SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: July 3, 1996
(Date of earliest event reported)
Renco Metals, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 333-4513 13-3724916
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(State or Other Juris- (Commission (I.R.S. Employer
diction of Incorporation) File Number) Identification No.)
238 North 2200 West, Salt Lake City, UT 84116
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (801) 532-2043
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This Document contains exactly 4 Pages.
The Exhibit Index is on page 4.
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ITEM 5. OTHER EVENTS
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On July 3, 1996, Renco Metals, Inc., a Delaware corporation (the
"Company"), issued $150,000,000 aggregate principal amount of the Company's 11
1/2% Senior Notes due 2003 (the "Notes"). The offering was underwritten by
Donaldson, Lufkin & Jenrette Securities Corporation (the "Underwriter") pursuant
to an underwriting agreement dated June 28, 1996, by and among the Company,
Magnesium Corporation of America ("Magcorp"), Sabel Industries, Inc. ("Sabel"),
and the Underwriter. The Notes are fully and unconditionally guaranteed by Sabel
and Magcorp.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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(c) Exhibits
Item 601(a) of
Regulation S-K
Exhibit No. Exhibit No. Description
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4.1 4 Indenture, dated as of July 1, 1996, for
the 11 1/2% Senior Notes due 2003.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on behalf of the Registrant
by the undersigned thereunto duly authorized.
Renco Metals, Inc.
By: /s/ Roger Fay
Roger Fay
Vice President
Date: July 17, 1996
<PAGE>
EXHIBIT INDEX
Item 601(a) of
Regulation S-K
Exhibit No. Exhibit No. Description
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4.1 4 Indenture dated as of July 1, 1996 for
the 11 1/2% Senior Notes due 2003
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RENCO METALS, INC.,
as Issuer,
MAGNESIUM CORPORATION OF AMERICA
and
SABEL INDUSTRIES, INC.,
as Guarantors,
and
FLEET NATIONAL BANK,
as Trustee
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INDENTURE
Dated as of July 1, 1996
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11-1/2% Senior Notes due 2003
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<PAGE>
INDENTURE dated as of July 1, 1996, among RENCO METALS, INC., a Delaware
corporation, as issuer (the "Company"), MAGNESIUM CORPORATION OF AMERICA, a
Delaware corporation, as Guarantor ("MagCorp" or a "Guarantor"), SABEL
INDUSTRIES, INC., an Alabama corporation, as Guarantor ("Sabel" or a
"Guarantor"), and FLEET NATIONAL BANK, a national banking association, as
Trustee (the "Trustee").
The Company and the Guarantors have duly authorized the execution and
delivery of this Indenture to provide for the issuance of the Securities (as
hereinafter defined) to be issued as provided for in this Indenture and the
related Guarantees (as hereinafter defined) of MagCorp and Sabel.
The parties hereto agree as follows for the benefit of each other and for
the equal and ratable benefit of the Holders (as hereinafter defined) of the
Securities:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
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SECTION 1.1 Definitions.
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"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Subsidiary of the Company or assumed in connection with an
Asset Acquisition of such Person, including, without limitation, Indebtedness
incurred in connection with, or in anticipation of, such Person's becoming a
Subsidiary of the Company or such acquisition.
"Affiliate" of any specified Person means any other Person which, directly
or indirectly, controls, is controlled by or is under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Affiliate Transaction" has the meaning provided in Section 4.14.
"Agent" means any Registrar or Paying Agent.
"Asset Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) or purchase or
acquisition of Capital Stock by the Company or any of its Subsidiaries to or in
any other Person, in either case as a result of which such Person shall become a
Subsidiary of the Company or any of its Subsidiaries or shall be merged with or
into the Company or any of its Subsidiaries or (ii) any acquisition by the
Company or any of its Subsidiaries of the assets of any Person which constitute
substantially all of an operating unit or business of such Person.
<PAGE>
"Asset Sale" means any direct or indirect sale, conveyance, transfer, lease
(including by means of sale-leaseback) or other disposition to any Person other
than the Company or a Subsidiary of the Company, in one transaction or a series
of related transactions, of (i) any Capital Stock of any Subsidiary of the
Company or (ii) any other property or asset of the Company or any Subsidiary of
the Company, in each case other than in the ordinary course of business and
other than isolated transactions which do not exceed $250,000 individually. For
the purposes of this definition, the term "Asset Sale" shall not include sales
of receivables not a part of a sale of the business from which they arose or any
disposition of all or substantially all of the properties and assets of the
Company that is governed under and complies with the requirements set forth in
Section 5.1.
"Asset Sale Offer" has the meaning provided in Section 4.13(a).
"Asset Sale Purchase Date" has the meaning provided in Section 4.13(a).
"Available Amount" has the meaning provided in Section 4.13(a).
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar federal or
state law for the relief of debtors.
"Base Period" has the meaning provided in Section 4.12(a)(ii).
"Board of Directors" means the Board of Directors of the Company or a
Guarantor, as appropriate, or any committee of such Board of Directors
authorized to act for it hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company or a Guarantor, as appropriate, to have
been duly adopted by the Board of Directors of the Company or a Guarantor, as
appropriate, and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Book-Entry Security" means a Security represented by a Global Security and
registered in the name of the nominee of the Depository.
"Business Day" means any day except a Saturday, a Sunday or any day on
which banking institutions in New York, New York or the city in which the
principal corporate trust office of the Trustee is located are required or
authorized by law or other governmental action to be closed.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of such Person's capital stock, whether
outstanding on the Issue Date or issued after the Issue Date, and any and all
rights, warrants or options exchangeable for or convertible into such capital
stock.
<PAGE>
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified and
accounted for as a capital lease obligation under GAAP, and, for the purposes of
this Indenture, the amount of such obligation at any date shall be the
capitalized amount thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means, at any time, (i) any evidence of Indebtedness
with a maturity of 180 days or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit or acceptances with a
maturity of 180 days or less of any financial institution that is a member of
the Federal Reserve System having combined capital and surplus and undivided
profits of not less than $250,000,000; (iii) commercial paper with a maturity of
180 days or less issued by a corporation (except an Affiliate of the Company)
organized under the laws of any state of the United States or the District of
Columbia and rated at least A-1 by Standard & Poor's Ratings Group or at least
P-1 by Moody's Investors Service, Inc.; and (iv) repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued
or unconditionally guaranteed by the United States of America or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; provided,
however, that the terms of such agreements comply with the guidelines set forth
in the Federal Financial Agreements of Depository Institutions with Securities
Dealers and Others, as adopted by the Comptroller of the Currency.
"Change of Control" means (i) the direct or indirect sale, lease, exchange
or other transfer of all or substantially all of the assets of the Company or
Renco to any Person or entity or group of Persons or entities acting in concert
as a partnership or other group (a "Group of Persons") other than an Affiliate
of the Company, (ii) the merger or consolidation of the Company or Renco with or
into another corporation with the effect that the then existing shareholders of
the Company or Renco, as the case may be, hold less than 50% of the combined
voting power of the then outstanding securities of the surviving corporation of
such merger or the corporation resulting from such consolidation ordinarily (and
apart from rights arising under special circumstances) having the right to vote
in the election of directors, (iii) the replacement of a majority of the Board
of Directors of Renco, over a two-year period, from the directors who
constituted the Board of Directors at the beginning of such period, and such
replacement shall not have been approved by a vote of at least a majority of the
Board of Directors then still in office who either were members of the Board of
Directors at the beginning of such period or whose election as a member of the
Board of Directors was previously so approved, or (iv) a Person or Group of
Persons (other than Renco and its Affiliates) shall, as a result of a tender or
exchange offer, open market purchases, privately negotiated purchases or
otherwise, have become the direct or indirect beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of the Company or
Renco representing 50% or more of the combined voting power of the then
outstanding securities of the Company or Renco ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of directors.
<PAGE>
"Change of Control Date" has the meaning provided in Section 4.15.
"Change of Control Offer" has the meaning provided in Section 4.15.
"Change of Control Payment Date" has the meaning provided in Section 4.15.
"Common Stock" means, with respect to any Person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of, such Person's common stock, whether
outstanding on the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"Company" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and, thereafter,
means the successor.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period increased (to the
extent deducted in determining Consolidated Net Income) by the sum of: (i) all
United States Federal, state and foreign income taxes of such Person paid or
accrued according to GAAP for such period (other than income taxes attributable
to extraordinary, unusual or nonrecurring gains or losses); (ii) all interest
expense of such Person paid or accrued in accordance with GAAP (net of any
interest income) for such period (including amortization of original issue
discount and the interest portion of deferred payment obligations); (iii)
depreciation and depletion; (iv) amortization including, without limitation,
amortization of capitalized debt issuance costs; and (v) any other non-cash
charges to the extent deducted from Consolidated Net Income (including non-cash
expenses recognized in accordance with Financial Accounting Standards Bulletin
Number 106).
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided,
however, that (a) the Net Income of any Person (the "Other Person") in which the
Person in question or one of its Subsidiaries has a joint interest with a third
party (which interest does not allow the net income of such Other Person to be
consolidated into the net income of the Person in question in accordance with
GAAP) shall be included only to the extent of the amount of dividends or
distributions paid to the Person in question or the Subsidiary, (b) the Net
Income of any Subsidiary of the Person in question that is subject to any
contractual restriction or limitation on the payment of dividends or the making
of other distributions shall be excluded to the extent of such restriction or
limitation (provided that this clause (b) shall not apply to any such
restrictions or limitations with respect to the Guarantors contained in the
Credit Facilities as such restrictions or limitations are in effect on the Issue
Date), (c)(i) the Net Income (or loss) of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition and
(ii) any net gain (but not loss) resulting from an Asset Sale by the Person in
question or any of its Subsidiaries other than in the ordinary course of
business shall be excluded and (d) extraordinary gains and losses shall be
excluded.
<PAGE>
"Consolidated Net Worth" means, with respect to any Person at any date of
determination, the consolidated stockholders' equity represented by the shares
of such Person's Capital Stock (other than Disqualified Stock) outstanding at
such date, as determined on a consolidated basis in accordance with GAAP.
"Credit Facilities" means (i) the revolving credit facility as in effect as
of the Issue Date between MagCorp and Congress Financial Corporation and (ii)
the revolving credit facility as in effect as of the Issue Date between Sabel
and Congress Financial Corporation, in each case as the same may at any time be
amended, amended and restated, supplemented or otherwise modified, including any
refinancing, refunding, replacement or extension thereof and whether by the same
or any other lender or group of lenders.
"Custodian" has the meaning provided in Section 6.1(b).
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Depository" means, with respect to the Securities issued in the form of
one or more Book-Entry Securities, The Depository Trust Company or another
person designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which, by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable
at the option of the holder thereof, in whole or in part, in each case on or
prior to the final Maturity Date of the Securities.
"Event of Default" has the meaning provided in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended and
the rules and regulations promulgated thereunder.
"Existing Notes" means the 12% Senior Notes Due 2000 issued, authenticated
and delivered under the indenture, dated as of August 1, 1993, among the
Company, the Guarantors and the Trustee, as amended or supplemented from time to
time pursuant to the terms of such indenture.
"Fair Market Value" or "fair value" means, with respect to any asset or
property, the price which could be negotiated in an arm's length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the transaction. Fair
Market Value shall be determined by the Board of Directors of the Company acting
in good faith and shall be evidenced by a Board Resolution delivered to the
Trustee.
<PAGE>
"Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio
of (i) Consolidated Cash Flow of such Person for the four full fiscal quarters
for which financial statements are available that immediately precede the date
of the transaction or other circumstances giving rise to the need to calculate
the Fixed Charge Coverage Ratio (the "Transaction Date") to (ii) all cash and
non-cash interest expense (including capitalized interest) of such Person and
its Subsidiaries determined in accordance with GAAP (net of any interest income
of such Person and its Subsidiaries and exclusive of deferred financing fees of
such Person and its Subsidiaries) and the aggregate amount of cash dividends or
other distributions declared or paid on Capital Stock (other than Common Stock)
of such Person and its Subsidiaries, in each case for such four full fiscal
quarter period. For purposes of this definition, if the Transaction Date occurs
prior to the date on which the Company's consolidated financial statements for
the four full fiscal quarters subsequent to the Issue Date are first available,
then "Consolidated Cash Flow" and the items referred to in the preceding clause
(ii) shall be calculated, in the case of the Company, after giving effect on a
pro forma basis as if the Securities outstanding on the Transaction Date were
issued on the first day of such four full fiscal quarter period. In addition to
and without limitation of the foregoing two sentences, for purposes of this
definition, "Consolidated Cash Flow" and the items referred to in the preceding
clause (ii) shall be calculated after giving effect on a pro forma basis for the
period of such calculation to (i) the Incurrence or repayment of any
Indebtedness of such Person or any of its Subsidiaries (other than Indebtedness
for working capital) at any time during the period (the "Reference Period") (A)
commencing on the first day of the four full fiscal quarter period for which
financial statements are available that precedes the Transaction Date and (B)
ending on and including the Transaction Date, including, without limitation, the
Incurrence or repayment of the Indebtedness giving rise to the need to make such
calculation, as if such Incurrence or repayment occurred on the first day of the
Reference Period; provided that if such Person or any of its Subsidiaries
directly or indirectly guarantees Indebtedness of a third Person, the above
clause shall give effect to the Incurrence of such guaranteed Indebtedness as if
such Person or Subsidiary had directly Incurred such guaranteed Indebtedness and
(ii) any Asset Sales or Asset Acquisitions (including, without limitation, any
Asset Acquisition giving rise to the need to make such calculation as a result
of the Company or any of its Subsidiaries (including any Person who becomes a
Subsidiary as a result of the Asset Acquisition) incurring Acquired
Indebtedness) occurring during the Reference Period and any retirement of
Indebtedness in connection with such Asset Sales, as if such Asset Sale or Asset
Acquisition and/or retirement occurred on the first day of the Reference Period.
Furthermore, in calculating the denominator (but not the numerator) of this
"Fixed Charge Coverage Ratio," (1) subject to clause (3) below, interest on
Indebtedness determined on a fluctuating basis as of the Transaction Date and
which will continue to be so determined thereafter shall be deemed to accrue at
a fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; (2) if interest on any Indebtedness actually
incurred on the Transaction Date may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate based upon a factor of a
prime or similar rate shall be deemed to have been in effect; and (3)
notwithstanding clause (1) above, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements relating
to Interest Rate Protection Obligations, shall be deemed to accrue at the rate
per annum resulting after giving effect to the operation of such agreements.
<PAGE>
"GAAP" means generally accepted accounting principles in effect on the
Issue Date 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 may be approved by a significant
segment of the accounting profession of the United States.
"Global Security" means a Security evidencing all or a part of the
Securities to be issued as Book-Entry Securities, issued to the Depository in
accordance with Section 2.2 and bearing the legend prescribed in Exhibit B.
"Guarantee" means the full and unconditional, joint and several, guarantee
of the Securities by each Guarantor set forth in Article X.
"Guarantor" means (i) each of the Company's Subsidiaries executing this
Indenture and (ii) each of the Company's Subsidiaries which becomes a guarantor
of the Securities pursuant to Section 4.19.
"Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, guarantee or otherwise become liable for or with respect to the payment
of, contingently or otherwise, such 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, without duplication, (i)
any liability, contingent or otherwise, of such Person (A) for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), (B) evidenced by a note, debenture or
similar instrument, letter of credit or draft accepted (including a purchase
money obligation) representing extensions of credit whether or not representing
obligations for borrowed money or (C) for the payment of money relating to a
Capitalized Lease Obligation or other obligation relating to the deferred
purchase price of any property or services (other than property or services
purchased on ordinary trade terms therefor) which purchase price is payable over
a period in excess of six months or is evidenced by a note, invoice or similar
written instrument with a maturity in excess of six months; (ii) any liability
of others of the kind described in the preceding clause (i) which the Person has
guaranteed or which is otherwise its legal liability; (iii) any obligation
secured by a lien to which the property or assets of such Person are subject,
whether or not the obligations secured thereby shall have been assumed by or
shall otherwise be such Person's legal liability; and (iv) any and all
deferrals, renewals, extensions, replacements, refinancings, and refundings of,
or amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clause (i), (ii) or (iii).
<PAGE>
"Indenture" means this Indenture as amended or supplemented from time to
time pursuant to the terms hereof.
"interest," when used with respect to any Security, means the amount of all
interest accruing on such Security, including all interest accruing subsequent
to the occurrence of any events specified in Sections 6.1(a)(vii) and (viii) or
which would have accrued but for any such event.
"Interest Payment Date," when used with respect to any Security, means the
stated maturity of an installment of interest specified in such Security.
"Interest Rate," when used with respect to any Security, means the rate per
annum specified in such Security as the rate of interest accruing on the
principal amount of such Security.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" has the meaning provided in Section 4.20.
"Issue Date" means the date on which the Securities were originally issued
in accordance with the terms of this Indenture.
"Legal Holiday" means any day other than a Business Day.
"Lien" means any mortgage, lien (statutory or other), pledge, security
interest, encumbrance, hypothecation, assignment for security or other security
agreement of any kind or nature whatsoever. For purposes of this Indenture, a
Person shall be deemed to own subject to a Lien any property which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such Person.
"Maturity Date," when used with respect to any Security, means the date
specified in such Security as the fixed date on which the principal of such
Security is due and payable.
<PAGE>
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents, including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations with respect to
Indebtedness are financed or sold with recourse to the Company or any of its
Subsidiaries), net of (i) brokerage commissions and other reasonable fees and
expenses (including fees and expenses of counsel and investment bankers) related
to such Asset Sale; (ii) provisions for all taxes payable as a result of such
Asset Sale; (iii) payments made to retire Indebtedness secured by the assets
subject to such Asset Sale (including retirements of Indebtedness under the
Credit Facilities) to the extent required pursuant to the terms of such
Indebtedness; and (iv) appropriate amounts to be provided by the Company or any
of its Subsidiaries, as the case may be, as a reserve, in accordance with GAAP,
against any liabilities associated with such Asset Sale and retained by the
Company or any of its Subsidiaries, as the case may be, after 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.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock (other
than Disqualified Stock) by the Company, the aggregate net proceeds received by
the Company, after payment of expenses, commissions and the like incurred in
connection therewith, whether such proceeds are in cash or in property (valued
at the Fair Market Value thereof, as determined in good faith by the Board of
Directors of the Company, at the time of receipt), (b) in the case of any
exchange, exercise, conversion or surrender of outstanding securities of any
kind of the Company for or into shares of Capital Stock of the Company which is
not Disqualified Stock, the net book value of such outstanding securities on the
date of such exchange, exercise, conversion or surrender (plus any additional
amount required to be paid by the holder to the Company upon such exchange,
exercise, conversion or surrender, less any and all payments made to the
holders, e.g., on account of fractional shares, and less all expenses incurred
by the Company in connection therewith) and (c) in the case of the issuance of
any Indebtedness by the Company, the aggregate net cash proceeds received by the
Company, after payment of expenses, commissions and the like incurred therewith.
"Officer" means the Chairman, the President, the Chief Executive Officer,
any Vice President, the Chief Financial Officer, the Treasurer, the Secretary or
the Controller of the Company or a Guarantor, as the case may be.
"Officers' Certificate" means a certificate signed by two Officers or by an
Officer and an Assistant Treasurer or Assistant Secretary of the Company or a
Guarantor, as the case may be.
"Opinion of Counsel" means a written opinion from legal counsel both of
which are acceptable to the Trustee, which may include counsel to the Company or
a Guarantor, as the case may be.
"Paying Agent" has the meaning provided in Section 2.3.
<PAGE>
"Permitted Liens" means, with respect to any Person, any lien arising by
reason of (a) any attachment, judgment, decree or order of any court, so long as
such lien is being contested in good faith and is either adequately bonded or
execution thereon has been stayed pending appeal or review, and any appropriate
legal proceedings which may have been duly initiated for the review of such
attachment, judgment, decree or order shall not have been finally terminated or
the period within which such proceedings may be initiated shall not have
expired; (b) taxes, assessments or governmental charges not yet delinquent or
which are being contested in good faith; (c) security for payment of workers'
compensation or other insurance; (d) security for the performance of tenders,
bids, leases and contracts (other than contracts for the payment of money); (e)
deposits to secure public or statutory obligations or in lieu of surety or
appeal bonds or to secure permitted contracts for the purchase or sale of any
currency entered into in the ordinary course of business; (f) operation of law
in favor of carriers, warehousemen, landlords, mechanics, materialmen, laborers,
employees or suppliers, incurred in the ordinary course of business for sums
which are not yet delinquent or are being contested in good faith by
negotiations or by appropriate proceedings which suspend the collection thereof;
(g) any interest or title of a lessor under any lease; (h) security for surety
or appeal bonds; and (i) easements, rights-of-way, zoning and similar covenants
and restrictions and other similar encumbrances or title defects which, in the
aggregate, are not substantial in amount and which do not in any case materially
interfere with the ordinary conduct of the business of the Company or any of its
Subsidiaries.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"principal" of a debt security means the principal amount of the security
plus, when appropriate, the premium, if any, on the security.
"Public Equity Offering" has the meaning provided in Section 3.1.
"Redemption Date" means, with respect to any Security, the Maturity Date of
such Security or the date on which such Security is to be redeemed by the
Company pursuant to Section 3.1.
"Registrar" has the meaning provided in Section 2.3.
"Renco" means The Renco Group, Inc., a New York corporation and the parent
of the Company.
"Required Filing Date" has the meaning provided in Section 4.8.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution on Capital Stock of the
Company or any Subsidiary of the Company or any payment made to the direct or
indirect holders (in their capacities as such) of Capital Stock of the Company
or any Subsidiary of the Company (other than (x) dividends or distributions
payable solely in Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to purchase Capital Stock (other than Disqualified
Stock), and (y) in the case of Subsidiaries of the Company, dividends or
distributions payable to the Company or to a Subsidiary of the Company), (ii)
the purchase, redemption or other acquisition or retirement for value of any
Capital Stock of the Company or any of its Subsidiaries, (iii) the making of any
principal payment on, or the purchase, defeasance, repurchase, redemption or
other acquisition or retirement for value, prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, of, any Indebtedness
which is subordinated in right of payment to the Securities (other than
Indebtedness acquired in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of the
date of acquisition) and (iv) the making of any Investment in any Person other
than pursuant to clauses (i) through (vii) of Section 4.20.
<PAGE>
"Sale-Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of the Company of any
real or tangible personal property, which property has been or is to be sold or
transferred by the Company or such Subsidiary to such Person in contemplation of
such leasing.
"SEC" means the Securities and Exchange Commission.
"Securities" means the 11-1/2% Senior Notes due 2003, issued, authenticated
and delivered under this Indenture, as amended or supplemented from time to time
pursuant to the terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors shall at the time be owned,
directly or indirectly, by such Person, by a Subsidiary of such Person or by
such Person and a Subsidiary of such Person, or (ii) any other Person (other
than a corporation) of which at least a majority of voting interest is at the
time, directly or indirectly, owned by such Person, by a Subsidiary of such
Person or by such Person and a Subsidiary of such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb), as amended by the Trust Indenture Reform Act of 1990, as in
effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means such successor.
"Trust Officer" means an officer or assistant officer of the Trustee
assigned to the Corporate Trustee Administration Department or similar
department performing corporate trust work, or any successor to such department
or, in the case of a successor trustee, an officer assigned to the department,
division or group performing the corporate trust work of such successor and also
means with respect to any particular corporate trust matter any other officer of
the Trustee to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"U.S. Government Obligations" has the meaning provided in Section 8.1(b).
"Wholly-Owned Subsidiary" means any Subsidiary all of the outstanding
Capital Stock of which (other than directors' qualifying shares) is owned,
directly or indirectly, by the Company.
<PAGE>
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the provision
shall be deemed incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
(a) "Commission" means the SEC;
(b) "indenture securities" means the Securities;
(c) "indenture security holder" means a Holder or Securityholder;
(d) "indenture to be qualified" means this Indenture;
(e) "indenture trustee" or "institutional trustee" means the Trustee;
and
(f) "obligor" on the indenture securities means the Company and the
Guarantors or any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings so assigned to them therein.
SECTION 1.3 Rules of Construction.
---------------------
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is exclusive;
(c) words in the singular include the plural, and words in the
plural include the singular;
(d) "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; and
(e) unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with GAAP as in effect from
time to time, applied on a basis consistent with the most recent
audited consolidated financial statements of the Company.
<PAGE>
ARTICLE II
THE SECURITIES
--------------
SECTION 2.1 Form and Dating.
---------------
The Securities and the Trustee's certificates of authentication with
respect thereto shall be substantially in the form set forth in Exhibit A
annexed hereto, which is hereby incorporated in and expressly made a part of
this Indenture. The Securities may have notations, legends or endorsements
required by law, rule, usage or agreement to which the Company or any Guarantor
is subject. Each Security shall be dated the date of its authentication. The
terms and provisions contained in the Securities shall constitute, and are
expressly made, a part of this Indenture.
SECTION 2.2 Execution and Authentication.
----------------------------
Two Officers shall execute the Securities on behalf of the Company by
either manual or facsimile signature. The Company's seal shall be impressed,
affixed, imprinted or reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security or at any time thereafter,
the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. Such signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue in an
aggregate principal amount not to exceed $150,000,000, upon receipt of an
Officers' Certificate signed by two Officers directing the Trustee to
authenticate the Securities and certifying that all conditions precedent to the
issuance of the Securities contained herein have been complied with. The
aggregate principal amount of Securities outstanding at any time may not exceed
$150,000,000 except as provided in Section 2.7.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. Such authenticating agent shall have the same
rights as the Trustee in any dealings hereunder with the Company or with any
Affiliate of the Company.
If the Securities are to be issued in the form of one or more Global
Securities, then the Company shall execute and the Trustee shall authenticate
and deliver one or more Global Securities that (i) shall represent and shall be
in minimum denominations of $1,000, (ii) shall be registered in the name of the
Depository for such Global Security or Securities or the nominee of such
Depository, (iii) shall be delivered by the Trustee to such Depository or
pursuant to such Depository's instructions and (iv) shall bear the legend set
forth in Exhibit B.
<PAGE>
SECTION 2.3 Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency (which shall be located in
the Borough of Manhattan in the City of New York, State of New York) where
Securities may be presented for registration of transfer or for exchange (the
"Registrar"), an office or agency (which shall be located in the Borough of
Manhattan, the City of New York, State of New York) where Securities 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 Securities and this
Indenture may be served. The Registrar shall keep a register of the Securities
and of their transfer and exchange. The Company may have one or more additional
paying agents. The term "Paying Agent" includes any additional paying agent.
None of the Company, any Guarantor or any Affiliate of the Company or any
Guarantor may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture, which shall incorporate the provisions of the
TIA. The agreement shall implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee in writing of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.7.
The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of notices and demands in connection with the Securities.
SECTION 2.4 Paying Agent To Hold Money in Trust.
-----------------------------------
Each Paying Agent shall hold in trust for the benefit of the
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities (whether such money has
been paid to it by the Company or any other obligor on the Securities), and the
Company and the Paying Agent shall notify the Trustee of any default by the
Company (or any other obligor on the Securities) in making any such payment.
Money held in trust by the Paying Agent need not be segregated except as
required by law and in no event shall the Paying Agent be liable for any
interest on any money received by it hereunder. The Company at any time may
require the 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 Event of Default specified in Section 6.1(a)(i) or (ii), upon written
request to the Paying Agent, require such Paying Agent to pay forthwith all
money so held by it to the Trustee and to account for any funds disbursed. Upon
making such payment, the Paying Agent shall have no further liability for the
money delivered to the Trustee.
SECTION 2.5 Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Securityholders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee at least five Business Days before each Interest Payment
Date, and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of the Securityholders.
<PAGE>
SECTION 2.6 Transfer and Exchange.
---------------------
When Securities in certificated form are presented to the Registrar with a
request from the Holder of such Securities to register the transfer or to
exchange them for an equal principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested; provided that every Security presented or surrendered for
registration of transfer or exchange shall be duly endorsed or be accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Registrar, duly executed by the Holder thereof or his attorneys duly authorized
in writing. To permit registrations of transfers and exchanges, the Company
shall issue and execute, and the Trustee shall authenticate new Securities
evidencing such transfer or exchange at the Registrar's request. No service
charge shall be made to the Securityholder for any registration of transfer or
exchange. The Company may require from the Securityholder payment of a sum
sufficient to cover any transfer taxes or other governmental charge that may be
imposed in relation to a transfer or exchange, but this provision shall not
apply to any exchange pursuant to Section 2.10, 3.7, 4.13, 4.15 or 9.5 (in which
events the Company will be responsible for the payment of such taxes). The
Trustee shall not be required to exchange or register a transfer of any Security
for a period of 15 days immediately preceding the first mailing of notice of
redemption of Securities to be redeemed or of any Security selected, called or
being called for redemption except, in the case of any Security where public
notice has been given that such Security is to be redeemed in part, the portion
thereof not to be redeemed.
In accordance with the provisions of the Indenture and subject to certain
limitations herein set forth, an owner of a beneficial interest in a Global
Security may request a Security in certificated form, in exchange in whole or in
part, as the case may be, for such beneficial owner's interest in the Global
Security.
Upon any exchange provided for in the preceding paragraph, the Company
shall execute and the Trustee shall authenticate and deliver to the person
specified by the Depository a new Security or Securities registered in such
names and in such authorized denominations as the Depository, pursuant to the
instructions of the beneficial owner of the Securities requesting the exchange,
shall instruct the Trustee. Thereupon, the beneficial ownership of such Global
Security shown on the records maintained by the Depository or its nominee shall
be reduced by the amounts so exchanged and an appropriate endorsement shall be
made by or on behalf of the Trustee on the Global Security.
Any such exchange shall be effected through the Depository in accordance
with the procedures of the Depository therefor.
<PAGE>
Notwithstanding the foregoing, no Global Security shall be registered for
transfer or exchange, or authenticated and delivered, whether pursuant to this
Section, Section 2.7, 2.10 or 3.7 or otherwise, in the name of a person other
than the Depository for such Global Security or its nominee until (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for such Global Security or if at any time the Depository ceases to
be a clearing agency registered under the Exchange Act, and a successor
depository is not appointed by the Company within 30 days, (ii) the Company
executes and delivers to the Trustee a Company order that all such Global
Securities shall be exchangeable or (iii) there shall have occurred and be
continuing an Event of Default. Upon the occurrence in respect of any Global
Security representing the Securities of any one or more of the conditions
specified in clause (i), (ii) or (iii) of the preceding sentence, such Global
Security may be registered for transfer or exchange for Securities registered in
the names of, authenticated and delivered to, such persons as the Trustee or the
Depository, as the case may be, shall direct.
Except as provided above, any Security authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, any Global
Security, whether pursuant to this Section, Section 2.7, 2.10 or 3.7 or
otherwise, shall also be a Global Security and bear the legend specified in
Exhibit B.
SECTION 2.7 Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Registrar or the Trustee or
if the Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the Holder of such Security furnishes to the Company and
to the Trustee evidence reasonably acceptable to them of the ownership and the
destruction, loss or theft of such Security. If required by the Trustee or the
Company, an indemnity bond shall be posted, sufficient in the judgment of both
to protect the Company, the Trustee or any Paying Agent from any loss that any
of them may suffer if such Security is replaced. The Company may charge such
Holder for the Company's expenses in replacing such Security and the Trustee may
charge the Company for the Trustee's expenses in replacing such Security. Every
replacement Security shall constitute an additional obligation of the Company.
SECTION 2.8 Outstanding Securities.
----------------------
The Securities outstanding at any time are all Securities that have been
authenticated by the Trustee except for (a) those cancelled by it, (b) those
delivered to it for cancellation, (c) to the extent set forth in Sections 8.1
and 8.2, on or after the date on which the conditions set forth in Section 8.1
or 8.2 have been satisfied, those Securities theretofore authenticated and
delivered by the Trustee hereunder and (d) those described in this Section 2.8
as not outstanding. A Security does not cease to be outstanding because the
Company or one of its Affiliates holds the Security.
<PAGE>
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser in whose hands such Security
is a legal, valid and binding obligation of the Company.
If the Paying Agent holds, in its capacity as such, on any Maturity Date or
on any optional redemption date, money sufficient to pay all accrued interest
and principal with respect to such Securities payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Securities cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9 Treasury Securities.
-------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any declaration of acceleration or notice of
default or direction, waiver or consent or any amendment, modification or other
change to this Indenture, Securities owned by the Company, any Guarantor or an
Affiliate of the Company or any Guarantor shall be disregarded as though they
were not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent
or any amendment, modification or other change to this Indenture, only
Securities as to which a Trust Officer of the Trustee receives an Officers'
Certificate stating that such Securities are so owned shall be so disregarded.
SECTION 2.10 Temporary Securities.
--------------------
Until definitive Securities are prepared and ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities in exchange for temporary
Securities. Until such exchange, temporary Securities shall be entitled to the
same rights, benefits and privileges as definitive Securities.
SECTION 2.11 Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall (subject to
the record-retention requirements of the Exchange Act) dispose of cancelled
Securities unless the Company in writing directs the Trustee to return such
Securities to the Company, and, if so disposed, shall deliver a certificate of
disposition thereof to the Company. The Company may not reissue or resell, or
issue new Securities to replace, Securities that the Company has redeemed or
paid, or that have been delivered to the Trustee for cancellation.
<PAGE>
SECTION 2.12 Defaulted Interest.
------------------
If the Company defaults on a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent permitted by law) any
interest payable on the defaulted interest, in accordance with the terms hereof,
to the Persons who are Securityholders on a subsequent special record date,
which date shall be at least five Business Days prior to the payment date. The
Company shall fix such special record date and payment date in a manner
satisfactory to the Trustee. At least 15 days before such special record date,
the Company shall mail to each Securityholder of such series a notice that
states the special record date, the payment date and the amount of defaulted
interest, and interest payable on such defaulted interest, if any, to be paid.
SECTION 2.13 CUSIP Number.
------------
The Company in issuing the Securities may use a "CUSIP" number, and if so,
such CUSIP number shall be included in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities, and that reliance may be placed only
on the other identification numbers printed on the Securities. The Company will
promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14 Deposit of Moneys.
-----------------
Prior to 10:00 a.m., New York City time, on each Interest Payment Date and
Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Trustee to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be. The principal and
interest on Book-Entry Securities shall be payable to the Depository or its
nominee, as the case may be, as the sole registered owner and the sole holder of
the Book-Entry Securities represented thereby. The principal and interest on
Securities in certificated form shall be payable at the office of the Paying
Agent.
ARTICLE III
REDEMPTION
----------
SECTION 3.1 Optional Redemption.
-------------------
The Securities will be subject to redemption, in whole or in part, at the
option of the Company, at any time on or after July 1, 2000, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued interest to the redemption date, if redeemed during the 12-month period
beginning on July 1 of the years indicated below:
<PAGE>
Year Percentage
---- ----------
2000............................. 105.750%
2001............................. 102.875%
2002............................. 100.000%
In addition, at any time prior to July 1, 1999, the Company may redeem up
to 33% of the aggregate principal amount of the Securities originally issued
with the proceeds of one or more Public Equity Offerings (as defined below) at a
redemption price (expressed as a percentage of principal amount) of 110.5% plus
accrued interest to the redemption date; provided that at least $100.0 million
aggregate principal amount of Securities remains outstanding immediately after
any such redemption. In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Company shall make such redemption
not more than 120 days after the consummation of any such Public Equity
Offering. "Public Equity Offering" means an underwritten public offering of
Capital Stock (other than Disqualified Stock) pursuant to a registration
statement filed with the SEC in accordance with the Securities Act.
SECTION 3.2 Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to Section 3.1 of this
Indenture and Paragraph 5 of the Securities, it shall notify the Trustee and the
Paying Agent in writing of the Redemption Date and the principal amount of
Securities to be redeemed.
The Company shall give each notice provided for in this Section 3.2 at
least 45 days before the Redemption Date (unless a shorter notice shall be
agreed to by the Trustee in writing), together with an Officers' Certificate
stating that such redemption will comply with the conditions contained herein
and in the Securities.
SECTION 3.3 Selection of Securities To Be Redeemed.
--------------------------------------
If less than all of the Securities are to be redeemed at any time, the
Trustee shall select the Securities to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, on which the
Securities being redeemed are listed or, if the Securities are not listed on a
national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate. The Trustee shall make the
selection from the Securities outstanding and not previously called for
redemption. The Trustee shall promptly notify the Company in writing of such
Securities selected for redemption and, in the case of Securities selected for
partial redemption, the principal amount to be redeemed. The Trustee may select
for redemption portions of the principal amount of Securities that have
denominations larger than $1,000. Securities and portions of them the Trustee
selects shall be in amounts of $1,000 or integral multiples of $1,000. If a
redemption is to be made with the proceeds of a Public Equity Offering pursuant
to Section 3.1, selection of the Securities for redemption shall be made by the
Trustee only on a pro rata basis unless such method is otherwise prohibited.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption.
<PAGE>
SECTION 3.4 Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail or cause the mailing of, in the name of, at the request of,
and at the expense of the Company, a notice of redemption by first-class mail to
each Holder of Securities to be redeemed at its registered address and the
Trustee and any Paying Agent.
The notice shall identify the Securities to be redeemed and shall state:
(a) the Redemption Date;
(b) the redemption price and the amount of accrued interest, if
any, to be paid;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price and accrued interest,
if any;
(e) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date and the only remaining right of the
Holders of such Securities of such series is to receive payment of the
redemption price upon surrender to the Paying Agent of the Securities
redeemed;
(f) if any Security is to be redeemed in part, the portion of
the principal amount (equal to $1,000 or any integral multiple
thereof) of such Security to be redeemed and that, on or after the
Redemption Date, upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed
portion thereof will be issued without charge to the Securityholder;
(g) if less than all of the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to
be redeemed and the aggregate principal amount of Securities estimated
to be outstanding after such partial redemption; and
(h) the CUSIP number, if any, pursuant to Section 2.13.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
<PAGE>
SECTION 3.5 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the redemption price. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price plus accrued interest to the Redemption Date, but interest installments
whose maturity is on or prior to such Redemption Date will be payable on the
relevant Interest Payment Dates to the Holders of record at the close of
business on the relevant record dates referred to in the Securities.
SECTION 3.6 Deposit of Redemption Price.
---------------------------
At least one Business Day prior to the Redemption Date, the Company shall
deposit with the Paying Agent in immediately available funds money sufficient to
pay the redemption price of and accrued interest on all Securities or portions
thereof to be redeemed on the Redemption Date.
If any Security surrendered for redemption in the manner provided in the
Securities shall not be so paid on the Redemption Date due to the failure of the
Company or any Guarantor to deposit sufficient funds with the Paying Agent,
interest will continue to accrue from the Redemption Date until such payment is
made on the unpaid principal and, to the extent lawful, on any interest not paid
on such unpaid principal, in each case at the date and in the manner provided in
the Securities.
SECTION 3.7 Securities Redeemed in Part.
---------------------------
Upon surrender to the Paying Agent of a Security that is redeemed in part,
the Company shall execute and the Trustee shall authenticate for the Holder a
new Security (accompanied by a notation of Guarantee duly endorsed by the
Guarantors) equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV
COVENANTS
---------
SECTION 4.1 Payment of Securities.
---------------------
The Company shall pay the principal of and interest on the Securities on
the dates and in the manner provided in the Securities and this Indenture.
An installment of principal or interest shall be considered paid on the
date due if the Trustee or the Paying Agent holds on such date immediately
available funds designated for and sufficient to pay such installment.
The Company shall pay interest on overdue principal and (to the extent
permitted by law) on overdue installments of interest at a rate equal to 13-1/2%
per annum.
<PAGE>
SECTION 4.2 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency, where Securities 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 Securities 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 11.2.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York, for such purposes. The Company will 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 Fleet National Bank, c/o First
Chicago Trust Company, 14 Wall Street, 8th Floor, Window No. 2, New York, New
York 10005, as an agency of the Company in accordance with Section 2.3.
SECTION 4.3 Corporate Existence.
-------------------
Subject to Article V, the Company shall do or cause to be done, at its own
cost and expense, all things necessary to and will cause each of its
Subsidiaries to, preserve and keep in full force and effect the corporate or
partnership existence and rights (charter and statutory), licenses and/or
franchises of the Company and each of its Subsidiaries; provided, however, that
the Company or any of its Subsidiaries shall not be required to preserve any
such rights, licenses or franchises if the Board of Directors of the Company
shall reasonably determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company or such Subsidiary and the loss
thereof is not adverse in any material respect to the Holders.
SECTION 4.4 Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon its or its Subsidiaries' income,
profits or property and (b) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a Lien upon its property; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
negotiations or proceedings and for which disputed amounts adequate reserves (in
the good faith judgment of the Board of Directors of the Company) have been
made.
<PAGE>
SECTION 4.5 Maintenance of Properties; Insurance;
Books and Records; Compliance with Law.
---------------------------------------
(a) The Company shall, and shall cause each of its Subsidiaries to, at all
times cause all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and supplied with all necessary equipment, and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereto.
(b) The Company and each of its Subsidiaries shall maintain insurance in
such amounts and covering such risks as are usually and customarily carried with
respect to similar facilities according to their respective locations.
(c) The Company shall and shall cause each of its Subsidiaries to keep
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Company
and each Subsidiary of the Company, in accordance with GAAP consistently applied
to the Company and each of its Subsidiaries taken as a whole.
(d) The Company shall and shall cause each of its Subsidiaries to comply
with all statutes, laws, ordinances, or government rules and regulations to
which it is subject, noncompliance with which would materially adversely affect
the business, prospects, earnings, properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole.
SECTION 4.6 Guarantees.
----------
The Company shall at all times ensure that the Guarantees shall remain in
full force and effect and shall not be subordinated in right of payment to any
Indebtedness of the Guarantors.
SECTION 4.7 Compliance Certificates.
-----------------------
(a) The Company and each Guarantor shall deliver to the Trustee, within 45
days after the end of each of the first three quarters of the Company's fiscal
year, and within 90 days after the end of such fiscal year, Officers'
Certificates of the Company and each Guarantor stating (i) that a review of the
activities of the Company or such Guarantor, as the case may be, during the
preceding fiscal quarter or year, as the case may be, has been made under the
supervision of the signing Officers with a view to determining whether the
Company or such Guarantor, as the case may be, has kept, observed, performed and
fulfilled its obligations under this Indenture, and (ii) that, to the best
knowledge of each Officer signing such certificate, the Company or such
Guarantor, as the case may be, has kept, observed, performed and fulfilled each
and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which such Officers may have knowledge, their
status and what action the Company or such Guarantor, as the case may be, is
taking or proposes to take with respect thereto).
<PAGE>
(b) So long as (and to the extent) not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
annual financial statements delivered pursuant to Section 4.8 shall be
accompanied by a written statement of the Company's independent public
accountants that in making the examination necessary for certification of such
annual financial statements nothing has come to their attention that would lead
them to believe that the Company or any Guarantor has violated any provisions of
Section 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 or 4.17 of this Indenture or,
if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
(c) The Company and each Guarantor shall, so long as any of the Securities
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 4.8 Reports.
-------
So long as any of the Securities are outstanding, whether or not the
Company is subject to Section 13(a) or 15(d) of the Exchange Act, the Company
shall file with the SEC the annual reports, quarterly reports and other
documents which the Company would have been required to file with the SEC
pursuant to such Sections 13(a) and 15(d) if the Company were so subject, such
documents to be filed with the SEC on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required so to
file such documents if the Company were so subject. The Company shall also in
any event (x) within 15 days after each Required Filing Date (i) transmit by
mail to all Holders, as their names and addresses appear in the register of
Securities maintained by the Registrar, without cost to such Holders and (ii)
file with the Trustee copies of the annual reports, quarterly reports and other
documents which the Company would have been required to file with the SEC
pursuant to Sections 13(a) and 15(d) of the Exchange Act if the Company were
subject to such Sections and (y) if filing such documents by the Company with
the SEC is not permitted under the Exchange Act, promptly upon written request
supply copies of such documents to any prospective Holder. The Company and the
Guarantors shall also comply with the other provisions of TIA Section 314(a).
SECTION 4.9 Further Assurance to the Trustee.
--------------------------------
The Company and the Guarantors shall, upon request of the Trustee, execute
and deliver such further instruments and do such further acts as may reasonably
be necessary or proper to carry out more effectively the provisions of this
Indenture.
<PAGE>
SECTION 4.10 Limitation on Additional Indebtedness.
-------------------------------------
The Company shall not, and shall not permit any of its Subsidiaries to,
Incur any Indebtedness (including Acquired Indebtedness), except for the
following:
(a) Indebtedness of the Company and the Guarantors under the
Securities, the Guarantees and this Indenture;
(b) Indebtedness of the Company and the Guarantors outstanding
(plus interest, premium, fees and other obligations associated
therewith) pursuant to the Credit Facilities (or pursuant to letters
of credit) not to exceed $40 million at any one time outstanding, less
any Indebtedness under the Credit Facilities required to be repaid and
repaid with the Net Cash Proceeds of an Asset Sale in accordance with
Section 4.13;
(c) Indebtedness of the Company and Guarantors not otherwise
referred to in this Section 4.10 outstanding on the Issue Date,
including but not limited to the Existing Notes;
(d) Indebtedness of the Company and the Guarantors if,
immediately after giving pro forma effect to the incurrence thereof,
the Fixed Charge Coverage Ratio of the Company would be greater than
or equal to 3.0:1;
(e) Indebtedness of the Company and the Guarantors in respect of
Interest Rate Protection Obligations incurred in the ordinary course
of business;
(f) Indebtedness of a Subsidiary issued to and held by the
Company or a Wholly-Owned Subsidiary or Indebtedness of the Company to
a Wholly-Owned Subsidiary in respect of intercompany advances or
transactions;
(g) Indebtedness of the Company and the Guarantors Incurred after
the Issue Date in connection with or arising out of Capitalized Lease
Obligations and purchase money Indebtedness not to exceed $5 million
at any one time outstanding;
(h) Indebtedness of the Company and the Guarantors Incurred after
the Issue Date in connection with the acquisition or licensing of
technology and other assets relating to the implementation of new cell
technology not to exceed $6 million at any one time outstanding; and
(i) any deferrals, renewals, extensions, replacements,
refinancings, or refundings of, or amendments, modifications or
supplements to, Indebtedness incurred under clauses (b) and (c) above,
whether involving the same or any other lender or creditor or group of
lenders or creditors, provided that any such deferrals, renewals,
extensions, replacements, refinancings, refundings, amendments,
modifications or supplements (i) shall not provide for any mandatory
redemption, amortization or sinking fund requirement in an amount
greater than or at a time prior to the amounts and times specified in
the Indebtedness being deferred, renewed, extended, replaced,
refinanced, refunded, amended, modified or supplemented, (ii) shall
not exceed the principal amount (plus accrued interest and prepayment
premium, if any) of the Indebtedness being replaced, renewed,
refunded, refinanced or extended and (iii) shall be subordinated to
the Securities at least to the extent and in the manner, if at all,
that the Indebtedness being replaced, renewed, refunded, refinanced or
extended is subordinate to the Securities.
<PAGE>
The Company shall not, directly or indirectly, Incur any Indebtedness which
by its terms (or by the terms of any agreement governing such Indebtedness) is
subordinated to any other Indebtedness of the Company unless such Indebtedness
is also by its terms (or by the terms of any agreement governing such
Indebtedness) made expressly subordinated to the Securities to the same extent
and in the same manner as such Indebtedness is subordinated to such other
Indebtedness of the Company. The Guarantors shall not, directly or indirectly,
in any event Incur any Indebtedness which by its terms (or by the terms of any
agreement governing such Indebtedness) is subordinated to any other Indebtedness
of such Guarantor unless such Indebtedness is also by its terms (or by the terms
of any agreement governing such Indebtedness) made expressly subordinated to the
Guarantee of the Securities by such Guarantor to the same extent and in the same
manner as such Indebtedness is subordinated to such other Indebtedness of such
Guarantor.
SECTION 4.11 Limitation on Liens.
-------------------
The Company shall not, and shall not permit, cause or suffer any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien of any kind
upon any of its property or assets owned or acquired by the Company on or after
the Issue Date, except for the following:
(a) Liens existing as of the Issue Date;
(b) Permitted Liens;
(c) Liens on the assets or property of a Subsidiary of the
Company existing at the time such Subsidiary became a Subsidiary of
the Company and not incurred as a result of (or in connection with or
in anticipation of) such Subsidiary's becoming a Subsidiary of the
Company; provided that such Liens do not extend to or cover any
property or assets of the Company or any of its Subsidiaries (other
than the property or assets of the Subsidiary so acquired);
(d) Liens on inventory, accounts, contract rights, documents,
instruments and general intangibles in respect of the Credit
Facilities (or letters of credit);
(e) any Lien securing Capitalized Lease Obligations and purchase
money obligations; provided that such Capitalized Lease Obligations
and purchase money obligations are incurred in compliance with Section
4.10; and provided further, that such Liens do not extend to or cover
any property or assets owned by the Company or any of its Subsidiaries
as of the Issue Date or extend to any property or assets other than
the property or assets subject to such Capitalized Lease Obligations
and purchase money obligations;
<PAGE>
(f) Liens pursuant to leases and subleases of real property which
do not interfere with the ordinary conduct of the business of the
Company or any of its Subsidiaries and which are made on customary and
usual terms applicable to similar properties;
(g) Liens securing Indebtedness which is incurred to refinance or
replace Indebtedness which has been secured by a Lien permitted under
this Indenture and is permitted to be refinanced or replaced under
this Indenture; provided that such Liens do not extend to or cover any
property or assets of the Company or any of its Subsidiaries not
securing the Indebtedness so refinanced or replaced; and
(h) Liens securing reimbursement obligations under letters of
credit but only in or upon the goods the purchase of which was
financed by such letters of credit.
SECTION 4.12 Limitation on Restricted Payments.
---------------------------------
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make any Restricted Payment, unless:
(i) no Default or Event of Default shall have occurred and be
continuing under this Indenture at the time of or after giving effect
to such Restricted Payment; and
(ii) immediately after giving effect to such Restricted Payment,
the aggregate of all Restricted Payments declared or made after the
Issue Date through and including the date of such Restricted Payment
(the "Base Period") does not exceed the sum of (1) 50% of the
Company's Consolidated Net Income (or in the event such Consolidated
Net Income shall be a deficit, minus 100% of such deficit) during the
Base Period, and (2) 100% of the aggregate Net Proceeds and the Fair
Market Value of marketable securities and property received by the
Company from the issue or sale, during the Base Period of Capital
Stock (other than Disqualified Stock) of the Company or any
Indebtedness or other securities of the Company convertible into or
exercisable or exchangeable for Capital Stock (other than Disqualified
Stock) of the Company which has been so converted, exercised or
exchanged, as the case may be. For purposes of determining under this
clause (ii) the amount expended for Restricted Payments, cash
distributed shall be valued at the face amount thereof and property
other than cash shall be valued at its Fair Market Value.
<PAGE>
(b) The provisions of clause (a) of this Section 4.12 shall not prohibit
(i) the payment of any dividend within 60 days after the date of declaration
thereof, if at such date of declaration such payment would comply with the
provisions of this Indenture; (ii) the retirement of any shares of Capital Stock
or subordinated Indebtedness of the Company in exchange for, by conversion into,
or out of the Net Proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of other shares of Capital Stock of the Company
(other than Disqualified Stock); (iii) the redemption or retirement of
subordinated Indebtedness of the Company in exchange for, by conversion into, or
out of the Net Proceeds of the substantially concurrent incurrence of
subordinated Indebtedness of the Company (other than any such subordinated
Indebtedness owing to a Subsidiary of the Company) that is contractually
subordinated in right of payment to the Securities and that is permitted to be
incurred in accordance with Section 4.10; (iv) a management fee payable to Renco
not to exceed $1.2 million in any one year; (v) the making of payments by the
Company to Renco (A) no earlier than ten days prior to the date on which Renco
is required to make its payments to the Internal Revenue Service or the
applicable state taxing authority, as the case may be, pursuant to a tax sharing
agreement between the Company and Renco (which tax sharing agreement provides
that the payments thereunder shall not exceed the amount the Company would have
been required to pay for taxes on a stand-alone basis, except that the Company
will not have the benefit of any of its tax loss carryforwards unless such tax
losses were a result of timing differences between the Company's accounting for
tax and financial reporting purposes, and which tax sharing agreement also
provides that transactions between the Company and Renco and its other
subsidiaries are accounted for on a cash basis and not on an accrual basis) and
(B) to reimburse Renco for out of pocket insurance payments made by Renco on
behalf of the Company and its Subsidiaries; (vi) the payment of a dividend to
Renco on the Issue Date of approximately $75.03 million; and (vii) the
redemption on the Issue Date of the 8,500 outstanding shares of the Company's
100% Preferred Stock, $1,000 par value per share, held by Renco plus accrued
dividends thereon.
In determining the amount of Restricted Payments permissible under clause
(b) of this Section 4.12, amounts expended pursuant to clauses (b)(i) and
(b)(ii) of this Section 4.12 shall be included as Restricted Payments and
amounts expended pursuant to clauses (b)(iii), (iv), (v), (vi) and (vii) of this
Section 4.12 shall not be so included. For purposes of determining the amount
expended for Restricted Payments, cash distributed or invested shall be valued
at the face amount thereof and property other than cash shall be valued at its
Fair Market Value.
SECTION 4.13 Limitation on Certain Sales of Assets and Subsidiary Stock.
----------------------------------------------------------
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
make any Asset Sale unless (i) such Asset Sale is for Fair Market Value, (ii)
the net proceeds therefrom consist of at least 85% cash or Cash Equivalents and
(iii) the Company shall commit to apply or to cause its Subsidiaries to apply
the Net Cash Proceeds of such Asset Sale within 180 days of receipt thereof, and
shall apply such Net Cash Proceeds within 270 days of receipt thereof, as
follows:
(A) first, to satisfy all mandatory repayment obligations under
the Credit Facilities arising by reason of such Asset Sale to the
extent that such repayment permanently reduces the amount that may be
borrowed under the Credit Facilities;
<PAGE>
(B) second, to repurchase Existing Notes required to be
repurchased pursuant to the indenture governing the Existing Notes;
and
(C) third, out of any Net Cash Proceeds remaining after
application of Net Cash Proceeds pursuant to the preceding paragraphs
(A) and (B) (the "Available Amount"), the Company shall make an offer
to purchase (the "Asset Sale Offer") from all Holders of Securities,
up to a maximum principal amount (expressed as a multiple of $1,000)
of Securities equal to the Available Amount at a purchase price of
100% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of purchase (the "Asset Sale Purchase
Date"); provided that the Company will not be required to apply
pursuant to this paragraph (C) Net Cash Proceeds received from any
Asset Sale if, and only to the extent that, such Net Cash Proceeds are
committed in writing to be applied to acquire or construct property or
assets in lines of business related to the Company's and its
Subsidiaries' businesses within 180 days after the consummation of
such Asset Sale and are so applied within 270 days after the
consummation of such Asset Sale; and provided further, that the
Company may defer the Asset Sale Offer until there is an aggregate
unutilized Available Amount equal to or in excess of $2.5 million (at
which time the entire unutilized Available Amount and not just the
amount in excess of $2.5 million shall be applied as required pursuant
to this Section 4.13).
(b) The Company shall provide the Trustee with written notice of the Asset
Sale Offer at least 40 days before any notice of any Asset Sale Offer is mailed
to Holders of the Securities (unless shorter notice is acceptable to the
Trustee). Notice of an Asset Sale Offer shall be mailed by the Company to all
Holders of Securities not less than 25 days nor more than 45 days before the
Asset Sale Purchase Date at their last registered address with a copy to the
Trustee and the Paying Agent. The Asset Sale Offer shall remain open from the
time of mailing for at least 20 Business Days and until at least 4:00 p.m., New
York City time, on the Business Day next preceding the Asset Sale Purchase Date.
The notice, which shall govern the terms of the Asset Sale Offer, shall include
such disclosures as are required by law and shall state:
(i) that the Asset Sale Offer is being made pursuant to this
Section 4.13;
(ii) the purchase price (including the amount of accrued
interest, if any) for each Security and the Asset Sale Purchase Date;
(iii) that any Security not tendered or accepted for payment will
continue to accrue interest in accordance with the terms thereof;
(iv) that, unless the Company defaults on making the payment, any
Security accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest after the Asset Sale Purchase Date;
<PAGE>
(v) that Holders electing to have Securities purchased pursuant
to an Asset Sale Offer will be required to surrender their Securities
to the Paying Agent at the address specified in the notice prior to
4:00 p.m., New York City time, on the business day next preceding the
Asset Sale Purchase Date and must complete any form letter of
transmittal proposed by the Company and acceptable to the Trustee and
the Paying Agent;
(vi) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than 4:00 p.m., New York City
time, on the business day next preceding the Asset Sale Purchase Date,
a tested telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Securities the Holder
delivered for purchase, the Security certificate number (if any) and a
statement that such Holder is withdrawing his election to have such
Securities purchased;
(vii) that if Securities in a principal amount in excess of the
Available Amount are tendered pursuant to the Asset Sale Offer, the
Company shall purchase Securities on a pro rata basis among the
Securities tendered (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of
$1,000 or integral multiples of $1,000 shall be acquired);
(viii) that Holders whose Securities are purchased only in part
will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; and
(ix) the instructions that Holders must follow in order to tender
their Securities.
On or before the Asset Sale Purchase Date, the Company shall (i) accept for
payment, on a pro rata basis among the Securities (subject to adjustment as
contemplated by clause (vii) above), Securities or portions thereof tendered
pursuant to the Asset Sale Offer, (ii) deposit with the Paying Agent on the
Asset Sale Purchase Date money, in immediately available funds, in an amount
sufficient to pay the purchase price of all Securities or portions thereof so
tendered and accepted and (iii) deliver to the Trustee the Securities so
accepted together with an Officers' Certificate setting forth the Securities or
portions thereof tendered to and accepted for payment by the Company. The Paying
Agent shall promptly mail or deliver to Holders of Securities so accepted
payment in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Company
to the Holder thereof. To the extent an Asset Sale Offer is not fully subscribed
to by the Holders, the Company may retain (free and clear of the Lien of this
Indenture) any unutilized portion of the Available Amount. The Paying Agent
shall promptly deliver to the Company the balance of any such moneys held by the
Paying Agent after payment to the holders of Securities as aforesaid.
The Company shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Securities pursuant to the
Asset Sale Offer. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.13, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.13 by virtue
thereof.
<PAGE>
(c) No transaction or action otherwise permitted under this Section 4.13
shall occur until the Trustee shall have received an Officers' Certificate and
an Opinion of Counsel as to (i) the Company's compliance with this Section 4.13
and (ii) the fulfillment of all conditions precedent to such transaction or
action.
SECTION 4.14 Limitation on Transactions with Affiliates.
------------------------------------------
The Company shall not, and the Company shall not permit, cause, or suffer
any Subsidiary of the Company to, conduct any business or enter into any
transaction or series of transactions with or for the benefit of any Affiliate
of the Company or any of its Subsidiaries or any holder of 10% or more of any
class of Capital Stock of the Company (each an "Affiliate Transaction"), except
in good faith and on terms that are, in the aggregate, no less favorable to the
Company or such Subsidiary, as the case may be, than those that could have been
obtained in a comparable transaction on an arm's-length basis from a Person not
an Affiliate of the Company or such Subsidiary. All Affiliate Transactions (and
each series of related Affiliate Transactions which are similar or part of a
common plan) involving aggregate payments or other market value in excess of
$500,000 shall be approved by the Board of Directors of the Company, such
approval to be evidenced by a Board Resolution stating that such Board of
Directors has, in good faith, determined that such transaction complies with the
foregoing provisions of this Section 4.14. Notwithstanding the foregoing, the
restrictions set forth in this Section 4.14 shall not apply to (i) customary
directors' fees, consulting fees, indemnification and similar arrangements, and
employee salaries and bonuses, (ii) transactions between the Company and any of
its Subsidiaries or among Subsidiaries of the Company, (iii) the payment of a
management fee to Renco and (iv) the making of payments by the Company to Renco
pursuant to Section 4.12(b)(v), (vi) and (vii).
SECTION 4.15 Change of Control.
-----------------
In the event of a Change of Control (the date of such occurrence being the
"Change of Control Date"), the Company shall notify the Trustee and the Holders
of Securities in writing of such occurrence and shall make an offer to purchase
(the "Change of Control Offer"), on a Business Day (the "Change of Control
Payment Date") not later than 60 days following the Change of Control Date, all
Securities then outstanding at a purchase price equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the Change of
Control Payment Date.
Notice of a Change of Control Offer shall be mailed by the Company not less
than 30 days nor more than 45 days before the Change of Control Payment Date to
the holders of Securities at their last registered addresses with a copy to the
Trustee and the Paying Agent. The Change of Control Offer shall remain open from
the time of mailing for at least 20 Business Days and until 5:00 p.m., New York
City time, on the Business Day next preceding the Change of Control Payment
Date. The notice, which shall govern the terms of the Change of Control Offer,
shall include such disclosures as are required by law and shall state:
<PAGE>
(a) that a Change of Control Offer is being made pursuant to this
Section 4.15 and that all Securities will be accepted for payment;
(b) the purchase price (including the amount of accrued interest,
if any) for each Security and the Change of Control Payment Date;
(c) that any Security not tendered for payment will continue to
accrue interest in accordance with the terms thereof;
(d) that, unless the Company defaults on making the payment, any
Security accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment
Date;
(e) that Holders electing to have Securities purchased pursuant
to a Change of Control Offer will be required to surrender their
Securities to the Paying Agent at the address specified in the notice
prior to 5:00 p.m., New York City time, on the business day next
preceding the Change of Control Payment Date and must complete any
form letter of transmittal proposed by the Company and acceptable to
the Trustee and the Paying Agent;
(f) that Holders of Securities will be entitled to withdraw their
election if the Paying Agent receives, not later than 4:00 p.m., New
York City time, on the business day next preceding the Change of
Control Payment Date, a tested telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of
Securities the Holder delivered for purchase, the Security certificate
number (if any) and a statement that such Holder is withdrawing his
election to have such Securities purchased;
(g) that Holders whose Securities are purchased only in part will
be issued Securities equal in principal amount to the unpurchased
portion of the Securities surrendered;
(h) the instructions that Holders must follow in order to tender
their Securities; and
(i) the circumstances and relevant facts regarding such Change of
Control (including, but not limited to, information with respect to
pro forma historical financial information after giving effect to such
Change of Control, information regarding the Persons acquiring control
and such Persons' business plans going forward).
On the Change of Control Payment Date, the Company shall (i) accept for
payment Securities or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Securities or portions thereof so tendered and accepted
and (iii) deliver to the Trustee the Securities so accepted together with an
Officers' Certificate setting forth the Securities or portions thereof tendered
to and accepted for payment by the Company. The Paying Agent shall promptly mail
or deliver to the Holders of Securities so accepted payment in an amount equal
to the purchase price, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Company to the Holder thereof.
<PAGE>
The Company shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act, and any other securities laws or
regulations in connection with the repurchase of Securities pursuant to a Change
of Control Offer. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.15, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.15 by virtue
thereof.
SECTION 4.16 Limitation on Dividends and Other
Payment Restrictions Affecting Subsidiaries.
-------------------------------------------
The Company shall not, and shall not permit any Subsidiary of the Company
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective or enter into any agreement with any Person that would cause or
create any consensual encumbrance or restriction of any kind on the ability of
any Subsidiary of the Company to (a) pay dividends, in cash or otherwise, or
make any other distributions on its Capital Stock or any other interest or
participation in, or measured by, its profits owned by the Company or a
Subsidiary of the Company, (b) make any loans or advances to, or pay any
Indebtedness owed to, the Company or any Subsidiary of the Company or (c)
transfer any of its properties or assets to the Company or to any Subsidiary of
the Company, except, in each case, for such encumbrances or restrictions
existing under or contemplated by or by reason of (i) the Securities or this
Indenture, (ii) any restrictions existing under or contemplated by agreements in
effect on the Issue Date, including, without limitation, restrictions under the
Credit Facilities as in effect on the Issue Date, (iii) any restrictions, with
respect to a Subsidiary of the Company that is not a Subsidiary of the Company
on the Issue Date, in existence at the time such Person becomes a Subsidiary of
the Company (but not created in contemplation of such Person becoming a
Subsidiary) or created after the Issue Date, so long as such restrictions are
not materially less favorable to the holders of the Securities than those under
the Credit Facilities as in effect on the Issue Date, and (iv) any restrictions
existing under any agreement that refinances or replaces an agreement containing
a restriction permitted by clause (i), (ii) or (iii) above; provided that the
terms and conditions of any such restrictions are not materially less favorable
in the aggregate to the holders of the Securities than those under or pursuant
to the agreement being replaced or the agreement evidencing the Indebtedness
refinanced or replaced.
SECTION 4.17 Limitation on Issuance of Preferred Stock by Subsidiaries.
---------------------------------------------------------
The Company shall not cause or permit any Subsidiary of the Company to
issue any Capital Stock other than Common Stock or to have outstanding at any
time any shares of Capital Stock other than Common Stock, except issuances of
Capital Stock to the Company or a Wholly-Owned Subsidiary of the Company that is
a Guarantor; provided, however, that the Company or such Wholly-Owned Subsidiary
of the Company, as the case may be, is at all times the sole beneficial and
record owner of such Capital Stock.
<PAGE>
SECTION 4.18 Special Covenants of Each Guarantor.
-----------------------------------
Each Guarantor shall comply with each of the covenants contained in this
Indenture that impose restrictions or obligations on such Guarantor (by virtue
of being a Guarantor or otherwise) notwithstanding that the text of such
covenant is worded as a restriction on or obligation of the Company with respect
to such Guarantor.
SECTION 4.19 Additional Guarantors.
---------------------
If the Company or any of its Subsidiaries shall transfer or cause to be
transferred, in one or a series of related transactions, any assets, businesses,
divisions, real property or equipment having a book value in excess of $100,000
to any Subsidiary that is not a Guarantor the Company shall, prior to such
transfer, (1) cause such transferee Subsidiary to become a Guarantor, execute a
Guarantee and agree to be bound by the terms of this Indenture, and (2) deliver
an Opinion of Counsel to the effect that such Guarantee has been duly authorized
and executed by such transferee Subsidiary and constitutes the legal, valid,
binding and enforceable obligation of such transferee Subsidiary (subject to
such customary exceptions concerning creditors' rights and equitable principles
as may be acceptable to the Trustee in its discretion).
SECTION 4.20 Limitation on Investments, Loans and Advances.
---------------------------------------------
The Company shall not make and shall not permit any of its Subsidiaries to
make any capital contributions, advances or loans to (including any guarantees
of loans to), or investments or purchases of Capital Stock in, any Person
(collectively, "Investments"), except: (i) Investments by the Company in any
Wholly-Owned Subsidiary and Investments in or to the Company or a Subsidiary by
any Subsidiary; (ii) Investments represented by accounts receivable created or
acquired in the ordinary course of business, (iii) advances to employees in the
ordinary course of business not to exceed an aggregate of $250,000 outstanding
at any one time; (iv) Investments under or pursuant to Interest Rate Protection
obligations; (v) Cash Equivalents; (vi) Investments in joint ventures not to
exceed $10 million in the aggregate; and (vii) Investments permitted to be made
pursuant to Section 4.12.
SECTION 4.21 Limitation on Sale-Leaseback Transactions.
-----------------------------------------
The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any Sale-Leaseback Transaction. Notwithstanding the foregoing, the
Company and its Subsidiaries may enter into Sale-Leaseback Transactions if (i)
after giving pro forma effect to any such Sale-Leaseback Transaction, the
Company shall be in compliance with Section 4.10, (ii) the sale price in such
Sale-Leaseback Transaction is at least equal to the Fair Market Value of such
property, and (iii) the Company or such Subsidiary shall apply the Net Cash
Proceeds of the sale as provided pursuant to Section 4.13, to the extent
required.
<PAGE>
SECTION 4.22 Waiver of Stay, Extension or Usury Laws
---------------------------------------
Each of the Company and the Guarantors covenants (to the extent permitted
by law) that it will not at any time insist upon, 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 or any
Guarantor from paying all or any portion of the principal of or interest on the
Securities 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 permitted by law) each of the Company and each
Guarantor 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.
ARTICLE V
SUCCESSOR CORPORATION
---------------------
SECTION 5.1 When Company May Merge, Etc.
----------------------------
Neither the Company nor any Guarantor shall consolidate with or merge with
or into or sell, assign, convey, lease or transfer all or substantially all of
its properties and assets as an entirety to any Person or group of affiliated
Persons in a single transaction or through a series of transactions, unless,
after giving effect thereto:
(a) the Company or such Guarantor, as the case may be, shall
be the continuing Person or the resulting, surviving or transferee
Person (the "surviving entity") shall be a corporation organized and
existing under the laws of the United States or any State thereof or
the District of Columbia;
(b) the surviving entity shall expressly assume, by a
supplemental indenture executed and delivered to the Trustee, in form
and substance reasonably satisfactory to the Trustee, all of the
obligations of the Company or such Guarantor, as the case may be, under
the Securities, the Guarantees and this Indenture;
(c) immediately before and immediately after giving effect to
such transaction or series of transactions (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of
transactions), no Default or Event of Default shall have occurred and
be continuing;
(d) the Company, such Guarantor or the surviving entity, as
the case may be, shall immediately before and immediately after giving
effect to such transaction or series of transactions (including,
without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of the transaction or series
of transactions) have a Consolidated Net Worth equal to or greater than
the Consolidated Net Worth of the Company or such Guarantor immediately
prior to such transaction or series of transactions;
<PAGE>
(e) immediately after giving effect to such transaction or
series of transactions, the Company, such Guarantor or the surviving
entity, as the case may be, could incur $1.00 of Indebtedness pursuant
to clause (d) of Section 4.10;
(f) the Company, such Guarantor or the surviving entity shall
have delivered to the Trustee an Officer's Certificate stating that
such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction
or series of transactions, such supplemental indenture complies with
this Section 5.1 and that all conditions precedent in the Indenture
relating to the transaction or series of transactions have been
satisfied; and
(g) neither the Company nor any Subsidiary would thereupon
become obligated with respect to any Indebtedness, nor any of its
property become subject to any Lien, unless the Company or such
Subsidiary could incur such Indebtedness or create such Lien under the
Indenture.
The foregoing provisions shall not be applicable with respect to a
transaction involving the consolidation or merger of a Guarantor with or into
any Person (other than the Company or an Affiliate of the Company) that results
in such Guarantor being released from its Guarantee as provided pursuant to
Section 10.3.
SECTION 5.2 Successor Entity Substituted.
----------------------------
Upon any consolidation, merger or any transfer of all or substantially all
of the assets of the Company in accordance with Section 5.1, the surviving
entity formed by such consolidation or into which the Company is merged or to
which such transfer 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 surviving entity had been named as the Company herein.
ARTICLE VI
DEFAULT AND REMEDIES
--------------------
SECTION 6.1 Events of Default.
-----------------
(a) An "Event of Default" occurs if:
(i) the Company defaults in the payment of interest on the
Securities when the same becomes due and payable and any such default
continues for a period of 30 days; or
(ii) the Company defaults in the payment of the principal of, or
premium, if any, on, the Securities when due (including by reason of a
default in payment upon an offer to purchase); or
<PAGE>
(iii) the Company or any Guarantor defaults in the performance
of, or breaches, any covenant contained in this Indenture (other than
defaults specified in clause (i) or (ii) above), and such default or
breach continues for a period of 30 days after written notice thereof
has been given to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount
of the outstanding Securities; or
(iv) the Company or any of its Subsidiaries fails to perform any
term, covenant, condition or provision of one or more classes or
issues of other Indebtedness in an aggregate principal amount of
$2,000,000 or more, which failure results in an acceleration of the
maturity thereof; or
(v) one or more judgments, orders or decrees for the payment of
money in excess of $2,000,000, either individually or in an aggregate
amount, shall be entered against the Company, any of its Subsidiaries
or any of their respective properties and shall not be discharged, and
there shall have been a period of 60 days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; or
(vi) any Guarantee shall be found to be unenforceable or invalid
by any final judgment, order or decree of any court; or
(vii) 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,
(D) makes a general assignment for the benefit of its
creditors or
(E) shall generally not pay its debts when such debts
become due or shall admit in writing its inability to pay its
debts generally; or
(viii) 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 for all or substantially all of its properties, 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 60 days; provided, however, 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.
<PAGE>
(b) For purposes of this Section 6.1, the term "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator or similar official
charged with maintaining possession or control over property for one or more
creditors.
(c) Subject to the provisions of Sections 7.1 and 7.2, the Trustee shall
not be charged with knowledge of any Event of Default unless written notice
thereof shall have been given to a Trust Officer at the corporate trust office
of the Trustee by the Company or any other Person.
SECTION 6.2 Acceleration.
------------
If an Event of Default (other than an Event of Default specified in Section
6.1(a)(vii) or (viii) with respect to the Company or any Guarantor) occurs and
is continuing, the Holders of at least 25% in aggregate principal amount of the
outstanding Securities may, by written notice to the Company and the Trustee,
and the Trustee upon the written request of the Holders of not less than 25% in
aggregate principal amount of the outstanding Securities, shall declare the
principal of, premium, if any, and accrued interest on all the Securities to be
due and payable immediately. Upon any such declaration such amounts shall become
due and payable immediately. If an Event of Default specified in Section
6.1(a)(vii) or (viii) with respect to the Company or any Guarantor occurs and is
continuing, then the principal of, premium, if any, and accrued interest on all
the Securities 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 a majority in aggregate principal amount of outstanding
Securities may, by written notice to the Trustee, rescind such declaration of
acceleration if all existing Events of Default have been cured or waived, other
than the non-payment of principal of, premium, if any, and accrued interest on
the Securities that have become due solely as a result of such acceleration and
if the rescission of acceleration would not conflict with any judgment or
decree. No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 6.3 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 Securities or to enforce the
performance of any provision of the Securities or this Indenture.
All rights of action and claims under this Indenture or the Securities may
be enforced by the Trustee even if the Trustee does not possess any of the
Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
<PAGE>
SECTION 6.4 Waiver of Past Default.
----------------------
Subject to Sections 6.7 and 9.2, the Holders of, in the aggregate, at least
a majority in aggregate principal amount of the outstanding Securities by notice
to the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default specified in Section 6.1(a)(i) or (ii) or in
respect of any provision hereof which cannot be modified or amended without the
consent of the Holder so affected pursuant to Section 9.2. When a Default or
Event of Default is so waived, it shall be deemed cured and ceases.
SECTION 6.5 Control by Majority.
-------------------
The Holders of at least a majority in aggregate principal amount of the
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it; provided, however, that the Trustee may refuse to follow
any direction that (i) conflicts with law or this Indenture, (ii) the Trustee
determines may be unduly prejudicial to the rights of another Securityholder, or
(iii) may involve the Trustee in personal liability unless the Trustee has asked
for and received indemnification reasonably satisfactory to it in its sole
discretion against any loss or expense caused by its following such direction;
and provided, further, that the Trustee may take any other action deemed proper
by the Trustee that is not inconsistent with such direction.
SECTION 6.6 Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to this Indenture
or the Securities unless:
(a) the Holder or Holders give to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in aggregate principal amount of
the outstanding Securities make a written request to the Trustee to
pursue a remedy;
(c) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity reasonably satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 15 days
after receipt of the request and the offer and, if requested,
provision of indemnity by the Holders; and
(e) during such 15-day period the Holders of a majority in
aggregate principal amount of the outstanding Securities do not give
the Trustee a written direction inconsistent with the request.
The foregoing limitations shall not apply to a suit instituted by a Holder
for the enforcement of the payment of principal of, premium, if any, or accrued
interest on such Security on or after the respective due dates set forth in such
Security.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
<PAGE>
SECTION 6.7 Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of, premium, if any, and interest on a
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of such Holder.
SECTION 6.8 Collection Suit by Trustee.
--------------------------
If an Event of Default specified in Section 6.1(a)(i) or (ii) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company, the Guarantors or any other obligor on the
Securities for the whole amount of principal and accrued interest remaining
unpaid, together with interest overdue on principal and, to the extent that
payment of such interest is lawful, interest on overdue installments of
interest, in each case at the Interest Rate and such further amount as shall be
sufficient to cover the costs and expenses of collection, including all sums due
and owing to the Trustee pursuant to Section 7.7 hereof.
SECTION 6.9 Trustee May File Proofs of Claim.
--------------------------------
The Trustee shall be entitled and empowered to file such proofs of claim
and other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Securityholders allowed in any judicial proceedings relative to the Company,
the Subsidiaries of the Company or any Guarantor (or any other obligor upon the
Securities), their respective creditors or property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Securityholder 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 Securityholders, to pay
to the Trustee any amounts due the Trustee under Section 7.7. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Securityholder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Securityholder in any such proceeding.
<PAGE>
SECTION 6.10 Priorities.
----------
If the Trustee collects any money pursuant to this Article VI, it shall pay
out such money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: to Holders for interest accrued on the Securities,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Securities for interest;
Third: to Holders for principal amounts owing under the
Securities, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for
principal; and
Fourth: to the Company or, to the extent the Trustee collects any
amount pursuant to Article X from any Guarantor, to such Guarantor.
The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to Securityholders 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 Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.7, or a suit by Holders of more than 10% in aggregate principal amount of the
outstanding Securities.
ARTICLE VII
TRUSTEE
-------
SECTION 7.1 Duties of Trustee.
-----------------
(a) If a Trust Officer of the Trustee has received written notice that 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 their exercise as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs.
<PAGE>
(b) Except during the continuance of an Event of Default actually known to
the Trustee:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others and no implied
covenants or obligations shall be read into this Indenture against the
Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine such certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture but need not verify the contents
thereof.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1.
(ii) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) 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 reasonable indemnity against such risk or liability is not reasonably assured
to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d), (f) and (g) of this Section
7.1.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company or any Guarantor.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) The Trustee may refuse to perform any duty or exercise any right or
power unless it is provided adequate funds to enable it to do so and it receives
indemnity reasonably satisfactory to it against any loss, liability, fee or
expense.
<PAGE>
SECTION 7.2 Rights of Trustee.
-----------------
Subject to Section 7.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. 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 or any Guarantor, personally or by agent or
attorney.
(b) Before the Trustee acts or refrains from acting with respect
to any matter contemplated by this Indenture, it may require an
Officers' Certificate or an Opinion of Counsel, which shall conform to
the provisions of Section 11.5. 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 may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
(other than the negligence or willful misconduct of an agent who is an
employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers, provided that the Trustee's
conduct does not constitute negligence or bad faith.
(e) Before taking or refraining from taking any action, the
Trustee may consult with counsel and the advice or opinion of such
counsel as to matters of law shall be full and complete authorization
and protection from liability in respect of any action taken, omitted
or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
SECTION 7.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual capacity or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any
Guarantor or their respective Subsidiaries and Affiliates with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to Sections 7.10 and 7.11.
<PAGE>
SECTION 7.4 Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture, the Securities or the Guarantees and
it shall not be accountable for the Company's or any Guarantor's use of the
proceeds from the issuance of the Securities, and it shall not be responsible
for any statement of the Company or any Guarantor in this Indenture, the
Guarantee or any document issued in connection with the sale of Securities or
any statement in the Securities other than the Trustee's certificate of
authentication.
SECTION 7.5 Notice of Defaults.
------------------
If a Default or an Event of Default with respect to the Securities occurs
and is continuing and is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default or Event of Default within 90 days after
the occurrence thereof. Except in the case of a Default or an Event of Default
in payment of principal of or interest on any Security, the Trustee may withhold
the notice to the Securityholders if a committee of its Trust Officers in good
faith determines that withholding the notice is in the interest of
Securityholders.
SECTION 7.6 Reports by Trustee to Holders.
-----------------------------
To the extent required by TIA Section 313(a), within 60 days after each May
15 commencing with May 15, 1997 and for as long as there are Securities
outstanding hereunder, the Trustee shall mail to each Securityholder the
Company's brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b) and TIA Section
313(c) and (d). A copy of such report at the time of its mailing to
Securityholders shall be filed with the SEC, if required, and each stock
exchange, if any, on which the Securities are listed.
The Company shall promptly notify the Trustee if the Securities become
listed on any stock exchange, and the Trustee shall comply with TIA Section
313(d).
SECTION 7.7 Compensation and Indemnity.
--------------------------
The Company and the Guarantors shall pay to the Trustee, the Paying Agent
and the Registrar from time to time reasonable compensation for their respective
services rendered hereunder. The Trustee's, the Paying Agent's and the
Registrar's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company and the Guarantors shall reimburse the
Trustee, the Paying Agent and the Registrar upon request for all reasonable
out-of-pocket disbursements, expenses and advances (including fees and expenses
of counsel) incurred or made by each of them in addition to the compensation for
their respective services. Such expenses shall include the reasonable
compensation, out-of-pocket disbursements and expenses of the Trustee's, the
Paying Agent's and the Registrar's agents and counsel.
<PAGE>
The Company and the Guarantors shall indemnify the Trustee, the Paying
Agent and the Registrar for, and hold each of them harmless against, any claim,
demand, expense (including but not limited to attorneys' fees and expenses),
loss or liability incurred by each of them arising out of or in connection with
the administration of this Indenture and their respective duties hereunder. Each
of the Trustee, the Paying Agent and the Registrar shall notify the Company and
the Guarantors promptly of any claim asserted against it for which it may seek
indemnity. However, failure by the Trustee, the Paying Agent or the Registrar to
so notify the Company and the Guarantors shall not relieve the Company or any
Guarantor of its obligations hereunder. The Company and the Guarantors need not
reimburse any expense or indemnify against any loss or liability incurred by the
Trustee, the Paying Agent or the Registrar through the Trustee's, the Paying
Agent's or the Registrar's, as the case may be, own willful misconduct,
negligence or bad faith.
To secure the Company's and the Guarantors' payment obligations in this
Section 7.7, each of the Trustee, the Paying Agent and the Registrar shall have
a lien prior to the Securities on all money or property held or collected by it,
in its capacity as Trustee, Paying Agent or Registrar, as the case may be,
except money or property held in trust to pay principal of or interest on
particular Securities. Such lien and indemnity shall survive the satisfaction,
discharge and termination of this Indenture, including the termination or
rejection hereof in any bankruptcy proceeding.
When any of the Trustee, the Paying Agent and the Registrar incurs expenses
or renders services after an Event of Default specified in Section 6.1(a)(vii)
or (viii) occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee.
----------------------
The Trustee may resign at any time by so notifying the Company and the
Guarantors in writing, such resignation to be effective upon the appointment of
a successor Trustee. The Holders of a majority in principal amount of the
outstanding Securities may remove the Trustee by so notifying the Trustee in
writing and may appoint a successor Trustee with the Company's consent, which
consent shall not be unreasonably withheld. The Company may remove the Trustee
if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
<PAGE>
If the Trustee resigns or is removed or if a vacancy exists in the office
of the Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company and the Guarantors shall promptly
appoint a successor Trustee. Within one year after the successor Trustee takes
office, the Holders of a majority in principal amount of the Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee (subject to the lien provided in Section 7.7), the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 25% in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Company's and the Guarantors' obligations under Section 7.7 shall continue
for the benefit of the retiring Trustee.
SECTION 7.9 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, provided such corporation shall be otherwise qualified and eligible
under this Article VII.
SECTION 7.10 Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee shall have a combined capital
and surplus of at least $100,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA Section 310(b);
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met. The provisions of TIA Section 310 shall apply to the Company,
as obligor of the Securities.
SECTION 7.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
The provisions of TIA Section 311 shall apply to the Company and each Guarantor,
as obligors on the Securities.
<PAGE>
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
----------------------------------
SECTION 8.1 Termination of Company's Obligations.
------------------------------------
The Company may terminate its obligations under the Securities and this
Indenture, and the obligations of the Guarantors shall terminate, except those
obligations referred to in the penultimate paragraph of this Section 8.1, if all
Securities previously authenticated and delivered (other than destroyed, lost or
stolen Securities which have been replaced or paid and Securities for whose
payment money has heretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust) have been delivered to the Trustee for cancellation and the Company
has paid all sums payable by it hereunder, or if:
(a) pursuant to Article III, the Company shall have given notice
to the Trustee and mailed a notice of redemption to each Holder of the
redemption of all of the Securities under arrangements satisfactory to
the Trustee for the giving of such notice;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee,
under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds in trust solely
for the benefit of the Holders for that purpose, money or direct
non-callable obligations of, or non-callable obligations guaranteed
by, the United States of America for the payment of which guarantee or
obligation the full faith and credit of the United States is pledged
("U.S. Government Obligations") maturing as to principal and interest
in such amounts and at such times as are sufficient without
consideration of any reinvestment of such interest, to pay principal
of and interest on the outstanding Securities to redemption as
certified to the Trustee by a nationally recognized firm of
independent public accountants designated by the Company, provided
that the Trustee shall have been irrevocably instructed to apply such
money or the proceeds of such U.S. Government Obligations to the
payment of said principal and interest with respect to the Securities;
and
(c) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent providing for the termination of the Company's
and the Guarantors' obligation under the Securities and this Indenture
have been complied with.
<PAGE>
Notwithstanding the foregoing paragraph, the Company's obligations and to
the extent applicable, the Guarantor's obligations in Sections 2.5, 2.6, 2.7,
2.8, 4.1, 4.2, 7.7, 7.8, 8.4, 8.5 and 10.1 shall survive until the Securities
are no longer outstanding. After the Securities are no longer outstanding, the
Company's obligations and to the extent applicable, the Guarantor's obligations
in Sections 7.7, 8.4 and 8.5 shall survive.
After such delivery or irrevocable deposit the Trustee upon request shall
acknowledge in writing the discharge of the Company's and the Guarantors'
obligations under the Securities and this Indenture except for those surviving
obligations specified above.
SECTION 8.2 Legal Defeasance and Covenant Defeasance.
----------------------------------------
(a) The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either paragraph (b) or paragraph (c)
below be applied to the outstanding Securities upon compliance with the
conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the outstanding
Securities on the date the conditions set forth below are satisfied
(hereinafter, "legal defeasance"). For this purpose, such legal defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of paragraph (e) below and
the other Sections of and matters under this Indenture referred to in (i) and
(ii) below, and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of Holders of
outstanding Securities to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth in such paragraph, payments in
respect of the principal of and interest on such Securities when such payments
are due, (ii) the Company's obligations and to the extent applicable, the
Guarantor's obligations with respect to such Securities under Sections 2.5, 2.6,
2.7, 2.8, 4.2, 7.7, 7.8, 8.4 and 8.5, (iii) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (iv) this Section 8.2. Subject to
compliance with this Section 8.2, the Company may exercise its option under this
paragraph (b) notwithstanding the prior exercise of its option under paragraph
(c) below with respect to the Securities.
<PAGE>
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company and to the extent applicable the
Guarantors shall be released and discharged from their obligations under any
covenant contained in Article V and in Sections 4.6 through 4.21 with respect to
the outstanding Securities on and after the date the conditions set forth below
are satisfied (hereinafter, "covenant defeasance"), and the Securities shall
thereafter be deemed to be not "outstanding" for the purpose of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the outstanding Securities, the Company
and any Guarantor may omit to comply with and shall have no liability in respect
of any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.1, but, except as
specified above, the remainder of this Indenture and such Securities shall be
unaffected thereby.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Securities:
(i) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of such
Securities, (A) money in an amount, or (B) U.S. Government Obligations
which through the scheduled payment of principal of and interest in
respect thereof in accordance with their terms will provide, not later
than one day before the due date of any payment, money in an amount,
or (C) a combination thereof, 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
and discharge and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge principal of, premium, if
any, and interest on the outstanding Securities on the Maturity Date
of such principal or installment of principal or interest in
accordance with the terms of this Indenture and of such Securities;
provided, however, that the Trustee (or other qualifying trustee)
shall have received an irrevocable written order from the Company
instructing the Trustee (or other qualifying trustee) to apply such
money or the proceeds of such U.S. Government Obligations to said
payments with respect to the Securities;
(ii) no Default or Event of Default or event which with notice or
lapse of time or both would become a Default or an Event of Default
with respect to the Securities shall have occurred and be continuing
on the date of such deposit or, insofar as Sections 6.1(a)(vii) and
(viii) are concerned, at any time during the period ending on the 91st
day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period);
(iii) such legal defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a Default or Event
of Default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound;
<PAGE>
(iv) in the case of an election under paragraph (b) above, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (y) since the
date of this Indenture, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the
outstanding Securities will not recognize income, gain or loss for
Federal income tax purposes as a result of such legal defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such legal
defeasance had not occurred;
(v) in the case of an election under paragraph (c) above, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the outstanding Securities will not
recognize income, gain or loss for Federal income tax purposes as a
result of such covenant defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred;
(vi) in the case of an election under either paragraph (b) or (c)
above, an Opinion of Counsel to the effect that, (x) the trust funds
will not be subject to any rights of any other holders of Indebtedness
of the Company, and (y) after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
Bankruptcy Law; provided, however, that if a court were to rule under
any such law in any case or proceeding that the trust funds remained
property of the Company, no opinion needs to be given as to the effect
of such laws on the trust funds except the following: (A) assuming
such trust funds remained in the Trustee's possession prior to such
court ruling to the extent not paid to Holders of Securities, the
Trustee will hold, for the benefit of the Holders of Securities, a
valid and enforceable security interest in such trust funds that is
not avoidable in bankruptcy or otherwise, subject only to principles
of equitable subordination, (B) the Holders of Securities will be
entitled to receive adequate protection of their interests in such
trust funds if such trust funds are used, and (C) no property, rights
in property or other interests granted to the Trustee or the Holders
of Securities in exchange for or with respect to any of such funds
will be subject to any prior rights of any other Person, subject only
to prior Liens granted under Section 364 of Title 11 of the U.S.
Bankruptcy Code (or any section of any other Bankruptcy Law having the
same effect), but still subject to the foregoing clause (B); and
(vii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that (A)
all conditions precedent provided for relating to either the legal
defeasance under paragraph (b) above or the covenant defeasance under
paragraph (c) above, as the case may be, have been complied with and
(B) if any other Indebtedness of the Company shall then be
outstanding, such legal defeasance or covenant defeasance will not
violate the provisions of the agreements or instruments evidencing
such Indebtedness.
<PAGE>
(e) All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this paragraph (e), the "Trustee") pursuant to paragraph (d)
above in respect of the outstanding Securities shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(other than the Company, any Guarantor or any of their respective Affiliates) as
the Trustee may determine, to the Holders of such Securities of all sums due and
to become due thereon in respect of principal and interest, but such money need
not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to paragraph (d) above or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Securities.
Anything in this Section 8.2 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request, in
writing, by the Company any money or U.S. Government Obligations held by it as
provided in paragraph (d) above which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent legal defeasance
or covenant defeasance.
SECTION 8.3 Application of Trust Money.
--------------------------
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Sections 8.1 and 8.2, and shall apply the
deposited money and the money from U.S. Government Obligations in accordance
with this Indenture to the payment of principal of, premium, if any, and
interest on the Securities.
SECTION 8.4 Repayment to Company or Guarantors.
----------------------------------
Subject to Sections 7.7, 8.1 and 8.2, the Trustee shall promptly pay to the
Company, or if deposited with the Trustee by the Guarantors, to the Guarantors,
upon receipt by the Trustee of an Officers' Certificate, any excess money,
determined in accordance with Sections 8.2(d)(i) and (e), held by it at any
time. The Trustee and the Paying Agent shall pay to the Company or the
Guarantors, as the case may be, upon receipt by the Trustee or the Paying Agent,
as the case may be, of an Officers' Certificate, any money held by it for the
payment of principal or interest that remains unclaimed for two years; provided,
however, that the Trustee and the Paying Agent before being required to make any
payment may, but need not, at the expense of the Company cause to be published
once in a newspaper of general circulation in The City of New York or mail to
each Holder entitled to such money 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 or the
Guarantors, as the case may be, Securityholders entitled to money must look
solely to the Company or the Guarantors for payment as general creditors unless
an applicable abandoned property law designates another Person, and all
liability of the Trustee or Paying Agent with respect to such money shall
thereupon cease.
<PAGE>
SECTION 8.5 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government obligations in accordance with this Indenture 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, then
and only then the Company's and each Guarantor's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had been made pursuant to this Indenture until such time as the Trustee
is permitted to apply all such money or U.S. Government Obligations in
accordance with this Indenture; provided, however, that if the Company or the
Guarantors have made any payment of interest on or principal of any Securities
because of the reinstatement of their obligations, the Company or the
Guarantors, as the case may be, shall be subrogated to the rights of the holders
of such Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
-----------------------------------
SECTION 9.1 Without Consent of Holders.
--------------------------
The Company and the Guarantors, when authorized by a Board Resolution of
each of them, and the Trustee may amend, waive or supplement this Indenture or
the Securities without notice to or consent of any Securityholder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(c) to comply with any requirements of the SEC under the TIA;
(d) to evidence the succession in accordance with Article V
hereof of another Person to the Company or a Guarantor and the
assumption by any such successor of the covenants of the Company
herein and in the Securities;
(e) to provide for an additional Guarantor as required by Section
4.19;
(f) to evidence and provide for the acceptance of appointment
hereunder by a separate or successor Trustee with respect to the
Securities; or
(g) to make any change that does not adversely affect the rights
of any Holder.
<PAGE>
SECTION 9.2 With Consent of Holders.
-----------------------
Subject to Section 6.7 and the provisions of this Section 9.2, the Company,
the Guarantors and the Trustee may amend or supplement this Indenture or the
Securities with the written consent of the Holders of not less than a majority
in aggregate principal amount of the Securities then outstanding. Subject to
Section 6.7 and the provisions of this Section 9.2, the Holders of, in the
aggregate, not less than a majority in aggregate principal amount of the
outstanding Securities affected may waive compliance by the Company or any
Guarantor with any provision of this Indenture or the Securities without notice
to any other Securityholder. However, without the consent of each Securityholder
affected, an amendment, supplement or waiver, including a waiver pursuant to
Section 6.4, may not:
(a) reduce the percentage in principal amount outstanding of
Securities necessary for consent to an amendment, supplement or waiver
of any provision of this Indenture or the Securities or who must
consent to take any action under the Securities, the Guarantee or the
Indenture;
(b) reduce the rate of, or extend the time for, payment of
interest on any Security;
(c) reduce the principal amount outstanding of or extend the
fixed maturity of any Security or alter the redemption provisions with
respect thereto;
(d) waive a default in the payment of the principal of, interest
on, or redemption payment or an offer to purchase required hereunder
with respect to, any Security;
(e) make any Security payable in currency other than that stated
in the Security;
(f) change the Company's obligation to purchase Securities upon
the occurrence of a Change of Control (or change the definition
thereof) or an Asset Sale in accordance with this Indenture or waive
any default in the performance thereof;
(g) affect the ranking of the Securities or the Guarantees;
(h) release any Guarantor from any of its obligations under its
Guarantee except pursuant to Section 10.3;
(i) impair the right to institute suit for the enforcement of any
payment on or with respect to the Securities or the Guarantee; or
(j) modify this Section 9.2 or Section 6.4.
It shall not be necessary for the consent of the Holders under this Section
9.2 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
<PAGE>
After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
SECTION 9.3 Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
SECTION 9.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment or waiver becomes effective, a written 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, 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 the notice of revocation before the date the
amendment, supplement or waiver becomes effective. Notwithstanding the above,
nothing in this paragraph shall impair the right of any Securityholder under
Section 316(b) of the TIA.
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 second
and third 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. Such consent shall be effective
only for actions taken within 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (a)
through (j) of Section 9.2; if it makes such a change, the amendment, supplement
or waiver shall bind every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.
SECTION 9.5 Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee shall (in accordance with the specific written direction of the Company)
request the Holder of the Security to deliver it to the Trustee. The Trustee
shall (in accordance with the specific written direction of the Company) place
an appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make the
appropriate notation or issue a new Security shall not affect the validity and
effect of such amendment, supplement or waiver.
<PAGE>
SECTION 9.6 Trustee To Sign Amendments, Etc.
--------------------------------
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article IX if the amendment, supplement or waiver does not
adversely affect the rights, duties or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing any amendment, supplement or
waiver, the Trustee shall be entitled to receive, if it so requests, an
indemnity reasonably satisfactory to it, 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 IX is authorized or
permitted by this Indenture and that any supplemental indenture constitutes the
legal, valid and binding obligation of the Company and each of the Guarantors,
enforceable against each of them in accordance with its terms (subject to
customary exceptions). The Company may not sign an amendment until its Board of
Directors approves it.
ARTICLE X
GUARANTEE ARRANGEMENTS
----------------------
SECTION 10.1 Guarantee.
---------
Each Guarantor hereby jointly and severally unconditionally and fully
guarantees (such guarantees collectively referred to as the "Guarantee") to each
Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Securities or the obligations of the
Company or any other Guarantors to the Holders or the Trustee hereunder or
thereunder, that: (a) the principal of, premium, if any, and any interest on the
Securities will be duly and punctually paid in full when due, whether at stated
maturity, by acceleration or otherwise, and interest on the overdue principal
and (to the extent permitted by law) interest, if any, on the Securities and all
other obligations of the Company or the Guarantors to the Holders or the Trustee
hereunder or thereunder (including fees, expenses or other) will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Securities
or any of such other obligations, the same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. Failing payment when
due of any amount so guaranteed, or failing performance of any other obligation
of the Company to the Holders, for whatever reason, each Guarantor will be
obligated to pay, or to perform or cause the performance of, without the
necessity of action by the Trustee or any Holder, the same immediately. An Event
of Default under this Indenture or the Securities shall constitute an event of
default under this Guarantee, and shall entitle the Holders of Securities to
accelerate the obligations of the Guarantors hereunder in the same manner and to
the same extent as the obligations of the Company. Each of the Guarantors hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Securities or this Indenture,
<PAGE>
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Securities with respect to any provisions hereof or thereof, any
release of any other Guarantor, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
Each of the Guarantors hereby agrees that its obligations hereunder constitute a
guarantee of payment and not of collection and waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that its
Guarantee will not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture and this Guarantee. If
any Securityholder or the Trustee is required by any court or otherwise to
return to the Company or to any Guarantor, or any custodian, trustee, liquidator
or other similar official acting in relation to the Company or such Guarantor,
any amount paid by the Company or such Guarantor to the Trustee or such
Securityholder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. All of the Guarantors agree that they shall
not be entitled to, and hereby irrevocably waive, any right of subrogation in
relation to the Securityholders or the Trustee, as the case may be, in respect
of any obligations guaranteed hereby. Each Guarantor further agrees that, as
between it, on the one hand, and the Holders of Securities and the Trustee, on
the other hand, (x) subject to this Article X, the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article VI hereof for the
purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article VI hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Guarantee. If acceleration of the time for payment of any amount
payable by the Company under this Indenture or the Securities is stayed upon the
insolvency, bankruptcy or reorganization of the Company, all such amounts
subject to acceleration under the terms of this Indenture shall nonetheless be
payable by the Guarantors hereunder pursuant to the terms of this Article X.
SECTION 10.2 Execution and Delivery of Guarantee.
-----------------------------------
To further evidence the Guarantee set forth in Section 10.1, each Guarantor
hereby agrees that a notation of such Guarantee shall be endorsed on each
Security authenticated and delivered by the Trustee and executed by either
manual or facsimile signature of two Officers of each Guarantor.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 10.1 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, such Guarantor's Guarantee of such Security
shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
<PAGE>
SECTION 10.3 Release of a Guarantor.
----------------------
Upon the sale or disposition of all of the Capital Stock of a Guarantor by
the Company or a Subsidiary of the Company, or upon the consolidation or merger
of a Guarantor with or into any Person (in each case, other than to the Company
or an Affiliate of the Company), such Guarantor will be automatically and
unconditionally released from all obligations under this Article X, provided
that (a) immediately before and after giving effect to such transactions, no
Default or Event of Default shall have occurred and be continuing and (b) the
proceeds received by the Company or any Subsidiary of the Company from such
transaction shall be applied as provided pursuant to Section 4.13.
SECTION 10.4 Limitation of Guarantee.
-----------------------
Each Guarantor, and by its acceptance hereof each Holder, hereby confirms
that it is the intention of all such parties that in no event shall any
Guarantor's obligations under its Guarantee constitute or result in a violation
of any applicable fraudulent conveyance or similar law of any relevant
jurisdiction. Therefore, in the event that the Guarantee would, but for this
sentence, constitute or result in such a violation, then the liability of the
Guarantors under the Guarantee shall be reduced to the extent necessary to
eliminate such violation under the applicable fraudulent conveyance or similar
law. Subject to the preceding limitation on liability, the Guarantee of each
Guarantor constitutes a guarantee of payment in full when due and not merely a
guarantee of collectibility as further set forth in Section 10.1.
ARTICLE XI
MISCELLANEOUS
-------------
SECTION 11.1 Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
SECTION 11.2 Notices.
-------
Any notice or communication shall be sufficiently given only if in writing
and delivered in Person or mailed by first-class mail addressed as follows:
(a) if to the Company or the Guarantors:
Renco Metals, Inc.
c/o Magnesium Corporation of America
238 North 2200 West
Salt Lake City, Utah 84116
Attention: Ira Leon Rennert, Chairman
<PAGE>
(b) if to the Trustee:
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Administration
The Company, the Guarantors or the Trustee by written notice to the other
may designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder, including any
notice delivered in connection with TIA Section 310(b), TIA Section 313(c), TIA
Section 314(a) and TIA Section 315(b), shall be mailed to him, first-class
postage prepaid, at his address as it appears on the registration books of the
Registrar and shall be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
Except for a notice to the Trustee, which is deemed given only when received, if
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.3 Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
SECTION 11.4 Certificate and Opinion of Counsel
as to Conditions Precedent.
----------------------------------
Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such Guarantor,
as the case may be, shall furnish to the Trustee at the request of the Trustee
(a) an Officers' Certificate in form and substance 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, (b) an Opinion of Counsel in form and substance satisfactory to
the Trustee stating that, in the opinion of counsel, all such conditions have
been complied with and (c) where applicable, a certificate or opinion by an
independent certified public accountant satisfactory to the Trustee that
complies with TIA Section 314(c).
SECTION 11.5 Statements Required in Certificate and Opinion of Counsel.
---------------------------------------------------------
Each certificate and Opinion of Counsel with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or
Opinion of Counsel has read such covenant or condition;
<PAGE>
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in
such certificate or Opinion of Counsel are based;
(c) 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
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
SECTION 11.6 Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Securityholders. The Paying
Agent or Registrar may make reasonable rules for its functions.
SECTION 11.7 Legal Holidays.
--------------
If a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
SECTION 11.8 Governing Law.
-------------
The internal laws of the State of New York shall govern this Indenture and
the Securities without regard to principles of conflict of laws.
SECTION 11.9 No Recourse Against Others.
--------------------------
A trustee, director, officer, employee, stockholder or beneficiary, as
such, of the Company or the Guarantors shall not have any liability for any
obligations of the Company or the Guarantors under the Securities, the
Guarantees or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by accepting a
Security waives and releases all such liability.
<PAGE>
SECTION 11.10 Successors.
----------
All agreements of the Company and each Guarantor in this Indenture and the
Securities shall bind their respective successors. All agreements of the Trustee
in this Indenture shall bind its successor.
SECTION 11.11 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 11.12 Separability.
------------
In case any provision in this Indenture or in the Securities 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,
and a Holder shall have no claim therefor against any party hereto.
SECTION 11.13 Table of Contents, Headings, Etc.
---------------------------------
The table of contents, cross-reference sheet and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, and are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
RENCO METALS, INC.
By: ----------------------------
Name:
Title:
FLEET NATIONAL BANK, as Trustee
By: ----------------------------
Name:
Title:
GUARANTORS:
MAGNESIUM CORPORATION OF AMERICA
By: ----------------------------
Name:
Title:
SABEL INDUSTRIES, INC.
By: ----------------------------
Name:
Title:
<PAGE>
Exhibit A
---------
(Form of Face of Security)
--------------------------
RENCO METALS, INC.
No. $
11-1/2% SENIOR NOTE DUE 2003
RENCO METALS, INC. promises to pay to or registered assigns
the principal sum of Dollars on July 1, 2003.
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15
RENCO METALS, INC.
By:__________________________________
By:__________________________________
Dated: _________________
Certificate of Authentication
This is one of the 11-1/2% Senior Notes due 2003 referred to in the
within-mentioned Indenture.
FLEET NATIONAL BANK, as Trustee
By:________________________________
Authorized Officer
<PAGE>
(REVERSE OF SECURITY)
RENCO METALS, INC.
11-1/2% SENIOR NOTE DUE 2003
1. Interest. RENCO METALS, INC., a Delaware corporation (the "Company"),
promises to pay, until the principal hereof is paid or made available for
payment, interest on the principal amount set forth on the reverse side hereof
at a rate of 11-1/2% per annum. Interest on this 11-1/2% Senior Note due 2003
(the "Security") will accrue from and including the most recent date to which
interest has been paid or, if no interest has been paid, from and including July
3, 1996 through but excluding the date on which interest is paid. Interest shall
be payable in arrears on January 1, July 1 and at the stated maturity commencing
January 1, 1997. 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 on
overdue interest (to the full extent permitted by law) at a rate of 13-1/2% per
annum.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on December 15 and June 15 next preceding
the interest payment date. Holders must surrender Securities to a Paying Agent
to collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. If the Security is a Global Security, all
payments in respect of this Security will be made to the Depository or its
nominee in immediately available funds in accordance with customary procedures
established from time to time by the Depository.
3. Paying Agent and Registrar. Initially, Fleet National Bank (the
"Trustee") will act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice. None of the Company, any Guarantor or
any of their Affiliates may act as Paying Agent, Registrar or co-Registrar.
4. Indenture. The Company issued the Securities under an Indenture dated as
of July 1, 1996 (the "Indenture"), among the Company, Magnesium Corporation of
America and Sabel Industries, Inc. (the "Guarantors"), and the Trustee. This
Security is one of an issue of Securities of the Company issued, or to be
issued, under the Indenture. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb), as amended from time
to time. The Securities are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of them. Capitalized and certain
other terms used herein and not otherwise defined have the meanings set forth in
the Indenture. The Securities are general unsecured obligations of the Company
limited in aggregate principal amount to $150,000,000. The Indenture limits,
among other things, the incurrence of Indebtedness by the Company and its
Subsidiaries; the creation of Liens by the Company and its Subsidiaries; the
declaration or payment of any dividend or any other distribution on Capital
Stock of the Company or any Subsidiary; purchases, redemptions, and other
acquisitions or retirements of Capital Stock of the Company and its
Subsidiaries; transactions by the Company and its Subsidiaries with their
respective Affiliates; the issuance of preferred stock by the Company's
Subsidiaries; and the ability of the Company or any of its Subsidiaries to merge
with or into another entity. The Indenture also requires each Guarantor to
comply with each of the covenants that impose restrictions on such Guarantor.
The limitations are subject to a number of important qualifications and
exceptions. The Company must report to the Trustee quarterly on compliance with
the limitations contained in the Indenture.
<PAGE>
5. Optional Redemption. The Securities will be subject to redemption, in
whole or in part, at the option of the Company, at any time on or after July 1,
2000, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued interest to the redemption date, if redeemed during
the 12-month period beginning on July 1 of the years indicated below:
Year Percentage
---- ----------
2000......................... 105.750%
2001......................... 102.875%
2002......................... 100.000%
In addition, at any time prior to July 1, 1999, the Company may redeem up
to 33% of the aggregate principal amount of the Securities originally issued
with the proceeds of one or more Public Equity Offerings (as defined below) at a
redemption price (expressed as a percentage of principal amount) of 110.5% plus
accrued interest to the redemption date; provided that at least $100.0 million
aggregate principal amount of Securities remains outstanding immediately after
any such redemption. In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Company shall make such redemption
not more than 120 days after the consummation of any such Public Equity
Offering. "Public Equity Offering" means an underwritten public offering of
Capital Stock (other than Disqualified Stock) pursuant to a registration
statement filed with the SEC in accordance with the Securities Act.
6. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. On and after the Redemption
Date, unless the Company defaults in making the redemption payment, interest
ceases to accrue on Securities or portions thereof called for redemption.
7. Offers To Purchase. Sections 4.13 and 4.15 of the Indenture provide that
after an Asset Sale or upon the occurrence of a Change of Control, and subject
to further limitations contained therein, the Company shall make an offer to
purchase certain amounts of Securities in accordance with the procedures set
forth in the Indenture.
8. Denominations, Transfer, Exchange. The Securities are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay to it any taxes and fees required
by law or permitted by the Indenture. The Registrar need not transfer or
exchange any Securities or portion of a Security selected for redemption, or
transfer or exchange any Securities for a period of 15 days before a selection
of Securities to be redeemed.
<PAGE>
9. Persons Deemed Owners. The registered Holder of a Security may be
treated as the owner of it for all purposes.
With respect to Global Securities, the Depository may grant proxies and
otherwise authorize Holders of Book-Entry Securities to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action which a Holder of a Security is entitled to give or take under this
Indenture.
10. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee or 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 as general creditors unless an
"abandoned property" law designates another Person.
11. Amendment, Supplement, Waiver. The Company and the Guarantors and the
Trustee may, without the consent of the Holders of any outstanding Securities,
amend, waive or supplement the Indenture or the Securities for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, making any change that does not adversely
affect the rights of any Holder. Other amendments and modifications of the
Indenture or the Securities may be made by the Company, the Guarantors and the
Trustee with the consent of the Holders of not less than a majority of the
aggregate principal amount of the outstanding Securities, subject to certain
exceptions requiring the consent of the Holders of the particular Securities to
be affected.
12. Successor Corporation. When a successor corporation assumes all the
obligations of its predecessor under the Securities and the Indenture and the
transaction complies with the terms of Article V of the Indenture, the
predecessor corporation will be released from those obligations.
13. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.1(a)(vii) or
(viii) of the Indenture) occurs and is continuing, then the Holders of not less
than 25% in aggregate principal amount of the outstanding Securities may, and
the Trustee upon the request of the Holders of not less than 25% in aggregate
principal amount of the outstanding Securities shall, declare the principal of
and interest on all of the Securities to be due and payable immediately. If an
Event of Default specified in Section 6.1(a)(vii) or (viii) of the Indenture
occurs and is continuing, the principal of, and premium, if any, and interest on
all of the Securities 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.
Holders may not enforce the Indenture or the Securities except as provided in
the Indenture. The Trustee may require indemnity reasonably satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the then
outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except a default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.
<PAGE>
14. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.
15. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company or the Guarantors shall not have any
liability for any obligations of the Company or the Guarantors under the
Securities, the Guarantee 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 Security waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
16. Discharge. The Company's obligations pursuant to the Indenture will be
discharged, except for obligations pursuant to certain sections thereof, subject
to the terms of the Indenture, upon the payment of all the Securities or upon
the irrevocable deposit with the Trustee of money or U.S. Government Obligations
sufficient to pay when due principal of, and premium, if any, and interest on
the Securities to maturity or redemption, as the case may be.
17. Authentication. This Security shall not be valid until the Trustee
manually signs the certificate of authentication on the other side of this
Security.
18. Abbreviations. Customary abbreviations may be used in the name of a
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).
19. Certain Information Obligations. Pursuant to the Indenture, whether or
not required by the rules and regulations of the SEC, so long as any Securities
are outstanding, the Company will file with the SEC and distribute or cause to
be distributed to holders of the Securities copies of the financial information
that would have been contained in such annual reports and quarterly reports that
the Company would have been required to file with the SEC pursuant to Section
13(a) or 15(d) of the Exchange Act. Such financial information shall include
annual reports containing consolidated financial statements and notes thereto,
together with an opinion thereon expressed by an independent public accounting
firm, management's discussion and analysis of financial condition and results of
operations as well as quarterly reports containing unaudited condensed
consolidated financial statements for the first three quarters of each fiscal
year.
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
Renco Metals, Inc.
c/o Magnesium Corporation of America
238 North 2200 West
Salt Lake City, Utah 84116
Attention: Ira Leon Rennert, Chairman
<PAGE>
GUARANTEE
Each Guarantor (which term includes any successor Person under the
Indenture) has unconditionally guaranteed, to the extent set forth in the
Indenture and subject to the provisions in the Indenture, (a) the due and
punctual payment of the principal of and interest on the Securities, whether at
maturity, by acceleration or otherwise, the due and punctual payment of interest
on overdue principal, and, to the extent permitted by law, interest, and the due
and punctual performance of all other obligations of the Company or the other
Guarantors to the Holders or the Trustee all in accordance with the terms set
forth in Article X of the Indenture and (b) in case of any extension of time of
payment or renewal of any Securities 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, whether at stated maturity, by acceleration
or otherwise.
The obligations of the Guarantors to the Holders of Securities and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article X of the Indenture and reference is hereby made to the Indenture for the
precise terms of the Guarantee.
Guarantors:
MAGNESIUM CORPORATION OF AMERICA
By:----------------------------------
Chief Executive Officer
By:----------------------------------
Secretary
SABEL INDUSTRIES, INC.
By:----------------------------------
Chief Executive Officer
By:----------------------------------
Secretary
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)----------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:------- Your signature:--------------------------
(Sign exactly as your name appears on
the other side of this Security)
Signature Guarantee:------------------------------------------------------------
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to
Section 4.13 or 4.15 of the Indenture, check the Box: 4.13 [ ] 4.15 [ ]
If you wish to have a portion of this Security purchased by the Company
pursuant to Section 4.13 or 4.15 of the Indenture, state the amount:
$---------------
Date:--------------- Your signature:-------------------------------------
(Sign exactly as your name appears on
the other side of this Security)
Signature Guarantee:--------------------------------
<PAGE>
EXHIBIT B
---------
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING
OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED
IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR
A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE
FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF
THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY
A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE>
CROSS-REFERENCE TABLE
TIA Section Indenture Section
- ----------- -----------------
Section 310(a)(1)..................................... 7.10
(a)(2)..................................... 7.10
(a)(3)..................................... N.A.
(a)(4)..................................... N.A.
(b)........................................ 7.8; 7.10; 11.2
(c)........................................ N.A.
Section 311(a)........................................ 7.11
(b)........................................ 7.11
(c)........................................ N.A.
Section 312(a)........................................ 2.5
(b)........................................ 11.3
(c)........................................ 11.3
Section 313(a)........................................ 7.6
(b)(1)..................................... 7.6
(b)(2)..................................... 7.6
(c)........................................ 7.6; 11.2
(d)........................................ 7.6
Section 314(a)........................................ 4.7; 4.8; 11.2
(b)........................................ N.A.
(c)(1)..................................... 11.4
(c)(2)..................................... 11.4
(c)(3)..................................... N.A.
(d)........................................ N.A.
(e)........................................ 11.5
(f)........................................ N.A.
Section 315(a)........................................ 7.1(b)
(b)........................................ 7.5; 11.2
(c)........................................ 7.1(a)
(d)........................................ 7.1(c)
(e)........................................ 6.11
Section 316(a) (last sentence)........................ 2.9
(a)(1)(A).................................. 6.5
(a)(1)(B).................................. 6.4
(a)(2)..................................... N.A.
(b)........................................ 6.7
- -------------------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
Section 317(a)(1)...................................... 6.8
(a)(2)...................................... 6.9
(b)......................................... 2.4
Section 318(a)(1)...................................... 11.1
- -------------------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions..................................................2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act............13
SECTION 1.3 Rules of Construction........................................13
ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating..............................................14
SECTION 2.2 Execution and Authentication.................................14
SECTION 2.3 Registrar and Paying Agent...................................15
SECTION 2.4 Paying Agent To Hold Money in Trust..........................15
SECTION 2.5 Securityholder Lists.........................................15
SECTION 2.6 Transfer and Exchange........................................16
SECTION 2.7 Replacement Securities.......................................17
SECTION 2.8 Outstanding Securities.......................................17
SECTION 2.9 Treasury Securities..........................................18
SECTION 2.10 Temporary Securities.........................................18
SECTION 2.11 Cancellation.................................................18
SECTION 2.12 Defaulted Interest...........................................19
SECTION 2.13 CUSIP Number.................................................19
SECTION 2.14 Deposit of Moneys............................................19
ARTICLE III
REDEMPTION
SECTION 3.1 Optional Redemption..........................................19
SECTION 3.2 Notices to Trustee...........................................20
SECTION 3.3 Selection of Securities To Be Redeemed.......................20
SECTION 3.4 Notice of Redemption.........................................21
SECTION 3.5 Effect of Notice of Redemption...............................22
SECTION 3.6 Deposit of Redemption Price..................................22
SECTION 3.7 Securities Redeemed in Part..................................22
<PAGE>
Section Page
- ------- ----
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities........................................22
SECTION 4.2 Maintenance of Office or Agency..............................23
SECTION 4.3 Corporate Existence..........................................23
SECTION 4.4 Payment of Taxes and Other Claims............................23
SECTION 4.5 Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.....................................24
SECTION 4.6 Guarantees...................................................24
SECTION 4.7 Compliance Certificates......................................24
SECTION 4.8 Reports......................................................25
SECTION 4.9 Further Assurance to the Trustee.............................25
SECTION 4.10 Limitation on Additional Indebtedness........................26
SECTION 4.11 Limitation on Liens..........................................27
SECTION 4.12 Limitation on Restricted Payments............................28
SECTION 4.13 Limitation on Certain Sales of Assets and Subsidiary Stock...29
SECTION 4.14 Limitation on Transactions with Affiliates...................32
SECTION 4.15 Change of Control............................................32
SECTION 4.16 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.....................34
SECTION 4.17 Limitation on Issuance of Preferred Stock by Subsidiaries....34
SECTION 4.18 Special Covenants of Each Guarantor..........................35
SECTION 4.19 Additional Guarantors........................................35
SECTION 4.20 Limitation on Investments, Loans and Advances................35
SECTION 4.21 Limitation on Sale-Leaseback Transactions....................35
SECTION 4.22 Waiver of Stay, Extension or Usury Laws......................36
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge, Etc..................................36
SECTION 5.2 Successor Entity Substituted.................................37
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default............................................37
SECTION 6.2 Acceleration.................................................39
SECTION 6.3 Other Remedies...............................................39
SECTION 6.4 Waiver of Past Default.......................................40
SECTION 6.5 Control by Majority..........................................40
SECTION 6.6 Limitation on Suits..........................................40
SECTION 6.7 Rights of Holders To Receive Payment.........................41
SECTION 6.8 Collection Suit by Trustee...................................41
SECTION 6.9 Trustee May File Proofs of Claim.............................41
SECTION 6.10 Priorities...................................................42
SECTION 6.11 Undertaking for Costs........................................42
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ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee............................................42
SECTION 7.2 Rights of Trustee............................................44
SECTION 7.3 Individual Rights of Trustee.................................44
SECTION 7.4 Trustee's Disclaimer.........................................45
SECTION 7.5 Notice of Defaults...........................................45
SECTION 7.6 Reports by Trustee to Holders................................45
SECTION 7.7 Compensation and Indemnity...................................45
SECTION 7.8 Replacement of Trustee.......................................46
SECTION 7.9 Successor Trustee by Merger, Etc.............................47
SECTION 7.10 Eligibility; Disqualification................................47
SECTION 7.11 Preferential Collection of Claims Against Company............47
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1 Termination of Company's Obligations.........................48
SECTION 8.2 Legal Defeasance and Covenant Defeasance.....................49
SECTION 8.3 Application of Trust Money...................................52
SECTION 8.4 Repayment to Company or Guarantors...........................52
SECTION 8.5 Reinstatement................................................53
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders...................................53
SECTION 9.2 With Consent of Holders......................................54
SECTION 9.3 Compliance with Trust Indenture Act..........................55
SECTION 9.4 Revocation and Effect of Consents............................55
SECTION 9.5 Notation on or Exchange of Securities........................55
SECTION 9.6 Trustee To Sign Amendments, Etc..............................56
ARTICLE X
GUARANTEE ARRANGEMENTS
SECTION 10.1 Guarantee....................................................56
SECTION 10.2 Execution and Delivery of Guarantee..........................57
SECTION 10.3 Release of a Guarantor.......................................58
SECTION 10.4 Limitation of Guarantee......................................58
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Trust Indenture Act Controls.................................58
SECTION 11.2 Notices......................................................58
SECTION 11.3 Communications by Holders with Other Holders.................59
SECTION 11.4 Certificate and Opinion of Counsel as to
Conditions Precedent.....................................59
SECTION 11.5 Statements Required in Certificate and Opinion of Counsel....59
SECTION 11.6 Rules by Trustee, Paying Agent, Registrar....................60
SECTION 11.7 Legal Holidays...............................................60
SECTION 11.8 Governing Law................................................60
SECTION 11.9 No Recourse Against Others...................................60
SECTION 11.10 Successors...................................................61
SECTION 11.11 Duplicate originals..........................................61
SECTION 11.12 Separability.................................................61
SECTION 11.13 Table of Contents, Headings, Etc.............................61
SIGNATURES...................................................................62
EXHIBIT A - Form of Security...............................................A-1
EXHIBIT B - Form of Legend for Book-Entry Securities.......................B-1
