Exhibit 4
OPTION AGREEMENT
This Agreement is entered into as of this 16'th 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
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 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, 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 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) 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
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 Daylight Savings time on June 15, 2007.
2.3 Warrant Exercise Price. The exercise price of the Warrant shall
be one 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 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 Shares shall be adjusted from time to time pursuant to customary
anti-dilution provisions in the Warrant.
2.5 Note.
(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 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.
2.6 Registration Rights.
(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 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 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 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 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 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 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 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 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 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 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
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 liens, charges, encumbrances and security interests whatsoever.
4.3 Authority. Each of NKK, NUF and NAC has full corporate power and
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.
4.4 Consents and Approvals. Except for applicable requirements of the
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
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 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".
(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
contract, option, agreement or other understanding to sell, transfer, assign,
pledge or 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
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
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
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 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 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
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 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 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 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.
5.9 Legal Proceedings. Except as disclosed in the USS Disclosure
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
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.
(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:
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:
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 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:
United States 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
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
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 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 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
-----------------------------
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
13. Registration under Securities Act, etc.........................................................14
13.1 Registration on Request...............................................................14
13.2 Indemnification.......................................................................14
14. Definitions....................................................................................18
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
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.
1.1 Manner of Exercise. This Warrant may be exercised by the
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 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 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.
2.1.1 Issuance of Additional Shares of Common Stock. If the
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
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 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 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
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
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 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 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 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 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 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.
3. Consolidation, Merger, etc.
3.1 Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. (a) If the Company shall be a party to any transaction
(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 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 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.
(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.
(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
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 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:
(i) the Company takes any action that would require an
adjustment of the Warrant Price pursuant to Sections 2.3 and 4; or
(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 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.
9. Restrictions on Transfer
9.1 Restrictive Legends. The Purchaser hereby agrees not to
sell, 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 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
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.
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, 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 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 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:
"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 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.
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 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
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:
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)
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)
---------------------------------------
(Street Address)
---------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
----------------------------
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 (5th)
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 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
(5th) anniversary date hereof to the tenth (10th) 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
(10th) 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 (10th) 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 (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
(10th) 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 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 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.
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.
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:
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.
(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 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 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 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 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 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.
(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) 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 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 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
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 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 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 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 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 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.
