assets are comprised
of securities of the types described in clauses (i) through (vii) above. In no
event shall any of the Cash Equivalents described in clauses (i) through (vii)
above have a final maturity more than one year from the date of purchase.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as the same may be amended from time to time, 42 U.S.C.
Section 9601 et seq.
"Change of Control" shall mean (i) any Person or "group" (within the meaning of
Rules 13d-3 or 13d-5 under the Securities Exchange Act (as in effect on the
Effective Date)) shall (A) have acquired beneficial ownership of 35% or more on
a fully diluted basis of the voting and/or economic interest in the Borrower's
capital stock or (B) have obtained power (whether or not exercised) to elect a
majority of the Borrower's directors, (ii) the Board of Directors of the
Borrower shall cease to consist of a majority of Continuing Directors or (iii)
a "change of control" or similar event shall occur under, and as defined in,
the New Senior Note Documents, the Subordinated Note Documents, the Working
Capital Facility or, until such time as the Existing Senior Secured Notes have
been repaid in full or defeased in accordance with the terms thereof, the
Existing Senior Secured Note Documents.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with respect to
which any security interests have been granted (or purported to be granted)
pursuant to any Security Document, including, without limitation, all Pledge
Agreement Collateral, all Security Agreement Collateral and the Mortgaged
Properties.
"Collateral Agency Agreement" shall have the meaning provided in Section
4.08(b).
"Collateral Agent" shall mean the Administrative Agent acting as collateral
agent for the Secured Creditors pursuant to the Security Documents.
"Commitment" shall mean, for each Lender, the amount set forth opposite such
Lender's name in Schedule 1.01(a) directly below the column entitled
"Commitment," as same may be terminated pursuant to Section 2.02 or 8.
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"Consolidated Cash Interest Expense" shall mean, for any period, Consolidated
Interest Expense for such period to the extent that same is paid or payable (or
is accrued and will be paid or payable) in cash for such period (net of any
cash interest income for such period).
"Consolidated EBIT" shall mean, for any period, Consolidated Net Income for
such period before Consolidated Interest Expense and provision for taxes for
such period and without giving effect (x) to any extraordinary gains or losses
and (y) to any gains or losses from sales of assets other than from sales of
inventory sold in the ordinary course of business and other sales of $1,000,000
or less.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT for such
period, adjusted by adding thereto (i) the amount of all amortization of
intangibles and depreciation that were deducted in arriving at Consolidated
EBIT for such period, (ii) the Borrower's proportionate share of the net income
of Wabush and NACME for such period (based on the Borrower's percentage equity
ownership interest in such Persons), whether or not such net income is actually
distributed to the Borrower or a Subsidiary thereof during such period, but
only to the extent that such net income is not otherwise included in arriving
at Consolidated EBIT for such period and (iii) the expensed (as opposed to
capitalized) portion of the Capital Expenditures incurred for the blast furnace
reline pursuant to Section 7.08(f) to the extent that same reduced Consolidated
EBIT for such period.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period, the
ratio of Consolidated EBITDA to Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" shall mean, for any period, the sum, without
duplication, of (i) Consolidated Cash Interest Expense for such period, (ii)
the amount of all Capital Expenditures made by the Borrower and its
Subsidiaries pursuant to Sections 7.08(a) and (b) for such period, (iii) the
scheduled principal amount of all amortization payments on all Indebtedness
(including, without limitation, the principal component of all Capitalized
Lease Obligations but excluding the refinancings effected pursuant to the
Transaction) of the Borrower and its Subsidiaries for such period (as
determined on the first day of such period) and (iv) the amount of all cash
payments made by the Borrower and its Subsidiaries in respect of income taxes
or income tax liabilities for such period net of any cash income tax refunds
actually received by the Borrower and its Subsidiaries during such period.
"Consolidated Indebtedness" shall mean, at any time, the principal amount of
all Indebtedness of the Borrower and its Subsidiaries at such time as
determined on a consolidated basis, other than any amounts owing under any
Interest Rate Protection Agreement or Other Hedging Agreement except to the
extent that such amounts are required to be reflected on the liability side of
a balance sheet in accordance with GAAP.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the ratio of
Consolidated EBITDA to Consolidated Cash Interest Expense for such period.
<PAGE> 66
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of the Borrower and its Subsidiaries for such
period (calculated without regard to any limitations on the payment thereof)
plus, without duplication, that portion of Capitalized Lease Obligations of the
Borrower and its Subsidiaries representing the interest factor for such period,
provided that the amortization of deferred financing, legal and accounting
costs with respect to the Transaction and the Phase II Expansion shall be
excluded from Consolidated Interest Expense to the extent same would otherwise
have been included therein.
"Consolidated Net Income" shall mean, for any period, the net income (or loss)
of the Borrower and its Subsidiaries for such period, determined on a
consolidated basis (after any deduction for minority interests), provided that
in determining Consolidated Net Income, (i) the net income of any other Person
which is not a Subsidiary of the Borrower or is accounted for by the Borrower
by the equity method of accounting shall be included only to the extent of the
payment of cash dividends or distributions by such other Person to the Borrower
or a Subsidiary thereof during such period, (ii) the net income (or loss) of
any other Person acquired by such specified Person or a Subsidiary of such
Person in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iii) the net income of any Subsidiary
of the Borrower shall be excluded to the extent that the declaration or payment
of dividends or similar distributions by that Subsidiary of its income is not
at the time permitted by operation of the terms of its charter or any
agreement, instrument or law applicable to such Subsidiary (other than the
Working Capital Facility) and (iv) any interest income for such period shall be
excluded.
"Contingent Obligation" shall mean, as to any Person, any obligation of such
Person as a result of such Person being a general partner of the other Person,
unless the underlying obligation is expressly made non-recourse as to such
general partner, and any obligation of such Person guaranteeing or intended to
guarantee any Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any obligation
of such Person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (x) for the purchase or payment of any such
primary obligation or (y) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of the Borrower on the
Effective Date and each other director of the Borrower if such director's
nomination for election to the Board of Directors of the Borrower is
recommended by a majority of the then Continuing Directors.
"Credit Documents" shall mean this Agreement and, after the execution and
delivery thereof pursuant to the terms of this Agreement, each Note, the
Subsidiaries Guaranty and each Security Document.
"Credit Party" shall mean the Borrower and each Subsidiary Guarantor.
<PAGE> 67
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"Default" shall mean any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.
"Dividend" shall mean, with respect to any Person, that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or partners or authorized or made any other distribution, payment or delivery
of property (other than common stock of such Person) or cash to its
stockholders or partners as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for a consideration any shares of any class
of its capital stock or any partnership interests outstanding on or after the
Effective Date (or any options or warrants issued by such Person with respect
to its capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to purchase or
otherwise acquire for a consideration any shares of any class of the capital
stock or any partnership interests of such Person outstanding on or after the
Effective Date (or any options or warrants issued by such Person with respect
to its capital stock). Without limiting the foregoing, "Dividends" with
respect to any Person shall also include all payments made or required to be
made by such Person with respect to any stock appreciation rights, plans,
equity incentive or achievement plans or any similar plans or setting aside of
any funds for the foregoing purposes.
"Documents" shall mean and include (i) the Credit Documents, (ii) the Existing
Senior Secured Notes Tender Offer Documents, (iii) the Existing Senior Secured
Notes Consent Solicitation Documents, (iv) the New Senior Note Documents and
(v) the Working Capital Facility.
"Dollars" and the sign "$" shall each mean freely transferable lawful money of
the United States.
"Effective Date" shall have the meaning provided in Section 11.10.
"Eligible Transferee" shall mean and include a commercial bank, financial
institution, any fund that invests in loans or any other "accredited investor"
(as defined in Regulation D of the Securities Act).
"End Date" shall mean, for any Applicable Margin Period, the last day of such
Applicable Margin Period.
"Environmental Bonds" shall mean those items of Indebtedness of the Borrower
identified as such on Schedule 5.22.
"Environmental Claims" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating
in any way to any Environmental Law or any permit issued, or any approval
given, under any such Environmental Law (hereafter, "Claims"), including,
without limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (b) any
and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment
due to the presence of Hazardous Materials.
<PAGE> 68
"Environmental Law" shall mean any Federal, state, foreign or local statute,
law, rule, regulation, ordinance, code, guideline, written policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
employee health and safety or Hazardous Materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Safe
Drinking Water Act, 42 U.S.C. Section 3803 et seq.; the Oil Pollution Act of
1990, 33 U.S.C. Section 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Hazardous
Material Transportation Act, 49 U.S.C. Section 1801 et seq. and the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; and any
state and local or foreign counterparts or equivalents, in each case as amended
from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of ERISA)
which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" (i) within the meaning of Section 414(b), (c),
(m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of
the Borrower being or having been a general partner of such person.
"Eurodollar Loan" shall mean each Loan designated as such by the Borrower at
the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the offered quotation to first-class banks in
the New York interbank Eurodollar market by the Administrative Agent for Dollar
deposits of amounts in immediately available funds comparable to the
outstanding principal amount of the Eurodollar Loan of the Administrative Agent
with maturities comparable to the Interest Period applicable to such Eurodollar
Loan commencing two Business Days thereafter as of 11:00 A.M. (New York time)
on the date which is two Business Days prior to the commencement of such
Interest Period, divided (and rounded upward to the nearest 1/16 of 1%) by (b)
a percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable law) applicable
to any member bank of the Federal Reserve System in respect of Eurocurrency
funding or liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 8.
<PAGE> 69
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CONFORMED AS EXECUTED]
"Excess Cash Flow" shall mean, for any period, the remainder of (a) Adjusted
Consolidated Net Income for such period, minus (b) the sum of, without
duplication, (i) the amount of all Capital Expenditures made by the Borrower
and its Subsidiaries during such period pursuant to Sections 7.08(a), (b), (e),
(f), (g) and (h) (other than any such Capital Expenditures to the extent
financed with equity proceeds or Indebtedness (other than with loans incurred
under the Working Capital Facility), (ii) the aggregate amount of permanent
principal payments of Indebtedness for borrowed money of the Borrower and its
Subsidiaries during such period (other than repayments of Loans, provided that
repayments of Loans shall be deducted in determining Excess Cash Flow if such
repayments were (x) required as a result of a Scheduled Repayment under Section
3.02(a) or (y) made as a voluntary prepayment with internally generated funds),
(iii) the aggregate amount of cash contributions made by the Borrower to its
pension plans during such period (except to the extent financed with equity
proceeds) and (iv) the aggregate amount of cash Investments made pursuant to
Sections 7.05(xii), (xiii) and (xv) during such period (except to the extent
financed with equity proceeds or Indebtedness (other than with loans incurred
under the Working Capital Facility).
"Excess Cash Payment Date" shall mean the date occurring on the earlier of (x)
120 days after the last day of each fiscal year of the Borrower and (y) the
date of delivery of the financial statements pursuant to Section 6.01(b) in
respect of the relevant Excess Cash Payment Period (in either case, beginning
with the Borrower's fiscal year ending closest to December 31, 1999).
"Excess Cash Payment Period" shall mean, with respect to the repayment required
on each Excess Cash Payment Date, the immediately preceding fiscal year of the
Borrower.
"Existing Indebtedness" shall have the meaning provided in Section 5.22.
"Existing Indebtedness Agreements" shall have the meaning provided in Section
4.06.
"Existing Senior Secured Note Documents" shall mean the Existing 13-1/2% Senior
Secured Discount Note Documents and the Existing 12-1/2% Senior Secured Note
Documents.
"Existing Senior Secured Note Indenture Supplements" shall mean each of the
Existing 12-1/2% Senior Secured Note Indenture Supplement and the Existing
13-1/2% Senior Secured Discount Note Indenture Supplement.
"Existing Senior Secured Note Indentures" shall mean each of the Existing
12-1/2% Senior Secured Note Indenture and the Existing 13-1/2% Senior Secured
Discount Note Indenture.
"Existing Senior Secured Note Indenture Trustee" shall mean State Street Bank
and Trust Company.
"Existing Senior Secured Notes" shall mean each of the Existing 12-1/2% Senior
Secured Notes and the 13-1/2% Senior Secured Discount Notes.
<PAGE> 70
"Existing Senior Secured Notes Consent" shall mean (i) each written consent
permitting the Borrower to enter into the Existing 13-1/2% Senior Secured
Discount Note Indenture Supplement from a holder of one or more Existing
13-1/2% Senior Secured Discount Notes outstanding on the record date for
determining those holders entitled to consent to such Existing 13-1/2% Senior
Secured Discount Note Indenture Supplement and (ii) each written consent
permitting the Borrower to enter into the Existing 12-1/2% Senior Secured Note
Indenture Supplement from a holder of one or more Existing 12-1/2% Senior
Secured Notes outstanding on the record date for determining those holders
entitled to consent to such Existing 12-1/2% Senior Secured Note Indenture
Supplement.
"Existing Senior Secured Notes Consent Solicitation" shall mean the
solicitation of Existing Senior Secured Notes Consents to amend the Existing
13-1/2% Senior Secured Discount Note Indenture and the Existing 12-1/2% Senior
Secured Note Indenture performed by or on behalf of the Borrower in connection
with the Existing Senior Secured Notes Tender Offer.
"Existing Senior Secured Notes Consent Solicitation Documents" shall mean each
of the documents distributed to holders of the Existing 13-1/2% Senior Secured
Discount Notes and the Existing 12-1/2% Senior Secured Notes or otherwise
entered into by the Borrower or any of such holders in connection with the
consummation of the Existing Senior Secured Notes Consent Solicitation,
including, without limitation, the Existing Senior Secured Notes Consents and
the Existing Senior Secured Notes Indenture Supplements.
"Existing Senior Secured Notes Tender Offer" shall mean (i) the offer by the
Borrower to purchase for cash any and all of the Existing 13-1/2% Senior
Secured Discount Notes and the Existing 12-1/2% Senior Secured Notes, the
foregoing to be effected pursuant to the Existing Senior Secured Notes Tender
Offer Documents.
"Existing Senior Secured Notes Tender Offer Documents" shall mean the offer to
purchase distributed by the Borrower in connection with the Existing Senior
Secured Notes Tender Offer, and all amendments and exhibits thereto, and all
documents related to any of the foregoing distributed to the holders or
representatives of the Existing Senior Secured Notes in connection with the
Existing Senior Secured Notes Tender Offer.
"Existing Term Loan Agreement" shall mean the Term Loan Agreement, dated as of
August 4, 1994, among the Borrower, the lenders party thereto and Harris Trust
and Savings Bank, as agent, as in effect on the Effective Date.
"Existing 13-1/2% Senior Secured Discount Note Documents" shall mean and
include each of the documents and other agreements (including, without
limitation, the Existing 13-1/2% Senior Secured Discount Note Indenture and the
Existing 13-1/2% Senior Secured Discount Note Indenture Supplement) governing
or evidencing the Existing 13-1/2% Senior Secured Discount Notes, as in effect
on the Effective Date and as the same may be amended, modified or supplemented
from time to time pursuant to the terms hereof and thereof.
"Existing 13-1/2% Senior Secured Discount Note Indenture" shall mean the
Indenture, dated as of August 11, 1994, among the Borrower, the Subsidiaries of
the Borrower party thereto and the Existing Senior Secured Note Indenture
Trustee, as in effect on the Effective Date and as the same may be amended,
modified or supplemented from time to time pursuant to the terms hereof and
thereof.
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CONFORMED AS EXECUTED]
"Existing 13-1/2% Senior Secured Discount Note Indenture Supplement" shall mean
the Supplemental Indenture to the Existing 13-1/2% Senior Secured Discount Note
Indenture in the form delivered to the Administrative Agent pursuant to Section
4.08 and entered into by the Borrower, the Subsidiaries of the Borrower party
thereto and the Existing Senior Secured Note Trustee in connection with the
Existing Senior Secured Notes Consent Solicitation.
"Existing 13-1/2% Senior Secured Discount Notes" shall mean the $117,958,000
aggregate principal amount of the Borrower's 13-1/2% Senior Secured Discount
Notes due 2004, which were issued pursuant to the Existing 13-1/2% Senior
Secured Discount Note Indenture.
"Existing 12-1/2% Senior Secured Note Documents" shall mean and include each of
the documents and other agreements (including, without limitation, the Existing
12-1/2% Senior Secured Note Indenture and the Existing 12-1/2% Senior Secured
Note Indenture Supplement) governing or evidencing the Existing 12-1/2% Senior
Secured Notes, as in effect on the Effective Date and as the same may be
amended, modified or supplemented from time to time pursuant to the terms
hereof and thereof.
"Existing 12-1/2% Senior Secured Note Indenture" shall mean the Indenture,
dated as of August 11, 1994, among the Borrower, the Subsidiaries of the
Borrower party thereto and the Existing Senior Secured Note Indenture Trustee,
as in effect on the Effective Date and as the same may be amended, modified or
supplemented from time to time pursuant to the terms hereof and thereof.
"Existing 12-1/2% Senior Secured Note Indenture Supplement" shall mean the
Supplemental Indenture to the Existing 12- 1/2% Senior Secured Note Indenture
in the form delivered to the Administrative Agent pursuant to Section 4.08 and
entered into by the Borrower, the Subsidiaries of the Borrower party thereto
and the Existing Senior Secured Note Trustee in connection with the Existing
12-1/2% Senior Secured Note Consent Solicitation.
"Existing 12-1/2% Senior Secured Notes" shall mean the $125,000,000 aggregate
principal amount of the Borrower's 12-1/2% Senior Secured Notes due 2002, which
were issued pursuant to the Existing 12-1/2% Senior Secured Note Indenture.
"Federal Funds Rate" shall mean, for any period, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in Section
2.01.
"GAAP" shall mean generally accepted accounting principles as in effect from
time to time, applied by the Borrower and its Subsidiaries on a basis
consistent with the preparation of the Borrower's most recent financial
statements furnished to the Lenders pursuant to Section 5.05.
"Granting Credit Party" shall mean Acme Steel and any other Subsidiary of the
Borrower that is engaged principally in the steel making (as opposed to the
steel fabricating) business of the Borrower.
<PAGE> 72
"Hazardous Materials" shall mean (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous waste," "hazardous materials," "extremely
hazardous substances," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar import, under
any applicable Environmental Law; and (c) any other chemical, material or
substance, the Release of which is prohibited, limited or regulated by any
governmental authority.
"Indebtedness" shall mean, as to any Person, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all indebtedness of such Person for the deferred purchase price of
property or services, which purchase price (other than in respect of any
Permitted Acquisition or any Investment made pursuant to Section 7.05(xv)) is
due more than six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such services, (iv) all
Indebtedness of the types described in clause (i), (ii), (iii), (v), (vi) (vii)
or (viii) of this definition secured by any Lien on any property owned by such
Person, whether or not such Indebtedness has been assumed by such Person
(provided, that, if the Person has not assumed or otherwise become liable in
respect of such Indebtedness, such Indebtedness shall be deemed to be in an
amount equal to the fair market value of the property to which such Lien
relates as determined in good faith by such Person), (v) the aggregate amount
required to be capitalized under leases under which such Person is the lessee,
(vi) all obligations of such person to pay a specified purchase price for goods
or services, whether or not delivered or accepted, i.e., take-or-pay and
similar obligations, but excluding those take-or-pay and similar obligations of
the type described in Schedule 9.01, (vii) all Contingent Obligations of such
Person and (viii) all obligations under any Interest Rate Protection Agreement,
any Other Hedging Agreement or under any similar type of agreement.
Notwithstanding the foregoing, Indebtedness shall not include (x) trade
payables and accrued expenses incurred by any Person in accordance with
customary practices and in the ordinary course of business of such Person and
(y) up to $6,000,000 of existing deferred payments in the aggregate still
required to be made to Raytheon Engineers and Constructors, Inc. and SMS
Schloemann-Siemag AG as part of Acme Steel's prior modernization of its steel
plant.
"Interest Determination Date" shall mean, with respect to any Eurodollar Loan,
the second Business Day prior to the commencement of any Interest Period
relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"Interlake Cross-Indemnification Agreement" shall mean the Cross
Indemnification Agreement, dated as of May 29, 1986, between Acme Steel and The
Interlake Corporation.
"Interlake Tax Indemnity Agreement" shall mean the Tax Indemnification
Agreement, dated as of May 30, 1986, between Acme Steel and The Interlake
Corporation
"Investments" shall have the meaning provided in Section 7.05.
"Leaseholds" of any Person shall mean all the right, title and interest of such
Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
<PAGE> 73
[CONFORMED COPY WITH
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CONFORMED AS EXECUTED]
"Lender" shall mean each financial institution listed on Schedule 1.01(a), as
well as any Person which becomes a "Lender" hereunder pursuant to Section 1.13
or 11.04(b).
"Leverage Ratio" shall mean, at any time, the ratio of Consolidated
Indebtedness at such time to Consolidated EBITDA for the Test Period then most
recently ended.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any other
similar recording or notice statute, and any lease having substantially the
same effect as any of the foregoing).
"Loan" shall have the meaning provided in Section 1.01.
"Margin Stock" shall have the meaning provided in Regulation U.
"Maturity Date" shall mean December 1, 2005.
"Minimum Borrowing Amount" shall mean (i) for Base Rate Loans, $1,000,000 and
(ii) for Eurodollar Loans, $5,000,000.
"Mortgage" shall mean each mortgage, deed to secure debt or deed of trust
pursuant to which any Granting Credit Party or the Borrower shall have granted
to the Collateral Agent a mortgage lien on such Credit Party's Mortgaged
Property.
"Mortgage Policy" shall have the meaning provided in Section 4.16.
"Mortgaged Property" shall mean each parcel of Real Property owned or leased by
any Granting Credit Party or the Borrower, as applicable, which is encumbered
by a Mortgage.
"MSSF" shall mean Morgan Stanley Senior Funding, Inc., in its individual
capacity, and any successor corporation thereto, by merger, consolidation or
otherwise.
"NACME" shall mean NACME Steel Processing, L.L.C., a Delaware limited liability
company of which the Borrower is a member, which is engaged in the business of
pickling, oiling and slitting steel.
"NAIC" shall mean the National Association of Insurance Commissioners.
"Net Debt Proceeds" shall mean, with respect to any incurrence of Indebtedness
for borrowed money, the cash proceeds (net of underwriting discounts and
commissions and other reasonable costs associated therewith) received by the
respective Person from the respective incurrence of such Indebtedness for
borrowed money.
<PAGE> 74
"Net Equity Proceeds" shall mean, with respect to each issuance or sale of any
equity by any Person or any capital contribution to such Person, the cash
proceeds (net of underwriting discounts and commissions and other reasonable
costs associated therewith) received by such Person from the respective sale or
issuance of its equity or from the respective capital contribution.
"Net Insurance Proceeds" shall mean, with respect to any Recovery Event, the
cash proceeds (net of reasonable costs and taxes incurred in connection with
such Recovery Event and the required payments of any Indebtedness permitted
under this Agreement (other than Indebtedness secured pursuant to the Security
Documents) which is secured by the respective assets subject to such Recovery
Event) received by the respective Person in connection with the respective
Recovery Event.
"Net Sale Proceeds" shall mean, for any Asset Sale, the gross cash proceeds
(including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from such sale of assets, net of the reasonable costs of such sale
(including fees and commissions, payments of unassumed liabilities relating to
the assets sold and required payments of any Indebtedness (other than
Indebtedness secured pursuant to the Security Documents) which is secured by
the respective assets which were sold), and the incremental taxes paid or
payable as a result of such Asset Sale.
"New Senior Note Documents" shall mean the New Senior Note Indenture, the New
Senior Notes and each other document or agreement relating to the issuance of
the New Senior Notes.
"New Senior Note Indenture" shall mean the Indenture dated as of December 18,
1997 among the Borrower, Acme Steel and Harris Trust and Savings Bank, as
trustee.
"New Senior Note Offering Memorandum" shall mean the Offering Memorandum, dated
as of December 18, 1997, relating to the Borrower's issuance of the New Senior
Notes.
"New Senior Notes" shall mean the Borrower's 10-7/8% New Senior Note due 2007.
"Note" shall have the meaning provided in Section 1.05.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section 1.06.
"Notice Office" shall mean the office of the Administrative Agent located at
130 Liberty Street, New York, New York 10006, Attention: Doug DiBella or such
other office as the Administrative Agent may hereafter designate in writing as
such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Administrative Agent, the
Collateral Agent or any Lender pursuant to the terms of this Agreement or any
other Credit Document.
"Other Hedging Agreement" shall mean any foreign exchange contracts, currency
swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values or
commodity prices.
"Parallel Loan" shall mean that item of Existing Indebtedness of the Borrower
identified as such on Schedule 5.22.
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"Payment Office" shall mean the office of the Administrative Agent located at
130 Liberty Street, New York, New York 10006, or such other office as the
Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall have the meaning provided in Section 7.02(xiii).
"Permitted Encumbrance" shall mean, with respect to any Mortgaged Property, (i)
the mortgage and other security documents securing the Existing Senior Secured
Notes described in the Collateral Agency Agreement and (ii) such other
exceptions to title as are set forth in the Mortgage Policy delivered with
respect thereto, all of which other exceptions must be acceptable to the Agents
in their reasonable discretion.
"Permitted Liens" shall have the meaning provided in Section 7.01.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Phase II Expansion" shall mean an expansion of the Borrower's facilities in
Riverdale, Illinois to more fully utilize the capacity of the Borrower's
existing hot mill, which expansion may involve the addition of an electric arc
furnace, a second caster, a second tunnel furnace and related machinery and
equipment.
"Plan" shall mean any pension plan as defined in Section 3(2) of ERISA, which
is maintained or contributed to by (or to which there is an obligation to
contribute of) the Borrower or a Subsidiary of the Borrower or an ERISA
Affiliate, and each such plan for the five year period immediately following
the latest date on which the Borrower, or a Subsidiary of the Borrower or an
ERISA Affiliate maintained, contributed to or had an obligation to contribute
to such plan.
"Pledge Agreement" shall have the meaning provided in Section 4.13.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined in the
Pledge Agreement.
"Pledged Stock" shall mean all "Pledged Stock" as defined in the Pledge
Agreement.
"Prime Lending Rate" shall mean the rate which the Administrative Agent
announces from time to time as its prime lending rate, the Prime Lending Rate
to change when and as such prime lending rate changes. The Prime Lending Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. The Administrative Agent may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.
"Projections" shall mean the projections prepared by the Borrower, dated
November, 1997, and furnished to the Lenders prior to the Effective Date.
<PAGE> 76
"Qualified Preferred Stock" shall mean any preferred stock of the Borrower so
long as the terms of any such preferred stock (i) do not contain any mandatory
put, redemption, repayment, sinking fund or other similar provision occurring
before December 31, 2006, (ii) do not require the cash payment of dividends,
(iii) do not contain any covenants, (iv) do not grant the holders thereof any
voting rights except for (x) voting rights required to be granted to such
holders under applicable law, (y) voting rights contemplated by the Rights
Agreement and (z) limited customary voting rights on fundamental matters such
as mergers, consolidations, sales of all or substantially all of the assets of
the Borrower, or liquidations involving the Borrower, and (v) are otherwise
reasonably satisfactory to the Agents.
"Quarterly Payment Date" shall mean each March 1, June 1, September 1 and
December 1 occurring after the Effective Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the same may
be amended from time to time, 42 U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all the right, title and interest of
such Person in and to land, improvements and fixtures, including Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation awards payable (i)
by reason of theft, loss, physical destruction, damage, taking or any other
similar event with respect to any property or assets of the Borrower or any of
its Subsidiaries and (ii) under any policy of insurance required to be
maintained under Section 6.03.
"Register" shall have the meaning provided in Section 11.15.
"Regulation D" shall mean Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
"Release" shall mean the disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, pouring or migrating,
into or upon any land or water or air, or otherwise entering into the
environment.
"Replaced Lender" shall have the meaning provided in Section 1.13.
"Replacement Lender" shall have the meaning provided in Section 1.13.
<PAGE> 77
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"Reportable Event" shall mean an event described in Section 4043(c) of ERISA
with respect to a Plan that is subject to Title IV of ERISA other than those
events as to which the 30-day notice period is waived under subsection .22,
.23, .25, .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Regulation Section
4043.
"Required Lenders" shall mean Lenders the sum of whose outstanding Loans
represent an amount greater than 50% of all outstanding Loans of all Lenders.
"Restricted Collateral Account" shall mean, with respect to any Asset Sale or
Recovery Event, an account of the Borrower and/or any Subsidiary of the
Borrower maintained with the Administrative Agent into which shall be deposited
the Net Sale Proceeds or the Net Insurance Proceeds, as the case may be, with
respect to such Asset Sale or Recovery Event (with such amount so deposited to
be held in cash or invested in Cash Equivalents, at the election of the
Borrower), provided that no amount may be withdrawn from such Restricted
Collateral Account except as follows: (i) on each date after the occurrence of
such Asset Sale or Recovery Event, as the case may be, and prior to the 360th
day after the receipt of the proceeds from such Asset Sale or Recovery Event,
as the case may be, with respect thereto on which the Borrower delivers to the
Administrative Agent a certificate signed by the President, the Chief Financial
Officer or the Treasurer of the Borrower stating that all or a specified
portion of the Net Sale Proceeds or Net Insurance Proceeds relating to such
Asset Sale or Recovery Event, as the case may be, has been, or
contemporaneously with the delivery of such certificate is being, reinvested by
the Borrower or such Subsidiary in assets as permitted by Section 3.02(d) or
3.02(f), as the case may be, an amount equal to the amount so reinvested or
being reinvested may be withdrawn, (ii) to repay outstanding Loans as required
by Section 3.02(d) or 3.02(f), as the case may be; and (iii) to repay
outstanding Loans in the event that the Borrower or such Subsidiary elects not
to use all or any portion of such proceeds for reinvestment purposes (it being
understood that all such amounts on deposit in the Restricted Collateral
Account are subject to being withdrawn by the Administrative Agent and applied
toward the Obligations at any time that an Event of Default exists and is
continuing).
"Rights Agreement" shall mean the Preferred Share Rights Purchase Agreement,
dated as of July 15, 1994, between the Borrower and First Chicago Trust Company
of New York, as rights agent.
"Scheduled Repayments" shall have the meaning provided in Section 3.02(a).
"SEC" shall have the meaning provided in Section 6.01(f).
"Section 3.04(b)(ii) Certificate" shall have the meaning provided in Section
3.04(b)(ii).
"Secured Creditors" shall have the meaning assigned that term in the respective
Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section 4.14.
"Security Agreement Collateral" shall mean all "Collateral" as defined in the
Security Agreement.
<PAGE> 78
"Security Document" shall mean and include each of the Security Agreement, the
Pledge Agreement, the Collateral Agency Agreement, each Mortgage, and, after
the execution and delivery thereof, each Additional Security Document.
"Start Date" shall mean, with respect to any Applicable Margin Period, the
first day of such Applicable Margin Period.
"Subordinated Note Documents" shall mean the Subordinated Notes, any indenture
or purchase agreement related thereto and each of the other documents entered
into in connection therewith.
"Subordinated Notes" shall have the meaning provided in Section 7.04(xii)
"Subsidiaries Guaranty" shall have the meaning provided in Section 4.15.
"Subsidiary" shall mean, as to any Person, (i) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person and/or one or more
Subsidiaries of such Person and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person and/or
one or more Subsidiaries of such Person has more than a 50% equity interest at
the time.
"Subsidiary Guarantor" shall mean each Subsidiary of the Borrower.
"Syndication Agent" shall mean MSSF, in its capacity as Syndication Agent and
Arranger for the Lenders hereunder.
"Syndication Date" shall mean that date upon which the Syndication Agent
determines (and notifies the Borrower) that the primary syndication (and
resultant addition of Persons as Lenders pursuant to Section 11.04(b)) has been
completed.
"Tax Sharing Agreements" shall have the meaning provided in Section 4.06.
"Taxes" shall have the meaning provided in Section 3.04(a).
"Test Date" shall mean, with respect to any Start Date, the last day of the
most recent fiscal quarter of the Borrower ended immediately prior to such
Start Date.
"Test Period" shall mean (i) for any determination made on or prior to the last
day of the fiscal quarter of the Borrower ending closest to September 30, 1998,
the period from January 1, 1998 through and including the last day of the
fiscal quarter of the Borrower then last ended (in each case taken as one
accounting period) and (ii) for any determination made thereafter, each period
of four consecutive fiscal quarters of the Borrower then last ended (in each
case taken as one accounting period).
"Total Commitment" shall mean, at any time, the sum of the Commitments of each
of the Lenders.
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"Transaction" shall mean, collectively, (i) the consummation of the Existing
Senior Secured Notes Tender Offer, (ii) the issuance of the New Senior Notes,
(iii) the consummation of the Existing Senior Secured Notes Consent
Solicitation, (iv) the consummation of the Bank Refinancing, (v) the amendment
and restatement of the Working Capital Facility and repayment of outstanding
loans thereunder on the Effective Date, (vi) the entering into of the Credit
Documents and the incurrence of all Loans on the Effective Date and (vii) the
payment of fees and expenses in connection with the foregoing.
"Type" shall mean the type of Loan determined with regard to the interest
option applicable thereto, i.e., whether a Base Rate Loan or a Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in effect in
the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if any, by
which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year, determined in accordance
with actuarial assumptions at such time consistent with Statement of Financial
Accounting Standards No. 87, exceeds the market value of the assets allocable
thereto.
"United States" and "U.S." shall each mean the United States of America.
"Universal Tool and Stamping" shall mean Universal Tool & Stamping Company,
Inc., an Indiana corporation.
"Wabush" shall mean the entity called Wabush Mines, a Canadian joint venture,
including Wabush Iron Co. Ltd., an Ohio corporation and one of the joint
venturers of Wabush Mines, which is engaged in the mining, beneficiation and
pelletizing of iron ore or any successor to either such entity, any entity of
approximately equivalent value substituted therefor or any investment of
approximately equivalent value and purpose.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any corporation
100% of whose capital stock (other than director's qualifying shares) is at the
time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such
Person and (ii) any partnership, limited liability company, association, joint
venture or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
"Working Capital Facility" shall mean the Amended and Restated Credit
Agreement, dated as of August 11, 1994, and amended and restated as of December
18, 1997, by and among the Borrower, the Subsidiary Guarantors party thereto,
the lenders from time to time party thereto and Harris Trust and Savings Bank,
as Agent (including any related security documents and guaranties), as the same
may be amended, supplemented, refinanced or replaced from time to time to the
extent permitted by Section 7.13.
<PAGE> 80
SECTION 10. The Administrative Agent and the Syndication Agent.
10.01 Appointment.
(a) The Lenders hereby irrevocably designate BTCo as
Administrative Agent (for purposes of this Section 10, the
term "Administrative Agent" also shall include BTCo in its
capacity as Collateral Agent pursuant to the Security
Documents) to act as specified herein and in the other Credit
Documents. The Lenders hereby designate MSSF as Syndication
Agent (for the purposes of this Section 10, the term
"Syndication Agent" also shall mean MSSF in its capacity as
Arranger) to act as specified herein and in the other Credit
Documents. Each Lender hereby irrevocably authorizes, and
each holder of any Note by the acceptance of such Note shall
be deemed irrevocably to authorize, the Administrative Agent
and the Syndication Agent to take such action on its behalf
under the provisions of this Agreement, the other Credit
Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically
delegated to or required of the Administrative Agent and the
Syndication Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The
Administrative Agent and the Syndication Agent may perform any
of their duties hereunder by or through its officers,
directors, agents, employees or affiliates.
(b) The Lenders also hereby designate State Street Bank and Trust
Company as a general collateral agent for such Lenders to act
as specified in the Collateral Agency Agreement until the same
is terminated in accordance with its terms. Each Lender
hereby authorizes, and each holder of any Note by the
acceptance of such Note shall be deemed to authorize, State
Street Bank and Trust Company to take such action on its
behalf under the provisions of the Collateral Agency Agreement
and any other instruments and agreements referred to therein
and to exercise such powers and to perform such duties
thereunder as are specifically delegated to State Street Bank
and Trust Company by the terms thereof and such other powers
as are reasonably incidental thereto. Each Lender also agrees
to be bound by the provisions of the Collateral Agency
Agreement and the Intercreditor Agreement.
10.02 Nature of Duties. Neither the Administrative Agent nor the Syndication
Agent shall have any duties or responsibilities except those expressly set
forth in this Agreement and in the other Credit Documents. Neither the
Administrative Agent, the Syndication Agent nor any of their officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Administrative Agent and
the Syndication Agent shall be mechanical and administrative in nature; neither
the Administrative Agent nor the Syndication Agent shall have by reason of this
Agreement or any other Credit Document a fiduciary relationship in respect of
any Lender or the holder of any Note; and nothing in this Agreement or any
other Credit Document, expressed or implied, is intended to or shall be so
construed as to impose upon the Administrative Agent or the Syndication Agent
any obligations in respect of this Agreement or any other Credit Document
except as expressly set forth herein or therein.
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10.03 Lack of Reliance on the Administrative Agent and the Syndication Agent.
Independently and without reliance upon the Administrative Agent or the
Syndication Agent, each Lender and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Borrower and its
Subsidiaries in connection with the making and the continuance of the Loans and
the taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of the Borrower and its Subsidiaries and,
except as expressly provided in this Agreement, neither the Administrative
Agent nor the Syndication Agent shall have any duty or responsibility, either
initially or on a continuing basis, to provide any Lender or the holder of any
Note with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter. Neither the Administrative Agent nor the Syndication Agent shall
be responsible to any Lender or the holder of any Note for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectability, priority or sufficiency of this Agreement or any
other Credit Document or the financial condition of the Borrower or any of its
Subsidiaries or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document, or the financial condition of the
Borrower or any of its Subsidiaries or the existence or possible existence of
any Default or Event of Default.
10.04 Certain Rights of the Agents. If any Agent shall request instructions
from the Required Lenders with respect to any act or action (including failure
to act) in connection with this Agreement or any other Credit Document, such
Agent shall be entitled to refrain from such act or taking such action unless
and until such Agent shall have received instructions from the Required
Lenders; and such Agent shall not incur liability to any Lender by reason of so
refraining. Without limiting the foregoing, no Lender or the holder of any
Note shall have any right of action whatsoever against any Agent as a result of
such Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Lenders.
10.05 Reliance. The Administrative Agent and the Syndication Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or telephone
message signed, sent or made by any Person that the Administrative Agent or the
Syndication Agent believed to be the proper Person, and, with respect to all
legal matters pertaining to this Agreement and any other Credit Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Administrative Agent or the Syndication Agent, as the case may be.
10.06 Indemnification. To the extent the Administrative Agent or the
Syndication Agent is not reimbursed and indemnified by the Credit Parties, the
Lenders will reimburse and indemnify the Administrative Agent and the
Syndication Agent in proportion to their respective "percentage" as used in
determining the Required Lenders (determined as if there were no Defaulting
Banks) for and against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, costs, expenses or disbursements of
whatsoever kind or nature which may be imposed on, asserted against or incurred
by the Administrative Agent or the Syndication Agent in performing its duties
hereunder or under any other Credit Document or in any way relating to or
arising out of this Agreement or any other Credit Document; provided that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements to the extent resulting from the Administrative Agent's or the
Syndication Agent's gross negligence or willful misconduct.
<PAGE> 82
10.07 The Administrative Agent and the Syndication Agent in their Individual
Capacity. With respect to its obligation to make Loans under this Agreement,
the Administrative Agent and the Syndication Agent shall have the rights and
powers specified herein for a "Lender" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Lenders," "Required Lenders," "holders of Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include the
Administrative Agent and the Syndication Agent in their respective individual
capacities. The Administrative Agent and the Syndication and their affiliates
may accept deposits from, lend money to, and generally engage in any kind of
banking, investment banking, trust or other business with, or provide debt
financing, equity capital or other services (including financial advisory
services) to, any Credit Party or any Affiliate of any Credit Party (or any
Person engaged in a similar business with any Credit Party or any Affiliate
thereof) as if they were not performing the duties specified herein, and may
accept fees and other consideration from any Credit Party or any Affiliate of
any Credit Party for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.
10.08 Holders. Any Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless and until a written notice of the
assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Administrative Agent. Any request, authority or consent of
any Person who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or endorsee, as the case may be, of
such Note or of any Note or Notes issued in exchange therefor.
10.09 Resignation by the Administrative Agent and the Syndication Agent.
(a) The Administrative Agent and/or the Syndication Agent may
resign from the performance of all its respective functions
and duties hereunder and/or under the other Credit Documents
at any time by giving 15 Business Days' prior written notice
to the Lenders. Such resignation, in the case of the
Administrative Agent, shall take effect upon the appointment
of a successor Administrative Agent pursuant to clauses (b)
and (c) below or as otherwise provided below, and such
resignation, in the case of the Syndication Agent, shall take
effect immediately.
(b) Upon any such notice of resignation by the Administrative
Agent, the Required Lenders shall appoint a successor
Administrative Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the
Borrower.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the
Administrative Agent with the consent of the Borrower (which
consent shall not be unreasonably withheld or delayed), shall
then appoint a successor Administrative Agent who shall serve
as Administrative Agent hereunder or thereunder until such
time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 20th Business Day
after the date such notice of resignation was given by the
Administrative Agent, the Administrative Agent's resignation
shall become effective and the Required Lenders shall
thereafter perform all the duties of the Administrative Agent
hereunder and/or under any other Credit Document until such
time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided above.
<PAGE> 83
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CONFORMED AS EXECUTED]
SECTION 11. Miscellaneous.
11.01 Payment of Expenses, etc. The Borrower shall: (i) whether or not the
transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agents (including, without limitation,
the reasonable fees and disbursements of White & Case and of the Agents' local
counsel and consultants) in connection with the preparation, execution and
delivery of this Agreement and the other Credit Documents and the documents and
instruments referred to herein and therein and any amendment, waiver or consent
relating hereto or thereto, of the Agents in connection with their syndication
efforts with respect to this Agreement and of the Agents and, after the
occurrence of an Event of Default, each of the Lenders in connection with the
enforcement of this Agreement and the other Credit Documents and the documents
and instruments referred to herein and therein or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings (including, without limitation, in each case the
reasonable fees and disbursements of counsel for each of the Agents and, after
the occurrence of an Event of Default, for each of the Lenders); (ii) pay and
hold each of the Lenders harmless from and against any and all present and
future stamp, excise and other similar documentary taxes with respect to the
foregoing matters and save each of the Lenders harmless from and against any
and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to such Lenders) to pay such taxes; and
(iii) indemnify each Agent and each Lender, and each of their respective
officers, directors, employees, representatives and agents from and hold each
of them harmless against any and all liabilities, obligations (including
removal or remedial actions), losses, damages, penalties, claims, actions,
judgments, suits, costs, expenses and disbursements (including reasonable
attorneys' and consultants' fees and disbursements) incurred by, imposed on or
assessed against any of them as a result of, or arising out of, or in any way
related to, or by reason of, (a) any investigation, litigation or other
proceeding (whether or not the any Agent or any Lender is a party thereto and
whether or not such investigation, litigation or other proceeding is brought by
or on behalf of any Credit Party) related to the entering into and/or
performance of this Agreement or any other Credit Document or the proceeds of
any Loans hereunder or the consummation of the Transaction or any other
transactions contemplated herein or in any other Credit Document or the
exercise of any of their rights or remedies provided herein or in the other
Credit Documents, or (b) the actual or alleged presence of Hazardous Materials
in the air, surface water or groundwater or on the surface or subsurface of any
Real Property owned or at any time operated by the Borrower or any of its
Subsidiaries, the generation, storage, transportation, handling or disposal of
Hazardous Materials by the Borrower or any of its Subsidiaries at any location,
whether or not owned or operated by the Borrower or any of its Subsidiaries,
the non-compliance of any Real Property with foreign, federal, state and local
laws, regulations, and ordinances (including applicable permits thereunder)
applicable to any Real Property, or any Environmental Claim asserted against
the Borrower, any of its Subsidiaries or any Real Property owned or at any time
operated by the Borrower or any of its Subsidiaries, including, in each case,
without limitation, the reasonable fees and disbursements of counsel and other
consultants incurred in connection with any such investigation, litigation or
other proceeding (but excluding any losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). To the extent that the
undertaking to indemnify, pay or hold harmless any Agent or any Lender set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Borrower shall make the maximum contribution to
the payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
<PAGE> 84
11.02 Right of Setoff. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default,
each Lender is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to any Credit Party or
to any other Person, any such notice being hereby expressly waived, to set off
and to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Lender (including, without
limitation, by branches and agencies of such Lender wherever located) to or for
the credit or the account of any Credit Party against and on account of the
Obligations and liabilities of the Credit Parties to such Lender under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations purchased by such Lender pursuant to
Section 11.06(b), and all other claims of any nature or description arising out
of or connected with this Agreement or any other Credit Document, irrespective
of whether or not such Lender shall have made any demand hereunder and although
said Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
11.03 Notices. Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopier or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered: if to any Credit Party, at the
address specified opposite its signature below or in the other relevant Credit
Documents; if to the Lender, at its address specified on Schedule II; and if to
the Administrative Agent, at the Notice Office; or, as to any Credit Party or
the Administrative Agent, at such other address as shall be designated by such
party in a written notice to the other parties hereto and, as to each Lender,
at such other address as shall be designated by such Lender in a written notice
to the Borrower and the Administrative Agent. All such notices and
communications shall, when mailed, telegraphed, telexed, telecopied, or cabled
or sent by overnight courier, be effective when deposited in the mails,
delivered to the telegraph company, cable company or overnight courier, as the
case may be, or sent by telex or telecopier, except that notices and
communications to the Administrative Agent and the Borrower shall not be
effective until received by the Administrative Agent or the Borrower, as the
case may be.
<PAGE> 85
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
11.04 Benefit of Agreement; Assignments; Participations.
(a) This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the respective successors and assigns
of the parties hereto; provided, however, the Borrower may not
assign or otherwise transfer any of its rights, obligations or
interest hereunder without the prior written consent of the
Lenders and, provided further, that, although any Lender may
transfer or grant participations in its rights hereunder, such
Lender shall remain a "Lender" for all purposes hereunder and
the transferee or participant, as the case may be, shall not
constitute a "Lender" hereunder and, provided further, that no
Lender shall transfer or grant any participation under which
the participant shall have rights to approve any amendment to
or waiver of this Agreement or any other Credit Document
except to the extent such amendment or waiver would (i) extend
the final scheduled maturity of any Loan or Note in which such
participant is participating, or reduce the rate or extend the
time of payment of interest thereon (except in connection with
a waiver of applicability of any post-default increase in
interest rates) or reduce the principal amount thereof, or
increase the amount of the participant's participation over
the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory
reduction in the Total Commitment, shall not constitute a
change in the terms of such participation, and that an
increase in any Commitment or Loan shall be permitted without
the consent of any participant if the participant's
participation is not increased as a result thereof), (ii)
consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement or (iii)
release all or substantially all of the Collateral under all
of the Security Documents (except as expressly provided in the
Credit Documents) supporting the Loans hereunder in which such
participant is participating. In the case of any such
participation, the participant shall not have any rights under
this Agreement or any of the other Credit Documents (the
participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed
by such Lender in favor of the participant relating thereto)
and all amounts payable by the Borrower hereunder shall be
determined as if such Lender had not sold such participation.
<PAGE> 86
(b) Notwithstanding the foregoing, any Lender (or any Lender
together with one or more other Lenders) may (x) assign all or
a portion of its outstanding Obligations hereunder to (i) its
parent company and/or any affiliate of such Lender which is at
least 50% owned by such Lender or its parent company or to one
or more Lenders or (ii) in the case of any Lender that is a
fund that invests in loans, any other fund that invests in
loans and is managed or advised by the same investment advisor
of such Lender or by an Affiliate of such investment advisor
or (y) assign all, or if less than all, a portion equal to at
least $2,000,000 in the aggregate for the assigning Lender or
assigning Lenders, of such outstanding Obligations hereunder
to one or more Eligible Transferees (treating any fund that
invests in loans and any other fund that invests in bank loans
and is managed or advised by the same investment advisor of
such fund or by an Affiliate of such investment advisor as a
single Eligible Transferee), each of which assignees shall
become a party to this Agreement as a Lender by execution of
an Assignment and Assumption Agreement, provided that, (i) at
such time Schedule 1.01(a) shall be deemed modified to reflect
the outstanding Loans of such new Lender and of the existing
Lenders, (ii) upon the surrender of the Note by the assigning
Lender (or, upon such assigning Lender's indemnifying the
Borrower for any lost Note pursuant to a customary
indemnification agreement) new Notes will be issued, at the
Borrower's expense, to such new Lender and to the assigning
Lender upon the request of such new Lender or assigning
Lender, such new Notes to be in conformity with the
requirements of Section 1.05 (with appropriate modifications)
to the extent needed to reflect the revised outstanding Loans,
(iii) the consent of the Agents and the Borrower shall be
required in connection with any assignment to an Eligible
Transferee pursuant to clause (y) above (each of which
consents shall not be unreasonably withheld or delayed,
provided that the consent of the Borrower shall not be
required at any time that an Event of Default exists), (iv)
the Administrative Agent shall receive at the time of each
such assignment, from the assigning or assignee Lender, the
payment of a non-refundable assignment fee of $3,500 (or
$1,500 in the case of an assignment between existing Lenders)
and (v) no such transfer or assignment will be effective until
recorded by the Administrative Agent on the Register pursuant
to Section 11.15. To the extent of any assignment pursuant to
this Section 11.04(b), the assigning Lender shall be relieved
of its obligations hereunder with respect to its assigned
outstanding Loans. At the time of each assignment pursuant to
this Section 11.04(b) to a Person which is not already a
Lender hereunder and which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for
Federal income tax purposes, the respective assignee Lender
shall, to the extent legally entitled to do so, provide to the
Borrower the appropriate Internal Revenue Service Forms (and,
if applicable, a Section 3.04(b)(ii) Certificate) described in
Section 3.04(b). To the extent that an assignment of all or
any portion of a Lender's outstanding Obligations pursuant to
Section 1.13 or this Section 11.04(b) would, at the time of
such assignment, result in increased costs under Section 1.10
or 3.04 from those being charged by the respective assigning
Lender prior to such assignment, then the Borrower shall not
be obligated to pay such increased costs (although the
Borrower, in accordance with and pursuant to the other
provisions of this Agreement, shall be obligated to pay any
other increased costs of the type described above resulting
from changes after the date of the respective assignment).
<PAGE> 87
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
(c) Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its Loans and Notes hereunder to a Federal
Reserve Bank in support of borrowings made by such Lender from
such Federal Reserve Bank and, with the consent of the
Administrative Agent, any Lender which is a fund may pledge
all or any portion of its Loans and Notes to its trustee in
support of its obligations to its trustee. No pledge pursuant
to this clause (c) shall release the transferor Lender from
any of its obligations hereunder.
11.05 No Waiver; Remedies Cumulative. No failure or delay on the part of any
Agent, the Collateral Agent or any Lender in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower or any other Credit Party and any Agent, the Collateral
Agent or any Lender shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights,
powers and remedies herein or in any other Credit Document expressly provided
are cumulative and not exclusive of any rights, powers or remedies which any
Agent, the Collateral Agent or any Lender would otherwise have. No notice to
or demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any Agent, the Collateral Agent or any
Lender to any other or further action in any circumstances without notice or
demand.
11.06 Payments Pro Rata.
(a) Except as otherwise provided in this Agreement, the
Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of
any Obligations hereunder, it shall distribute such payment to
the Lenders (other than any Lenders that have consented in
writing to waive its pro rata share of any such payment) pro
rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization
upon security, by the exercise of the right of setoff or
banker's lien, by counterclaim or cross action, by the
enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the
principal of, or interest on, the Loans, of a sum which with
respect to the related sum or sums received by other Lenders
is in a greater proportion than the total of such Obligation
then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately
prior to such receipt, then such Lender receiving such excess
payment shall purchase for cash without recourse or warranty
from the other Lenders an interest in the Obligations of the
respective Credit Party to such Lenders in such amount as
shall result in a proportional participation by all the
Lenders in such amount; provided that if all or any portion of
such excess amount is thereafter recovered from such Lender,
such purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.
<PAGE> 88
11.07 Calculations; Computations; Accounting Terms.
(a) The financial statements to be furnished to the Agents
pursuant hereto shall be made and prepared in accordance with
GAAP (except as set forth in the notes thereto or as otherwise
disclosed in writing by the Borrower to the Lenders); provided
that, (i) except as otherwise specifically provided herein,
all computations of Excess Cash Flow, the Applicable Base Rate
Margin and the Applicable Eurodollar Rate Margin and all
computations and all definitions used in determining
compliance with Sections 7.08 through 7.12, inclusive, shall
utilize accounting principles and policies in conformity with
those used to prepare the historical financial statements of
the Borrower referred to in Section 5.05(a) and (ii) from and
after such time as all Existing Senior Secured Notes have been
defeased in accordance with the terms thereof and hereof,
there shall be excluded from the calculation of the Leverage
Ratio, the Consolidated Interest Coverage Ratio and the
Consolidated Fixed Charge Coverage Ratio all Existing Senior
Secured Notes that have been defeased.
(b) All computations of interest and Fees hereunder shall be made
on the basis of a year of 360 days for the actual number of
days (including the first day but excluding the last day)
occurring in the period for which such interest or Fees are
payable.
<PAGE> 89
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
11.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL,
EXCEPT AS OTHERWISE PROVIDED IN THE MORTGAGE, BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, THE
BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY
FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK
PERSONAL JURISDICTION OVER IT, AND AGREES NOT TO PLEAD OR
CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENTS BROUGHT IN ANY OF THE
AFOREMENTIONED COURTS, THAT SUCH COURTS LACK PERSONAL
JURISDICTION OVER IT. THE BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE
30 DAYS AFTER SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER
CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID
OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
BORROWER IN ANY OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND
HEREBY FURTHER IRREVOCABLY, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
<PAGE> 90
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
11.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on 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. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
11.10 Effectiveness. This Agreement shall be come effective on the date (the
"Effective Date") on which (i) the Borrower, each Agent and each of the Lenders
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered the same to the Administrative Agent at
the Notice Office, or, in the case of the Lenders, shall have given to the
Administrative Agent telephonic (confirmed in writing), written or telex notice
(actually received) at such office that the same has been signed and mailed to
it and (ii) the conditions set forth in Section 4 are met to the satisfaction
of the Administrative Agent and the Required Lenders. Unless the
Administrative Agent has received actual notice from any Lenders that the
conditions contained in Section 4 have not been met to its satisfaction, upon
the satisfaction of the condition described in clause (i) of the immediately
preceding sentence and upon the Administrative Agent's good faith determination
that the conditions described in clause (ii) of the immediately preceding
sentence have been met, then the Effective Date shall have been deemed to have
occurred, regardless of any subsequent determination that one or more of the
conditions thereto had not been met. The Administrative Agent will give the
Borrower and each Lender prompt written notice of the occurrence of the
Effective Date.
11.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
<PAGE> 91
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
11.12 Amendment or Waiver; etc.
(a) Neither this Agreement nor any other Credit Document nor any
terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit
Parties party thereto and the Required Lenders, provided that
no such change, waiver, discharge or termination shall,
without the consent of each Lender (other than a Defaulting
Lender) (with Obligations being directly affected in the case
of following clause (i)), (i) extend the final scheduled
maturity of any Loan or Note, or reduce the rate or extend the
time of payment of interest or Fees thereon, or reduce the
principal amount thereof (except to the extent repaid in cash)
(it being understood that any amendment or modification to the
financial definitions in this Agreement or to Section 11.07(a)
shall not constitute a reduction in the rate of interest or
Fees for the purposes of this clause (i)), (ii) release all or
substantially all of the Collateral (except as expressly
provided in the Credit Documents) under all the Security
Documents, (iii) amend, modify or waive any provision of this
Section 11.12, (iv) reduce the percentage specified in the
definition of Required Lenders (it being understood that, with
the consent of the Required Lenders, additional extensions of
credit pursuant to this Agreement may be included in the
determination of the Required Lenders on substantially the
same basis as the extensions of Loans are included on the
Effective Date) or (v) consent to the assignment or transfer
by the Borrower of any of its rights and obligations under
this Agreement; provided further, that no such change, waiver,
discharge or termination shall (x) increase the Commitments of
any Lender over the amount thereof then in effect without the
consent of such Lender (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total
Commitment shall not constitute an increase of the Commitment
of any Lender, and that an increase in the available portion
of any Commitment of any Lender shall not constitute an
increase of the Commitment of such Lender), (y) without the
consent of the Administrative Agent, amend, modify or waive
any provision of Section 10 or any other provision as same
relates to the rights or obligations of the Administrative
Agent or (z) without the consent of the Collateral Agent,
amend, modify or waive any provision relating to the rights or
obligations of the Collateral Agent.
<PAGE> 92
(b) If, in connection with any proposed change, waiver, discharge
or termination to any of the provisions of this Agreement as
contemplated by clauses (i) through (v), inclusive, of the
first proviso to Section 11.12(a), the consent of the Required
Lenders is obtained but the consent of one or more of such
other Lenders whose consent is required is not obtained, then
the Borrower shall have the right, so long as all
non-consenting Lenders whose individual consent is required
are treated as described in either clauses (A) or (B) below,
to either (A) replace each such non-consenting Lender or
Lenders with one or more Replacement Lenders pursuant to
Section 1.13 so long as at the time of such replacement, each
such Replacement Lender consents to the proposed change,
waiver, discharge or termination or (B) repay the outstanding
Loans of such non-consenting Lender in accordance with Section
3.01(b), provided that, unless the Loans that are repaid,
pursuant to preceding clause (B) are immediately replaced in
full at such time through the addition of new Lenders or the
increase of the outstanding Loans of existing Lenders (who in
each case must specifically consent thereto), then in the case
of any action pursuant to preceding clause (B) the Required
Lenders (determined after giving effect to the proposed
action) shall specifically consent thereto, provided further,
that in any event the Borrower shall not have the right to
replace a Lender, or repay its Loans solely as a result of the
exercise of such Lender's rights (and the withholding of any
required consent by such Lender) pursuant to the second
proviso to Section 11.12(a).
11.13 Survival. All indemnities set forth herein including, without
limitation, in Sections 1.10, 1.11, 3.04, 10.06 and 11.01 shall survive the
execution, delivery and termination of this Agreement and the Notes and the
making and repayment of the Obligations.
11.14 Domicile of Loans. Each Lender may transfer and carry its Loans at, to
or for the account of any office, Subsidiary or Affiliate of such Lender.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 11.14 would, at the time of such
transfer, result in increased costs under Section 1.10 or 3.04 from those being
charged by the respective Lender prior to such transfer, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective transfer).
<PAGE> 93
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
11.15 Register. The Borrower hereby designates the Administrative Agent to
serve as the Borrower's agent, solely for purposes of this Section 11.15, to
maintain a register (the "Register") on which it will record the Commitments
from time to time of each of the Lenders, the Loans made by each of the Lenders
and each repayment in respect of the principal amount of the Loans of each
Lender. Failure to make any such recordation, or any error in such recordation
shall not affect the Borrower's obligations in respect of such Loans. With
respect to any Lender, the transfer of the Commitments of such Lender and the
rights to the principal of, and interest on, any Loan made pursuant to such
Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of
any Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
11.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Lender shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Lender Bank
and/or the new Lender. The Borrower agrees to indemnify the Administrative
Agent from and against any and all losses, claims, damages and liabilities of
whatsoever nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its duties under this Section 11.15.
<PAGE> 94
11.16 Confidentiality.
(a) Subject to the provisions of clause (b) of this Section 11.16,
each Lender agrees that it will use its reasonable efforts not
to disclose without the prior consent of the Borrower (other
than to its employees, auditors, advisors or counsel or to
another Lender or to any Person who evaluates, approves,
structures or administers the Loans on behalf of a Lender, in
either case if the Lender or such Lender's holding or parent
company in its sole discretion determines that any such party
should have access to such information, provided such Persons
shall be subject to the provisions of this Section 11.16 to
the same extent as such Lender) any information with respect
to the Borrower or any of its Subsidiaries which is now or in
the future furnished pursuant to this Agreement or any other
Credit Document and which is designated by the Borrower to the
Lenders in writing as confidential (it being understood that
all information delivered pursuant to Section 6.01(c) shall be
considered confidential information), provided that any Lender
may disclose any such information (i) as has become generally
available to the public other than by virtue of a breach of
this Section 11.16(a) by the respective Lender, (ii) as may be
required or appropriate in any report, statement or testimony
submitted to any municipal, state or Federal regulatory body
having or claiming to have jurisdiction over such Lender or to
the Federal Reserve Board, the Federal Deposit Insurance
Corporation or the NAIC or similar organizations (whether in
the United States or elsewhere) or their successors, (iii) as
may be required or appropriate in respect to any summons or
subpoena or in connection with any litigation, (iv) in order
to comply with any law, order, regulation or ruling applicable
to such Lender, (v) to any Agent or the Collateral Agent and
(vi) to any prospective or actual transferee or participant in
connection with any contemplated transfer or participation of
any of the Notes or Commitments or any interest therein by
such Lender, provided that such prospective transferee agrees
to be bound by the confidentiality provisions contained in
this Section 11.16.
(b) The Borrower hereby acknowledges and agrees that each Lender
may share with any of its affiliates any information related
to the Borrower or any of its Subsidiaries (including, without
limitation, any nonpublic customer information regarding the
creditworthiness of the Borrower and its Subsidiaries),
provided such Persons shall be subject to the provisions of
this Section 11.16 to the same extent as such Lender).
* * *
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
Acme Metals Incorporated
13500 S. Perry Avenue
Riverdale, Illinois 60827-1182
Attn: Treasurer
<PAGE> 95
By: /s/ James W. Hoekwater
---------------------------
Title: Treasurer
Tel. No.: (708) 849-2500
Fax No.: (708) 841-6010
with a copy to:
13500 S. Perry Avenue
Riverdale, Illinois 60827-1182
Attn: General Counsel
Tel. No.: (708) 849-2500
Fax No.: (708) 841-6010
MORGAN STANLEY SENIOR FUNDING,
INC., Individually and as Syndication Agent
and Arranger
By: /s/ Michael McLaughlin
---------------------------
Title: Principal
BANKERS TRUST COMPANY,
Individually and as Administrative Agent
By: /s/ Robert R. Telesca
---------------------------
Title: Assistant Vice President
SANWA BUSINESS CREDIT CORPORATION
By: /s/ Frank Plank
---------------------------
Title: First Vice President
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By: /s/ Lynn C. Baranski
---------------------------
Title: Authorized Signatory
GCB INVESTMENT PORTFOLIO
By: Citibank, N.A.
By: /s/ Steve Kaufman
---------------------------
Title: Vice President
KZH HOLDING CORPORATION III
By: /s/ V. Conway
---------------------------
Title: Authorized Agent
FLOATING RATE PORTFOLIO
By: Chancellor LGT Senior Secured
Management, Inc., as Attorney-in-fact
By: /s/ Chris Jansen
---------------------------
Title: Managing Director
<PAGE> 96
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
COMMITMENTS
<TABLE>
<CAPTION>
Bank Commitment
---- ----------
<S> <C>
Morgan Stanley Senior Funding, Inc. $113,500,000.00
Bankers Trust Company $ 15,000,000.00
Sanwa Business Credit Corporation $ 18,000,000.00
Merrill Lynch Senior Floating Rate Fund, Inc. $ 10,000,000.00
GCB Investment Portfolio $ 10,000,000.00
KZH Holding Corporation III $ 5,000,000.00
Floating Rate Portfolio $ 3,500,000.00
TOTAL: $175,000,000.00
---------------
</TABLE>
<PAGE> 97
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
BANK ADDRESSES
<TABLE>
<CAPTION>
Bank Address
---- -------
<S> <C>
Morgan Stanley Senior Funding, Inc. 1585 Broadway
New York, New York 10036
Attn: James Morgan
Tel. No.: (212) 761-4866
Fax No.: (212) 761-0592
with a copy to:
1585 Broadway
New York, New York 10036
Attn: Michael McLaughlin
Tel. No.: (212) 761-2838
Fax No.: (212) 761-3932
Bankers Trust Company 233 South Wacker Drive
Chicago, Illinois 60600
Attn: Dan Horn
Tel. No.: (312) 993-8095
Fax No.: (312) 993-8218
Sanwa Business Credit Corporation One South Wacker Drive
Chicago, Illinois 60606
Attn: Greg Cooper
Tel. No.: (312) 853-1401
Fax No.: (312) 782-6035
Merrill Lynch Senior Floating Rate Fund, Inc. 800 Scudders Mill Road
Area 1B
Plainsboro, New Jersey 08536
Attn: Lynn Baranski
Tel. No.: (609) 282-5013
Fax No.: (609) 282-2756
</TABLE>
<PAGE> 98
<TABLE>
<S> <C>
GCB Investment Portfolio 599 Lexington Avenue
26th Floor/Zone 10
New York, New York 10043
Attn: Steve Kaufman
Tel. No.: (212) 291-5951
Fax No.: (212) 291-5928
KZH Holding Corporation III c/o The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attn: Virginia Conway
Tel. No.: (212) 946-7575
Fax No.: (212) 946-7776
Floating Rate Portfolio Address for Administrative Notices:
Chancellor LGT Asset Management, Inc.
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attention: Linda DiNapoli
Tel. No.: (415) 445-7525
Fax No.: (415) 296-0511
Address for Notices regarding Amendments and Waivers:
GT Global Floating Rate Fund, Inc.
c/o Chancellor LGT Senior Secured Management, Inc.
1166 Avenue of the Americas
New York, New York 10036
Attention: Susan McKofke
Tel. No.: (212) 278-9647
Fax No.: (212) 278-9847
</TABLE>
<PAGE> 99
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
CERTAIN TAX MATTERS
<PAGE> 100
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
PLANS
<PAGE> 101
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
REAL PROPERTIES
<PAGE> 102
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
CAPITALIZATION
<PAGE> 103
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
SUBSIDIARIES
<PAGE> 104
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
CERTAIN ENVIRONMENTAL MATTERS
<PAGE> 105
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
EXISTING INDEBTEDNESS
<PAGE> 106
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
INSURANCE
<PAGE> 107
EXISTING LIENS
<TABLE>
<CAPTION>
Filing File Original Description Permitted
Location Debtor Secured Party Number File Date of Collateral Refinancing
-------- ------ ------------- ------ --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 108
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
EXISTING INVESTMENTS
<PAGE> 109
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
CERTAIN TRANSACTIONS WITH AFFILIATES
<PAGE> 110
[CONFORMED COPY WITH
EXHIBITS G, H, AND I
CONFORMED AS EXECUTED]
CERTAIN TAKE-OR-PAY OBLIGATIONS
<PAGE> 1
EXHIBIT 10.30
<TABLE>
<CAPTION>
PARTICIPANT AND CURRENT TITLE OR PARTICIPATION PARTICIPATION
TITLE AT TERMINATION IN PLAN EFFECTIVE DATE TERMINATION DATE
-------------------------------- -------------- ----------------
<S> <C> <C>
Brian W. H. Marsden January 22, 1987 March 1, 1997
Chairman of the Board
Acme Metals Incorporated
Stephen D. Bennett June 1, 1990
President and Chief Executive Officer
Acme Metals Incorporated
Gerald J. Shope May 25, 1995
Vice President-Human Resources
Acme Metals Incorporated
Jerry F. Williams January 22, 1987
Vice President Finance and Administration
Acme Metals Incorporated
Edward P. Weber, Jr. January 22, 1987
Vice President, General Counsel
and Secretary
Acme Metals Incorporated
James W. Hoekwater May 25, 1995
Treasurer
Acme Metals Incorporated
Derrick T. Bay January 28, 1998
Controller
Acme Metals Incorporated
Gregory J. Pritz May 25, 1995 January 16, 1998
Controller
Acme Metals Incorporated
Robert W. Dyke March 14, 1988
Senior Vice President - Fabricating
Acme Metals Incorporated
James N. Howell January 28, 1998
Senior Vice President - Steel
Acme Metals Incorporated
</TABLE>
<PAGE> 2
EXHIBIT 10.30
<TABLE>
<CAPTION>
PARTICIPANT AND CURRENT TITLE OR PARTICIPATION PARTICIPATION
TITLE AT TERMINATION IN PLAN EFFECTIVE DATE TERMINATION DATE
-------------------------------- -------------- -------------------
<S> <C> <C>
Gary S. Lucenti May 25, 1995 August 31, 1997
President
Acme Steel Company
Larry C. Kipp May 25, 1995
President
Universal Tool & Stamping Company, Inc.
Edward J. Urbaniak, Jr. January 24, 1997
President
Alpha Tube Corporation
Reynold C. MacDonald January 22, 1987 May 25, 1995
Former Chairman of the Board
Acme Steel Company;
Director
Acme Metals Incorporated
Richard J. Stefan January 22, 1987 May 25, 1995
Retired Vice President-Employee Relations
Acme Metals Incorporated
Reno P. Zenere January 22, 1987 May 25, 1995
Vice President
Acme Packaging Corporation
Jerry D. Kendall February 1, 1988 May 25, 1995
Vice President Marketing
of Steel Products
James M. Schwyn May 25, 1992 May 25, 1995
Former President
Universal Tool & Stamping Company, Inc.
Steven G. Jansto May 25, 1995 October 31, 1995
Former President
Alpha Tube Corporation
</TABLE>
<PAGE> 1
EXHIBIT 21
ACME METALS INCORPORATED
SUBSIDIARY LISTING
AS OF MARCH 2, 1998
<TABLE>
<CAPTION>
SUBSIDIARY NAME, D/B/A, STATE OR COUNTRY OF
AND ITS SUBSIDIARIES INCORPORATION TYPE OF BUSINESS
- -------------------------- -------------------- -----------------------
<S> <C> <C>
ACME STEEL COMPANY Delaware Integrated steel producer
Alabama Metallurgical Washington Inactive
Corporation
ACME PACKAGING CORPORATION Delaware Manufacture and sale of steel
(d/b/a Acme Steel Packaging Corporation, strapping and related tools
State of California)
(d/b/a RAPZ Strapping Products, State
of Illinois and town of New Britain,
Connecticut)
Acme Steel Company Barbados Foreign trading company
International, Inc.
ALPHA TUBE CORPORATION Delaware Manufacture and sale of welded
(d/b/a Walbridge Steel, States of carbon steel tubing
Michigan and Ohio)
Alta Slitting Corporation Delaware Slitting and processing
of steel products
(1)UNIVERSAL TOOL & STAMPING Indiana Manufacture and sale of auto
COMPANY, INC. and truck jacks
</TABLE>
(1)Universal Tool & Stamping Company, Inc. was sold pursuant to a Stock
Purchase Agreement on March 9, 1998.
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8 (Nos. 33-17235,
33-19437, and 33-30841) and in the Registration Statements on Form S-8 (Nos.
33-38747 and 33-59627) of Acme Metals Incorporated of our report dated January
23, 1998, except as to the Note entitled "Assets Held for Sale" which is as of
March 10, 1998, appearing on page 38 in this Annual Report on Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Chicago, Illinois
March 17, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> DEC-28-1997
<CASH> 6,454
<SECURITIES> 0
<RECEIVABLES> 59,646
<ALLOWANCES> 1,296
<INVENTORY> 81,630
<CURRENT-ASSETS> 192,443
<PP&E> 864,192
<DEPRECIATION> (313,842)
<TOTAL-ASSETS> 829,081
<CURRENT-LIABILITIES> 100,300
<BONDS> 423,243
0
0
<COMMON> 11,627
<OTHER-SE> 174,716
<TOTAL-LIABILITY-AND-EQUITY> 829,081
<SALES> 488,030
<TOTAL-REVENUES> 488,030
<CGS> 483,879
<TOTAL-COSTS> 523,087
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,632
<INCOME-PRETAX> (76,642)
<INCOME-TAX> (29,124)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (23,411)
<CHANGES> (6,276)
<NET-INCOME> (77,205)
<EPS-PRIMARY> (6.64)
<EPS-DILUTED> (6.64)
</TABLE>
