Exhibit 10-A
OPTION AGREEMENT
This Agreement is entered into as of this 16th day of January, 2002 by and
between United States Steel Corporation, a Delaware corporation with offices at
000 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000 ("USS"), NKK Corporation, a Japanese
corporation, with offices at 0-0-0, Xxxxxxxxxx, Xxxxxxx-xx, Xxxxx 000-0000,
Xxxxx ("NKK"), National Steel Corporation, a Delaware corporation with offices
at 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxxxxxx, XX 00000 ("National"), NKK U.S.A.
Corporation, a Delaware corporation and a wholly owned subsidiary of NKK, with
offices at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 ("NAC"), and NUF LLC, a Delaware
limited liability company and an indirect wholly owned subsidiary of NKK, with
offices at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 ("NUF").
WITNESSETH
WHEREAS: USS and National, with the support of NKK, have agreed to attempt
to negotiate an acquisition agreement (the "National Steel Agreement") which
will involve the combination of the businesses of USS and National on terms that
will assure a competitive and viable combined company, on a basis which is fair
to the creditors, shareholders, workers, suppliers and customers of both USS and
National, structured as a merger of National with USS of Delaware Inc, a
Delaware corporation and a wholly owned subsidiary of USS ("Acquisition Sub")
(hereinafter the "Acquisition");
WHEREAS: NKK beneficially owns, through NAC, 22,100,000 shares of Class A
common stock of National (the "NKK Shares");
WHEREAS: NUF and National are parties to a Subordinated Credit Agreement
pursuant to which NUF has agreed to lend to National a $100 million revolving
credit facility and National has granted NUF a lien on certain of its assets
("NUF Loan")
WHEREAS: National's Board of Directors has appointed a Special Committee,
consisting of the Board's three independent directors (the "Special Committee"),
to review and evaluate the terms of this Agreement and the Acquisition and to
recommend to the Board what action, if any, the Board should take with respect
to this Agreement and the Acquisition.
WHEREAS: In order to induce USS to negotiate and enter into the National
Steel Agreement, NKK and NUF are willing to grant to USS an option to purchase
the NKK Shares and the NUF Loan;
WHEREAS: USS was converted from a Delaware limited liability company named
United States Steel LLC into a Delaware corporation named United States Steel
Corporation, at the close of business on December 31, 2001.
NOW THEREFORE, in consideration of the mutual obligations contained herein,
and intending to be legally bound, the parties do hereby agree as follows:
1. The Option
1.1 Grant of Option. For one dollar and other good and valuable
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consideration, the receipt and sufficiency of which is hereby acknowledged, NKK,
NAC or NUF, as the case may be, does hereby grant to USS or the Acquisition Sub
the right to acquire all (but not less than all) right, title and interest to
(a) the NKK Shares and (b) the NUF Loan, at any time during the term set forth
in Section 1.2, subject to the terms and conditions set forth herein
(collectively, the "Option"); provided that USS or the Acquisition Sub must
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exercise the Option for the NKK Shares and the NUF Loan simultaneously.
1.2 Term. The Option shall come into effect on the date set forth above,
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which shall be the date when this Agreement has been executed by all parties and
shall expire at 11:59 PM Eastern Daylight Savings time on June 15, 2002. If the
Option is not exercised prior to the expiration of the foregoing period, this
Agreement shall terminate and none of the parties shall thereafter have any
further liability or obligation under or in connection with this Agreement other
than as expressly provided in Sections 8.1 and 8.14, which shall continue in
full force and effect following the termination of this Agreement.
1.3 Method of Exercise. The Option may be exercised at any time by USS's
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or the Acquisition Sub's delivery to NAC and NUF of a written communication,
with a copy to NKK, stating that USS or the Acquisition Sub exercises the
Option. Such communication shall be effective on the later of NAC's receipt or
NUF's receipt thereof at the addresses set forth in Section 8.2 and may be made
by hand delivery, postal delivery as set forth in Section 8.2 or messenger
service delivery which provides proof of delivery.
1.4 Option Price. The price to be paid upon exercise of the Option for (a)
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the NKK Shares shall be a warrant in the form attached hereto as Exhibit A (the
"Warrant") issued to NAC or at the direction of NAC to any corporation or other
entity controlled by, controlling or under direct or indirect common control
with NKK; and (b) the NUF Loan shall be a note in the form attached hereto as
Exhibit B, payable to NUF or such other party controlled by, controlling or
under direct or indirect common control with NKK as NUF shall designate (the
"Note").
2. Terms of the Warrant and Note
2.1 Warrant Shares. The securities to be issued upon exercise of the
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Warrant are four million (4,000,000) shares of common stock, $1.00 par value per
share, of USS, the successor to United States Steel LLC, a subsidiary of USX
Corporation, a Delaware corporation ("USX"), which had a targeted common stock
for its steel business ("USX-U. S. Steel common stock"). Shares of USS or USX -
U. S. Steel common stock are hereinafter collectively referred to as "Steel
Stock" and the shares of USS Stock issuable upon exercise of the Warrant are
hereafter referred to as the "Warrant Shares.
2.2 Expiration of Warrant. The Warrant shall expire at 11:59 PM Eastern
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Daylight Savings time on June 15, 2007.
2.3 Warrant Exercise Price. The exercise price of the Warrant shall be one
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hundred fifty percent (150%) of the average closing price of Steel Stock as
reported on the New York Stock Exchange Composite Tape during the last sixty
(60) trading days prior to
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the fifth (5th) day before the effective date of USS's or Acquisition Sub's
exercise of the Option, or, if the National Steel Agreement is executed prior to
the effective date of the exercise of the Option, then during the last sixty
(60) trading days prior to the fifth (5th) day before the date of the National
Steel Agreement.
2.4 Adjustment of Exercise Price. The exercise price per share of Warrant
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Shares shall be adjusted from time to time pursuant to customary anti-dilution
provisions in the Warrant.
2.5 Note.
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(a) USS or the Acquisition Sub shall issue a Note of Thirty Million
Dollars ($30 Million) to NUF or its designee at the time of the exercise of
the Option for the NUF Loan. The Note will have a term of twenty (20)
years, will not bear interest and will be convertible into One Million (1
Million) shares of USS Stock at any time by the holder of the Note five (5)
years after issue. During the initial five (5) year period of the Note, USS
or the Acquisition Sub shall have the right to (a) pre-pay the Note in the
amount of Thirty Million Dollars ($30 Million) or (b) deliver One Million
(1 Million) shares of USS Stock, provided, in the case of clause (b), the
closing price of the USS Stock on the New York Stock Exchange exceeds
thirty dollars ($30) per share for each of the ten trading days immediately
preceding the date of delivery. From and after the fifth anniversary of the
issuance of the Note, either NUF or its designee or USS or the Acquisition
Sub shall have the right to convert the Note into One Million (1 Million)
shares of USS Stock; provided, that during the period between such fifth
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anniversary and the tenth anniversary of such issuance, such right may not
be exercised unless the closing price of the USS Stock on the New York
Stock Exchange exceeds thirty dollars ($30) per share for each of the ten
trading days immediately preceding the date of delivery. From and after the
tenth anniversary of the issuance of the Note, either NUF or its designee
or USS or the Acquisition Sub shall have the right to convert the Note into
One Million (1 Million) shares of USS Stock, without any limitation
concerning the price of such USS Stock at the time of any such conversion.
The Note shall contain customary anti-dilution protections. The shares of
USS Stock issuable upon conversion of the Note are hereinafter referred to
as the "Note Shares." NUF or its designee may transfer the Note or the Note
Shares, as the case may be, to any corporation or other entity controlled
by, controlling or under direct or indirect common control with NKK.
(b) Simultaneously with the exercise of the Option and the delivery
of the Note: (i) NKK shall pay to NUF one hundred million dollars in
connection with NKK's guarantee of the NUF Loan and all other required
payments pursuant to such guarantee of the NUF Loan; (ii) NKK shall be
subrogated to all of the rights and obligations of NUF under the NUF Loan;
(iii) NUF shall transfer the Note to NKK and such transfer shall constitute
a partial collection by NKK of the NUF Loan; and (iv) NKK shall waive the
remaining outstanding balance of NUF Loan.
(c) Immediately after the exercise of the Option, the delivery of the
Note to NKK and its designee and the actions set forth in Section 2.5(b),
the NUF Loan shall be cancelled together with the NKK guarantee thereof and
all documentation relating thereto shall be superseded by the Note.
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2.6 Registration Rights.
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(a) NKK or NAC, as the case may be, agrees that NAC or its designee
shall not sell, transfer or assign the Warrant for a period of three years
following any exercise of the Option; provided, that if warrants to issue
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USS Stock are issued to other shareholders or creditors of National in
connection with the Acquisition then the Warrant or portions thereof shall
be freely transferable to the same extent as such other warrants; and
provided, further, that NAC or NKK, as the case may be, or its designee may
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transfer the Warrant to any corporation or other entity controlled by,
controlling or under direct or indirect common control with NKK.
(b) USS agrees that, within 90 days of receipt of a written request
from NKK, NAC, NUF and/or the designee thereof, as the case may be, USS or
the Acquisition Sub will at its cost and expense file with the Securities
and Exchange Commission a Registration Statement covering the sale by NKK,
NAC, NUF and/or the designee thereof, as the case may be, of the Warrant
Shares and/or the Note Shares and that USS will, or shall cause the
Acquisition Sub to, take all steps reasonably necessary to cause such
registration statement to be declared effective and to remain effective and
to cause the shares of stock covered thereby to be listed on the New York
Stock Exchange, Inc., the Chicago Stock Exchange and the Pacific Stock
Exchange. This request for registration may be exercised not more than once
with respect to the Warrant Shares and not more than once with respect to
the Note Shares.
(c) USS agrees and represents that none of the information supplied
by or on behalf of USS or the Acquisition Sub for inclusion or
incorporation by reference in connection with the Registration Statement to
be filed by USS or the Acquisition Sub with the SEC will contain at the
time the Registration Statement becomes effective under the Securities Act
of 1933, as amended and the rules and regulations thereunder (the "1933
Act"), any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make these
statements therein in light of the circumstances under which they were made
not misleading. None of the information supplied by or on behalf of USS or
the Acquisition Sub for inclusion or incorporation by reference in
connection with the Prospectus used in connection with the Registration
Statement will contain at the date mailed to stockholders any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in light of the circumstances under which
they were made not misleading. The Registration Statement and the
Prospectus will comply in form in all material respects to the provisions
of the 1933 Act and the Securities and Exchange Act of 1934.
(d) NKK, NAC or NUF as the case may be, agree and represent that none
of the information supplied by or on behalf of NKK, NAC or NUF, as the case
may be, for inclusion or incorporation by reference in connection with the
Registration Statement to be filed by USS or the Acquisition Sub with the
SEC will contain at the time the Registration Statement becomes effective
under the Securities Act of 1933, as amended and the rules and regulations
thereunder (the "1933 Act") any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make these statements therein in light
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of the circumstances under which they were made not misleading. None of the
information supplied by or on behalf of NKK, NAC or NUF, as the case may
be, for inclusion or incorporation by reference in connection with the
Prospectus used in connection with the Registration Statement will contain
at the date mailed to stockholders and any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in light of the circumstances under which they were made not
misleading.
3. Covenants of NKK, NAC and NUF
NKK, NAC and NUF or the designee thereof, as the case may be, covenant and
agree as follows:
3.1 Approval of Acquisition. NKK, NAC or the designee thereof, as the case
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may be, will vote the NKK Shares in favor of the Acquisition at any meeting of
National's shareholders called to vote upon, consent to or otherwise approve the
Acquisition, including any action by written consent in lieu of a meeting.
3.2 Other Voting Matters. During the term of this Agreement, NKK, NAC, NUF
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or the designee thereof, as the case may be, agrees to vote the NKK Shares
against (i) any merger and/or acquisition agreement (other than the National
Steel Agreement), merger, consolidation, combination, sale of substantially all
the assets of National, liquidation or winding up of National (other than
pursuant to insolvency laws), (ii) any Acquisition Proposal, or (iii) any change
in the Constituent Documents of National or any National subsidiary. For
purposes of this Agreement, "Acquisition Proposal" shall mean any inquiry,
proposal or offer from any person (other than USS or any of its affiliates)
relating to any merger, consolidation, combination, sale of substantially all
the assets of National, liquidation or winding up of National (other than
pursuant to insolvency laws) or other direct or indirect business combination
involving National or any subsidiary or the issuance or acquisition of shares of
capital stock or other equity securities of National or any subsidiary
representing 25% or more (by voting power) of the outstanding capital stock of
National or such subsidiary or any tender or exchange offer that if consummated
would result in any person, together with all affiliates thereof, beneficially
owning shares of capital stock or other equity securities of National or any
subsidiary representing 25% or more (by voting power) of the outstanding capital
stock of National or such subsidiary, or the acquisition, license, purchase or
other disposition of a substantial portion of the technology, business or assets
of National or any subsidiary outside the ordinary course of business or
inconsistent with past practice (the forgoing reference to National's subsidiary
shall not include National Steel Pellet Company, one of National's subsidiaries,
and National's non-solicitation obligations under this Section 3.2 shall not
apply with respect to such subsidiary).
3.3 Solicitation of Acquisition Proposals. NKK, NAC, NUF or the designee
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thereof, as the case may be, will not authorize any investment banker or other
representative of NKK, to solicit, initiate or encourage the submission of any
Acquisition Proposal.
3.4 Transfer of NKK Shares and NUF Loan. NKK, NAC, NUF or the designee
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thereof, as the case may be, will not: (i) sell, transfer, assign, pledge or
otherwise dispose of any of the NKK Shares or the NUF Loan (except to (x) NKK or
any other company
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controlling, controlled by or under common control with NUF or (y) USS and each
of its affiliates); (ii) enter into any contract, option, agreement or other
understanding to sell, transfer, assign, pledge or otherwise dispose of any of
the NKK Shares or the NUF Loan (except with (x) NKK or any other company
controlling, controlled by or under common control with NUF or (y) USS and each
of its affiliates); (iii) grant any proxy, power of attorney or authorization in
respect to the NKK Shares or the NUF Loan, other than in favor of a designee of
USS; (iv) deposit the NKK Shares into a voting trust or other agreement
involving the voting of the NKK Shares; (v) receive any repayment in relation to
the NUF Loan (except pursuant to any transaction pursuant to clause (i)(x) or
(ii)(x) above); (vi) take any other action that would in any manner impede,
frustrate, prevent, or nullify the consummation of the Acquisition and the other
transactions contemplated in the National Steel Agreement.
3.5 Proxy Statement. NKK and NAC shall allow USS and National to include a
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statement in the Proxy Statement/Prospectus to the effect that NKK and NAC have
agreed to vote the NKK Shares in favor of the Acquisition.
3.6 Bankruptcy, Insolvency, Etc. The provisions of this Section 3 will not
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be construed to limit or impair (a) the right of National or its subsidiaries to
take or refrain from taking any action for the purpose of preparing for,
commencing, implementing, avoiding or postponing any bankruptcy, insolvency or
similar proceeding, whether voluntary or involuntary, involving National or any
of its subsidiaries or (b) the right of NKK, any of its affiliates or any of the
representatives of NKK serving on the Board of Directors of National to vote on
or otherwise act to approve or carry out any such action.
4. Representations of NKK, NUF and NAC
NKK, NUF and NAC represent and warrant to USS that:
4.1 Corporate Organization. NKK is a corporation duly organized and
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validly existing under the laws of Japan. NUF is a limited liability company
duly organized, validly existing and in good standing under the laws of
Delaware. NAC is corporation duly organized, validly existing and in good
standing under the laws of Delaware.
4.2 Ownership. NKK, through NAC, owns the NKK Shares free and clear of all
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liens, charges, encumbrances and security interests whatsoever.
4.3 Authority. Each of NKK, NUF and NAC has full corporate power and
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authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of each of NKK, NUF and NAC, and no
other corporate proceedings are necessary for the execution and delivery of this
Agreement by NKK, NUF or NAC. This Agreement has been duly and validly executed
and delivered by each of NKK, NUF or NAC and (assuming due authorization,
execution and delivery by USS) constitutes a valid and binding obligation of
each of NKK, NUF and NAC, enforceable against NKK, NUF or NAC in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
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4.4 Consents and Approvals. Except for applicable requirements of the
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Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), no prior notice or filing with, and
no permit, authorization, consent or approval of, any governmental or regulatory
agency (a "Governmental Entity") is necessary in connection with the execution,
delivery or performance by NKK, NUF or NAC of this Agreement or for the
consummation by NKK, NUF or NAC of the transactions contemplated by this
Agreement.
4.5 Investment Intent. The Warrant and Note to be acquired pursuant
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hereto, and any shares issued or issuable upon the exercise of such Warrant by
NKK, NAC or the designee thereof, as the case may be, or the Note Shares, will
be acquired by NKK, NAC, NUF, or the designee thereof, as the case may be, for
their own account and not with a view to distribution, except in compliance
with, or pursuant to an available exemption from, the registration requirements
of the United States Securities Act of 1933 or any rules or regulations
promulgated thereunder (the "Securities Act"). NKK, NAC, NUF, or the designee
thereof, as the case may be, will not resell, transfer, assign or distribute the
Warrant or the Note and the underlying shares and/or the Note Shares except in
compliance with the registration requirements of the Securities Act or pursuant
to an available exemption therefrom.
4.6 Broker's Fees. Except as set forth in Schedule 4.6, neither NKK, NUF
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or NAC nor any of their respective affiliates, nor any of their respective
officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated by this Agreement.
4.7 No Other Representations; Sale "As Is, Where Is".
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(a) Except for the representations and warranties contained in this
Article IV, neither NKK, NUF nor NAC nor any other person or entity makes
any representation or warranty, express or implied, on behalf of NKK, NUF
or NAC or any of their affiliates or the business or operations thereof.
(b) EXCEPT AS SET FORTH IN THIS ARTICLE IV, NEITHER NKK, NUF NOR NAC
MAKES ANY REPRESENTATION OR WARRANTY REGARDING THE BUSINESS, PROSPECTS,
ASSETS, PROPERTIES, LIABILITIES, CONDITION (FINANCIAL OR OTHERWISE) OR
RESULTS OF OPERATIONS OF NATIONAL, AND EACH OF NKK, NUF and NAC HEREBY
DISCLAIMS ALL IMPLIED WARRANTIES RELATING TO THE BUSINESS, PROSPECTS,
ASSETS, PROPERTIES, LIABILITIES, CONDITION (FINANCIAL OR OTHERWISE) OR
RESULTS OF OPERATIONS OF NATIONAL (INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE). EXCEPT AS SET FORTH
IN THIS ARTICLE IV, IT IS EXPRESSLY ACKNOWLEDGED AND AGREED THAT THE NKK
SHARES AND THE NUF LOAN ARE SOLD "AS IS, WHERE IS", AND THAT NONE OF USS OR
ANY OF ITS AFFILIATES SHALL HAVE ANY CLAIM AGAINST NKK, NUF and NAC OR ANY
OF THEIR AFFILIATES WITH RESPECT THERETO.
4.8 Transfer of NKK Shares. NKK and NAC have not (i) entered into any
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contract, option, agreement or other understanding to sell, transfer, assign,
pledge or
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otherwise dispose of any of the NKK Shares; or (ii) granted any proxy, power of
attorney or authorization in respect to the NKK Shares. NKK, NAC and NUF have
not entered into any contract, option, agreement or other understanding to sell,
transfer, assign, pledge or otherwise dispose of any of the NUF Loan to any
third party not controlling, controlled by or under common control with NUF.
4.9 No Encumbrances. Except as set forth in Schedule 4.9, to the
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reasonable knowledge of NKK, NUF and NAC, the execution and delivery of this
agreement and the consummation by NKK, NUF and NAC of the transactions
contemplated herein (i) does not conflict with the provisions of any other
contract or other agreement binding upon NKK, NUF or NAC or affecting the NKK
Shares; and (ii) will not result in the creation of any lien, pledge, security
interest or other encumbrance on the NKK Shares.
5. Representations of USS
USS represents to NKK on the date hereof and on the date of the
execution of the Option:
5.1 Corporate Organization. USS is, and the Acquisition Sub, when
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organized, will be, a corporation duly incorporated validly existing and in good
standing under the law of the state of Delaware and is duly qualified and in
good standing as a foreign corporation in each jurisdiction where such
qualification is required to conduct its business and owns its properties as
currently conducted and carry out its obligations hereunder, except in each case
where the failure to be so qualified would not result in a material adverse
effect on the business, properties, financial condition results of operation or
prospects of USS or the Acquisition Sub, as the case may be, on a consolidated
basis.
5.2 Organizational Documents. USS has previously delivered to NKK and
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National complete and accurate copies of the organizational documents of USS. No
amendments or modifications thereto have been adopted or are contemplated and
each remains in full force and effect on the date hereof.
5.3 Authority. USS has full corporate power and authority to execute and
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deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have or will have been duly and validly
approved by the Board of Directors of USS, and no other corporate proceedings
are necessary for the execution and delivery of this Agreement by USS. This
Agreement has been duly and validly executed and delivered by USS and (assuming
due authorization, execution and delivery by NKK, NUF, NAC and National)
constitutes a valid and binding obligation of USS, enforceable against USS in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally. Notwithstanding anything set forth herein, USS shall require
Board approval prior to any exercise by USS or Acquisition Sub of the Option
granted herein.
5.4 Consents and Approvals. Except for applicable requirements of the HSR
----------------------
Act, no filing with, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary in connection with the execution, delivery or
performance by USS or the
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Acquisition Sub of this Agreement or for the consummation by USS or the
Acquisition Sub of the transactions contemplated by this Agreement.
5.5 Capitalization. The authorized capital stock of USS consists of
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240,000,000 shares consisting of (i) 40,000,000 shares of preferred stock, $1.00
par value per share and (ii) 200,000,000 shares of common stock. As of January
1, 2002, there were 89,195,915 and zero shares of such common stock and
preferred stock outstanding, respectively. All of the issued and outstanding
shares of USS Stock have been duly authorized and validly issued and are fully
paid, not assessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
5.6 Reports. USS has previously delivered to NKK and to National true and
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complete copies of USX Corporation's Annual Report on Form 10-K for the year
ended December 31, 2000; Quarterly Reports on Form 10-Q for the Quarters ended
March 31, June 30, and September 30, 2001; the Current Reports on Form 8-K dated
February 27, April 24, June 15, July 2, July 31, August 1, August 2, August, 6,
October 12, November 5, November 7, and November 28 the Proxy Statement filed
March 12, 2001 and the Proxy Statement/Prospectus filed on September 20, 2001
and of the Current Report on Form 8-K of USS, dated December 31, 2001 (the "USS
Disclosure Documents"). The USS Disclosure Documents conform in all material
respects to the requirements of the Exchange Act. As of the dates thereof, the
USS Disclosure Documents did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances in which they were
made not misleading.
5.7 Financial Statements. The consolidated financial statements of USS and
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the U.S. Steel Group contained in the USS Disclosure Documents were prepared in
accordance with generally accepted accounting principles consistently applied
(except for changes noted therein, if applicable) and fairly present in all
material respects the financial position of USS on a consolidated basis and of
the U. S. Steel Group, as the case may be, as of the dates thereof and the
results of operations and statement of cash flows of USS on a consolidated basis
and of the U. S. Steel Group, as the case may be, for the periods ended on such
dates subject in the case of unaudited interim financial statements to normal
year end adjustments. To the knowledge of USS, PricewaterhouseCoopers LLP, whose
report on the annual financial statements is contained therein, are independent
public accountants as defined by regulations of the SEC.
5.8 Material Adverse Change. Except as disclosed in the USS Disclosure
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Documents since September 30, 2001, (a) the business of USS, on a consolidated
basis, and the U. S. Steel Group has been conducted in the ordinary course,
consistent with past practice; (b) neither USS, the U. S. Steel Group or any of
their respective properties has suffered any fire, loss or other casualty that
has resulted in or is likely to result in a material adverse effect on the
business, properties, financial condition, results of operation or prospects of
USS, on a consolidated basis, or the U. S. Steel Group; and (c) there has not
occurred any condition that has, had, or with the passage of time, the giving of
notice or both, will have, a material adverse effect on the business, properties
financial condition, results of operation or prospects of USS, on a consolidated
basis.
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5.9 Legal Proceedings. Except as disclosed in the USS Disclosure
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Documents, (i) there are no legal proceedings pending, or to the knowledge of
USS threatened, against USS which, individually or in the aggregate, if
adversely decided, would have a material adverse effect on the business,
properties, financial condition results of operation or prospects of USS, on a
consolidated basis; (ii) USS is not in violation of any law, regulation,
ordinance, judicial decree or administrative order (including without limitation
environmental, tax and employee matters) which violation, individually or in the
aggregate, will have a material adverse effect on the business, properties,
financial condition, results of operation or prospects of USS, on a consolidated
basis; and (iii) USS has all Permits necessary to own its respective assets and
conduct its business as currently conducted; no such permits are being
challenged and, to the knowledge of USS, there is no basis for such a challenge
except for matters which, individually or in the aggregate, will not have a
material adverse effect on the business, properties, financial condition,
results of operation or prospects of USS, on a consolidated basis.
5.10 Broker's Fees. Except as set forth in Schedule 5.10, neither USS
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nor any of its respective affiliates, nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement.
5.11 No Other Representations; Sale "As Is, Where Is.
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(a) Except for the representations and warranties contained in
this Article V and Article VI, neither USS nor any other person or
entity makes any representation or warranty, express or implied, on
behalf of USS or any of its affiliates or the business or operations
thereof.
(b) EXCEPT AS SET FORTH IN THIS ARTICLE V AND ARTICLE VI, USS
MAKES NO REPRESENTATION OR WARRANTY REGARDING THE BUSINESS, PROSPECTS,
ASSETS, PROPERTIES, LIABILITIES, CONDITION (FINANCIAL OR OTHERWISE) OR
RESULTS OF OPERATIONS OF USS, AND USS HEREBY DISCLAIMS ALL IMPLIED
WARRANTIES RELATING TO THE BUSINESS, PROSPECTS, ASSETS, PROPERTIES,
LIABILITIES, CONDITION (FINANCIAL OR OTHERWISE) OR RESULTS OF
OPERATIONS OF USS (INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE). EXCEPT AS SET FORTH IN THIS ARTICLE V AND
ARTICLE VI, IT IS EXPRESSLY ACKNOWLEDGED AND AGREED THAT THE WARRANTS
AND THE NOTE ARE SOLD "AS IS, WHERE IS", AND THAT NONE OF NKK OR ANY OF
ITS AFFILIATES SHALL HAVE ANY CLAIM AGAINST USS OR ANY OF ITS
AFFILIATES WITH RESPECT THERETO.
5.12 Guarantee. USS guarantees the obligation of the Acquisition Sub
---------
hereunder related to the conversion of the Note to USS Stock.
6. Special Representations of USS
USS covenants and agrees to NKK that, upon the exercise of the Option:
-10-
6.1 Corporate Authorization. The exercise of the Option, the
-----------------------
execution and delivery of the Warrant and the Note and the consummation of the
transactions contemplated hereby will have been approved by the Board of
Directors of USS and, no other corporate approval or action will be required on
the part of USS. USS has full corporate power and authority and all necessary
internal approvals to execute and deliver this Agreement. Approval of the
execution and delivery of this Agreement by the USS Board of Directors is not
required.
6.2 Warrant and Note Authorization. Each of the Warrant and the Note
------------------------------
is duly and validly authorized and when executed and delivered will be a legally
valid, binding and enforceable obligation of USS or the Acquisition Sub. The
Warrant Shares and the Note Shares have been duly and validly authorized and
reserved for issuance. When issued and delivered in accordance with the Warrant
and the Note, respectively, the Warrant Shares and the Note Shares will be duly
and validly issued, fully-paid, non-assessable and free of pre-emptive rights.
6.3 Tender Offer; Consideration. Following any exercise of the
---------------------------
Option, USS or the Acquisition Sub shall, in a reasonably prompt manner, subject
to compliance with all applicable laws, make a tender offer to acquire the
shares of all shareholders of National other than NAC in exchange for (a)
warrants with terms no less favorable to the holders thereof than those provided
to NAC hereunder with a per share value not less than the per share value paid
for the NKK Shares (i.e., 1 share of common stock, par value $0.01 per share, of
National (the "National Stock") for a warrant which may be exercised for .181
shares of USS Stock), or (b) USS Stock based upon an exchange ratio determined
by dividing the average price of National Stock during the fifteen trading day
period ending on January 11, 2002 (i.e. $1.54 per share) by the average price of
Steel Stock during the same period (i.e. $17.78 per share), which yields an
exchange ratio of one share of National Stock for 0.086 shares of USS Stock.
Notwithstanding the foregoing, the option to obtain warrants shall not be
available to National's stockholders unless a sufficient number of stockholders
(other than NAC) elect to receive warrants so that the warrants are eligible for
listing on the New York Stock Exchange. If the consideration per share paid or
payable by USS, the Acquisition Sub or any of their affiliates for any portion
of the NKK Shares has a fair market value greater than the fair market value of
the shares of the USS Stock or warrants provided in the preceding sentence, USS
will offer all holders of National's Stock other than NAC, the right to exchange
each of their shares for such consideration. If, within one year following the
closing of a tender offer made pursuant to this Section 6.3, USS, the
Acquisition Sub or any of their affiliates effect any merger or consolidation
involving National, each holder of National Stock outstanding at the effective
time of such merger or consolidation shall be provided with the option to
receive the same number of shares of USS Stock or the same warrants as are
offered to stockholders tendering their shares in such tender offer. The shares
of USS Stock and warrants (including underlying shares) issued to the holders of
National Stock (other than NAC) pursuant to this Section 6.3 shall be covered by
an effective registration statement under the Securities Act of 1933, shall be
registered under the Securities Exchange Act of 1934 and shall be listed for
trading on the New York Stock Exchange.
7. Representations of National
National hereby represents and warrants to USS on the date hereof that:
-11-
7.1 Corporate Organization. National is a corporation duly
----------------------
organized, validly existing and in good standing under the laws of Delaware.
7.2 Capitalization. The authorized capital stock of National
--------------
consists of 30,000,000 shares of Class A National Stock and 65,000,000 shares of
Class B National Stock. As of January 1, 2002, there were 22,100,000 and
19,188,240 shares of Class A National Stock and Class B National Stock
outstanding, respectively. All of the issued and outstanding shares of National
Stock have been duly authorized and validly issued and are fully paid, not
assessable and free of preemptive rights, with no personal liability attaching
to the ownership thereof.
7.3 Authority. National has full corporate power and authority to
---------
execute and deliver this Agreement. The Board of Directors of National has
approved this Agreement pursuant to the provisions of Section 203(a) of the
Delaware Corporation Law based upon the recommendation of the Special Committee.
7.4 SEC Documents. National has previously delivered to USS true and
-------------
complete copies of its Annual Report on Form 10-K for the year ended December
31, 2000; Quarterly Reports on Form 10-Q for the Quarters ended March 31, June
30, and September 30, 2001; the Current Reports on Form 8-K dated 1/25/01,
2/15/01, 3/2/01, 3/6/01, 5/3/01, 7/27/01, 9/10/01, 10/3/01, 10/22/01, 10/26/01,
11/27/01 and 12/11/01 (the "National Disclosure Documents"). The National
Disclosure Documents conform in all material respects to the requirements of the
Exchange Act. As of the dates thereof, the National Disclosure Documents did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading.
7.5 Financial Statements. The consolidated financial statements of
--------------------
National contained in the National Disclosure Documents were prepared in
accordance with generally accepted accounting principles consistently applied
(except for changes noted therein, if applicable) and fairly present in all
material respects the financial position of National as of the dates thereof and
the results of operations and statement of cash flows of National for the
periods ended on such dates subject in the case of unaudited interim financial
statements to normal year end adjustments. To the knowledge of National, Ernst &
Young LLP, whose report on the annual financial statements is contained therein,
are independent public accountants as defined by regulations of the SEC.
7.6 Material Adverse Change. Except as disclosed in the National
-----------------------
Disclosure Documents since September 30, 2001, (a) the business of National has
been conducted in the ordinary course, consistent with past practice (taking
into account the financial condition of National and market conditions affecting
the steel industry generally); and (b) neither National or any of its respective
properties has suffered any fire, loss or other casualty that has resulted in or
is likely to result in a material adverse effect on the business, properties,
financial condition, results of operation or prospects of National.
7.7 Legal Proceedings. Except as disclosed in the National
-----------------
Disclosure Documents, (i) there are no legal proceedings pending, or to the
knowledge National threatened, against National which, individually or in the
aggregate, if adversely decided, would have a material adverse effect on the
business, properties, financial condition results
-12-
of operation or prospects of National; (ii) National is not is in violation of
any law, regulation, ordinance, judicial decree or administrative order
(including without limitation environmental, tax and employee matters) which
violation, individually or in the aggregate, will have a material adverse effect
on the business, properties, financial condition, results of operation or
prospects of National; and (iii) National has all Permits necessary to own its
respective assets and conduct its business as currently conducted; no such
permits are being challenged and, to the knowledge of National, there is no
basis for such a challenge except for matters which, individually or in the
aggregate, will not have a material adverse effect on the business, properties,
financial condition, results of operation or prospects of National.
7.8 No Other Representations; Sale "As Is, Where Is.
-----------------------------------------------
(a) Except for the representations and warranties contained in
this Article VII, neither National nor any other person or entity makes
any representation or warranty, express or implied, on behalf of
National or any of its affiliates or the business or operations
thereof.
(b) EXCEPT AS SET FORTH IN THIS ARTICLE VII, NATIONAL MAKES NO
REPRESENTATION OR WARRANTY REGARDING THE BUSINESS, PROSPECTS, ASSETS,
PROPERTIES, LIABILITIES, CONDITION (FINANCIAL OR OTHERWISE) OR RESULTS
OF OPERATIONS OF NATIONAL, AND NATIONAL HEREBY DISCLAIMS ALL IMPLIED
WARRANTIES RELATING TO THE BUSINESS, PROSPECTS, ASSETS, PROPERTIES,
LIABILITIES, CONDITION (FINANCIAL OR OTHERWISE) OR RESULTS OF
OPERATIONS OF NATIONAL (INCLUDING ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE). EXCEPT AS SET FORTH IN THIS ARTICLE
VII, IT IS EXPRESSLY ACKNOWLEDGED AND AGREED THAT THE NATIONAL STOCK IS
SOLD "AS IS, WHERE IS", AND THAT NONE OF USS OR ANY OF ITS AFFILIATES
SHALL HAVE ANY CLAIM AGAINST NATIONAL OR ANY OF ITS AFFILIATES WITH
RESPECT THERETO.
8. General
8.1 Expenses. Except as expressly provided in this Agreement,
--------
whether or not the transactions contemplated hereunder shall be consummated,
each party shall pay its own expenses incident to the preparation of this
Agreement and for consummating the transaction, including all outside counsel
and accountant fees incurred by it. Each party shall also pay all filing fees,
taxes and other expenses required to be paid by it under applicable laws,
regulations or contracts to perform the covenants and obligations hereunder.
8.2 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been given if actually
delivered by any reasonable means or if mailed by registered or certified mail,
return receipt requested, to the following addresses or to such other address as
any party may subsequently designate in writing:
(a) If to USS, then to:
-00-
Xxxxxx Xxxxxx Steel Corporation
000 Xxxxx Xxxxxx - Xxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attn: Senior Vice President & Treasurer
Tel: 000-000-0000
Fax: 000-000-0000
E-mail: xxxxxxxxx@xxx.xxx
With copy to:
United States Steel Corporation
000 Xxxxx Xxxxxx - Xxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attn: Assistant General Counsel - Commercial
Tel: 000-000-0000
Fax: 000-000-0000
E-mail: xxxxxxxx@xxx.xxx
(b) If to NKK, then to:
NKK Corporation
0-0-0, Xxxxxxxxxx Xxxxxxx-xx
Xxxxx 000-0000
Xxxxx
Attn: General Manager, International Business Planning Dept.,
Steel Division
Tel: 00-0-0000-0000
Fax: 00-0-0000-0000
E-mail: Xxxxxxx_Xxxxxxxx@xxxxx.xxxxx.xxx.xx.xx
With copy to:
NKK Corporation
0-0-0, Xxxxxxxxxx Xxxxxxx-xx
Xxxxx 000-0000
Xxxxx
Attn: Chief, General Manager, International and Domestic Legal
Affairs
Tel: 00-0-0000-0000
Fax: 00-0-0000-0000
E-mail: Xxxxxx_xxxxxxxxxxx@xxxxx.xxxxx.xxx.xx.xx
With copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
-14-
E-mail: xxxxxx@xxxxxxx.xxx
(c) If to NAC or NUF, to:
NKK America, Inc or NUF LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: President
Tel: 000-000-0000
Fax: 000-000-0000
E-mail: Xxxxx_Xxxxxxx@xxxxx.xxxxx.xxx.xx.xx
With a copy to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
as provided in (b)
(d) If to National, then to:
National Steel Corporation
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Vice President, General Counsel and Secretary
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxxxxxxx.xxx
With copies to:
Xxxxxx X. Xxxxxxx
Chairman of the Special Committee
of the Board of Directors of National Steel Corporation
c/o National Steel Corporation
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attn: President
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxxx@xxxxxxxxxxxxx.xxx
Xxxxx & XxXxxxxx
One Prudential Plaza
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxx.x.xxxxxx@xxxxxxxx.xxx
-15-
8.3 Nonsurvival of Certain Representations and Warranties. The right
-----------------------------------------------------
of USS to assert a claim against National relating to the breach any of the
representations and warranties set forth in Section 7.4 through 7.7 of this
Agreement shall terminate as of time of the exercise or expiration of the
Option. National Steel shall have no liability or obligation with respect to any
claim by USS alleging the breach of the foregoing representations and warrants
in the event USS exercises the Option.
8.4 Applicable Laws; Counterparts. This Agreement shall be construed
-----------------------------
and enforced in accordance with the laws of the State of Delaware. This
Agreement may be executed simultaneously in two or more counterparts, including
by facsimile, each of which shall be deemed an original but all of which
together shall constitute but one and the same instrument.
8.5 Entire Agreement. This Agreement contains the full agreement
----------------
between the parties hereto, supersedes any and all agreements and amendments
thereto which may have been heretofore negotiated or entered into between them.
There are no further understandings written or oral between the parties.
8.6 Descriptive Heading. The descriptive headings of this Agreement
-------------------
are inserted for convenience only and are not intended to indicate all of the
matter following them. Accordingly, they shall not control or affect the meaning
or construction of any of the provisions hereof.
8.7 Severability. If any provisions of this Agreement shall be
------------
determined to be invalid or unenforceable, the remainder of this Agreement shall
not be effected thereby and shall remain enforceable to the maximum extent
permitted by law.
8.8 Parties. This Agreement is intended solely for the benefit of
-------
the parties and no rights are created or intended to be created in favor of any
third parties. This Agreement cannot be assigned by either party hereto without
the written consent of the other party.
8.9 Consent to Jurisdiction. Solely for the purposes of disputes
-----------------------
among the parties hereto, the parties hereto consent and submit to the personal
jurisdiction of the United States District Court for the State of Delaware or to
any court of the State of Delaware having jurisdiction over any controversy in
connection with this Agreement, and to service of process upon them in
accordance with applicable rules and statutes, solely in connection with actions
or proceedings involving the parties to and relating to this Agreement. NKK
hereby appoints Corporation Service Company as its agent for the purposes of
receiving and accepting service of process on its behalf.
8.10 Amendment. This Agreement may not be amended or modified other
---------
than by written agreement executed by the parties hereto expressly stating that
it is a modification of this Agreement. Without limiting the foregoing, no
amendment, modification or waiver of or supplement to this Agreement will become
effective unless it has been approved by the Board of Directors of National."
8.11 Post-Sale Agreement. Promptly following the Closing in the event
-------------------
USS or the Acquisition Sub exercises the Option, NKK and USS shall negotiate in
good faith an agreement, similar to the cooperative agreement currently in
effect between NKK and
-16-
National, pursuant to which NKK and USS can assist each other with respect to
certain commercial, operational, marketing and technology matters, subject to
compliance with all applicable laws. The terms of all such agreements shall be
fully disclosed to the Board of Directors of National prior to the date such
agreements are entered into by USS and NKK.
8.12 National Steel Agreement; Due Diligence. National and USS agree
---------------------------------------
to use all commercially reasonable efforts to promptly negotiate and execute the
National Steel Agreement and to use all commercially reasonable efforts to
consummate the Acquisition as promptly as possible following the execution of
the National Steel Agreement. USS shall prepare and deliver to National a
preliminary draft of the National Steel Agreement on or before January 31, 2002.
National shall prepare and deliver to USS a preliminary draft of the disclosure
schedules to the National Steel Agreement not more than 10 business days after
its receipt of the preliminary draft National Steel Agreement from USS. USS and
National intend that specific terms and conditions of debt exchange offers will
be determined by negotiation between USS and National and/or between USS and
National's debt holders/creditors and that such terms and conditions will be
reflected in the National Steel Agreement. Within five (5) business days of the
date of this Agreement, USS shall commence, and National shall participate and
cooperate in, a reasonable business, financial and legal due diligence
investigation by USS of National and its subsidiaries. National and USS shall
use commercially reasonable efforts to complete such due diligence investigation
as soon as practicable.
8.13 Understandings Regarding Approval by National's Board of
--------------------------------------------------------
Directors. USS acknowledges and agrees that the approval of this Agreement by
---------
National's Board of Directors (a) relates solely to the grant to USS of the
Option as expressly provided for in this Agreement (as in effect on the date it
has been executed on behalf of National), (b) is not intended as an approval of
any other agreement, understanding or arrangement between or involving USS and
NKK or any of their respective affiliates or associates, including any
amendment, modification, waiver or supplement relating to this Agreement entered
into or granted after the date it has been executed on behalf of National, and
(c) will be limited solely to an approval of USS becoming an "interested
stockholder" of National for purposes of Section 203(a)(1) of the Delaware
General Corporation Law as a result of the grant to USS of the Option and (d)
will not be construed to constitute an approval or recommendation of any
business combination or other transaction involving National or any of its
subsidiaries, including an approval or recommendation pursuant to Sections 251
or 271 of the Delaware General Corporation Law with respect to any merger or
consolidation involving National or any of its subsidiaries or any sale of all
or substantially all of the assets of National or any of its subsidiaries.
8.14 Agreement to Refrain from Taking Certain Actions. Except in
------------------------------------------------
accordance with a definitive National Steel Agreement approved by the Board of
Directors of National, for a period of three years after the date of this
Agreement, USS shall not and shall not cause or permit any of its affiliates,
associates or other persons under its control to (a) engage in any business
combination with National or any of its subsidiaries, (b) make, or in any way
participate, directly or indirectly, in any solicitation of any proxy to vote or
seek to advise or influence any person or entity with respect to the voting of
any voting stock of National or any of its subsidiaries, (c) form, join or in
any way participate, directly or indirectly, in a group with respect to any
voting stock of National or any of its subsidiaries, (d) enter into any
discussions, negotiations, arrangements or understandings with any third
-17-
party with respect to any of the foregoing, (e) disclose any intention, plan or
arrangement inconsistent with the foregoing, or (f) otherwise act, alone or in
concert with others, directly or indirectly, to seek to control or influence the
management or policies of National or any of its subsidiaries. Notwithstanding
the foregoing, the provisions of this Section 8.14 (a) shall terminate as of the
date any bankruptcy, insolvency or similar proceeding is commenced by or against
National (other than a proceeding commenced against National by USS or any of
its affiliates) and (b) shall not be construed to prevent USS or the Acquisition
Sub from voting any shares of National Stock acquired by them pursuant to the
Option or pursuant to a tender offered made in accordance with Section 6.3 of
this Agreement in connection with any matter submitted for the vote or consent
of National's stockholders, if USS and its affiliates and associates (other than
National and its directors and officers) would not be deemed to be participants
in the solicitation of proxies with respect to such matter. As used in this
Section 8.14, the terms "affiliate," "associate," "person," "business
combination," "control" and "voting stock" have the respective meanings provided
in Section 203 of the Delaware General Corporation Law, and the terms
"solicitation," "proxy" "group" and "participants" have the respective meanings
provided in the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder. The provisions of this Section 8.14 will
survive the termination of this Agreement and will continue in full force and
effect thereafter.
IN WITNESS WHEREOF, the parties hereto have entered into this agreement
as of the date first listed above.
UNITED STATES STEEL CORPORATION NKK CORPORATION
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxx Xxxxxx
--------------------------------- -------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxx Xxxxxx
------------------------------ -----------------------------
Title: Vice Chairman & CFO Title: Executive Vice President
------------------------------ ----------------------------
NATIONAL STEEL CORPORATION NKK U.S.A. CORPORATION
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxx
--------------------------------- -------------------------------
Name: Xxxxxxx Xxxxxx Name: Xxxxx Xxxxxxx
------------------------------ -----------------------------
Title: Chairman & CEO Title: President
------------------------------ ----------------------------
NUF LLC
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
-------------------------------
Title: President
------------------------------
-18-
Schedule 4.9
The execution and delivery of this Agreement and the consummation of the
transactions contemplated herein may conflict with the provisions of the
following agreements.
Matters reflected in this Schedule 4.9 are not necessarily limited to the
matters required to be disclosed herein. Such additional matters are set forth
for informational purposes and do not necessarily include other matters of a
similar nature.
1. Eleventh Supplemental Indenture, dated as of March 31, 1999, between
National, the Chase Manhattan Bank and Xxxxx X. Xxxxxxxx.
2. U.S. $500,000,000 Credit Agreement, dated as of September 28, 2001, by and
among National, Citicorp USA, Inc. and certain issuers named therein.
3. Amended and Restated Subordinated Credit Agreement, dated as of September
28, 2001, by and between National and NUF LLC.
4. Loan Agreement, dated March 18, 1992, between Mitsubishi Corporation and
National Pickle Line Corporation.
5. Mortgage, Assignment of Rents and Leases, and Security Agreement dated
March 18, 1992 from National Pickle Line Corporation to Mitsubishi
Corporation and Mitsubishi International Corporation.
6. Guaranty Agreement, dated March 18, 1992, between Mitsubishi Corporation
and National.
7. Partnership Agreement, made as of September 18, 1990, among Dofasco Inc.,
National Ontario II Limited, Galvatek Ontario Corporation and DNN
Galvanizing Corporation.
8. Shareholders' Agreement, made as of September 18, 1990, among DNN
Galvanizing Corporation, 904153 Ontario, Inc., National Ontario Corporation
and Galvatek America Corporation.
9. Loan Agreement, dated February 9, 1989, among Mitsubishi Corporation,
Marubeni Corporation and National Caster Acquisition Corporation.
10. Guaranty Agreement, dated February 9, 1989, among National, Mitsubishi
Corporation and Marubeni Corporation.
11. Mortgage, Assignment of Rents and Leases and Security Agreement dated
December 3, 1990 from National Acquisition Corporation to Mitsubishi
Corporation and Marubeni Corporation.
12. Limited Liability Company Agreement, made as of February 2, 1998, between
National and Xxxxxxxx Steel Co., Inc.
13. Participation Agreement, dated as of September 1, 1987, among National
Acquisition Corporation, Grant Holdings, Inc., The Connecticut National
Bank,
1
The Fuji Bank and Trust Company, Mitsubishi International Corporation and
Marubeni America Corporation, National , Mitsubishi Corporation and
Marubeni Corporation.
14. Lease Agreement, dated as of September 1, 1987, between The Connecticut
National Bank and National Acquisition Corporation.
15. Participation Agreement, dated as of December 20, 1985, among Wilmington
Trust Company, Comerica Bank-Detroit, SGE (New York) Associates, Marubeni
U.K.P.L.C. and National.
16. Loan Agreement, dated August 7, 1992, by and among Mitsubishi Corporation,
Nissho Iwai Corporation and Okura & Co. , Ltd. and Double G Coatings
Company, L. P.
17. Mortgage, Assignment of Rents and Leases, and Security Agreement, dated
August 7, 1992, from Double G Coatings Company, L.P. to Mitsubishi
Corporation, Mitsubishi International Corporation, Nissho Iwai American
Corporation, Nissho Iwai Corporation, Okura & Co. (America), Inc., and
Okura & Co., Ltd.
18. Guaranty Agreement, dated August 7, 1992, by National in favor of
Mitsubishi Corporation, Nissho Iwai Corporation and Okura & Co., Ltd.
19. Procoil Corporation and The Fuji Bank and Trust Company, dated as of March
10, 1997.
2
Exhibit A
--------------------------------------------------------
UNITED STATES STEEL CORPORATION
Form of Common Stock Purchase Warrant
Dated as of
---------------------------------------------------------
This Warrant and any shares acquired upon the exercise of this Warrant
have not been registered under the Securities Act of 1933, as amended,
and may not be transferred, sold or otherwise disposed of except while
a registration under such Act is in effect or pursuant to an exemption
therefrom under such Act. This Warrant and such shares may be
transferred only in compliance with the conditions specified in this
Warrant.
TABLE OF CONTENTS
-----------------
1. Exercise of Warrant........................................................................... 1
-- --------------------
1.1 Manner of Exercise................................................................... 1
--- ------------------
1.2 When Exercise Effective.............................................................. 1
--- -----------------------
1.3 Delivery of Stock Certificates, etc.................................................. 2
--- ------------------------------------
2. Adjustment of Warrant Price................................................................... 2
-- ----------------------------
2.1.1 Issuance of Additional Shares of Common Stock........................................ 2
----- ---------------------------------------------
2.1.2 Extraordinary Dividends and Distributions............................................ 2
----- -----------------------------------------
2.1.3 Other Distribution of Cash........................................................... 4
----- --------------------------
2.2 Treatment of Stock Dividends, Stock Splits, etc...................................... 4
--- -----------------------------------------------
2.3 Adjustments for Combinations, etc.................................................... 5
--- ---------------------------------
2.4 Dilution in Case of Tender Offer, Exchanged offer or other Negotiated
--- ---------------------------------------------------------------------
Purchase by the Company.............................................................. 5
-----------------------
2.5 Minimum Adjustment of Warrant Price.................................................. 6
--- -----------------------------------
2.6 Other Adjustment Provisions.......................................................... 6
--- ---------------------------
3. Consolidation, Merger, etc.................................................................... 7
-- ---------------------------
3.1 Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc........... 7
--- --------------------------------------------------------------------------
3.2 Assumption of Obligations............................................................ 8
--- -------------------------
4. Other Dilutive Events......................................................................... 8
-- ---------------------
5. No Dilution or Impairment..................................................................... 9
-- -------------------------
6. The Company's Report as to Adjustments........................................................ 9
-- --------------------------------------
7. Notices of Corporate Action................................................................... 9
-- ---------------------------
8. Registration of Common Stock................................................................. 10
-- ----------------------------
9. Restrictions on Transfer..................................................................... 11
-- ------------------------
9.1 Restrictive Legends................................................................. 11
--- -------------------
9.2 Notice of Proposed Transfer; Opinions of Counsel.................................... 11
--- ------------------------------------------------
9.3 Termination of Restrictions......................................................... 12
--- ---------------------------
10. Availability of Information.................................................................. 12
--- ---------------------------
11. Reservation of Stock, etc.................................................................... 13
--- -------------------------
12. Registration and Transfer of Warrants, etc................................................... 14
--- -------------------------------------------
12.1 Warrant Register; Ownership of Warrants............................................. 14
---- ---------------------------------------
12.2 Transfer and Exchange of Warrants................................................... 14
---- ---------------------------------
12.3 Replacement of Warrants............................................................. 14
---- -----------------------
i
13. Registration under Securities Act, etc....................................................... 14
--- ---------------------------------------
13.1 Registration on Request............................................................. 14
---- -----------------------
13.2 Indemnification..................................................................... 14
---- ----------------
14. Definitions.................................................................................. 17
--- -----------
15. Remedies..................................................................................... 21
--- --------
16. No Rights or Liabilities as Stockholder...................................................... 21
--- ---------------------------------------
17. Notices...................................................................................... 21
--- -------
18. Amendments................................................................................... 22
--- ----------
19. Expiration................................................................................... 22
--- ----------
20. Descriptive Headings......................................................................... 22
--- --------------------
21. GOVERNING LAW................................................................................ 22
--- -------------
22. Judicial Proceedings; Waiver of Jury......................................................... 22
--- ------------------------------------
FORM OF SUBSCRIPTION.................................................................................. 23
--------------------
FORM OF ASSIGNMENT................................................................................... 24
------------------
ii
UNITED STATES STEEL CORPORATION
Common Stock Purchase Warrant (the "Warrant")
Date: _____________
UNITED STATES STEEL CORPORATION (the "Company"), a Delaware
corporation, for value received, hereby certifies that [ ] (the
"Purchaser"), or registered assigns, is entitled to purchase from the Company
four million (4,000,000) shares of duly authorized, validly issued, fully paid
and nonassessable shares of the Common Stock, par value $1.00 per share (the
"Common Stock") of the Company at any time during the period commencing on the
date hereof and ending at 11:59 PM Eastern Daylight Savings time on June 15,
2007 (the "Exercise Period") , all subject to the terms, conditions and
adjustments set forth below in this Warrant.
This Warrant is issued pursuant to that certain Option Agreement
(the "Option Agreement"), dated as of January 16, 2002, by and between United
States Steel Corporation, a Delaware corporation with offices at 000 Xxxxx
Xxxxxx, Xxxxxxxxxx, XX 00000-0000, NKK Corporation, a Japanese corporation with
offices at 0-0-0, Xxxxxxxxxx, Xxxxxxx-xx, Xxxxx 000-0000, Xxxxx ("NKK"),
National Steel Corporation, a Delaware corporation with offices at 0000 Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxx, XX 00000, NKK U. S. A. Corporation, a Delaware
corporation and a wholly owned subsidiary of NKK with offices at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and NUF LLC, a Delaware limited liability
company and an indirect wholly owned subsidiary of NKK, with offices at 000 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000. Certain capitalized terms used in this Warrant are
defined in Section 13; references to an "Exhibit" are, unless otherwise
specified, to one of the Exhibits attached to this Warrant and references to a
"Section" are, unless otherwise specified, to one of the sections of this
Warrant.
1. Exercise of Warrant.
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1.1 Manner of Exercise. This Warrant may be exercised by the
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holder hereof, in whole or in part, during normal business hours on any Business
Day during the Exercise Period, by surrender of this Warrant to the Company at
its principal office, accompanied by a subscription in substantially the form
attached to this Warrant (or a reasonable facsimile thereof) duly executed by
the Purchaser and accompanied by payment, in cash, by certified or official bank
check payable to the order of the Company, in the amount obtained by multiplying
(a) 4 million (4,000,000) by (b) the Warrant Price as in effect on the date on
which this Warrant is exercised and the Purchaser shall thereupon be entitled to
receive four million (4,000,000) or such fewer number of shares of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
(or Other Securities).
1.2 When Exercise Effective. The exercise of this Warrant shall
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be deemed to have been effected immediately prior to the close of business on
the Business Day on which this Warrant shall have been surrendered to the
Company as provided in
Section 1.1, and at such time the Purchaser in whose name or names any
certificate or certificates for shares of Common Stock (or Other Securities)
shall be issuable upon such exercise as provided in section 1.3 shall be deemed
to have become the holder of record thereof.
1.3 Delivery of Stock Certificates, etc. As soon as practicable
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after the exercise of this Warrant, and in any event within five (5) Business
Days thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Purchaser a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) to which the Purchaser shall be entitled pursuant to Section 1.1
hereof upon such the exercise of this Warrant plus, in lieu of any fractional
share to which such holder would otherwise be entitled, cash in an amount equal
to the same fraction of the Current Market Price per share on the Business Day
next preceding the date of such exercise.
2. Adjustment of Warrant Price.
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2.1.1 Issuance of Additional Shares of Common Stock. If the
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Company shall issue after the date on which the Warrant is initially issued
rights or warrants (other than this Warrant) to all holders of Common Stock
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase Common Stock at a price per share
less than the Current Market Price per share of Common Stock on the record date
for the determination of stockholders entitled to receive such rights or
warrants, then the Warrant Price in effect at the opening of business on the day
next following such record date shall be adjusted to equal the price determined
by multiplying (I) the Warrant Price in effect immediately prior to the opening
of business on the day next following the date fixed for such determination by
(II) a fraction, the numerator of which shall be the sum of (A) the number of
shares of Common Stock outstanding on the close of business on the date fixed
for such determination and (B) the number of shares that the aggregate proceeds
to the Company from the exercise of such rights or warrants for Common Stock
would purchase at such Current Market Price, and the denominator of which shall
be the sum of (A) the number of shares of Common Stock outstanding on the close
of business on the date fixed for such determination and (B) the number of
additional shares of Common Stock offered for subscription or purchase pursuant
to such rights or warrants. Such adjustment shall become effective immediately
after the opening of business on the day next following such record date (except
as provided in Section 2.6(b)). In determining whether any rights or warrants
entitle the holders of Common Stock to subscribe for or purchase shares of
Common Stock at less than the Current Market Price thereof, there shall be taken
into account any consideration received by the Company upon issuance and upon
exercise of such rights or warrants, the value of such consideration, if other
than cash, to be determined by the Board of Directors.
2.1.2 Extraordinary Dividends and Distributions. (a) If the
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Company shall distribute to all holders of the Common Stock any shares of
capital stock (other than common stock of the Company), evidences of
indebtedness, cash or other
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assets of the Company (including securities, but excluding (w) any dividend or
distribution referred to in Section 2.2, (x) any rights or warrants referred to
in Section 2.1.1 or in the second or third paragraph of this Section 2.1.2, (y)
any dividend or distribution paid exclusively in cash or (z) any stocks,
securities or other property received as a result of a transaction referred to
in Section 2(c)) (any of the foregoing being hereinafter referred to in this
Section 2.1.2 as the "Securities"), then in each such case the Warrant Price
shall be adjusted so that it shall equal the price determined by multiplying (I)
the Warrant Price in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to receive such
distribution by (II) a fraction, the numerator of which shall be the Current
Market Price per share of the Common Stock on the record date mentioned below
less the then fair market value (as determined by the Board of Directors) of the
portion of the Securities so distributed to one share of Common Stock, and the
denominator of which shall be the Current Market Price per share of the Common
Stock on the record date mentioned below. Such adjustment shall become effective
immediately at the opening of business on the day next following the record date
for the determination of stockholders entitled to receive such distribution
(except as provided in Section 2.6(b).
With respect to the Rights Agreement, dated as of December 31,
2001 (as amended or otherwise modified from time to time, the Rights
Agreement"), between the Company and Mellon Investor Services LLC (terms used in
this paragraph and not otherwise defined herein having the meanings set forth in
the Rights Agreement), the Warrant Price will be adjusted only when the Rights
issuable pursuant thereto become exercisable after the Company's right of
redemption thereunder has expired. Subject to the foregoing, upon the later to
occur of the Distribution Date and a Section 11(a)(ii) Event (the "Adjustment
Date"), the Warrant Price in effect at the opening of business on the Adjustment
Date shall be adjusted to equal the price determined by multiplying such Warrant
Price by a fraction the numerator of which shall be equal to the Current Market
Price per share of the Common Stock on the Trading Day immediately prior to the
Adjustment Date less an amount equal to the quotient of (x) the aggregate fair
market value on the Adjustment Date (as determined by the Board of Directors) of
the Rights distributed under the Rights Agreement divided by (y) the number of
shares of Common Stock outstanding on such day prior to the Adjustment Date and
the denominator of which shall be equal to such Current Market Price per share
of the Common Stock. Such adjustment shall become effective immediately after
the opening of business on the day next following such Adjustment Date. In case
the Company shall (other than pursuant to the Rights Agreement) distribute
rights or warrants to purchase Common Stock pro rata to all holders of Common
Stock which rights or warrants are not at such time immediately exercisable but,
upon the occurrence of a specified event or events ("Exercise Trigger Date")
will become exercisable and once they become exercisable will entitle, or upon
the occurrence of an additional specified event or events ("Price Trigger Date")
will entitle, the holder thereof to purchase Common Stock at a price per share
of Common Stock less than the Current Market Price of the Common Stock on the
Trading Day next succeeding the later of the Exercise Trigger Date or the Price
Trigger Date ("Adjustment Trigger Date") and there shall have occurred such
Adjustment Trigger Date, thus permitting the holders of such rights or warrants
irrevocably to exercise any exchange, subscription or purchase rights conferred
by such rights or warrants at a price
3
per share of Common Stock less than such Current Market Price, then the Warrant
Price in effect at the opening of business on the Adjustment Trigger Date shall
be adjusted by multiplying (I) such Warrant Price by (II) a fraction, the
numerator of which shall be equal to the Current Market Price per share of the
Common Stock on the Trading Day immediately prior to the Adjustment Trigger Date
less an amount equal to the quotient of (x) the aggregate fair market value on
the Adjustment Trigger Date of the rights or warrants so distributed (as
determined by the Board of Directors) divided by (y) the number of shares of
Common Stock outstanding on such day prior to the Adjustment Trigger Date and
the denominator of which shall be equal to such Current Market Price per share
of the Common Stock. Such adjustment shall become effective immediately after
the opening of business on the day next following such Adjustment Trigger Date.
2.1.3 Other Distribution of Cash. If the Company shall, by
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dividend or otherwise, at any time distribute to all holders of the Common Stock
cash (excluding any regular quarterly dividend payable solely in cash, any cash
that is distributed as part of a distribution requiring a Warrant Price
adjustment pursuant to Section 2.1.2 and cash that is distributed in a merger or
consolidation to which Section 3.1 applies) in an aggregate amount that,
together with (A) the aggregate amount of any other distributions to all holders
of the Common Stock made exclusively in cash (to which this Section 2.1.3 would
otherwise apply) within the 12 months preceding the date of payment of such
distribution and in respect of which no Warrant Price adjustment has been made
and (B) all Excess Purchase Payments in respect of each tender offer or exchange
offer or other negotiated purchase for Common Stock concluded by the Company or
any of its Subsidiaries within the 12 months preceding the date of payment of
such distribution and in respect of which no Warrant Price adjustment has been
made, exceeds an amount equal to 12.5% of the product of the Current Market
Price per share of Common Stock on the date fixed for determination of holders
of Common Stock entitled to receive such distribution times the number of shares
of Common Stock outstanding on such date, then the Warrant Price shall be
adjusted so that it shall equal the price determined by multiplying (I) such
Warrant Price in effect immediately prior to the Warrant Price adjustment
contemplated by this Section 2.1.3by (II) a fraction the numerator of which
shall be the Current Market Price per share of the Common Stock on the date
fixed for determination of holders of Common Stock entitled to receive such
distribution less the combined amount of such cash and such Excess Purchase
Payments so distributed applicable to one share of Common Stock and the
denominator of which shall be such Current Market Price per share of the Common
Stock on such date of determination. Such adjustment shall become effective
immediately prior to the opening of business on the day next following the date
fixed for such determination.
2.2 Treatment of Stock Dividends, Stock Splits, etc. If the
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Company shall after the date on which the Warrant is initially issued (A) pay a
dividend or make a distribution on any class of its capital stock in shares of
Common Stock, or (B) subdivide the outstanding Common Stock into a greater
number of shares, then the Warrant Price in effect at the opening of business on
the day next following the date fixed for the determination of stockholders
entitled to receive such dividend or distribution or at the opening of business
on the day next following the day on which such subdivision becomes effective,
as the case may be, shall be adjusted to equal the price determined by
4
multiplying (I) the Warrant Price in effect immediately prior to the opening of
business on the day next following the date fixed for the determination of
stockholders entitled to receive such dividend or distribution or prior to the
opening of business on the day next following the day on which such subdivision
becomes effective by (II) a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding on the close of business on the date fixed
for such determination or prior to the effectiveness of such subdivision, and
the denominator of which shall be the sum of (A) the number of shares of Common
Stock outstanding on the close of business on the date fixed for such
determination or prior to the effectiveness of such subdivision and (B) the
number of additional shares of Common Stock offered as dividend or in connection
with the subdivision of the outstanding shares of Common Stock. An adjustment
made pursuant to this Section 2.2 shall become effective immediately after the
opening of business on the day next following the record date in the case of a
dividend or distribution and shall become effective immediately after the
opening of business on the day next following the effective date in the case of
a subdivision or combination.
2.3 Adjustments for Combinations, etc. In case the outstanding
----------------------------------
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2.4 Dilution in Case of Tender Offer, Exchanged offer or other
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Negotiated Purchase by the Company. In case a tender offer or exchange offer or
----------------------------------
other negotiated purchase made by the Company or any of its Subsidiaries for all
or any portion of the Common Stock shall be consummated, if the aggregate amount
of any Excess Purchase Payment, together with (A) the aggregate amount of any
distributions made to all holders of Common Stock made exclusively in cash
(excluding any regular quarterly dividend payable solely in cash, any cash that
is distributed as part of a distribution requiring a Warrant Price adjustment
pursuant to Section 2.1.2 and cash that is distributed in a merger or
consolidation to which Section 3.1 applies) within the 12 months preceding the
consummation of such tender or exchange offer or other negotiated purchase and
in respect of which no Warrant Price adjustment has been made, and (B) all other
Excess Purchase Payments in respect of each tender or exchange offer or other
negotiated purchase for Common Stock concluded by the Company or any of its
Subsidiaries within the 12 months preceding the consummation of such tender or
exchange offer or other negotiated purchase and in respect of which no Warrant
Price adjustment has been made, exceeds an amount equal to 12.5% of the product
of the Current Market Price per share of Common Stock on the consummation date
of such tender or exchange offer or other negotiated purchase (any such date,
the "Purchase Date") times the number of shares of Common Stock outstanding
(including any tendered, exchanged or purchased shares) on such Purchase Date,
then the Warrant Price shall be adjusted so that it shall equal the price
determined by multiplying (I) such Warrant Price in effect immediately prior to
such Purchase Date by (II) a fraction, the numerator of which shall be the
Current Market Price per share of the Common Stock on such Purchase Date less
the combined amount of Excess Purchase Payments and such cash so distributed
applicable to one share of Common Stock and the denominator of
5
which shall be such Current Market Price per share on such Purchase Date. Such
adjustment shall become effective immediately prior to the opening of business
on the day next following such Purchase Date.
2.5 Minimum Adjustment of Warrant Price. No adjustment in the
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Warrant Price shall be required unless such adjustment would require a
cumulative increase or decrease of at least 1% in such price; provided, however,
that any adjustments that by reason of this Section 2.5 are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment until made; and provided, further, that any adjustment shall be
required and made in accordance with the provisions of Sections 2 and 3 (other
than this Section 2.5) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of shares of
Common Stock or any other common stock issuable upon exercise of this Warrant.
Notwithstanding any other provisions of Sections 2 and 3, the Company shall not
be required to make any adjustment of any Warrant Price established hereunder
for the issuance of any shares of common stock of the Company (including Common
Stock) pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of additional
optional amounts in shares of such common stock under such plan. All
calculations under Sections 2 and 3 shall be made to the nearest 1/100 of a cent
(with $.00005 being rounded upward) or to the nearest 1/10,000 of a share (with
.00005 of a share being rounded upward), as the case may be.
2.6 Other Adjustment Provisions. In any case in which Section
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2.1 provides that an adjustment shall become effective on the day next
following a record date for an event, the Company may defer until the
occurrence of such event (A) issuing to the holder of this Warrant the
additional shares of Common Stock or any other common stock of the
Company issuable upon exercise of this Warrant by reason of the
adjustment required by such event over and above the number of shares
of Common Stock or such other common stock issuable the exercise of
this Warrant before giving effect to such adjustment and (B) paying to
such holder any amount in cash in lieu of any fraction thereof
pursuant to Section 3.1.
(a) For purposes of this Section 2 and in Section 3, the
number of shares of Common Stock or any other common stock of the Company at any
time outstanding shall not include any shares of Common Stock or such other
common stock then owned or held by or for the account of Company. The Company
shall not pay a dividend or make any distribution on shares of Common Stock or
such other common stock held in the treasury of the Company.
(b) There shall be no adjustment of the Warrant Price in
case of the issuance of any stock of the Company in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this Section 2 and in Section 3. If any action or transaction would require
adjustment of the Warrant Price established hereunder pursuant to more than one
paragraph of this Section 2 and 3, only the adjustment which would result in the
largest reduction of such Warrant Price shall be made.
6
3. Consolidation, Merger, etc.
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3.1 Adjustments for Consolidation, Merger, Sale of Assets,
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Reorganization, etc. (a) If the Company shall be a party to any transaction
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(including without limitation a merger or consolidation of the Company and
excluding any transaction as to which Sections 2 and 4 (a) apply), in each case
as a result of which shares of Common Stock shall be converted into the right to
receive stock, securities or other property (including cash or any combination
thereof), (each of the foregoing being referred to herein as a "Transaction"),
the holder of this Warrant (if not converted into the right to receive stock,
securities or other property in connection with such Transaction) shall
thereafter be entitled to purchase the kind and amount of shares of stock,
securities and other property (including cash or any combination thereof)
receivable upon the consummation of such Transaction by a holder of that number
of shares or fraction thereof of Common Stock issuable upon exercise of this
Warrant immediately prior to such Transaction, assuming such holder of this
Warrant (i) is not a person with which the Company consolidated or into which
the Company merged or which merged into the Company or to which such sale or
transfer was made, as the case may be (a "Constituent Person"), or an affiliate
of a Constituent Person and (ii) failed to exercise his rights of election, if
any, as to the kind or amount of stock, securities and other property (including
cash) receivable upon such Transaction (provided that if the kind or amount of
stock, securities and other property (including cash) receivable upon such
Transaction is not the same for each share of Common Stock of the Company held
immediately prior to such Transaction by other than a Constituent Person or an
affiliate thereof and in respect of which such rights of election shall not have
been exercised ("non-electing share"), then for the purpose of this Section 3.1
the kind and amount of stock, securities and other property (including cash)
receivable upon such Transaction by each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
non-electing shares). The Company shall not be a party to any Transaction unless
the terms of such Transaction are consistent with the provisions of this Section
3.1 and it shall not consent or agree to the occurrence of any Transaction until
the Company has entered into an agreement with the other party or parties to
such transaction for the benefit of the holder of this Warrant that will contain
provisions enabling the holder of this Warrant that remain outstanding after
such Transaction to receive consideration received by holders of Common Stock at
the Warrant Price in effect immediately prior to such Transaction, should such
holder decide to exercise this Warrant after such Transaction. The provisions of
this Section 3.1 shall similarly apply to successive Transactions.
(b) The reclassification of common stock, shares of which are
issuable upon exercise of this Warrant, into securities which include securities
other than such common stock (other than any reclassification upon a
consolidation or merger to which Section 3.1 applies), shall be deemed to
involve (i) a distribution of such securities other than such common stock to
all holders of such common stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the determination of
stockholders entitled to receive such distribution") and (ii) a subdivision or
combination, as the case may be, of the number of shares of such common stock
outstanding immediately prior to such reclassification into the number of shares
of such common
7
stock outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be the effective date of such subdivision or
combination).
(c) After the date, if any, on which all outstanding shares of
Common Stock or of any other common stock shares of which are then issuable upon
exercise of this Warrant are exchanged for shares of another class of common
stock (as provided in the Certificate of Incorporation of Company), the holder
of this Warrant shall thereafter be entitled to receive the number of shares of
such other class of common stock receivable upon such exchange by a holder of
that number of shares or fraction thereof of Common Stock and/or such other
common stock share of which were issuable upon exercise of this Warrant
immediately prior to such exchange. From and after any such exchange, Warrant
Price adjustments as nearly equivalent as may be practicable to the adjustments
pursuant to Sections 2 and 3 which, prior to such exchange, were made in respect
of Common Stock and/or such other common stock into which this Warrant is then
convertible shall instead be made pursuant to such Sections 2 and 3 in respect
of shares of such other class of common stock.
3.2 Assumption of Obligations. Notwithstanding anything contained
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in this Warrant to the contrary, the Company will not effect any consolidation,
merger, sale of all or substantially all assets or capital reorganization or
reclassification of the Common Stock in each case involving the Company, unless,
prior to the consummation thereof, each Person (other than the Company) which
may be required to deliver any stock, securities, cash or property upon the
exercise of this Warrant as provided herein shall unconditionally assume, by a
binding written instrument delivered to the holder of this Warrant, (a) the
obligations of the Company under this Warrant (and if the Company shall survive
the consummation of such transaction, such assumption shall be in addition to,
and shall not release the Company from, any continuing obligations of the
Company under this Warrant), (b) the obligations of the Company under the Option
Agreement and (c) the obligation to deliver to such holder such shares of stock,
securities, cash or property as, in accordance with the foregoing provisions of
this section 3, such holder may be entitled to receive.
4. Other Dilutive Events.
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(a) The Company from time to time may reduce the Warrant Price by
any amount for any period of at least 20 business days (or such other period as
may then be required by applicable law), provided that the Board of Directors
shall have determined that such reduction is in the best interests of the
Company. No reduction in the Warrant Price pursuant to this Section 4(a) shall
become effective unless the Company shall have mailed a notice, at least 15 days
prior to the date on which such reduction is scheduled to become effective, to
the holder of this Warrant. Such notice shall be given by first class mail,
postage prepaid, at such holder's address as the same appears on the stock
transfer books of the Company. Such notice shall state the amount per share by
which the Warrant Price will be reduced and the period for which such reduction
will be in effect.
8
(b) The Company may make such reductions in the Warrant Price, in addition
to those required by Sections 2 and 3, as the Board determines to be necessary
in order that any event treated for Federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the recipients; provided that any
such reduction shall not be effective until written evidence of the action of
the Board authorizing such reduction shall be filed with the Secretary of the
Company and notice thereof shall have been given by first class mail, postage
prepaid, to the holder of this Warrant at such holder's address as the same
appears on the warrant register of the Company.
5. No Dilution or Impairment. The Company will not, by amendment of its
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certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not permit the par value of
any shares of stock receivable upon the exercise of this Warrant to exceed the
amount payable therefor upon such exercise, (b) will take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of stock on the exercise of the
Warrants from time to time outstanding, (c) will not take any action which
results in any adjustment of the Warrant Price if the total number of shares of
Common Stock (or Other Securities) issuable after the action upon the exercise
of this Warrant would exceed the total number of shares of Common Stock (or
Other Securities) then authorized by the Company's certificate of incorporation
and available for the purpose of issue upon such exercise, and (d) will not
issue any capital stock of any class which is preferred as to dividends or as to
the distribution of assets upon voluntary or involuntary dissolution,
liquidation or winding-up, unless the rights of the holders thereof shall be
limited to a fixed sum or percentage of par value or a sum determined by
reference to a formula based on a published index of interest rates, an interest
rate publicly announced by a financial institution or a similar indicator of
interest rates in respect of participation in dividends and to a fixed sum or
percentage of par value in any such distribution of assets.
6. The Company's Report as to Adjustments. Whenever the Warrant Price is
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adjusted as herein provided, the Company shall promptly prepare a certificate
setting forth the Warrant Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment, which certificate shall be
prima facie evidence of the correctness of such adjustment. Promptly after
preparation of such certificate, the Company shall send a copy of such
certificate by first class mail, postage prepaid, to the holder of this Warrant
at such holder's address as the same appears on the register transfer books of
the Company.
7. Notices of Corporate Action. Subject to the provisions of Section 6, if:
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(i) the Company takes any action that would require
an adjustment of the Warrant Price pursuant to Sections 2.3 and 4; or
9
(ii) there shall be any consolidation or merger to
which the Company is a party and for which approval of any stockholders of
the Company is required, or the sale or transfer of all or substantially
all of the assets of the Company; or
(iii) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Company; or
(iv) the Company or any of its Subsidiaries shall
commence a tender offer or exchange offer for all or a portion of the
outstanding shares of Common Stock (or shall amend any such tender or
exchange offer), then the Company shall cause to be mailed to the holder of
this Warrant at its address as shown on the register of the Company, as
promptly as possible, but at least 15 days prior to the earliest applicable
date hereinafter specified, a notice stating, as applicable, (A) the
proposed record date for a dividend or distribution or the proposed
effective date of a consolidation, merger, sale, transfer, liquidation,
dissolution or winding up, (B) the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property, if any,
deliverable upon such consolidation, merger, sale, transfer, liquidation,
dissolution or winding up or (C) the date on which such tender or exchange
offer commenced, the date on which such tender or exchange offer is
scheduled to expire unless extended, the consideration offered and the
other material terms thereof (or the material terms of any amendment
thereto). Failure to give or receive such notice or any defect therein
shall not affect the legality or validity of the related transaction.
8. Registration of Common Stock. If any shares of Common Stock required to be
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reserved for purposes of exercise of this Warrant require registration with or
approval of any governmental authority under any federal or state law (other
than the Securities Act) before such shares may be issued upon exercise, the
Company will, at its expense and as expeditiously as possible, use all
reasonable efforts to cause such shares to be duly registered or approved, as
the case may be. The shares of Common Stock (and Other Securities) issuable upon
exercise of this Warrant (or upon conversion of any shares of Common Stock
issued upon such exercise) shall constitute Warrant Shares (as such term is
defined in the Option Agreement). Each holder of this Warrant shall be entitled
to all of the benefits afforded to a holder of any such Warrant Shares under the
Option Agreement, and such holder, by its acceptance of this Warrant, agrees to
be bound by and to comply with the terms and conditions of the Option Agreement
applicable to such holder as a holder of such Warrant Shares. At any such time
as Common Stock is listed on any national securities exchange, the Company will,
at its expense, obtain promptly and maintain the approval for listing on each
such exchange, upon official notice of issuance, the shares of Common Stock
issuable upon exercise of the then outstanding Warrants and maintain the listing
of such shares after their issuance; and the Company will also list on such
national securities exchange, will register under the Exchange Act and will
maintain such listing of, any Other Securities that at any time are issuable
upon exercise of the Warrants, if and at the time that any securities of the
same class shall be listed on such national securities exchange by the Company.
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9. Restrictions on Transfer
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9.1 Restrictive Legends. The Purchaser hereby agrees not to sell,
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transfer or assign this Warrant for a period of three years following the date
hereof. Except as otherwise permitted by this section 9, this Warrant (including
any Warrant issued upon the transfer of this Warrant) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"This Warrant and any shares acquired upon the exercise of this
Warrant have not been registered under the Securities Act of 1933, and may
not be transferred, sold or otherwise disposed of except while a
registration under such Act is in effect or pursuant to an exemption
therefrom under such Act. This Warrant and such shares may be transferred
only in compliance with the conditions specified in this Warrant."
Except as otherwise permitted by this section 9, each certificate for Common
Stock (or Other Securities) issued upon the exercise of this Warrant, and each
certificate issued upon the transfer of any such Common Stock (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred in
the absence of such registration or an exemption therefrom under such Act.
Such shares may be transferred only in compliance with , or pursuant to an
available exemption from, the registration requirements of the United
States Securities Act of 1933 or any rules or regulations promulgated
thereunder."
9.2 Notice of Proposed Transfer; Opinions of Counsel. Prior to any
------------------------------------------------
transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act, the holder thereof
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this section 9.2. Each
such notice (a) shall describe the manner and circumstances of the proposed
transfer in sufficient detail to enable counsel to render the opinions referred
to below, and (b) shall designate counsel for the holder giving such notice (who
may be in-house counsel for such holder). The holder giving such notice will
submit a copy thereof to the counsel designated in such notice and the Company
will promptly submit a copy thereof to its counsel. The following provisions
shall then apply:
(i) If (A) in the opinion of such counsel for the
holder the proposed transfer may be effected without registration of such
Restricted Securities under the Securities Act, and (B) counsel for the
Company shall not have rendered an opinion within 7 Business Days after the
receipt by the Company of such written notice that such registration is
required, such holder shall thereupon be entitled to transfer such
securities in accordance with the terms of the notice delivered by such
holder to the Company. Each warrant or
11
certificate, if any, representing such securities issued upon or in
connection with such transfer shall bear the appropriate restrictive legend
required by section 9.1, unless in the opinion of each such counsel such
legend is no longer required to insure compliance with the Securities Act.
If for any reason counsel for the Company (after having been furnished with
the information required to be furnished by clause (a) of this section 9.2)
shall fail to deliver an opinion to the Company as aforesaid, then for all
purposes of this Warrant the opinion of counsel for the Company shall be
deemed to be the same as the opinion of counsel for such holder.
(ii) If in the opinion of either of or both such
counsel the proposed transfer may not legally be effected without
registration of such Restricted Securities under the Securities Act (such
opinion or opinions to state the basis of the legal conclusions reached
therein), the Company will promptly so notify the holder thereof and
thereafter such holder shall not be entitled to transfer such Warranty
until either (x) receipt by the Company of a further notice from such
holder pursuant to the foregoing provisions of this section 9.2 and
fulfillment of the provisions of clause (i) above or (y) such shares have
been effectively registered under the Securities Act.
Notwithstanding the foregoing provisions of this section 9.2(ii), the purchaser
of the Warrant shall be permitted to transfer any Warrant Shares to a limited
number of institutional investors, provided that (A) each such investor
represents in writing that it is acquiring such Warrant Shares for investment
and not with a view to the distribution thereof (subject, however, to any
requirement of law that the disposition thereof shall at all times be within the
control of such transferee), (B) each such investor agrees in writing to be
bound by all the restrictions on transfer of such Warrant Shares contained in
this section 9.2 and (C) the purchaser of such Warrant Shares delivers to the
Company an opinion of counsel satisfactory to the Company, stating that such
transfer may be effected without registration under the Securities Act.
9.3 Termination of Restrictions. The restrictions imposed by this
---------------------------
section 9 upon the transferability of the Warrant and the Warrant Shares shall
cease and terminate as to the Warrant and any particular Warrant Shares (a) when
such securities shall have been effectively registered under the Securities Act,
or (b) when, in the opinions of both counsel for the holder thereof and counsel
for the Company, such restrictions are no longer required in order to insure
compliance with the Securities Act. Whenever such restrictions shall cease and
terminate as to the Warrant and any Warrant Shares, the holder thereof shall be
entitled to receive from the Company, without expense (other than applicable
transfer taxes, if any), new securities of like tenor not bearing the applicable
legends required by section 9.1.
10. Availability of Information. The Company has filed a registration statement
---------------------------
pursuant to the requirements of section 12 of the Exchange Act and shall file
the reports required to be filed by companies subject to the reporting
requirements of sections 13 and 15(d) of the Exchange Act (including but not
limited to the reports under sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c) of Rule 144 adopted by the
12
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder (or, if the Company does not file such reports, it
will from time to time, upon the request of any holder of Warrant Shares,
furnish to such holder the same information that would be required to be
disclosed if the Company filed such reports) and will take such further action
as any holder of Warrant Shares may reasonably request, all to the extent
required from time to time to enable such holder to sell Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any holder of Warrant Shares, the Company
will deliver to such holder a written statement as to whether it has complied
with the requirements of this section 10.
11. Reservation of Stock, etc.
--------------------------
(a) The Company covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock and/or, if this Warrant is then
exercisable by the holder to purchase other common stock of the Company, such
other common stock, or its issued shares of Common Stock or such other common
stock, as the case may be, held in its treasury, or both, for the purpose of
enabling the holder of this Warrant to exercise such Warrant, the full number of
shares of Common Stock or such other common stock deliverable upon the exercise
of such Warrant. The Company covenants that any shares of Common Stock or other
common stock of the Company issued upon exercise of this Warrant shall be
validly issued, fully paid and nonassessable. The Company shall endeavor to list
the shares of Common Stock or other common stock of the Company required to be
delivered upon conversion of this Warrant, prior to such delivery, upon each
national securities exchange, if any, upon which the outstanding Common Stock or
such other common stock is listed at the time of such delivery. Prior to the
delivery of any securities that the Company shall be obligated to deliver upon
exercise of this Warrant, the Company shall endeavor to comply with all federal
and state laws and regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by, any
governmental authority.
(b) The Company will pay any and all documentary, stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Common Stock or other securities or property on exercise of this
Warrant pursuant hereto; provided, however, that the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock or other securities or
property in a name other than that of the holder of this Warrant to be exercised
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Company the amount of any such
tax or established, to the reasonable satisfaction of the Company, that such tax
has been paid.
13
12. Registration and Transfer of Warrants, etc.
------------------------------------------
12.1 Warrant Register; Ownership of Warrants. The Company will
---------------------------------------
keep at its principal office a register in which the Company will provide for
the registration of Warrants and the registration of transfers of Warrants. The
Company may treat the Person in whose name any Warrant is registered on such
register as the owner thereof for all other purposes, and the Company shall not
be affected by any notice to the contrary, except that, if and when this Warrant
is properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer thereof as the owner of such Warrant for all purposes. Subject
to section 9, a Warrant, if properly assigned, may be exercised by a new holder
without a new Warrant first having been issued.
12.2 Transfer and Exchange of Warrants. Upon surrender of this
---------------------------------
Warrant for registration of transfer or for exchange to the Company at its
principal office, the Company at its expense will (subject to compliance with
section 9, if applicable) execute and deliver in exchange therefor a new Warrant
or Warrants of like tenor, in the name of such holder or as such holder (upon
payment by such holder of any applicable transfer taxes) may direct, calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants so surrendered.
12.3 Replacement of Warrants. Upon receipt of evidence reasonably
-----------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, upon delivery of an indemnity bond in such reasonable amount as the
Company may determine (or, in the case of any Warrant held by any Institutional
Holder or its nominee, of an indemnity agreement from such Institutional Holder
reasonably satisfactory to the Company), or, in the case of any such mutilation,
upon the surrender of such Warrant for cancellation to the Company at its
principal office, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
13. Registration under Securities Act, etc.
---------------------------------------
13.1 Registration on Request. The Company agrees that, within 90
-----------------------
days of receipt of a written request from the Purchaser, the Company will at its
cost and expense file with the Commission a Registration Statement covering the
sale by the Purchaser of the Warrant Shares and that the Company will take all
steps reasonably necessary to cause such registration statement to be declared
effective and to remain effective and to cause the shares of stock covered
thereby to be listed on the New York Stock Exchange, Inc., the Chicago Stock
Exchange and the Pacific Stock Exchange. This request for registration may be
exercised by the holders of the Warrant Shares no more often than once in any
12-month period.
13.2 Indemnification.
---------------
(a) Indemnification by the Company. In the event of any
------------------------------
registration of any securities of the Company under the Securities Act, the
Company will,
14
and hereby does, indemnify and hold harmless the holder of any Warrant Shares
covered by such registration statement, its directors and officers, each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such holder or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such holder or any
such director or officer or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such holder and each such director, officer, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding, provided that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
holder for use in the preparation thereof and, provided, further that the
Company shall not be liable to any Person who participates as an underwriter, in
the offering or sale of Warrant Shares or to any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such Person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of the Warrant Shares to such Person if such statement
or omission was corrected in such final prospectus. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such holder or any such director, officer, underwriter or controlling person and
shall survive the transfer of such securities by such holder.
(b) Indemnification by the Sellers. The Company may require,
------------------------------
as a condition to including any Warrant Shares in any registration statement
filed pursuant to section 13.1, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such Warrant
Shares, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this section 13.2) the Company, each
director of the Company, each officer of the Company and each other person, if
any, who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such
15
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such seller for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Any such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling person and shall survive the transfer
of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
-----------------------
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this section
13.2, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding subdivisions of this section 13.2, except to
the extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to assume the defense thereof,
jointly with any other indemnifying party similarly notified, to the extent that
the indemnifying party may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement of any such action which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability, or a covenant not to
xxx, in respect to such claim or litigation. No indemnified party shall consent
to entry of any judgment or enter into any settlement of any such action the
defense of which has been assumed by an indemnifying party without the consent
of such indemnifying party.
(d) Other Indemnification. Indemnification similar to that
---------------------
specified in the preceding subdivisions of this section 13.2 (with appropriate
modifications) shall be given by the Company and each seller of Warrant Shares
with respect to any required registration or other qualification of securities
under any Federal or state law or regulation of any governmental authority,
other than the Securities Act.
(e) Indemnification Payments. The indemnification required by
------------------------
this section 13.2 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided for in the
------------
preceding subdivisions of this section 13.2 is unavailable to an indemnified
party in
16
respect of any expense, loss, claim, damage or liability referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such expense, loss, claim, damage or liability in such proportion as
is appropriate to reflect the relative fault of the Company on the one hand and
of the holder or underwriter, as the case may be, on the other in connection
with the statements or omissions which resulted in such expense, loss, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the holder or underwriter, as the
case may be, on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the
Company, by the holder or by the underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, provided that the foregoing contribution agreement shall
not inure to the benefit of any indemnified party if indemnification would be
unavailable to such indemnified party by reason of the provisions contained in
the first sentence of subdivision (a) of this section 13.2, and in no event
shall the obligation of any indemnifying party to contribute under this
subdivision (f) exceed the amount that such indemnifying party would have been
obligated to pay by way of indemnification if the indemnification provided for
under subdivisions (a) or (b) of this section 13.2 had been available under the
circumstances.
The Company and the holders of Warrant Shares agree that it would not be
just and equitable if contribution pursuant to this subdivision (f) were
determined by pro rata allocation (even if the holder and any underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth in the preceding sentence and subdivision (c) of this
section 13.2, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.
Notwithstanding the provisions of this subdivision (f), no holder of
Warrant Shares or underwriter shall be required to contribute any amount in
excess of the amount by which (i) in the case of any such holder, the net
proceeds received by such holder from the sale of Warrant Shares or (ii) in the
case of an underwriter, the total price at which the Warrant Shares purchased by
it and distributed to the public were offered to the public exceeds, in any such
case, the amount of any damages that such holder or underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
14. Definitions. As used herein, unless the context otherwise requires, the
-----------
following terms have the following respective meanings:
17
"Board of Directors" or "Board" means, at any time, the duly elected or
------------------ -----
acting board of directors (or duly authorized committee thereof) of the Company
at such time.
Business Day: Any day other than a Saturday or a Sunday or a day on which
------------
commercial banking institutions in the City of New York are authorized by law to
be closed. Any reference to "days" (unless Business Days are specified) shall
mean calendar days.
Closing Price: of shares of any class of common stock of the Company for
-------------
any day shall mean the last reported sales price, regular way on such day, or,
if no reported sale takes place on such day, the average of the reported closing
bid and asked prices on such day, regular way, in either case as reported on the
New York Stock Exchange Composite Tape or, if such common stock is not listed or
admitted to trading on the NYSE, on the principal national securities exchange
on which such common stock is listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, on the National Market
System of NASDAQ or, if such common stock is not quoted on such National Market
System, the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by NASDAQ or, if closing bid and asked
prices for such common stock on such day shall not have been reported through
NASDAQ, the average of the closing bid and asked prices on such day as furnished
by any NYSE member firm regularly making a market in such common stock selected
for such purpose by the Board of Directors.
Commission: The Securities and Exchange Commission or any other federal
----------
agency at the time administering the Securities Act.
Common Stock: As defined in the introduction to this Warrant, such term to
------------
include any stock into which such Common Stock shall have been changed or any
stock resulting from any reclassification of such Common Stock, and all other
stock of any class or classes (however designated) of the Company the holders of
which have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.
Company: As defined in the introduction to this Warrant, such term to
-------
include any corporation that shall succeed to or assume the obligations of the
Company hereunder in compliance with section 3.
Current Market Price: shall mean, with respect to any class of common stock
--------------------
of the Company, the average of the daily Closing Prices of a share of such
common stock during the five consecutive Trading Days immediately before the
date in question; provided, however, that (i) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Warrant Price pursuant to Sections 2.1.1, 2.1.2,
2.1.3 and 2.4 occurs on or after the 5th Trading Day prior to the day in
question and prior to the "ex" date for the issuance or distribution requiring
such computation, the Closing Price for each Trading Day prior to the "ex" date
18
for such other event shall be adjusted by multiplying such Closing Price by the
same fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, (ii) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the Conversion Price pursuant to Sections 2.1.1, 2.1.2, 2.1.3 and 2.4 occurs
on or after the "ex" date for the issuance or distribution requiring such
computation and on or prior to the day in question, the Closing Price for each
Trading Day on and after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the fraction by which the
Warrant Price is so required to be adjusted as a result of such other event, and
(iii) if the "ex" date for the issuance or distribution requiring such
computation is on or prior to the day in question, after taking into account any
adjustment required pursuant to clause (ii) of this proviso, the Closing Price
for each Trading Day on or after such "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value on the day in question
(as determined by the Board of Directors in a manner consistent with any
determination of such value for purposes of Section 2.1.2 or 2.1.3 of the
evidences of indebtedness, shares of capital stock or assets being distributed
applicable to one share of the applicable class of common stock of the Company
as of the close of business on the day before such "ex" date. For purposes of
this definition, the term "ex" date, with respect to any class of common stock
of the Company, (i) when used with respect to any issuance or distribution,
means the first date on which such common stock trades regular way on such
exchange or in the relevant market from which the Closing Price was obtained
without the right to receive such issuance or distribution, (ii) when used with
respect to any subdivision or combination of shares of such common stock, means
the first date on which such common stock trades regular way on such exchange or
in such market after the time at which such subdivision or combination becomes
effective, and (iii) when used with respect to any tender or exchange offer
means the first date on which such common stock trades regular way on such
exchange or in such market after the expiration time of such tender or exchange
offer.
Excess Purchase Payment: means the excess, if any, of (A) the aggregate of
-----------------------
the cash and the value (as determined by the Board of Directors) of all other
consideration paid by the Company or any of its Subsidiaries with respect to the
shares of the applicable class of common stock of the Company acquired in a
tender or exchange offer or other negotiated purchase respectively, over (B) the
product of the Current Market Price per share of such common stock times the
number of shares of such common stock acquired in such tender or exchange offer
or purchase.
Exchange Act: The Securities Exchange Act of 1934, or any similar federal
------------
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
Institutional Holder: means a "qualified institutional buyer" as defined in
--------------------
Rule 144A promulgated under the Securities Act.
NASD: The National Association of Securities Dealers, Inc.
----
19
NASDAQ: means the National Association of Securities Dealers, Inc.
------
Automated Quotations System or any successor thereto.
NYSE: means the New York Stock Exchange, Inc. or any successor thereto.
----
"Person" means an individual, a corporation, a partnership, a limited
------
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
Purchaser: As defined in the introduction to this Warrant.
---------
Restricted Securities: (a) any Warrants bearing the applicable legend set
---------------------
forth in section 9.2, (b) any shares of Common Stock (or Other Securities)
issued upon the exercise of Warrants which are evidenced by a certificate or
certificates bearing the applicable legend set forth in such section, (c) any
shares of Common Stock (or Other Securities) issued subsequent to the exercise
of any of the Warrants as a dividend or other distribution with respect to, or
resulting from a subdivision of the outstanding shares of Common Stock (or Other
Securities) into a greater number of shares by reclassification, stock splits or
otherwise, or in exchange for or in replacement of the Common Stock (or Other
Securities) issued upon such exercise, which are evidenced by a certificate or
certificates bearing the applicable legend set forth in such section, and (d)
unless the context otherwise requires, any shares of Common Stock (or Other
Securities) issuable upon the exercise of Warrants, which, when so issued, will
be evidenced by a certificate or certificates bearing the applicable legend set
forth in such section.
Rights: shall mean the rights of the Company which are issuable under the
------
Company's stockholder rights plan adopted by the Board of Directors, the terms
and conditions of which are set forth in the Rights Agreement, or rights to
purchase any capital stock of the Company under any successor shareholder rights
plan or plan adopted in replacement of the Company's stockholder rights plan.
Rights Agreement: shall have the meaning given to it in the second
----------------
paragraph of Section 2.1.2.
Securities Act: The Securities Act of 1933, or any similar federal statute,
--------------
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
Subsidiary: means a Person more than 50% of the outstanding voting stock of
----------
which is owned, directly or indirectly, by another Person (whether through one
or more other Subsidiaries or otherwise). For the purposes of this definition,
"voting stock" means stock or other ownership interest which ordinarily has
voting power for the election of directors or other members of a governing body,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.
Trading Day: shall mean, with respect to any class of common stock of the
-----------
Company, any day on which such common stock is traded on the NYSE, or if such
20
common stock is not listed or admitted to trading on the NYSE, on the principal
national securities exchange on which such common stock is listed or admitted,
or if not listed or admitted to trading on any national securities exchange, on
the National Market System of the NASDAQ, or if such common stock is not quoted
on such National Market System, in the applicable securities market in which
such common stock is traded.
Warrant Price: initially, the amount per share of the Common Stock,
-------------
equal to (a) one hundred fifty percent (150%) of the average closing price of
the Common Stock as reported on the NYSE Composite Tape during the last sixty
(60) trading days prior to the fifth (5th) day before the date of the exercise
of the option pursuant to Section 1.3 of the Option Agreement, or if the
National Steel Agreement (as defined in the Option Agreement) is executed, then
during the last sixty (60) trading days prior to the fifth (5th) day before the
date of such National Steel Agreement, or (b) if the Common Stock is not then
listed or admitted to trading on NYSE or any other national securities exchange
but is quoted on a national market system security by the NASD, one hundred
fifty percent (150%) of the average closing bid and asked prices of the Common
Stock as shown by the NASD automated quotation system the Common Stock during
the last sixty (60) trading days prior to the fifth (5th) day before the date of
the exercise of the option pursuant to Section 1.3 of the Option Agreement, or
if an National Steel Agreement (as defined in the Option Agreement) is executed,
then during the last sixty (60) trading days prior to the fifth (5th) day before
the date of such Agreement. The Warrant Price shall be adjusted and readjusted
from time to time as provided in Sections 2 and 3 hereof and, as so adjusted or
readjusted, shall remain in effect until a further adjustment or readjustment
thereof is required by Sections 2 and 3 and there hereof.
Warrant: As defined in the introduction to this Warrant.
-------
15. Remedies. The Company stipulates that the remedies at law of the holder of
--------
this Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
16. No Rights or Liabilities as Stockholder. Nothing contained in this Warrant
---------------------------------------
shall be construed as conferring upon the holder hereof any rights as a
stockholder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
stockholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
17. Notices. All notices and other communications under this Warrant shall be
-------
in writing and shall be delivered, or mailed by registered or certified mail,
return receipt requested, by a nationally recognized overnight courier, postage
prepaid, addressed (a) if to any holder of any Warrant, at the registered
address of such holder as set forth in the register kept at the principal office
of the Company, or (b) if to the Company, to the
21
attention of its President at its principal office, provided that the exercise
of any Warrant shall be effected in the manner provided in section 1.
18. Amendments. This Warrant and any term hereof may be changed, waived,
----------
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
19. Expiration. The right to exercise this Warrant shall expire at 11:59 p.m.,
----------
Eastern Daylight Savings time, on June 15, 2007.
20. Descriptive Headings. The headings in this Agreement are for purposes of
--------------------
reference only and shall not limit or otherwise affect the meaning hereof.
21. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
-------------
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
22. Judicial Proceedings; Waiver of Jury. Any judicial proceeding brought
------------------------------------
against the Company with respect to this Warrant may be brought in any court of
competent jurisdiction in the State of New York or of the United States of
America for the Southern District of New York and, by execution and delivery of
this Agreement, the Company (a) accepts, generally and unconditionally, the
nonexclusive jurisdiction of such courts and any related appellate court, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Warrant, subject to any rights of appeal, and (b) irrevocably waives
any objection the Company may now or hereafter have as to the venue of any such
suit, action or proceeding brought in such a court or that such court is an
inconvenient forum. Nothing herein shall limit the right of any holder of any
Warrant to bring proceedings against the Company in the courts of any other
jurisdiction. THE COMPANY HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY, OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS WARRANT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
UNITED STATES STEEL CORPORATION
By:____________________________
Name:
Title:
22
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To [NAME OF ISSUER]
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, ______ shares of Common
Stock of [NAME OF ISSUER] and herewith makes payment of $ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to , whose address is .
Dated:
(Signature must conform in all respects to name of holder
as specified on the face of Warrant)
_________________________________________________________
(Street Address)
_________________________________________________________
(City) (State)(Zip Code)
23
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto the right represented by such
Warrant to purchase shares of [Common Stock] of [NAME OF ISSUER] to which such
Warrant relates, and appoints Attorney to make such transfer on the
books of [NAME OF ISSUER] maintained for such purpose, with full power of
substitution in the premises.
Dated:
(Signature must conform in all respects to name of holder
as specified on the face of Warrant)
_________________________________________________________
(Xxxxxx Xxxxxxx)
_________________________________________________________
(City) (State)(Zip Code)
Signed in the presence of:
_______________________________________
24
Exhibit B
Form of Convertible Note
NEITHER THIS NOTE NOR THE SHARES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND, EXCEPT FOR ANY TRANSFERS SPECIFICALLY AUTHORIZED UNDER THE TERMS OF
THIS NOTE, NEITHER THIS NOTE NOR SUCH SHARES MAY BE OFFERED, SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT REGISTRATION THEREOF UNDER THE ACT OR
COMPLIANCE WITH RULE 144 OR RULE 144A PROMULGATED UNDER THE ACT, OR UNLESS USS
OF DELAWARE, INC. HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
IT, THAT SUCH REGISTRATION IS NOT REQUIRED. TRANSFER OF THIS NOTE OR ANY
INTEREST HEREIN IS ALSO SUBJECT TO RESTRICTIONS UNDER THE TERMS HEREOF.
CONVERTIBLE PROMISSORY NOTE
---------------------------
$30,000,000.00 Dated:__________,2001
FOR VALUE RECEIVED, the undersigned, USS OF DELAWARE, INC. (the "Company"),
promises to pay to the order of [ ], or its permitted registered assigns or
at such other place or places as the Holder may designate in writing, the
principal sum of THIRTY MILLION and NO/100 DOLLARS ($30,000,000) unless
converted pursuant to the conditions set forth herein on or before
________[2022], without interest. Payment of the principal of this Note will be
made in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
As used herein, "Holder" means, at any time, the person in whose name this Note
is registered in the Note Register (as defined below).
This Convertible Promissory Note ("Note") is issued by the Company pursuant to
that certain Option Agreement (the "Option Agreement"), dated as of January 16,
2002, by and between United States Steel Corporation ("USS"), a Delaware
corporation with offices at 000 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000, NKK
Corporation, a Japanese corporation with offices at 0-0-0, Xxxxxxxxxx,
Xxxxxxx-xx, Xxxxx 000-0000, Xxxxx ("NKK"), National Steel Corporation, a
Delaware corporation with offices at 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxxxxxx, XX
00000, NKK U.S.A. Corporation, a Delaware corporation and a wholly owned
subsidiary of NKK with offices at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and
NUF LLC, a Delaware limited liability company and an indirect wholly owned
subsidiary of NKK, with offices at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000.
Capitalized terms not otherwise defined in this Note shall have the meaning set
forth in the Option Agreement, which definitions are incorporated herein.
1. Prepayment
----------
During the period from the date hereof to the fifth (5/th/) anniversary of
such date, the Company may prepay the principal of the Note, without
premium or penalty.
2. Events of Default
-----------------
"Event of Default", wherever used with respect to this Note, means any one
of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Authority):
(a) Payment Default. The Company shall fail to pay or cause to be paid all
---------------
or any portion of the principal of this Note when it becomes due and
payable; or
(b) Breach of Representation or Warranty. Any representation or warranty
------------------------------------
made by USS in the Option Agreement shall prove to have been untrue or
misleading when made in any respect that is material and adverse to the
value of the Holder's investment in the Note or the Conversion Shares; or
(c) Breach of Other Covenants or Failure of any Condition. The Company
-----------------------------------------------------
shall fail to perform, keep or observe any agreement or covenant contained
in this Note or USS shall fail to perform, keep or observe any agreement or
covenant contained in the Option Agreement, and any such failure shall
remain unremedied for thirty (30) days after written notice thereof shall
have been given to USS or the Company, as the case may be, by the Holder;
provided, however, that if any such failure is susceptible to cure within
30 days and the Company or USS, as the case may be, commences to cure such
failure within said 30-day period, then no Event of Default shall be deemed
to have occurred if the Company or USS diligently prosecutes said cure
thereafter to completion and cures said failure by the thirtieth (30th) day
after the date of said notice; or
(d) Involuntary Bankruptcy Events. The entry by a court having jurisdiction
-----------------------------
in the premises of a decree or order (A) for relief in respect of the
Parent or the Company, (each, a "Subject Entity") in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) adjudging any Subject Entity
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
any Subject Entity under any applicable federal or state law, or appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of any Subject Entity or of any substantial part of any
property of any Subject Entity, or ordering the winding up or liquidation
of the affairs of any Subject Entity, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days;
or
(e) Voluntary Bankruptcy Events. Any Subject Entity shall (i) voluntarily
---------------------------
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter
2
in effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in
clause (d) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for any Subject Entity or for a substantial part of a Subject Entity's
assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing.
If an Event of Default (other than an Event of Default specified in clause
(d) or (e) above) occurs and is continuing, the Holder may declare the
principal amount of this Note to be immediately due and payable. If an
Event of Default specified in clause (d) or (e) above occurs, the principal
amount of the Note shall automatically become and be immediately due and
payable without any declaration or other act on the part of the Holder or
any other Person.
3. Conversion Rights
-----------------
(a) Holder's Conversion Right
-------------------------
(i) Conditional Conversion. During the period from the fifth (5/th/)
anniversary date hereof to the tenth (10/th/) anniversary of such date
(the "Holder Conditional Conversion Period"), if the average Closing
Price (as hereinafter defined) of the Common Stock is greater than the
Conversion Price (as hereinafter defined) during any period of 10
consecutive Trading Days (as hereinafter defined) (each, a "Qualified
Trading Period"), then on the first Business Day immediately following
the last trading day of any such Qualified Trading Period during the
Holder Conditional Conversion Period (each a "Holder Conversion Date")
the Holder may convert the Note into fully paid and nonassessable
shares of Common Stock (calculated as to each conversion to the
nearest full share of Common Stock) at the Conversion Price in effect
on the applicable Holder Conversion Date by delivering written notice
to that effect to the Company on such Holder Conversion Date.
(ii) Unconditional Conversion. At any time after the tenth (10/th/)
anniversary date hereof, at the option of the Holder, this Note, may
be converted at the principal amount hereof into fully paid and
nonassessable shares of the Common Stock (calculated as to each
conversion to the nearest 1/100 of a share of Common Stock) at the
Conversion Price in effect at the time of conversion.
(b) The Company's Conversion Right.
------------------------------
(i) Conditional Conversion. During the period from the date hereof to
----------------------
the tenth (10/th/) anniversary of such date (the "Company Conditional
Conversion Period"), if the average Closing Price (as hereinafter
defined) of the Common Stock is greater than the Conversion Price on
each Trading Day (as hereinafter defined) during any Qualified Trading
Period then on the first Business Day immediately following the last
trading day of any such Qualified Trading Period during the Company
Conditional Conversion Period
3
(each a "Company Conversion Date") the Company may convert the Note
into fully paid and nonassessable shares of Common Stock (calculated as
to each conversion to the nearest full share of Common Stock) at the
Conversion Price in effect on the applicable Conversion Date by
delivering written notice to that effect to the Holder on such Company
Conversion Date.
(ii) Unconditional Conversion. At any time after the tenth (10/th/)
------------------------
anniversary date hereof, the Company shall have the right to convert
the Note into fully paid and nonassessable shares of Common Stock
(calculated as to each conversion to the nearest full share of Common
Stock) at the Conversion Price in effect on the date of conversion by
delivering written notice to that effect to the Holder on or prior to
such date of conversion.
The parties hereto agree that any conversion pursuant to any of the
foregoing clauses shall be made in accordance with the provisions of
Annex A, which is expressly incorporated by reference herein. If a
conversion is effected pursuant to the foregoing provisions, then as
promptly as practicable on or after the applicable conversion date the
Holder shall surrender the Note at the principal executive offices of
the Company (which, if the Company shall so require, shall be duly
endorsed to the Company or in blank, or be accompanied by proper
instruments of transfer to the Company or in blank), accompanied by
irrevocable written notice to the Company specifying the name or names
(with address or addresses) in which a certificate or certificates
evidencing the full number of shares of Common Stock issuable upon such
conversion are to be issued and the Company shall deliver such
certificate or certificates registered in the name(s) and in the
denominations set forth in such instructions, together with a cash
adjustment in respect of any fraction of a share of Common Stock. Any
such conversion shall be deemed to have been made as of the applicable
conversion date, and the person or persons entitled to receive the
Common Stock deliverable upon conversion of this Note shall be treated
for all purposes as the record holder or holders of such Common Stock
on such date.
4. Change of Control Conversion Option
-----------------------------------
If a Change of Control occurs at any time, the Holder shall have the right
and option, but not the obligation, to immediately convert (the "Change of
Control Conversion Option") this Note to Common Stock at the Conversion
Price then in effect on the Change of Control Exercise Date (as defined
below). The Company shall give the Holder prompt written notice if a Change
of Control occurs (a "Notice"). In order to exercise the Change of Control
Conversion Option with respect to any Change of Control, the Holder must
deliver a written notice of its election to exercise to the Company within
30 days after it has received the Notice relating thereto and the closing
of any exercise of the Change of Control Conversion Option will be held at
10:00 A.M. at the principal executive offices of the Company on the 30th
day after the Company receives such written notice, or at such other time
and place upon which the Holder and the Company shall agree (the "Change of
Control Exercise Date").
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or more related transactions, of all or
substantially all of the properties and assets of the
4
Company and its Subsidiaries, taken as a whole, to any Person or group (as
such term is defined for purposes of Rule 13d-5 under the 1934 Act or any
successor rule), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company or the Parent, or (iii) the consummation of any
transaction or other event (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than any affiliate of NKK or USS (considered as a single Person
solely for this purpose), becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the 1934 Act), directly or
indirectly, of more than 40% of the total voting power of all the then
outstanding shares of Voting Stock of the Company or any Person with which
the Company consolidates or into which the Company merges.
5. Information Obligations
-----------------------
(a) Parent Information. The Parent has filed a registration statement
------------------
pursuant to the requirements of section 12 of the Exchange Act and shall
file the reports required to be filed by companies subject to the reporting
requirements of sections 13 and 15(d) of the Exchange Act (including but
not limited to the reports under sections 13 and 15(d) of the Exchange Act
referred to in subparagraph (c) of Rule 144 adopted by the Commission under
the Securities Act) and the rules and regulations adopted by the Commission
thereunder (or, if the Parent does not file such reports, it will from time
to time, upon the request of any holder of Note Shares, furnish to such
holder the same information that would be required to be disclosed if the
Parent filed such reports) and will take such further action as any holder
of Note Shares may reasonably request, all to the extent required from time
to time to enable such holder to sell Note Shares without registration
under the Securities Act within the limitation of the exemptions provided
by (a) Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any holder of Note Shares, the Parent
will deliver to such holder a written statement as to whether it has
complied with the requirements of this section 5(a).
(b) Company Information. The Company will deliver to the Holder (without
-------------------
duplication) within five days after any officer of the Company obtains
knowledge of any Event of Default or any event which, with notice or lapse
of time or both, would constitute an Event of Default (a "Default"), if
such Event of Default or Default is then continuing, a certificate of the
chief financial officer or the chief accounting officer of the Company
setting forth the details thereof and the action which the Company is
taking or proposes to take with respect thereto.
6. Consolidation, Merger and Sale of Assets
----------------------------------------
The Company will not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or directly and/or indirectly
through its Subsidiaries sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the properties and assets of the
Company and its Subsidiaries taken as a whole in one or more related
transactions, to any other Person unless:
(a) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition
5
shall have been made (the "Successor Company") is a corporation,
partnership, limited liability company or other similar business entity
organized and validly existing under the laws of the United States, any
state thereof or the District of Columbia;
(b) the Successor Company unconditionally assumes in a binding instrument
all the obligations of the Company under the Notes and USS' obligations
under the Option Agreement; and
(c) immediately after such transaction no Event of Default or event which,
with notice or lapse of time or both, would constitute an Event of Default
exists.
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any transfer, conveyance, sale, lease or other
disposition of all or substantially all of the properties and assets of the
Company and its Subsidiaries taken as a whole in one or more related
transactions in accordance with this paragraph, the Successor Company shall
succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Note with the same effect as if such Successor
Company had been named as the Company herein, and thereafter, except in the
case of a lease, the Company shall be relieved of all obligations and
covenants under this Note.
7. Transfer and Related Provisions
-------------------------------
The Holder shall not offer, sell, contract to sell or otherwise dispose of
this Note without the prior written consent of the Company; provided,
however, that the Holder shall be permitted to transfer the Note (i) to any
of NKK and/or any of NKK's wholly-owned subsidiaries or a Person that that
directly or indirectly owns NKK and (ii) (A) if the Holder is legally
precluded from holding this Note and (B) during the continuance of an Event
of Default, provided, that such transferee agrees to be bound by the terms
contained herein.
The Company shall keep at its principal office a register (the "Register")
in which shall be entered the name and address of the registered holder of
this Note and particulars of this Note and of all permitted transfers of
this Note. Upon surrender for registration of a permitted transfer of this
Note to the Company, the Company shall execute and deliver, in the name of
the designated transferee or transferees, one or more new Notes, of any
denominations of $1,000,000 and multiples thereof and like aggregate
principal amount. Notwithstanding the foregoing, the Company shall not be
required to register the transfer or exchange of this Note unless it has
been duly endorsed. All Notes issued upon any registration of transfer or
exchange of this Note shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits, as this Note.
No service charge shall be made for any registration of transfer or
exchange of this Note so long as such transfers occur no more frequently
than annually, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
connection therewith.
6
Prior to due presentment of this Note for registration of a permitted
transfer, the Company and its agents may treat the Person in whose name it
is registered as the owner of this Note for all purposes whatsoever,
whether or not it is overdue and neither the Company nor any of its agents
shall be affected by notice to the contrary.
8. Replacement of Note
-------------------
If this Note has been mutilated and is surrendered to the Company, the
Company shall execute and deliver in exchange a new Note of the same
principal amount and bearing a number not then outstanding. If the Holder
shall deliver to the Company (i) evidence reasonably satisfactory to the
Company that this Note has been destroyed, lost or stolen and (ii) such
security or indemnity as may be required by the Company to hold it and its
agents harmless, then, in the absence of notice that this Note has been
acquired by a bona fide purchaser, the Company shall execute and deliver,
in lieu of this Note, a new Note of a like principal amount and bearing a
number not then outstanding. The provisions of this paragraph are exclusive
and shall preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Notes.
9. Parent's Guaranty
-----------------
The Parent shall guarantee the obligations of the Company under the Note
solely to the extent that the Company is required to deliver shares of the
Common Stock or other securities in connection with the conversion of the
Note.
10. Miscellaneous
-------------
The Company waives presentment for payment, demand, notice of nonpayment,
notice of protest and protest of this Note, and all notices in connection
with the delivery, acceptance, or dishonor of this Note.
The Company agrees that if for any reason any amount due hereunder is paid
by cashier's, certified teller's check or other check, there shall be no
discharge of the Company's obligation until said check be finally paid by
the issuer thereof.
The Holder shall not by any act or omission be deemed to waive any of its
rights or remedies under this Note unless such waiver shall be in writing
and signed by the Holder, and then only to the extent specifically set
forth therein.
No right or remedy herein conferred upon or reserved to the Holder is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
This Note may not be amended other than with the written consent of the
Holder and the Company.
7
Upon demand therefor, the Company agrees to pay to the Holder all costs and fees
arising out of enforcing this Note, whether incurred in any court action,
arbitration, or mediation, on appeal, in any bankruptcy (or state receivership
or other insolvency or similar proceedings or circumstances), in any forfeiture,
and for any post-judgment collection services (collectively, "Enforcement
Costs").
The Company and, by its acceptance of this Note, the Holder agree that, subject
to the specific terms hereof and to the extent that New York law applies, the
relevant provisions of the Uniform Commercial Code as in effect in the State of
New York pertaining to negotiable instruments shall be applied to this Note,
even if this Note is not deemed to be an "instrument" or a "negotiable
instrument" thereunder.
If this Note will at any time become subject to the Trust Indenture Act of 1939,
the Company will make appropriate revisions hereto and will enter into an
indenture with an appropriate trustee so as to comply with such act.
This Note shall be governed by and construed in accordance with the laws of the
State of New York. In any court proceeding, the Company agrees to submit to the
jurisdiction the courts in the State of New York or of the United States of
America for the Southern District of New York. The Company hereby irrevocably
waives to the fullest extent permitted by law any objection that it may now or
hereafter have to the laying of such venue and any claim that any such forum is
an inconvenient forum. Nothing in this Section shall impair the right of the
Holder to bring any action or proceeding against the Company or its property in
the courts of any other county or jurisdiction and the Company irrevocably
submits to the nonexclusive jurisdiction of the appropriate courts (as selected
by the Holder) of the jurisdiction in which the Company is organized or any
place where any property or any office of the Company is located.
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned has duly
executed and delivered this Note as of the date first written above.
USS OF DELAWARE, INC.
By:_________________________
Name:
Title:
The Parent hereby expressly agree to be bound solely by Sections 5(a) and 9 of
this Note and Sections 3, 4, 5, 6, 7, 8, 9 and 10 of Annex A hereto.
UNITED STATES STEEL CORPORATION
By:_________________________
Name:
Title:
8
Annex A
-------
Conversion Rights
-----------------
1. Right of Conversion. The Note may be converted as provided in the Note.
------------------------
2. Conversion Procedures. If the Holder elects to exercise its conversion
--------------------------
right, the Holder shall surrender this Note at the principal executive offices
of the Company (which, if the Company shall so require, shall be duly endorsed
to the Company or in blank, or be accompanied by proper instruments of transfer
to the Company or in blank), accompanied by irrevocable written notice to the
Company and the Parent to the effect that the Holder elects so to convert this
Note (which notice shall specify the name or names (with address or addresses)
in which a certificate or certificates evidencing the shares of Common Stock to
be issued upon such conversion are to be issued).
If the Company elects to exercise its conversion right, the Company shall send a
written notice to the Holder setting forth the procedure for such conversion.
The Company may require the Holder to surrender this Note at the executive
offices of the Company (which, if the Company shall so require, shall be duly
endorsed to the Company or in blank, or be accompanied by proper instruments of
transfer to the Company or in blank). The Holder shall notify the Company and
the Parent of the name or names (with address or addresses) in which a
certificate or certificates evidencing the shares of Common Stock to be issued
upon such conversion are to be issued.
In connection with any conversion of the Note, the Company shall, as soon as
practicable after the surrender of this Note at the office referred to above and
compliance with the other conditions herein contained, deliver at such office,
to the person or persons entitled thereto (as specified in the applicable
written notice of conversion), a certificate or certificates evidencing the
number of full shares of Common Stock to which such person or persons shall be
entitled as aforesaid, together with a cash adjustment in respect of any
fraction of a share of Common Stock as hereinafter provided. Such conversion
shall be deemed to have been made as of the date of such surrender of this Note
(or, if later, the date of compliance with such other conditions), and the
person or persons entitled to receive the Common Stock deliverable upon
conversion of this Note shall be treated for all purposes as the record holder
or holders of such Common Stock on such date.
3. No Fractional Shares. No fractional shares of Common Stock shall be issued
-------------------------
upon conversion of this Note. Instead of any fractional share of Common Stock
that would otherwise be issuable to the Holder upon conversion of this Note (or
any specified portion hereof), the Parent shall pay a cash adjustment in respect
of such fractional share in an amount equal to the same fraction of the Closing
Price (as hereinafter defined) on the Trading Day that is at least Two Trading
Days prior to the day of conversion.
4. Reservation of Shares; Etc. The Parent will at all times reserve and keep
-------------------------------
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock and/or, if this Note is then convertible
into other common stock of the Parent, such other common stock, or its issued
shares of Common Stock or such other common stock, as the case
may be, held in its treasury, or both, for the purpose of effecting conversion
of shares of this Note, the full number of shares of Common Stock or such other
common stock deliverable upon the conversion of all outstanding Notes not
theretofore converted. For purposes of this Section 4, the number of shares of
Common Stock or such other common stock that shall be deliverable upon the
conversion of all outstanding Notes shall be computed as if at the time of
computation all Notes were held by a single holder. The Parent covenants that
any shares of Common Stock or other common stock of the Parent issued upon
conversion of shares of this Series shall be validly issued, fully paid and
nonassessable. The Parent shall endeavor to list the shares of Common Stock or
other common stock of the Parent required to be delivered upon conversion of
this Note, prior to such delivery, upon each national securities exchange, if
any, upon which the outstanding Common Stock or such other common stock is
listed at the time of such delivery. Prior to the delivery of any securities
that the Parent shall be obligated to deliver upon conversion of this Note, the
Parent shall endeavor to comply with all federal and state laws and regulations
thereunder requiring the registration of such securities with, or any approval
of or consent to the delivery thereof by, any governmental authority.
5. Prior Notice of Certain Events. Subject to the provisions of Section 6(g),
-----------------------------------
if:
(i) the Parent takes any action that would require an adjustment of the
Conversion Price pursuant to Sections 6(a) through (f); or
(ii) there shall be any consolidation or merger to which the Parent is a party
and for which approval of any stockholders of the Parent is required, or the
sale or transfer of all or substantially all of the assets of the Parent; or
(iii) there shall occur the voluntary or involuntary liquidation, dissolution or
winding up of the Parent; or
(iv) the Parent or any of its Subsidiaries shall commence a tender offer or
exchange offer for all or a portion of the outstanding shares of Common Stock
(or shall amend any such tender or exchange offer), then the Parent shall cause
to be mailed to the holder of this Note at its address as shown on the register
of the Company, as promptly as possible, but at least 15 days prior to the
earliest applicable date hereinafter specified, a notice stating, as applicable,
(A) the proposed record date for a dividend or distribution or the proposed
effective date of a consolidation, merger, sale, transfer, liquidation,
dissolution or winding up, (B) the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property, if any, deliverable upon such
consolidation, merger, sale, transfer, liquidation, dissolution or winding up or
(C) the date on which such tender or exchange offer commenced, the date on which
such tender or exchange offer is scheduled to expire unless extended, the
consideration offered and the other material terms thereof (or the material
terms of any amendment thereto). Failure to give or receive such notice or any
defect therein shall not affect the legality or validity of the related
transaction.
6. Adjustment of Conversion Price.
-----------------------------------
2
(a) The Conversion Price per share of Common Stock shall be adjusted from time
to time as follows:
(i) If the Parent shall after the date on which the Note is initially issued
(A) pay a dividend or make a distribution on any class of its capital stock in
shares of Common Stock, (B) subdivide the outstanding Common Stock into a
greater number of shares or (C) combine the outstanding Common Stock into a
smaller number of shares, then the Conversion Price in effect at the opening of
business on the day next following the date fixed for the determination of
stockholders entitled to receive such dividend or distribution or at the opening
of business on the day next following the day on which such subdivision or
combination becomes effective, as the case may be, shall be adjusted so that the
holder of any share of this Note thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock that such holder would
have owned or have been entitled to receive after the happening of any of the
events described above had such Note been converted immediately prior to the
record date in the case of a dividend or distribution or the effective date in
the case of a subdivision or combination. An adjustment made pursuant to this
Section 6(a)(i) shall become effective immediately after the opening of business
on the day next following the record date in the case of a dividend or
distribution and shall become effective immediately after the opening of
business on the day next following the effective date in the case of a
subdivision or combination.
(ii) If the Parent shall issue after the date on which the Note is initially
issued rights or warrants to all holders of Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Common Stock at a price per share less than the
Current Market Price per share of Common Stock on the record date for the
determination of stockholders entitled to receive such rights or warrants, then
the Conversion Price in effect at the opening of business on the day next
following such record date shall be adjusted to equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior to the opening
of business on the day next following the date fixed for such determination by
(II) a fraction, the numerator of which shall be the sum of (A) the number of
shares of Common Stock outstanding on the close of business on the date fixed
for such determination and (B) the number of shares that the aggregate proceeds
to the Parent from the exercise of such rights or warrants for Common Stock
would purchase at such Current Market Price, and the denominator of which shall
be the sum of (A) the number of shares of Common Stock outstanding on the close
of business on the date fixed for such determination and (B) the number of
additional shares of Common Stock offered for subscription or purchase pursuant
to such rights or warrants. Such adjustment shall become effective immediately
after the opening of business on the day next following such record date (except
as provided in Section 6(i)). In determining whether any rights or warrants
entitle the holders of Common Stock to subscribe for or purchase shares of
Common Stock at less than the Current Market Price thereof, there shall be taken
into account any consideration received by the Parent upon issuance and upon
exercise of such rights or warrants, the value of such consideration, if other
than cash, to be determined by the Board of Directors.
(iii) If the Parent shall distribute to all holders of the Common Stock any
shares of capital stock (other than common stock of the Parent), evidences of
indebtedness, cash or other assets of the Parent (including securities, but
excluding (w) any dividend or distribution referred to in
3
Section 6(a)(i), (x) any rights or warrants referred to in Section 6(a)(ii) or
in the second or third paragraph of this Section 6(a)(iii), (y) any dividend or
distribution paid exclusively in cash or (z) any stocks, securities or other
property received as a result of a transaction referred to in Section 6(c)) (any
of the foregoing being hereinafter referred to in this Section 6(a)(iii) as the
"Securities"), then in each such case the Conversion Price shall be adjusted so
that it shall equal the price determined by multiplying (I) the Conversion Price
in effect immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by (II) a
fraction, the numerator of which shall be the Current Market Price per share of
the Common Stock on the record date mentioned below less the then fair market
value (as determined by the Board of Directors) of the portion of the Securities
so distributed to one share of Common Stock, and the denominator of which shall
be the Current Market Price per share of the Common Stock on the record date
mentioned below. Such adjustment shall become effective immediately at the
opening of business on the day next following the record date for the
determination of stockholders entitled to receive such distribution (except as
provided in Section 6(i)).
With respect to the Rights Agreement, dated as of December 31, 2001 (as amended
or otherwise modified from time to time, the "Rights Agreement"), between the
Parent and Mellon Investor Services LLC (terms used in this paragraph and not
otherwise defined herein having the meanings set forth in the Rights Agreement),
the Conversion Price will be adjusted only when the Rights issuable pursuant
thereto become exercisable after the Parent's right of redemption thereunder has
expired. Subject to the foregoing, upon the later to occur of the Distribution
Date and a Section 11(a)(ii) Event (the "Adjustment Date"), the Conversion Price
in effect at the opening of business on the Adjustment Date shall be adjusted to
equal the price determined by multiplying such Conversion Price by a fraction
the numerator of which shall be equal to the Current Market Price per share of
the Common Stock on the Trading Day immediately prior to the Adjustment Date
less an amount equal to the quotient of (x) the aggregate fair market value on
the Adjustment Date (as determined by the Board of Directors) of the Rights
distributed under the Rights Agreement divided by (y) the number of shares of
Common Stock outstanding on such day prior to the Adjustment Date and the
denominator of which shall be equal to such Current Market Price per share of
the Common Stock. Such adjustment shall become effective immediately after the
opening of business on the day next following such Adjustment Date. In case the
Parent shall (other than pursuant to the Rights Agreement) distribute rights or
warrants to purchase Common Stock pro rata to all holders of Common Stock which
rights or warrants are not at such time immediately exercisable but, upon the
occurrence of a specified event or events ("Exercise Trigger Date") will become
exercisable and once they become exercisable will entitle, or upon the
occurrence of an additional specified event or events ("Price Trigger Date")
will entitle, the holder thereof to purchase Common Stock at a price per share
of Common Stock less than the Current Market Price of the Common Stock on the
Trading Day next succeeding the later of the Exercise Trigger Date or the Price
Trigger Date ("Adjustment Trigger Date") and there shall have occurred such
Adjustment Trigger Date, thus permitting the holders of such rights or warrants
irrevocably to exercise any exchange, subscription or purchase rights conferred
by such rights or warrants at a price per share of Common Stock less than such
Current Market Price, then the Conversion Price in effect at the opening of
business on the Adjustment Trigger Date shall be adjusted by multiplying (I)
such Conversion Price by (II) a fraction, the numerator
4
of which shall be equal to the Current Market Price per share of the Common
Stock on the Trading Day immediately prior to the Adjustment Trigger Date less
an amount equal to the quotient of (x) the aggregate fair market value on the
Adjustment Trigger Date of the rights or warrants so distributed (as determined
by the Board of Directors) divided by (y) the number of shares of Common Stock
outstanding on such day prior to the Adjustment Trigger Date and the denominator
of which shall be equal to such Current Market Price per share of the Common
Stock. Such adjustment shall become effective immediately after the opening of
business on the day next following such Adjustment Trigger Date.
(iv) If the Parent shall, by dividend or otherwise, at any time distribute to
all holders of the Common Stock cash (excluding any regular quarterly dividend
payable solely in cash, any cash that is distributed as part of a distribution
requiring a Conversion Price adjustment pursuant to Section 6(a)(iii) and cash
that is distributed in a merger or consolidation to which Section 6(c) applies)
in an aggregate amount that, together with (A) the aggregate amount of any other
distributions to all holders of the Common Stock made exclusively in cash (to
which this Section 6(a)(iv) would otherwise apply) within the 12 months
preceding the date of payment of such distribution and in respect of which no
Conversion Price adjustment has been made and (B) all Excess Purchase Payments
in respect of each tender offer or exchange offer or other negotiated purchase
for Common Stock concluded by the Parent or any of its Subsidiaries within the
12 months preceding the date of payment of such distribution and in respect of
which no Conversion Price adjustment has been made, exceeds an amount equal to
12.5% of the product of the Current Market Price per share of Common Stock on
the date fixed for determination of holders of Common Stock entitled to receive
such distribution times the number of shares of Common Stock outstanding on such
date, then the Conversion Price shall be adjusted so that it shall equal the
price determined by multiplying (I) such Conversion Price in effect immediately
prior to the Conversion Price adjustment contemplated by this Section 6(a)(iv)
by (II) a fraction the numerator of which shall be the Current Market Price per
share of the Common Stock on the date fixed for determination of holders of
Common Stock entitled to receive such distribution less the combined amount of
such cash and such Excess Purchase Payments so distributed applicable to one
share of Common Stock and the denominator of which shall be such Current Market
Price per share of the Common Stock on such date of determination. Such
adjustment shall become effective immediately prior to the opening of business
on the day next following the date fixed for such determination.
(v) In case a tender offer or exchange offer or other negotiated purchase made
by the Parent or any of its Subsidiaries for all or any portion of the Common
Stock shall be consummated, if the aggregate amount of any Excess Purchase
Payment, together with (A) the aggregate amount of any distributions made to all
holders of Common Stock made exclusively in cash (excluding any regular
quarterly dividend payable solely in cash, any cash that is distributed as part
of a distribution requiring a Conversion Price adjustment pursuant to Section
6(a)(iii) and cash that is distributed in a merger or consolidation to which
Section 6(c) applies) within the 12 months preceding the consummation of such
tender or exchange offer or other negotiated purchase and in respect of which no
Conversion Price adjustment has been made, and (B) all other Excess Purchase
Payments in respect of each tender or exchange offer or other negotiated
purchase for Common Stock concluded by the Parent or any of its Subsidiaries
within the 12 months preceding the consummation of such tender or exchange offer
or other negotiated purchase and in
5
respect of which no Conversion Price adjustment has been made, exceeds an amount
equal to 12.5% of the product of the Current Market Price per share of Common
Stock on the consummation date of such tender or exchange offer or other
negotiated purchase (any such date, the "Purchase Date") times the number of
shares of Common Stock outstanding (including any tendered, exchanged or
purchased shares) on such Purchase Date, then the Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying (I) such
Conversion Price in effect immediately prior to such Purchase Date by (II) a
fraction, the numerator of which shall be the Current Market Price per share of
the Common Stock on such Purchase Date less the combined amount of Excess
Purchase Payments and such cash so distributed applicable to one share of Common
Stock and the denominator of which shall be such Current Market Price per share
on such Purchase Date. Such adjustment shall become effective immediately prior
to the opening of business on the day next following such Purchase Date.
(vi) The Parent from time to time may reduce the Conversion Price by any amount
for any period of at least 20 business days (or such other period as may then be
required by applicable law), provided that the Board of Directors shall have
determined that such reduction is in the best interests of the Parent. No
reduction in the Conversion Price pursuant to this Section 6(a)(vi) shall become
effective unless the Parent shall have mailed a notice, at least 15 days prior
to the date on which such reduction is scheduled to become effective, to each
holder of a Note. Such notice shall be given by first class mail, postage
prepaid, at such holder's address as the same appears on the stock transfer
books of the Parent. Such notice shall state the amount per share by which the
Conversion Price will be reduced and the period for which such reduction will be
in effect.
(vii) The Parent may make reductions in the Conversion Price, in addition to
those required by Sections 6(a)(i) through (v), as the Board determines to be
necessary in order that any event treated for Federal income tax purposes as a
dividend of stock or stock rights will not be taxable to the recipients;
provided that any such reduction shall not be effective until written evidence
of the action of the Board authorizing such reduction shall be filed with the
Secretary of the Parent and notice thereof shall have been given by first class
mail, postage prepaid, to each holder of a Note at such holder's address as the
same appears on the note register of the Company.
(b) No adjustment in the Conversion Price shall be required unless such
adjustment would require a cumulative increase or decrease of at least 1% in
such price; provided, however, that any adjustments that by reason of this
Section 6(b) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment until made; and provided, further, that any
adjustment shall be required and made in accordance with the provisions of this
Section 6 (other than this Section 6(b)) not later than such time as may be
required in order to preserve the tax-free nature of a distribution to the
holders of shares of Common Stock or any other common stock into which this Note
is convertible. Notwithstanding any other provisions of this Section 6, the
Parent shall not be required to make any adjustment of any Conversion Price
established hereunder for the issuance of any shares of common stock of the
Parent (including Common Stock) pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of the Parent and
the investment of additional optional amounts in shares of such common stock
under such plan. All calculations under this Section 6 shall be made to the
6
nearest 1/100 of a cent (with $.00005 being rounded upward) or to the nearest
1/10,000 of a share (with .00005 of a share being rounded upward), as the case
may be.
(c) If the Parent shall be a party to any transaction (including without
limitation a merger or consolidation of the Parent and excluding any transaction
as to which Sections 6(a)(i) through (vi) apply), in each case as a result of
which shares of Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), (each
of the foregoing being referred to herein as a "Transaction"), each Note which
is not converted into the right to receive stock, securities or other property
in connection with such Transaction shall thereafter be convertible into the
kind and amount of shares of stock, securities and other property (including
cash or any combination thereof) receivable upon the consummation of such
Transaction by a holder of that number of shares or fraction thereof of Common
Stock into which this Note was convertible immediately prior to such
Transaction, assuming such holder of this Note (i) is not a person with which
the Parent consolidated or into which the Parent merged or which merged into the
Parent or to which such sale or transfer was made, as the case may be (a
"Constituent Person"), or an affiliate of a Constituent Person and (ii) failed
to exercise his rights of election, if any, as to the kind or amount of stock,
securities and other property (including cash) receivable upon such Transaction
(provided that if the kind or amount of stock, securities and other property
(including cash) receivable upon such Transaction is not the same for each share
of Common Stock of the Parent held immediately prior to such Transaction by
other than a Constituent Person or an affiliate thereof and in respect of which
such rights of election shall not have been exercised ("non-electing share"),
then for the purpose of this Section 6(c) the kind and amount of stock,
securities and other property (including cash) receivable upon such Transaction
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). The Parent
shall not be a party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this Section 6(c) and it shall not consent or
agree to the occurrence of any Transaction until the Parent has entered into an
agreement with the other party or parties to such transaction for the benefit of
the holder of this Note that will contain provisions enabling the holders of
such shares that remain outstanding after such Transaction to convert into the
consideration received by holders of Common Stock at the Conversion Price in
effect immediately prior to such Transaction. The provisions of this Section
6(c) shall similarly apply to successive Transactions.
(d) The reclassification of common stock into which this Note is then
convertible into securities which include securities other than such common
stock (other than any reclassification upon a consolidation or merger to which
Section 6(c) applies), shall be deemed to involve (i) a distribution of such
securities other than such common stock to all holders of such common stock (and
the effective date of such reclassification shall be deemed to be "the date
fixed for the determination of stockholders entitled to receive such
distribution") and (ii) a subdivision or combination, as the case may be, of the
number of shares of such common stock outstanding immediately prior to such
reclassification into the number of shares of such common stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be the effective date of such subdivision or combination).
(e) If the Parent shall, by dividend or otherwise, distribute to all holders of
Common Stock or other class of common stock into which this Note is then
convertible shares of common stock
7
other than Common Stock or any class of common stock into which this Note is
then convertible, each Note shall be convertible, in addition to the number of
shares of Common Stock and/or such other common stock into which such Note is
then convertible, into the number of shares of such other common stock
receivable upon payment of such distribution to a holder of that number of
shares or fraction thereof of Common Stock or such other common stock into which
this Note was convertible immediately prior to the record date fixed for the
determination of stockholders entitled to receive such distribution. This Note
shall become so convertible immediately after the opening of business on the day
next following such record date (except as provided in Section 6(i)). In
addition, a Conversion Price shall be established with respect to such common
stock in an amount equal to the quotient of (i) 30 divided by (ii) the number of
shares or fraction thereof of such common stock that a holder of one share of
Common Stock or such other common stock into which this Note is then convertible
would be entitled to receive on the payment date for such distribution from and
after any such date of determination of stockholders entitled to receive such
distribution and, thereafter, Conversion Price adjustments as nearly as
equivalent in type as may be practicable to the adjustments pursuant to Sections
6(a) through (c) which are to be made in respect of Common Stock shall be made
in respect of shares of such common stock. Notwithstanding the foregoing and the
provisions of Section 6(a)(iii), if the Parent shall make such a distribution in
common stock and, thereafter, all of the shares of such common stock cease to be
outstanding, on the date such shares of common stock cease to be outstanding (x)
this Note shall cease to be convertible into shares of such common stock, (y) a
distribution of shares of such common stock shall be deemed to have occurred on
such date and (z) the Conversion Price for the class of common stock upon which
such distribution was made, or if no shares of such class are then outstanding
because shares of such class were exchanged for shares of another class of
common stock, of such other class of common stock, shall be adjusted in the
manner set forth in Section 6(a)(iii) to the same extent as if shares of the
common stock in which such distribution was made were within the meaning of the
term "Securities" in Section 6(a)(iii).
(f) After the date, if any, on which all outstanding shares of Common Stock or
of any other common stock into which this Note is then convertible are exchanged
for shares of another class of common stock (as provided in the Certificate of
Incorporation of Parent), this Note shall thereafter be convertible into the
number of shares of such other class of common stock receivable upon such
exchange by a holder of that number of shares or fraction thereof of Common
Stock and/or such other common stock into which the Note was convertible
immediately prior to such exchange. From and after any such exchange, Conversion
Price adjustments as nearly equivalent as may be practicable to the adjustments
pursuant to Sections 6(a) through 6(e) which, prior to such exchange, were made
in respect of Common Stock and/or such other common stock into which this Note
is then convertible shall instead be made pursuant to such Sections 6(a) through
6(e) in respect of shares of such other class of common stock.
(g) Whenever the Conversion Price is adjusted as herein provided, the Parent
shall promptly prepare a certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment, which certificate shall be prima facie evidence of the correctness
of such adjustment. Promptly after preparation of such certificate, the Parent
shall send a copy of such certificate by first class mail, postage prepaid, to
the holder of this Note at such holder's address as the same appears on the
register transfer books of the Company.
8
(h) In any case in which Section 6(a) or 6(e) provides that an adjustment shall
become effective on the day next following a record date for an event, the
Parent may defer until the occurrence of such event (A) issuing to the holder of
this Note the additional shares of Common Stock or any other common stock of the
Parent issuable upon such conversion by reason of the adjustment required by
such event over and above the number of shares of Common Stock or such other
common stock issuable upon such conversion before giving effect to such
adjustment and (B) paying to such holder any amount in cash in lieu of any
fraction thereof pursuant to Section 6(c).
(i) For purposes of this Section 6, the number of shares of Common Stock or any
other common stock of the Parent at any time outstanding shall not include any
shares of Common Stock or such other common stock then owned or held by or for
the account of Parent. The Parent shall not pay a dividend or make any
distribution on shares of Common Stock or such other common stock held in the
treasury of the Parent.
(j) There shall be no adjustment of the Conversion Price in case of the issuance
of any stock of the Parent in a reorganization, acquisition or other similar
transaction except as specifically set forth in this Section 6. If any action or
transaction would require adjustment of any Conversion Price established
hereunder pursuant to more than one paragraph of this Section 6, only the
adjustment which would result in the largest reduction of such Conversion Price
shall be made.
7. Stapled Securities.
-----------------------
(a) Prior to a Separation Event (as hereinafter defined) with respect to any
Stapled Securities, such Stapled Securities will be deemed, for purposes of the
adjustments contemplated hereby, to comprise part of the shares of Common Stock
to which such Stapled Securities appertain, and as a result, distributions in
respect of such Stapled Securities will be deemed, for such purposes, to be
distributions in respect of such shares.
(b) If the Holder converts this Note (or any portion of the principal amount
hereof) after a Separation Event with respect to any Stapled Securities, it
shall be entitled to receive upon such conversion, in addition to the shares of
Common Stock issuable upon such conversion, the same rights to which the Holder
would have been entitled under the Stapled Securities that would have
appertained to such shares of Common Stock if the Holder had effected such
conversion before such Separation Event.
8. Consolidations, Mergers or Sales of Assets. In the event of any
-----------------------------------------------
consolidation of the Parent with, or merger of the Parent into, any other
Person, any merger of another Person into the Parent (other than a merger which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of the Common Stock) or any sale or transfer of all or
substantially all of the assets of the Parent, the Person formed by such
consolidation or resulting from such merger or which acquires such assets, as
the case may be, shall enter into an unconditional binding written agreement
enforceable by the Holder providing that the Holder shall have the right
thereafter, during the period in which this Note shall be convertible, to
convert this Note (or portion of the principal amount hereof) only into the kind
and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock into which this Note (or portion thereof)
9
might have been converted immediately prior to such consolidation, merger, sale
or transfer, assuming the Holder (i) is not a Person with which the Parent
consolidated or into which the Parent merged or which merged into the Parent or
to which such sale or transfer was made, as the case may be, (a "Constituent
Person") or an Affiliate of a Constituent Person and (ii) failed to exercise his
or her rights of election, if any, as to the kind or amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer;
provided, however, that if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer is not the
same for each share of Common Stock held immediately prior to such
consolidation, merger, sale or transfer by Persons other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised (each, a "Non-Electing Share"), then for purposes
of this Section 8 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by each
Non-Electing Share shall be deemed to be the kind and amount so receivable per
share by a plurality of the Non-Electing Shares. Such written agreement shall
provide for adjustments which, for events subsequent to the effective date of
such agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Annex A. The provisions of this Section 8 shall
-------
similarly apply to successive consolidations, mergers, sales or transfers. If
the conversion rights of the Holder of this Note shall be adjusted pursuant to
this Section 8, then the Parent shall cause to be given to the Holder and any
other holders of outstanding Notes, within 5 days after consummation of the
transaction triggering such adjustment, a notice describing such adjustment in
appropriate detail.
9. Taxes. The Parent will pay any and all documentary, stamp or similar
------------
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion of this Note pursuant
hereto; provided, however, that the Parent shall not be required to pay any tax
that may be payable in respect of any transfer involved in the issue or delivery
of shares of Common Stock or other securities or property in a name other than
that of the holder of this Note to be converted and no such issue or delivery
shall be made unless and until the person requesting such issue or delivery has
paid to the Parent the amount of any such tax or established, to the reasonable
satisfaction of the Parent, that such tax has been paid.
10. Registration under the Securities Act
--------------------------------------------
10.1 Registration on Request. The Parent agrees that, within 90 days of receipt
-----------------------
of a written request from the Holder, the Parent will at the its cost and
expense file with the Commission a Registration Statement covering the sale by
the Holder of the Note Shares and that the Parent will take all steps reasonably
necessary to cause such registration statement to be declared effective and to
remain effective and to cause the shares of stock covered thereby to be listed
on the New York Stock Exchange, Inc., the Chicago Stock Exchange and the Pacific
Stock Exchange. This request for registration may be exercised by the holders of
the Note Shares no more often than once.
10.2. Indemnification.
(a) Indemnification by the Parent. In the event of any registration of any
------------------------------------
securities of the Parent under the Securities Act, the Parent will, and hereby
does, indemnify and hold harmless
10
the holder of any Note Shares covered by such registration statement, its
directors and officers, each other Person who participates as an underwriter in
the offering or sale of such securities and each other Person, if any, who
controls such holder or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such holder or any such director or officer or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Parent will reimburse such holder and each such
director, officer, underwriter and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding, provided that
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the Parent shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Parent by such holder, for use in the preparation thereof and,
provided, further that the Parent shall not be liable to any Person who
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participates as an underwriter, in the offering or sale of Note Shares or to any
other Person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of the Note Shares to such Person
if such statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such holder or any such director, officer, underwriter
or controlling person and shall survive the transfer of such securities by such
holder.
(b) Indemnification by the Sellers. The Parent may require, as a condition to
-------------------------------------
including any Note Shares in any registration statement filed pursuant to
section 10.1, that the Parent shall have received an undertaking satisfactory to
it from the prospective seller of such Note Shares, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in subdivision
(a) of this section 10.2) the Parent, each director of the Parent, each officer
of the Parent and each other person, if any, who controls the Parent within the
meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Parent by such seller for
use in the preparation of such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment
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or supplement. Any such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Parent or any such
director, officer or controlling person and shall survive the transfer of such
securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified party of
-----------------------------
notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subdivisions of this section 10.2, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as provided
--------
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this section 10.2, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to assume the defense thereof, jointly with
any other indemnifying party similarly notified, to the extent that the
indemnifying party may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement of any such action which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability, or a covenant not to
xxx, in respect to such claim or litigation. No indemnified party shall consent
to entry of any judgment or enter into any settlement of any such action the
defense of which has been assumed by an indemnifying party without the consent
of such indemnifying party.
(d) Other Indemnification. Indemnification similar to that specified in the
----------------------------
preceding subdivisions of this section 10.2 (with appropriate modifications)
shall be given by the Parent and each seller of Note Shares with respect to any
required registration or other qualification of securities under any Federal or
state law or regulation of any governmental authority, other than the Securities
Act.
(e) Indemnification Payments. The indemnification required by this section
-------------------------------
10.2 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or expense,
loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided for in the preceding
-------------------
subdivision of this section 10.2 is unavailable to an indemnified party in
respect of any expense, loss, claim, damage or liability referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such expense, loss, claim, damage or liability in such proportion as
is appropriate to reflect the relative fault of the Parent on the one hand and
of the holder or underwriter, as the case may be, on the other in connection
with the statements or omissions which resulted in such expense, loss, damage or
liability, as well as any other relevant equitable considerations. The
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relative fault of the Parent on the one hand and of the holder or underwriter,
as the case may be, on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission to state a material fact relates to information supplied by the
Parent, by the holder or by the underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, provided that the foregoing contribution agreement shall
--------
not inure to the benefit of any indemnified party if indemnification would be
unavailable to such indemnified party by reason of the provisions contained in
the first sentence of subdivision (a) of this section 10.2, and in no event
shall the obligation of any indemnifying party to contribute under this
subdivision (f) exceed the amount that such indemnifying party would have been
obligated to pay by way of indemnification if the indemnification provided for
under subdivisions (a) or (b) of this section 10.2 had been available under the
circumstances.
The Parent and the holders of Note Shares agree that it would not be just and
equitable if contribution pursuant to this subdivision (f) were determined by
pro rata allocation (even if the holder and any underwriters were treated as one
--- ----
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth in
the preceding sentence and subdivision (c) of this section 10.2, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (f), no holder of Note Shares
or underwriter shall be required to contribute any amount in excess of the
amount by which (i) in the case of any such holder, the net proceeds received by
-
such holder from the sale of Note Shares or (ii) in the case of an underwriter,
--
the total price at which the Note Shares purchased by it and distributed to the
public were offered to the public exceeds, in any such case, the amount of any
damages that such holder or underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
11. Certain Definitions. The following definitions shall apply to terms used in
-------------------
this Annex A:
"Board of Directors" or "Board" means, at any time, the duly elected or acting
board of directors (or duly authorized committee thereof) of the Parent at such
time.
"Closing Price" of shares of any class of common stock of the Parent for any day
shall mean the last reported sales price, regular way on such day, or, if no
reported sale takes place on such day, the average of the reported closing bid
and asked prices on such day, regular way, in either case as reported on the New
York Stock Exchange Composite Tape or, if such common stock is not listed or
admitted to trading on the NYSE, on the principal national securities exchange
on which such common stock is listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, on the National Market
System of NASDAQ or, if such common
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stock is not quoted on such National Market System, the average of the closing
bid and asked prices on such day in the over-the-counter market as reported by
NASDAQ or, if closing bid and asked prices for such common stock on such day
shall not have been reported through NASDAQ, the average of the closing bid and
asked prices on such day as furnished by any NYSE member firm regularly making a
market in such common stock selected for such purpose by the Board of Directors.
"Common Stock" shall mean the Common Stock, par value $1.00 per share, of Parent
including any stock into which such Common Stock shall have been changed or any
stock resulting from any reclassification of such Common Stock, and all other
stock of any class or classes (however designated) of the Parent the holders of
which have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.
"Conversion Price" initially means $30, subject to adjustment from time to time
as set forth herein.
"Current Market Price" shall mean, with respect to any class of common stock of
the Parent, the average of the daily Closing Prices of a share of such common
stock during the five consecutive Trading Days immediately before the date in
question; provided, however, that (i) if the "ex" date for any event (other than
the issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Sections 6(a)(ii) through (v)
occurs on or after the 5th Trading Day prior to the day in question and prior to
the "ex" date for the issuance or distribution requiring such computation, the
Closing Price for each Trading Day prior to the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the same fraction by
which the Conversion Price is so required to be adjusted as a result of such
other event, (ii) if the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Sections 6(a) (ii) through (v) occurs on or after
the "ex" date for the issuance or distribution requiring such computation and on
or prior to the day in question, the Closing Price for each Trading Day on and
after the "ex" date for such other event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Conversion Price is
so required to be adjusted as a result of such other event, and (iii) if the
"ex" date for the issuance or distribution requiring such computation is on or
prior to the day in question, after taking into account any adjustment required
pursuant to clause (ii) of this proviso, the Closing Price for each Trading Day
on or after such "ex" date shall be adjusted by adding thereto the amount of any
cash and the fair market value on the day in question (as determined by the
Board of Directors in a manner consistent with any determination of such value
for purposes of Section 6(a) (iii) or (iv)) of the evidences of indebtedness,
shares of capital stock or assets being distributed applicable to one share of
the applicable class of common stock of the Parent as of the close of business
on the day before such "ex" date. For purposes of this definition, the term "ex"
date, with respect to any class of common stock of the Parent, (i) when used
with respect to any issuance or distribution, means the first date on which such
common stock trades regular way on such exchange or in the relevant market from
which the Closing Price was obtained without the right to receive such issuance
or distribution, (ii) when used with respect to any subdivision or combination
of shares of such common stock, means the first date on which such common stock
trades regular way on
14
such exchange or in such market after the time at which such subdivision or
combination becomes effective, and (iii) when used with respect to any tender or
exchange offer means the first date on which such common stock trades regular
way on such exchange or in such market after the expiration time of such tender
or exchange offer.
"Excess Purchase Payment" means the excess, if any, of (A) the aggregate of the
cash and the value (as determined by the Board of Directors) of all other
consideration paid by the Parent or any of its Subsidiaries with respect to the
shares of the applicable class of common stock of the Parent acquired in a
tender or exchange offer or other negotiated purchase respectively, over (B) the
product of the Current Market Price per share of such common stock times the
number of shares of such common stock acquired in such tender or exchange offer
or purchase.
"Exchange Act" means the Securities Exchange Act of 1934, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"NASDAQ" means the National Association of Securities Dealers, Inc. Automated
Quotations System or any successor thereto.
"Note Shares" means the shares of the Common Stock issuable upon conversion of
the Note pursuant to the terms and conditions set forth in this Note.
"NYSE" means the New York Stock Exchange, Inc. or any successor thereto.
"Parent" means United States Steel Corporation.
"Person" means an individual, a corporation, a partnership, a limited liability
company, an association, a trust or any other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"Rights Agreement" shall have the meaning given to it in the second paragraph of
Section 6(a)(iii).
"Rights" shall mean the rights of the Parent which are issuable under the
Parent's stockholder rights plan adopted by the Board of Directors, the terms
and conditions of which are set forth in the Rights Agreement, or rights to
purchase any capital stock of the Parent under any successor shareholder rights
plan or plan adopted in replacement of the Parent's stockholder rights plan.
"Securities Act" means the Securities Act of 1933, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Separation Event" has the meaning set forth in the definition of the term
"Stapled Securities" below.
"Stapled Securities" means securities issued under any plan or agreement
providing in substance that, until such securities are redeemed or the rights
thereunder are otherwise terminated or a specified event occurs (a "Separation
Event"), (i) a specified number of such securities will appertain to each share
of Common Stock then issued or to be issued in the future (including
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shares issued upon conversion of this Note) and (ii) each such security will be
evidenced or represented by the certificate representing the share of Common
Stock to which it appertains and will automatically trade with such share.
"Subsidiary" means a Person more than 50% of the outstanding voting stock of
which is owned, directly or indirectly, by another Person (whether through one
or more other Subsidiaries or otherwise). For the purposes of this definition,
"voting stock" means stock or other ownership interest which ordinarily has
voting power for the election of directors or other members of a governing body,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.
"Trading Day" shall mean, with respect to any class of common stock of the
Parent, any day on which such common stock is traded on the NYSE, or if such
common stock is not listed or admitted to trading on the NYSE, on the principal
national securities exchange on which such common stock is listed or admitted,
or if not listed or admitted to trading on any national securities exchange, on
the National Market System of the NASDAQ, or if such common stock is not quoted
on such National Market System, in the applicable securities market in which
such common stock is traded.
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