THE EXCHANGE OFFER
Purpose and Effect
AK
Steel issued $350.0 million in aggregate principal amount of original notes on the Original Issue Date and an additional $30.0 million in aggregate principal amount of original notes on the Add-On Issue Date, in transactions exempt from registration
under the Securities Act. In connection with each of the issuances, AK Steel and AK Holding entered into a registration rights agreement. The registration rights agreements require that we file a registration statement under the Securities Act
with respect to the registered notes to be issued in the exchange offer and, upon the effectiveness of the registration statement, offer to you the opportunity to exchange your original notes for a like principal amount of registered notes. Except
as set forth below, these registered notes will be issued without a restrictive legend and, we believe, may be reoffered and resold by you without registration under the Securities Act. After we complete the exchange offer, our obligations with
respect to the registration of the original notes and the registered notes will terminate, except as provided in the last paragraph of this section. Copies of each of the registration rights agreements have been filed as exhibits to the registration
statement of which this prospectus forms a part. Notwithstanding anything to the contrary set forth in this prospectus, this exchange offer is not being made to you, and you may not participate in the exchange offer, if (a) you are our
affiliate within the meaning of Rule 405 of the Securities Act or (b) you are a
broker-
dealer that acquired original notes directly from us. We will not be required to pay any liquidated
damages, assuming:
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we have exchanged the registered notes for the original notes within 400 days of the Original Issue Date; and
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if we are required to file a shelf registration statement, such shelf registration statement is declared effective by the SEC within 120 days of
the date such filing obligation arises.
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Based on interpretations by the staff of the SEC set forth in
no-action letters issued to third parties unrelated to us, we believe that registered notes to be issued to you in the exchange offer may be offered for resale, resold and otherwise transferred by you, without compliance with the registration and
prospectus delivery provisions of the Securities Act, unless you are a
broker-dealer
that receives registered notes in exchange for original notes acquired by you as a result of
market-making
activities or other trading activities. This interpretation, however, is based on your representation to us that:
(1) the registered notes to be issued to you in the exchange offer are acquired in the ordinary course of your business;
(2) at the time of the commencement of the exchange offer you have no arrangement or understanding with any
person to participate in the distribution (within the meaning of the Securities Act) of the registered notes to be issued to you in the exchange offer in violation of the Securities Act;
(3) you are not an affiliate (as defined in Rule 405 promulgated under the Securities Act) of us;
(4) if you are a
broker-dealer,
you are not engaging in, and do not intend to
engage in, a distribution of the registered notes to be issued to you in the exchange offer;
(5) if you are a
participating
broker-dealer
that will receive registered notes for its own account in exchange for the original notes that were acquired as a result of
market-making
or
other trading activities, that you will deliver a prospectus in connection with any resale of the registered notes; and
(6) you are not acting on behalf of any persons or entities who could not truthfully make the foregoing representations.
If you have any of the disqualifications described above or cannot make each of the representations set forth above, you may not rely on the interpretations by the staff of the SEC referred to above.
Under those circumstances, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a sale, transfer or other disposition of any notes unless you are able to utilize an applicable
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exemption from all of those requirements. In addition, each
broker-dealer
that receives registered notes in the exchange offer for its own account in
exchange for original notes that were acquired by the
broker-dealer
as a result of
market-making
activities or other trading activities, must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of those registered notes. See Plan of Distribution.
If you will not receive freely tradable registered notes in the exchange offer or are not eligible to participate in the exchange offer, you can elect, by indicating on the letter of transmittal and
providing additional necessary information, to have your original notes registered in a shelf registration statement on an appropriate form pursuant to Rule 415 under the Securities Act. If we are obligated to file a shelf
registration statement, we will be required to use our commercially reasonable efforts to keep the shelf registration statement effective for a period of two years following the date of issuance of original notes or such shorter period that will
terminate when:
(1) all of the original notes covered by the shelf registration statement have been sold
pursuant to the shelf registration statement;
(2) all of the original notes have been exchanged pursuant to
the exchange offer;
(3) all of the original notes covered by the shelf registration statement cease to be
outstanding for purposes of the indenture governing the notes; or
(4) a subsequent shelf registration
statement covering all of the original notes covered by and not sold under the initial shelf registration statement or earlier subsequent registration statement has been declared effective under the Securities Act.
Other than as set forth in this paragraph, you will not have the right to require us to register your original notes under the Securities
Act. See Procedures for Tendering below.
In certain circumstances set forth in the registration rights
agreements, including if the exchange offer is not consummated (or, if required, the shelf registration statement is not declared effective) within the requisite time periods as specified in the registration rights agreements (each, a Target
Registration Date), the annual interest rate borne by the notes will be increased by 0.25% per annum, with respect to the first 90 days after the applicable Target Registration Date, and, if the exchange offer is not completed (or,
if required, the shelf registration statement is not declared effective) prior to the end of each 90-day period thereafter, the interest rate borne by the notes will increase by an additional 0.25% per annum up to a maximum increase for all
such registration defaults of 1.00% per annum, in each case until the exchange offer is completed or the shelf registration statement is declared effective.
Consequences of Failure to Exchange
After we complete the exchange offer,
if you have not tendered your original notes, you will not have any further registration rights, except as set forth above. Your original notes will continue to be subject to restrictions on transfer. Therefore, the liquidity of the market for your
original notes could be adversely affected upon completion of the exchange offer if you do not participate in the exchange offer.
Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept any and all original notes validly tendered and not withdrawn prior to
5:00 p.m., New York City time, on the expiration date. We will issue $1,000 principal amount of registered notes in exchange for each $1,000 principal amount of original notes accepted in the exchange offer. However, no note of $2,000 in
principal amount or less shall be exchanged in part. You may tender some or all of your original notes pursuant to the exchange offer. However, original notes may be tendered only in integral multiples of $1,000 principal amount.
The form and terms of the registered notes are substantially the same as the form and terms of the original notes, except that the
registered notes to be issued in the exchange offer have been registered under the Securities
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Act and will not bear legends restricting their transfer. The registered notes will be issued pursuant to, and entitled to the benefits of, the indenture. The indenture also governs the original
notes. The registered notes and the original notes will be deemed a single issue of notes under the indenture.
As of the date
of this prospectus, $380.0 million in aggregate principal amount of original notes were outstanding. This prospectus, together with the letter of transmittal, is being sent to all registered holders and to others believed to have beneficial
interests in the original notes. You do not have any appraisal or dissenters rights in connection with the exchange offer under the Delaware General Corporation Law (the DGCL) or the indenture. We intend to conduct the exchange
offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC promulgated under the Exchange Act.
We will be deemed to have accepted validly tendered original notes when, as, and if we have given oral or written notice of our acceptance to the exchange agent. The exchange agent will act as our agent
for the tendering holders for the purpose of receiving the registered notes from us. If we do not accept any tendered notes because of an invalid tender, the occurrence of other events set forth in this prospectus or otherwise, we will return
certificates for any unaccepted original notes, without expense, to the tendering holder as promptly as practicable after the expiration date.
You will not be required to pay brokerage commissions or fees or, except as set forth below under Transfer Taxes, transfer taxes with respect to the exchange of your original notes in
the exchange offer. We will pay all charges and expenses, other than applicable taxes, in connection with the exchange offer. See Fees and Expenses below.
Expiration Date; Amendments
The exchange offer will expire at
5:00 p.m., New York City time, on August 28, 2013, unless we determine, in our sole discretion, to extend the exchange offer, in which case, it will expire at the later date and time to which it is extended. We do not intend to extend the
exchange offer, although we reserve the right to do so. If we extend the exchange offer, we will give oral or written notice of the extension to the exchange agent and give each registered holder notice by means of a press release or other public
announcement of any extension prior to 9:00 a.m., New York City time, on the next business day after the scheduled expiration date.
We also reserve the right, in our sole discretion,
(1) subject to
applicable law, to extend the exchange offer and delay accepting any original notes or, if any of the conditions set forth below under Conditions have not been satisfied or waived, to terminate the exchange offer by giving oral or
written notice of the delay or termination to the exchange agent, or
(2) to amend the terms of the exchange
offer in any manner, by complying with Rule 14e-1(d) under the Exchange Act to the extent that rule applies. If we make any material amendment to the terms of the exchange offer or waive any material condition, we will keep the exchange offer
open for at least five business days after we notify you of such change or waiver. If we make a material change to the terms of the exchange offer, it may be necessary for us to provide you with an amendment to this prospectus reflecting that
change. We may only delay, terminate or amend the offer prior to its expiration.
We acknowledge and undertake to comply with
the provisions of Rule 14e-l(c) under the Exchange Act, which requires us to return the original notes surrendered for exchange promptly after the termination or withdrawal of the exchange offer. We will notify you as promptly as we can of any
extension, termination or amendment.
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Procedures for Tendering
Book-Entry Interests
The original notes were issued as global
securities in fully registered form without interest coupons. Beneficial interests in the global securities, held by direct or indirect participants in DTC, are shown on, and transfers of these interests are effected only through, records maintained
in book-entry form by DTC with respect to its participants.
If you hold your original notes in the form of book-entry
interests and you wish to tender your original notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the expiration date either:
(1) a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other
documents required by the letter of transmittal, to the exchange agent at the address set forth on the cover page of the letter of transmittal; or
(2) a
computer-generated
message transmitted by means of DTCs Automated Tender Offer Program system and received by the exchange agent and forming a part of a
confirmation of book-entry transfer, in which you acknowledge and agree to be bound by the terms of the letter of transmittal.
In addition,
in order to deliver original notes held in the form of book-entry interests:
(1) a timely confirmation of
book-entry transfer of such original notes into the exchange agents account at DTC pursuant to the procedure for book-entry transfers described below under Book-Entry Transfer must be received by the exchange agent prior to
the expiration date; or
(2) you must comply with the guaranteed delivery procedures described below.
The method of delivery of original notes and the letter of transmittal and all other required documents to the exchange
agent is at your election and risk. Instead of delivery by mail, we recommend that you use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure delivery to the exchange agent before the expiration date.
You should not send the letter of transmittal or original notes to us. You may request your broker, dealer, commercial bank, trust company, or nominee to effect the above transactions for you.
Certificated Original Notes
Only registered holders of certificated original notes may tender those notes in the exchange offer. If your original notes are certificated notes and you wish to tender those notes for exchange pursuant
to the exchange offer, you must transmit to the exchange agent, on or prior to the expiration date, a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other required documents, to the address
set forth below under Exchange Agent. In addition, in order to validly tender your certificated original notes:
(1) the certificates representing your original notes must be received by the exchange agent prior to the expiration date; or
(2) you must comply with the guaranteed delivery procedures described below.
Procedures Applicable to All Holders
If you tender an original note and you do not withdraw the tender prior to the expiration date, you will have made an agreement with us in accordance with the terms and subject to the conditions set forth
in this prospectus and in the letter of transmittal.
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If your original notes are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee and you wish to tender your notes, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing
and executing the letter of transmittal and delivering your original notes, either make appropriate arrangements to register ownership of the original notes in your name or obtain a properly completed bond power from the registered holder. The
transfer of registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal
must be guaranteed by an eligible institution unless:
(1) original notes tendered in the exchange offer are
tendered either:
(A) by a registered holder who has not completed the box entitled Special Registration
Instructions or Special Delivery Instructions on the letter of transmittal, or
(B) for the
account of an eligible institution; and
(2) the box entitled Special Registration Instructions on
the letter of transmittal has not been completed.
If signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantee must be by a financial institution, which includes most banks, savings and loan associations and brokerage houses, that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock
Exchange Medallion Program or the Stock Exchanges Medallion Program.
If the letter of transmittal is signed by a person other
than you, your original notes must be endorsed or accompanied by a properly completed bond power and signed by you as your name appears on those original notes.
If the letter of transmittal or any original notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary
or representative capacity, those persons should so indicate when signing. Unless we waive this requirement, in this instance you must submit with the letter of transmittal proper evidence satisfactory to us of their authority to act on your behalf.
We will determine, in our sole discretion, all questions regarding the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of tendered original notes. This determination will be final and binding. We reserve the absolute right to reject any and all original notes not properly tendered or any original notes our acceptance of which
would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular original notes. Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and binding on all parties. You must cure any defects or irregularities in connection with tenders of your original notes within the time period we will determine unless we waive
that defect or irregularity. Although we intend to notify you of defects or irregularities with respect to your tender of original notes, neither we, the exchange agent nor any other person will incur any liability for failure to give this
notification. Your tender will not be deemed to have been made and your notes will be returned to you if:
(1)
you improperly tender your original notes;
(2) you have not cured any defects or irregularities in your
tender; and
(3) we have not waived those defects, irregularities or improper tender.
The exchange agent will return your original notes, unless otherwise provided in the letter of transmittal, as soon as practicable
following the expiration of the exchange offer.
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In addition, we reserve the right in our sole discretion to:
(1) purchase or make offers for, or offer registered notes for, any original notes that remain outstanding subsequent to
the expiration of the exchange offer;
(2) terminate the exchange offer; and
(3) to the extent permitted by applicable law, purchase notes in the open market, in privately negotiated transactions or
otherwise.
The terms of any of these purchases or offers could differ from the terms of the exchange offer.
By tendering, you will represent to us that, among other things:
(1) the registered notes to be issued to you in the exchange offer are acquired in the ordinary course of your business;
(2) at the time of the commencement of the exchange offer you have no arrangement or understanding with any person to
participate in the distribution (within the meaning of the Securities Act) of the registered notes to be issued to you in the exchange offer in violation of the Securities Act;
(3) you are not an affiliate (as defined in Rule 405 promulgated under the Securities Act) of us;
(4) if you are a
broker-dealer,
you are not engaging in, and do not intend to
engage in, a distribution of the registered notes to be issued to you in the exchange offer;
(5) if you are a
participating
broker-dealer
that will receive registered notes for its own account in exchange for the original notes that were acquired as a result of
market-making
or
other trading activities, that you will deliver a prospectus in connection with any resale of the registered notes; and
(6) you are not acting on behalf of any persons or entities who could not truthfully make the foregoing representations.
In all cases, issuance of registered notes for original notes that are accepted for exchange in the exchange offer will be made only after timely receipt by the exchange agent of certificates for your
original notes or a timely book-entry confirmation of your original notes into the exchange agents account at DTC, a properly completed and duly executed letter of transmittal, or a
computer-generated
message instead of the letter of transmittal, and all other required documents. If any tendered original notes are not accepted for any reason set forth in the terms and conditions of the exchange offer or if original notes are submitted for a
greater principal amount than you desire to exchange, the unaccepted or non-exchanged original notes, or original notes in substitution therefor, will be returned without expense to you. In addition, in the case of original notes, tendered by
book-entry transfer into the exchange agents account at DTC pursuant to the book-entry transfer procedures described below, the non-exchanged original notes will be credited to your account maintained with DTC promptly after the expiration or
termination of the exchange offer.
Guaranteed Delivery Procedures
If you desire to tender your original notes and your original notes are not immediately available, time will not permit your original
notes or other required documents to reach the exchange agent before the time of expiration or you cannot complete the procedure for book-entry on a timely basis, you may tender if:
(1) you tender through an eligible financial institution;
(2) on or prior to 5:00 p.m., New York City time, on the expiration date, the exchange agent receives from an
eligible institution, a written or facsimile copy of a properly completed and duly executed letter of transmittal and notice of guaranteed delivery, substantially in the form provided by us; and
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(3) the certificates for all certificated original notes, in proper form for
transfer, or a book-entry confirmation, and all other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed
delivery.
The notice of guaranteed delivery may be sent by facsimile transmission, mail or hand delivery.
The notice of guaranteed delivery must set forth:
(1) your name and address;
(2) the amount of original notes you
are tendering; and
(3) a statement that your tender is being made by the notice of guaranteed delivery and
that you guarantee that within three New York Stock Exchange trading days after the execution of the notice of guaranteed delivery, the eligible institution will deliver the following documents to the exchange agent: (A) the certificates for
all certificated original notes being tendered, in proper form for transfer or a book-entry confirmation of tender; (B) a written or facsimile copy of the letter of transmittal, or a book-entry confirmation instead of the letter of transmittal;
and (C) any other documents required by the letter of transmittal.
Book-Entry Transfer
The exchange agent will establish an account with respect to the book-entry interests at DTC for purposes of the exchange offer promptly
after the date of this prospectus. You must deliver your book-entry interest by book-entry transfer to the account maintained by the exchange agent at DTC for the exchange offer. Any financial institution that is a participant in DTCs systems
may make book-entry delivery of book-entry interests by causing DTC to transfer the book-entry interests into the exchange agents account at DTC in accordance with DTCs procedures for transfer.
If one of the following situations occurs:
(1) you cannot deliver a book-entry confirmation of book-entry delivery of your book-entry interests into the exchange agents account at DTC; or
(2) you cannot deliver all other documents required by the letter of transmittal to the exchange agent prior to the
expiration date,
then you must tender your book-entry interests according to the guaranteed delivery procedures discussed above.
Withdrawal Rights
You
may withdraw tenders of your original notes at any time prior to 5:00 p.m., New York City time, on the expiration date.
For your withdrawal to be effective, the exchange agent must receive a written or facsimile transmission notice of withdrawal at its
address set forth below under Exchange Agent prior to 5:00 p.m., New York City time, on the expiration date.
The notice of withdrawal must:
(1) state your name;
(2) identify the specific original notes to be withdrawn, including the certificate number or numbers and the principal
amount of withdrawn notes;
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(3) be signed by you in the same manner as you signed the letter of
transmittal when you tendered your original notes, including any required signature guarantees or be accompanied by documents of transfer sufficient for the exchange agent to register the transfer of the original notes into your name; and
(4) specify the name in which the original notes are to be registered, if different from yours.
We will determine all questions regarding the validity, form and eligibility, including time of receipt, of withdrawal notices. Our
determination will be final and binding on all parties. Any original notes withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any original notes which have been tendered for exchange but which
are not exchanged for any reason will be returned to you without cost as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn original notes may be retendered by following one of the
procedures described under Procedures for Tendering above at any time on or prior to 5:00 p.m., New York City time, on the expiration date.
Conditions
Notwithstanding any other provision of the exchange offer and
subject to our obligations under the registration rights agreements, we will not be required to accept for exchange, or to issue registered notes in exchange for, any original notes and may terminate or amend the exchange offer, if at any time
before the acceptance of any original notes for exchange any of the following events occur:
(1) the exchange
offer violates applicable law or any applicable interpretation of the staff of the SEC;
(2) an injunction,
order or decree has been issued that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer;
(3) an action or proceeding has been instituted or threatened in any court or by any governmental agency which might materially impair our ability to proceed with the exchange offer;
(4) all governmental approvals have not been obtained, which approvals we deem necessary for the consummation of the
exchange offer;
(5) there has been any material change, or development involving a prospective material
change, in our business or financial affairs which, in our reasonable judgment, would materially impair our ability to consummate the exchange offer; or
(6) there has been proposed, adopted or enacted any law, statute, rule or regulation which, in our reasonable judgment, would materially impair our ability to consummate the exchange offer or have a
material adverse effect on us if the exchange offer was consummated.
These conditions are for our sole benefit and we may
assert them regardless of the circumstances giving rise to them, subject to applicable law. We also may waive in whole or in part at any time and from time to time any particular condition in our sole discretion. If we waive a condition, we may be
required, in order to comply with applicable securities laws, to extend the expiration date of the exchange offer. Our failure at any time to exercise any of the foregoing rights will not be deemed a waiver of these rights and these rights will be
deemed ongoing rights which may be asserted at any time (in the case of any condition involving governmental approvals necessary to the consummation of the exchange offer) and from time to time prior to the time of expiration (in the case of all
other conditions).
In addition, we will not accept for exchange any original notes tendered, and no registered notes will be
issued in exchange for any of those original notes, if at the time the notes are tendered any stop order is threatened by the SEC or in effect with respect to the registration statement of which this prospectus is a part or the qualification of the
indenture under the Trust Indenture Act of 1939.
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In addition, we will not accept for exchange any original notes tendered, and no registered
notes will be issued in exchange for any of those original notes, if at the time the notes are tendered any stop order is threatened by the SEC or in effect with respect to the registration statement of which this prospectus is a part or the
qualification of the indenture under the Trust Indenture Act of 1939, as amended.
The exchange offer is not conditioned on
any minimum principal amount of original notes being tendered for exchange.
Exchange Agent
We have appointed U.S. Bank National Association as exchange agent for the exchange offer. Questions, requests for assistance and requests
for additional copies of the prospectus, the letter of transmittal and other related documents should be directed to the exchange agent addressed as follows:
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By Mail, Hand Delivery or Overnight Courier:
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By Facsimile Transmission:
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U.S. Bank National Association
U.S. Bank West Side Flats Operations Center
60 Livingston Ave.
St. Paul, MN 55107
Attention: Specialized Finance
Reference: AK Steel
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(651) 466-7372
Attention: Specialized Finance
Reference: AK Steel
Confirm by Telephone:
(800) 934-6802
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The exchange agent also acts as trustee under the indenture.
Fees and Expenses
We
will not pay brokers, dealers, or others soliciting acceptances of the exchange offer. This solicitation is being made primarily by mail. Additional solicitations, however, may be made in person or by telephone by our officers and employees.
We will pay the estimated cash expenses to be incurred in connection with the exchange offer.
Transfer Taxes
You will
not be obligated to pay any transfer taxes in connection with a tender of your original notes for exchange unless you instruct us to register registered notes in the name of, or request that original notes not tendered or not accepted in the
exchange offer be returned to, a person other than the registered tendering holder, in which event the registered tendering holder will be responsible for the payment of any applicable transfer tax.
Accounting Treatment
We
will not recognize any gain or loss for accounting purposes upon the consummation of the exchange offer. We will amortize the expense of the exchange offer over the term of the registered notes in accordance with GAAP.
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DESCRIPTION OF THE REGISTERED NOTES
The original notes were issued under an indenture (the Indenture), dated as of November 20, 2012 (the Original
Issue Date), among AK Steel, as issuer, AK Holding, as guarantor, and U.S. Bank National Association, as trustee (the Trustee). The registered notes will also be issued under the Indenture. The original notes and the registered
notes offered hereby will be treated as a single class of debt securities under the Indenture, including for purposes of redemptions, offers to purchase, and determining whether the required percentage of holders have given their approval or consent
to an amendment or waiver or joined in the directing of the Trustee to take certain actions on behalf of the holders. For purposes of this description, unless the context otherwise requires, references to the notes include the original
notes, the registered notes offered hereby, and any Additional Notes offered under the Indenture.
The following description
is a summary of the material provisions of the Indenture and the notes and does not purport to be complete. This summary is subject to and is qualified by reference to all the provisions of the Indenture, the notes and the Registration Rights
Agreements, including the definitions of certain terms used in the Indenture. We urge you to read these documents because they, and not this description, define your rights as holders of the notes. A copy of the Indenture is available upon request
as described under Where You Can Find More Information.
For purposes of this Description of the Registered
Notes, the terms AK Steel, we, us and our mean AK Steel Corporation and its successors under the Indenture, excluding its subsidiaries and parent, and the term AK Holding means AK
Steel Holding Corporation and its successors under the Indenture, excluding its subsidiaries.
General
The notes are secured unsubordinated obligations of AK Steel, and will mature on December 1, 2018. AK Steel initially issued $350.0
million in aggregate principal amount of original notes on November 20, 2012 (the initial notes) and subsequently issued an additional $30.0 million in aggregate principal amount of original notes on June 24, 2013 (the
add-on notes). AK Steel will issue the registered notes in exchange for original notes in an aggregate principal amount of up to $380.0 million. AK Steel may, without the consent of the Holders of the notes, issue additional notes (the
Additional Notes) subject to compliance with the provision described under Certain CovenantsLimitation on Liens,
provided
that if the Additional Notes are not fungible with the notes for U.S. federal income
tax purposes, the Additional Notes will have a separate CUSIP number. None of these Additional Notes may be issued if an Event of Default (as defined under the subheading Events of Default) has occurred and is continuing with
respect to the notes. The notes and any Additional Notes subsequently issued would be treated as a single class for all purposes under the Indenture.
Each note will bear interest at the rate of 8.750% per annum from the most recent interest payment date to which interest has been paid on the notes. Interest on the notes will be payable on
June 1 and December 1 of each year beginning on December 1, 2013. Interest will be paid to Holders of record at the close of business on May 15 or November 15 immediately preceding the interest payment date. Interest will be
computed on the basis of a 360-day year of twelve 30-day months on a U.S. corporate bond basis. Unless the context requires otherwise, all references herein to interest include any additional interest payable pursuant to the Registration
Rights Agreements referred to under The Exchange Offer.
The notes will be payable both as to principal and
interest at the office or agency of AK Steel. Initially, the paying agent office of the Trustee will serve as such office.
The notes will not be entitled to the benefit of any sinking fund.
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Change of Control
AK Steel must commence, within 30 days of the occurrence of a Change of Control Repurchase Event, and consummate an Offer to Purchase for all notes then outstanding, at a purchase price equal to 101% of
their principal amount, plus accrued interest, if any, to the Payment Date.
There can be no assurance that AK Steel will have
sufficient funds available at the time of any Change of Control Repurchase Event to make any debt payment (including repurchases of notes) required by the foregoing covenant, as well as any other repayments pursuant to covenants that may be
contained in loan facilities or other securities of AK Steel that might be outstanding at the time.
AK Steel will not be
required to make an Offer to Purchase upon the occurrence of a Change of Control Repurchase Event if a third party makes an offer to purchase the notes in the manner, at the times and price, and otherwise in compliance with the requirements of the
Indenture applicable to an Offer to Purchase for a Change of Control Repurchase Event, and purchases all notes validly tendered and not withdrawn in such offer to purchase.
Notwithstanding anything to the contrary herein, an Offer to Purchase upon the occurrence of a Change of Control Repurchase Event may be made in advance of a Change of Control, conditional upon such
Change of Control Repurchase Event, if a definitive agreement is in place for the Change of Control at the time of making the Offer to Purchase pursuant to the Change of Control Repurchase Event.
The definition of Change of Control includes a phrase relating to the direct or indirect sale, transfer, conveyance or other disposition
of all or substantially all of the properties or assets of AK Steel and its Subsidiaries, taken as a whole. There is no precise, established definition of the phrase substantially all under applicable law. Accordingly, the
ability of a Holder of the notes to require AK Steel to purchase its notes as a result of the sale, transfer, conveyance or other disposition of less than all of the assets of AK Steel and its Subsidiaries may be uncertain.
Holders may not be able to require us to purchase their notes in certain circumstances involving a significant change in the composition
of the Board of Directors, including a proxy contest where the Board of Directors does not endorse the dissident slate of directors but approves them as continuing directors. In this regard, a decision of the Delaware Chancery Court (not
involving our company or our securities) considered a change of control redemption provision of an indenture governing publicly traded debt securities substantially similar to the change of control described in clause (4) of the definition of
Change of Control. In its decision, the court noted that a board of directors may approve a dissident shareholders nominees solely for purposes of such an indenture,
provided
the board of directors determines in good faith
that the election of the dissident nominees would not be materially adverse to the interests of the corporation or its stockholders (without taking into consideration the interests of the holders of debt securities in making this determination).
Optional Redemption
At any time prior to December 1, 2015, we may redeem the notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes redeemed plus the Applicable Premium,
plus accrued and unpaid interest to the redemption date.
Applicable Premium means, with respect to any note on
any redemption date, the greater of (1) 1.0% of the principal amount of such note and (2) the excess, if any of (a) the present value at such redemption date of (i) the redemption price of such note at December 1, 2015 (such
redemption price set forth in the table below), plus (ii) all required interest payments due on such note through December 1, 2015 (excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the
Treasury Rate as of such redemption date plus 50 basis points; over (b) the then outstanding principal amount of such note.
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Treasury Rate means, as of any redemption date, the yield to maturity as of such
redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two business days prior to the
redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to December 1, 2015;
provided
,
however
, that
if the period from the redemption date to December 1, 2015, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
We may redeem the notes, in whole or in part, at any time on or after December 1, 2015, at the redemption price for the notes
(expressed as a percentage of principal amount) set forth below, plus accrued and unpaid interest to the redemption date, if redeemed during the twelve-month period commencing on December 1 of the years indicated below:
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Year
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Redemption
Price
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2015
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104.375
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%
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2016
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102.188
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%
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2017 and thereafter
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100.000
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%
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In addition, at any time prior to December 1, 2015, we may redeem up to 35% of the principal amount
of the notes (including any Additional Notes) with the net cash proceeds of one or more sales of AK Holdings common stock (to the extent proceeds are contributed to us as equity) at a redemption price (expressed as a percentage of principal
amount) of 108.750%, plus accrued and unpaid interest to the redemption date;
provided
that at least 65% of the aggregate principal amount of notes originally issued on the Closing Date remains outstanding after each such redemption and
notice of any such redemption is mailed within 60 days of each such sale of common stock.
We will give not less than 30
days nor (except in connection with the satisfaction and discharge or defeasance of the Indenture) more than 60 days notice of any redemption. If less than all of the notes are to be redeemed, subject to DTC procedures, selection of the
notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the notes are listed, or, if the notes are not listed on a national securities exchange, by lot or
by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate. However, no note of $2,000 in principal amount or less shall be redeemed in part. If any note is to be redeemed in part only, the notice of redemption
relating to such note will state the portion of the principal amount to be redeemed. A new note in principal amount equal to the unredeemed portion will be issued upon cancellation of the original note.
We may at any time and from time to time purchase notes in the open market, by tender offer, through privately negotiated transactions or
otherwise.
Guarantees
Payment of the principal of, premium, if any, and interest on the notes will be fully and unconditionally guaranteed on an unsecured unsubordinated basis by AK Holding, our direct parent.
In addition, we may be required to cause certain Subsidiaries to Guarantee the notes pursuant to the provision described under
Certain CovenantsLimitation on Subsidiary Debt. Any such Guarantee will be released upon the release or discharge (other than a discharge through payment thereon) of the Indebtedness of such Subsidiary which resulted in the
obligation to Guarantee the notes, the disposition of capital stock in compliance with the Indenture of such Subsidiary such that it no longer is a Subsidiary of AK Holding or upon defeasance or satisfaction and discharge of the notes. Finally, we
may choose to cause any Subsidiary to Guarantee the notes and may cause such Note Guarantee to be released at any time,
provided
that after giving effect to such release, we would be in compliance with the provision described under
Certain CovenantsLimitation on Subsidiary Debt.
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Security
General
The notes are and any future Subsidiary Guarantees will be,
secured by a first priority Lien (subject to certain exceptions and permitted liens specified in the applicable Security Documents) on real property, plant and equipment (other than Excluded Property) that are owned or hereafter acquired by AK Steel
and by any future Subsidiary Guarantors (the Notes Collateral).
If (1) any real property, plant or equipment
(other than Excluded Property) is acquired by AK Steel or a Subsidiary Guarantor that is not automatically subject to a perfected security interest under the Security Documents, (2) any real property, plant or equipment which was Excluded
Property ceases to be Excluded Property or (3) any Subsidiary becomes a Subsidiary Guarantor, then AK Steel or such Subsidiary Guarantor will, as soon as reasonably practicable after such propertys acquisition or it no longer being
Excluded Property or such Subsidiary becoming a Subsidiary Guarantor, provide security over such property (or, in the case of a new Subsidiary Guarantor, provide security over all of its assets constituting Notes Collateral except Excluded Property)
in favor of the Collateral Agent and deliver certain applicable documents to the Collateral Agent, including, in the case of real property, title insurance, surveys and opinions in respect thereof to the extent required in the Indenture and the
Security Documents.
The notes and the Note Guarantees will not be secured by the ABL Collateral and will effectively rank
junior to all Indebtedness under the Credit Agreement to the extent of the value of such assets and may be effectively junior to other permitted liens on the Notes Collateral.
The Notes Collateral does not include any of the following (collectively, Excluded Property):
(i) all of AK Steels and the Subsidiary Guarantors right, title and interest in any leasehold interest in any real property (whether held on the date of the indenture or acquired hereafter);
(ii) any lease, permit, license, contract, property rights or agreement to which AK Steel or any Subsidiary
Guarantor is a party or any of its rights or interests thereunder, or any assets owned by AK Steel or any Subsidiary Guarantor subject to any such lease, permit, license, contract, property rights or agreement, if and for so long as the grant of
such security interest shall constitute or result in (a) the abandonment, invalidation or unenforceability of any right, title or interest of AK Steel or any Subsidiary Guarantor therein or (b) in a breach or termination pursuant to the
terms of, or a default under, any such lease, permit, license, contract, property rights or agreement that is not rendered unenforceable or otherwise deemed ineffective by the UCC or any other applicable law;
(iii) fixed or capital assets owned by AK Steel or any Subsidiary Guarantor that are subject to a Lien described in clause
(5) under Certain CovenantsLimitation on Liens) if the contractual obligation pursuant to which such Lien is granted (or in the document providing for such capital lease) prohibits the creation of any other Lien on such
fixed or capital assets;
(iv) any property or assets, the pledge of which would require governmental consent,
approval, license or authorization (in each case, only to the extent such requirement is not rendered ineffective by any applicable law, including the UCC); and
(v) certain other exceptions described in the Security Documents.
In addition,
pursuant to the Security Documents, AK Steel is not required to take steps to perfect security interests in certain assets, including entering into and recording mortgages of any owned real property (together with any improvements thereon) with a
greater of book or fair market value below $10.0 million and vehicles.
It is understood and agreed that the Notes Collateral
does not include any ABL Collateral.
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AK Steel, AK Holding and the Subsidiary Guarantors will be able to incur additional
indebtedness in the future that could share in the Notes Collateral on a
pari passu
basis (such obligations, Parity Lien Obligations). The amount of such indebtedness will be limited by the covenant disclosed under
Certain CovenantsLimitation on Liens. Under certain circumstances, the amount of such additional indebtedness could be significant.
Security Documents
On or after the Original Issue Date, AK Steel
and the Collateral Agent entered into one or more Security Documents defining the terms of the security interests that secure the notes and the Note Guarantees and other future Parity Lien Obligations. These security interests secure the payment and
performance when due of all of the Obligations of AK Steel and the Subsidiary Guarantors under the Parity Lien Obligations, including the notes, the Indenture, the Note Guarantees and the Security Documents, as provided in the Security Documents.
Subject to the terms of the Security Documents, AK Steel and the Subsidiary Guarantors have the right to remain in possession
and retain exclusive control of the Notes Collateral (other than certain cash proceeds of the Notes Collateral that may be required to be deposited with the Collateral Agent in accordance with the provisions of the Security Documents and other than
as set forth in the Security Documents), to freely operate the Notes Collateral and to collect, invest and dispose of any income therefrom.
The administrative agent under the Credit Agreement and the Collateral Agent entered into a customary collateral access agreement giving the secured parties under the Credit Agreement the ability to enter
and use the Notes Collateral under certain circumstances.
Collateral Trust Agreement
General
On the Original Issue Date, AK Steel, the Trustee, and the Collateral Agent entered into the Collateral Trust Agreement. The Collateral
Trust Agreement sets forth the terms on which the Collateral Agent (directly or through co-trustees or agents) will accept, hold, administer, enforce and distribute the proceeds of all Liens on the Notes Collateral held by it in trust for the
benefit of Holders of the notes and all other future Parity Lien Obligations. The agent or other representative of the holders of any series of future Debt (together with the Trustee, the Authorized Representatives) intended to
constitute Parity Lien Obligations will be required to execute a joinder to the Collateral Trust Agreement in order to confirm the agreement of the applicable secured parties to be bound by the terms thereof.
Equal and Ratable Sharing of Collateral
Pursuant to the Collateral Trust Agreement, each Authorized Representative (on behalf of itself and each holder of Obligations that it represents) acknowledged and agreed that, pursuant to the Security
Documents, the security interest granted to the Collateral Agent under the Security Documents, shall for all purposes and at all times secure the Obligations in respect of the notes, the Note Guarantee, and any other Parity Lien Obligations on an
equal and ratable basis.
Enforcement of Liens; Voting
The Collateral Trust Agreement provides that if an event of default shall have occurred and be continuing under the Indenture or any
Parity Lien Obligation, and if the Collateral Agent shall have received a written direction from the Applicable Authorized Representative, unless inconsistent with applicable law, (a) the Collateral Agent shall have the right and power to
institute and maintain such suits and proceedings as it may deem appropriate to protect and enforce the rights vested in it by the Collateral Trust Agreement and each Security Document and (b) the Applicable Authorized Representative shall have
the right, by an instrument in
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writing executed and delivered to the Collateral Agent, to direct the time, method and place of conducting any such proceeding, or of exercising any trust or power conferred on the Collateral
Agent, or for the appointment of a receiver, or for the taking of any action or remedial action authorized by the Collateral Trust Agreement. The Trustee is the Applicable Authorized Representative, and the Trustee thereby will instruct the
Collateral Agent to take such action against the Notes Collateral as the Trustee may determine (or will follow the direction of the holders of a majority in principal amount of the outstanding notes in establishing such action).
The right of the Collateral Agent to repossess and dispose of the Notes Collateral upon the occurrence of an Event of Default under the
Indenture:
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in the case of Notes Collateral securing Liens permitted under the covenant described under Certain CovenantsLimitation on
Liens, is subject to applicable law and the terms of agreements governing such Liens;
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with respect to any Notes Collateral, is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy case were to be commenced by
or against AK Steel or any Subsidiary Guarantor prior to the Collateral Agent having repossessed and disposed of the Notes Collateral; and
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in the case of real property Notes Collateral, could also be significantly impaired by restrictions under state law.
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Order of Application of Proceeds of Collateral
Any proceeds of any Notes Collateral foreclosed upon or otherwise realized upon pursuant to the Security Documents following and during the continuance of an Event of Default will be applied in the
following order:
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first, to the Collateral Agent to pay unpaid fees of the Collateral Agent and any costs and expenses due to the Collateral Agent in connection with the
foreclosure or realization of such Notes Collateral;
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second, to the Trustee and each other Authorized Representative (if any), equally and ratably (in the same proportion that such unpaid Parity Lien
Obligations of the Trustee or such other Authorized Representative, as applicable, bears to all unpaid Parity Lien Obligations on the relevant distribution date) for application to the payment in full of all outstanding Parity Lien Obligations and
other obligations secured by the Notes Collateral (other than obligations secured by the Notes Collateral paid pursuant to the immediately preceding clause and contingent obligations secured by the Notes Collateral) that are then due and payable to
the secured parties (which shall then be applied or held by the Trustee and each such other Authorized Representative in such order as may be provided in the applicable indenture or other instrument governing such Debt); and
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finally, in the case of any surplus, to AK Steel or the Subsidiary Guarantors that pledged such Notes Collateral, or its successors or assigns.
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The application of proceeds provisions set forth immediately above are intended for the benefit of, and
will be enforceable as a third party beneficiary by, each present and future holder of Parity Lien Obligations, the Trustee, each other present and future Authorized Representative and the Collateral Agent.
AK Steel did not conduct appraisals of the Notes Collateral in connection with the offering of the notes. The book value of the Notes
Collateral as of March 31, 2013 was approximately $1,475.1 million. Book value should not be considered a proxy for fair market value, and the amount realized in respect of the Notes Collateral in the event of a liquidation will depend upon
market and economic conditions, the availability of buyers and similar factors. In addition, the fact that other Persons may have Liens senior to the Liens securing the notes in respect of Notes Collateral could have a material adverse effect on the
amount that would be realized upon a liquidation of the Notes Collateral. Accordingly, there can be no assurance that proceeds of any sale of the Notes Collateral pursuant to the Indenture and the related Security Documents following an Event of
Default would be sufficient to satisfy, or would not be substantially less than, amounts due under the notes. See Risk FactorsRisks Relating to the
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NotesThe liens securing the notes will provide holders of the notes with a secured claim only to the extent of the value of the assets that have been granted as security for the notes and
we may be able to incur additional secured indebtedness. If the proceeds of any of the Notes Collateral were not sufficient to repay all amounts due on the notes, the Holders of the notes (to the extent not repaid from the proceeds of the sale
of the Notes Collateral) would have only an unsecured claim against the remaining assets of AK Steel and the Subsidiary Guarantor. By its nature, some or all of the Notes Collateral will be illiquid and may have no readily ascertainable market
value. Likewise, there can be no assurance that the Notes Collateral will be saleable, or, if saleable, that there will not be substantial delays in its liquidation. To the extent that Liens, rights or easements granted to third parties encumber
assets located on property owned by AK Steel or the Subsidiary Guarantor, including the Notes Collateral, such third parties have or may exercise rights and remedies with respect to the property subject to such Liens that could adversely affect the
value of the Notes Collateral and the ability of the Trustee or the Holders of the notes to realize or foreclose on Notes Collateral.
Release of Liens
The Liens on the Notes Collateral securing the notes and the Note Guarantees will be automatically released:
(1) upon payment in full of principal, interest and all other Obligations on the notes or satisfaction and discharge of
the Indenture or defeasance thereof (including covenant defeasance);
(2) solely with respect of any class of
Parity Lien Obligations in accordance with the terms thereof;
(3) upon release of a Note Guarantee (with
respect to the Liens securing such Note Guarantee granted by such Subsidiary Guarantor);
(4) in connection
with any disposition of Notes Collateral to any Person other than AK Steel or any Subsidiary Guarantor (but excluding any transaction subject to the covenant described under Certain CovenantsConsolidation, Merger and Sale of
Assets where the recipient becomes an obligor) that is permitted by the Indenture (with respect to the Lien on such Notes Collateral);
(5) in whole or in part, with the consent of the Holders of the requisite percentage of notes in accordance with the provisions described under the caption Modification and Waiver; and
(6) with respect to any portion of the Notes Collateral, if such portion becomes Excluded Property.
Each of the releases described in clauses (1), (2) and (3) shall be effected automatically without the consent of
the Holders or any action on the part of the Trustee or the Collateral Agent. Upon compliance by AK Steel with the conditions precedent required by the Indenture, the Trustee or the Collateral Agent shall promptly cause the applicable Notes
Collateral to be released and re-conveyed to AK Steel.
The Trustee and the Collateral Agent will, promptly upon the request
of AK Steel, do all reasonable things, presently or in the future, to effect and evidence the release of the security interests and liens upon the satisfaction of the conditions for such release described herein.
In addition, at the request of AK Steel or the applicable Subsidiary Guarantor, as the case may be:
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if any part of the Notes Collateral is subject to any Lien permitted under the covenant described under Certain CovenantsLimitation
on Liens that is senior to the Liens securing the Notes Collateral as a matter of law, the Collateral Agent will be authorized to execute any document evidencing such subordination; and
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if any part of the Notes Collateral is secured by a Lien of the type described in clause (5) under Certain CovenantsLimitation
on Liens, and the terms of the Lien prohibit the existence of a junior Lien on the applicable property, the Collateral Agent will be authorized to release the Lien on such
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Notes Collateral and execute any document evidencing such release;
provided
, that immediately upon the ineffectiveness, lapse or termination of any such restriction, AK Steel or the
applicable Subsidiary Guarantor, as the case may be, will take all necessary actions in order to secure the Notes Collateral subject to such Permitted Lien in the same manner upon which it was secured prior to the imposition of the Permitted Lien.
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To the extent applicable, AK Steel will comply with Section 314(d) of the Trust Indenture Act,
relating to the release of property and to the substitution therefor of any property to be pledged as collateral for the notes. Any certificate or opinion required by Section 314(d) of the Trust Indenture Act may be made by an officer of AK
Steel except in cases where Section 314(d) requires that such certificate or opinion be made by an independent engineer, appraiser or other expert. Notwithstanding anything to the contrary herein, AK Steel and the Subsidiary Guarantors will not
be required to comply with all or any portion of Section 314(d) of the Trust Indenture Act if they determine, in good faith based on advice of outside counsel, that under the terms of that section and/or any interpretation or guidance as to the
meaning thereof of the SEC and its staff, including no action letters or exemptive orders, all or any portion of Section 314(d) of the Trust Indenture Act is inapplicable to the released Notes Collateral. Without limiting the
generality of the foregoing, certain no-action letters issued by the SEC have permitted an indenture qualified under the Trust Indenture Act to contain provisions permitting the release of collateral from Liens under such indenture in the ordinary
course of an issuers business without requiring the issuer to provide certificates and other documents under Section 314(d) of the Trust Indenture Act. In addition, under interpretations provided by the SEC, to the extent that a release
of a Lien is made without the need for consent by the noteholders of the notes or the Trustee, the provisions of Section 314(d) may be inapplicable to the release. The Indenture generally permits the disposition of assets in the ordinary course
of business as set forth under the definition of Notes Collateral Asset Sale.
As used above:
Applicable Authorized Representative means, until the occurrence of the Non-Controlling Authorized Representative Enforcement
Date, the Authorized Representative of a class of Parity Lien Obligations secured by valid and perfected Liens on such Notes Collateral, the aggregate principal amount of which exceeds the aggregate principal amount of secured obligations of any
other class of Parity Lien Obligations secured by valid and perfected Liens on such Notes Collateral. Following the Non-Controlling Authorized Representative Date, the Applicable Authorized Representative shall be the Major Non-Controlling
Authorized Representative.
Major Non-Controlling Authorized Representative means the Authorized
Representative of a class of Parity Lien Obligations (other than the class of Parity Lien Obligations the Authorized Representative of which is the Applicable Authorized Representative), the aggregate principal amount of which exceeds the aggregate
principal amount of secured obligations of any other class of Parity Lien Obligations (other than the class of Parity Lien Obligations the Authorized Representative of which is the Applicable Authorized Representative).
Non-Controlling Authorized Representative Enforcement Date shall mean the date that is 180 days (throughout which 180-day
period such Authorized Representative was the Major Non-Controlling Authorized Representative) after the occurrence of both (a) an Event of Default (under and as defined in the applicable secured debt document) and (b) the Collateral
Agents and each other Authorized Representatives receipt of written notice from such Authorized Representative certifying that (i) such Authorized Representative is the Major Non-Controlling Authorized Representative with respect to
the Notes Collateral and that an Event of Default has occurred and is continuing and (ii) the secured obligations with respect to which such Authorized Representative is the Authorized Representative are currently due and payable in full
(whether as a result of acceleration thereof or otherwise) in accordance with the terms of the applicable documents;
provided
that the Non-Controlling Authorized Representative Enforcement Date shall be stayed and shall not occur (and shall
be deemed not to have occurred for all purposes) with respect to the Notes Collateral (A) at any time the Collateral Agent has commenced and is diligently pursuing any enforcement action with respect to the Notes Collateral (or the Applicable
Authorized Representative shall have instructed the Collateral Agent to do the same) or (B) at any time the grantor that has granted a security interest in such Notes Collateral is then a debtor under or with respect to (or otherwise subject
to) any bankruptcy proceeding.
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Disposition of Collateral; Collateral Proceeds Account
Pursuant to the Indenture and the Security Documents, AK Steel and the Subsidiary Guarantors will deposit in a segregated cash collateral
account under the control of the Collateral Agent (an Asset Sales Proceeds Account): (l) cash proceeds from any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions) of Notes
Collateral having an aggregate fair market value of more than $5.0 million, (2) any cash proceeds in excess of $5.0 million of any Notes Collateral taken by eminent domain, expropriation or other similar governmental taking and (3) cash
proceeds in excess of $5.0 million of insurance upon any part of the Notes Collateral. The Collateral Agent will have a perfected security interest in and control of the account for the benefit of the Trustee and the noteholders and the holders of
other Parity Lien Obligations. Proceeds of the account may only be released to AK Steel or the applicable Subsidiary Guarantor for use as permitted by clause (3) or (4) described under Certain CovenantsLimitation on Notes
Collateral Asset Sales. AK Steel and the Subsidiary Guarantors will be required to comply with the requirements described above with respect to dispositions of Notes Collateral before they may use the moneys in the Asset Sales Proceeds
Account.
No Impairment of the Security Interests
Neither AK Steel nor any of its Restricted Subsidiaries is permitted to take any action, or knowingly omit to take any action, which action or omission could reasonably be expected to have the result of
materially impairing the security interest with respect to the Notes Collateral for the benefit of the Trustee and the noteholders.
The Indenture provides that any release of Notes Collateral in accordance with the provisions of the Indenture and the Security Documents will not be deemed to impair the security under the Indenture, and
that any engineer or appraiser may rely on such provision in delivering a certificate requesting release so long as all other provisions of the Indenture with respect to such release have been complied with.
Certain Covenants
Limitation on
Liens
The Indenture provides that AK Holding will not, and will not permit any of its Subsidiaries to, create, incur,
issue, assume or Guarantee any Indebtedness secured by a Lien upon (a) any Notes Collateral, (b) any Principal Property of AK Steel or any Principal Property of a Subsidiary of AK Steel or (c) any shares of stock or other equity
interests or Indebtedness of any Subsidiary of AK Steel that owns a Principal Property (whether such Principal Property, shares of stock or other equity interests or Indebtedness is now existing or owned or hereafter created or acquired) or any
shares of stock or other equity interests or Indebtedness of AK Steel, except, in the case of any assets not constituting Notes Collateral, if the notes are secured equally and ratably with, or at AK Holdings option, prior to such
Indebtedness, so long as such Indebtedness shall be so secured.
The foregoing restriction shall not apply to, and there shall
be excluded from Indebtedness in any computation under such restriction, Indebtedness secured by:
(1) Liens on
any property or assets existing at the time of the acquisition thereof by AK Steel or any of its Subsidiaries and not incurred in contemplation of such acquisition;
(2) Liens on property or assets of a Person existing at the time such Person is merged into or consolidated with AK Steel
or any of its Subsidiaries or at the time of a sale, lease or other disposition of the properties and assets of such Person (or a division thereof) as an entirety or substantially as an entirety to AK Steel or any of its Subsidiaries;
provided
that any such Lien does not extend to any Principal Property owned by AK Steel or any of its Subsidiaries immediately prior to such merger, consolidation, sale, lease or disposition and not incurred in contemplation of such
acquisition;
(3) Liens on property or assets of a Person existing at the time such Person becomes a Subsidiary
of AK Steel and not incurred in contemplation of such acquisition;
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(4) Liens in favor of AK Steel or any Subsidiary Guarantor;
(5) Liens on property or assets (including shares of Capital Stock or Indebtedness of any Subsidiary formed to acquire,
construct, develop or improve such property) to secure all or part of the cost of acquisition, construction, development or improvement of such property, or to secure Indebtedness incurred to provide funds for any such purpose;
provided
that
the commitment of the creditor to extend the credit secured by any such Lien shall have been obtained no later than 360 days after the later of (a) the completion of the acquisition, construction, development or improvement of such property or
assets or (b) the placing in operation of such property or assets;
(6) Liens in favor of the United
States of America or any State thereof, or any department, agency or instrumentality or political subdivision thereof, to secure partial, progress, advance or other payments;
(7) Liens in favor of the notes (other than Additional Notes) and the Note Guarantees; and
(8) Liens existing on the date of the Indenture or any extension, renewal, replacement or refunding of any Indebtedness
secured by a Lien existing on the date of the Indenture or referred to in clauses (1), (2), (3), (5) or (7);
provided
that any such extension, renewal, replacement or refunding of such Indebtedness shall be created within 360 days of
repaying the Indebtedness secured by the Lien referred to in clauses (1), (2), (3), (5) or (7) and the principal amount of the Indebtedness secured thereby and not otherwise authorized by clauses (1), (2), (3), (5) or (7) shall
not exceed the principal amount of Indebtedness plus any premium or fee or accrued and unpaid interest payable in connection with any such extension, renewal, replacement or refunding, so secured at the time of such extension, renewal, replacement
or refunding.
Notwithstanding the restrictions described above, AK Holding and any of its Subsidiaries may create, incur,
issue, assume or Guarantee Indebtedness secured by Liens if at the time of such creation, incurrence, issuance, assumption or Guarantee, after giving effect thereto and to the retirement of any Indebtedness which is concurrently being retired, the
aggregate amount of all such Indebtedness secured by Liens which would otherwise be subject to such restrictions (other than any Indebtedness secured by Liens permitted as described in clauses (1) through (8) of the immediately preceding
paragraph) plus the aggregate amount (without duplication) of (x) all Non-Guarantor Subsidiary Debt (other than Non-Guarantor Subsidiary Debt described in clauses (1) through (5) of the first sentence of the second paragraph under
Limitation on Subsidiary Debt below) and (y) all Attributable Debt of AK Steel and any of its Subsidiaries in respect of Sale and Leaseback Transactions (with the exception of such transactions which are permitted under
clauses (1) through (4) of the first sentence of the first paragraph under Limitation on Sale and Leaseback Transactions below) does not exceed an amount equal to (x) 15% of Consolidated Net Tangible Assets less
(y) the aggregate principal amount of the initial notes outstanding at such time and the amount of any Indebtedness incurred to extend, renew, replace or refund the initial notes secured by Liens pursuant to clause (8) above.
In addition, AK Holding will not, and will not permit any of its Subsidiaries to create, incur, issue, assume or Guarantee any
Indebtedness secured by a Lien on the ABL Collateral that is subordinated or junior to the Liens on the ABL Collateral securing the Bank Obligations, unless the notes are secured by such ABL Collateral equally and ratably with, or at AK Steels
option, prior to such Indebtedness.
Limitation on Subsidiary Debt
The Indenture provides that AK Steel will not permit any of its Restricted Subsidiaries that is not a Guarantor to create, assume, incur,
Guarantee or otherwise become liable for or suffer to exist any Indebtedness (any Indebtedness of a non-Guarantor Subsidiary of AK Steel, Non-Guarantor Subsidiary Debt), without Guaranteeing the payment of the principal of, premium, if
any, and interest on the notes on an unsubordinated basis.
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The foregoing restriction shall not apply to, and there shall be excluded from Indebtedness
in any computation under such restriction, Non-Guarantor Subsidiary Debt constituting:
(1) Indebtedness of a
Person existing at the time such Person is merged into or consolidated with any Restricted Subsidiary of AK Steel or at the time of a sale, lease or other disposition of the properties and assets of such Person (or a division thereof) as an entirety
or substantially as an entirety to any Restricted Subsidiary of AK Steel and is assumed by such Restricted Subsidiary;
provided
that any Indebtedness was not incurred in contemplation thereof and is not Guaranteed by any other Subsidiary of
AK Steel;
(2) Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary of AK
Steel;
provided
that any Indebtedness was not incurred in contemplation thereof;
(3) Indebtedness owed
to AK Steel or any Guarantor;
(4) Indebtedness outstanding on the date of the Indenture or any extension,
renewal, replacement or refunding of any Indebtedness existing on the date of the Indenture or referred to in clauses (1), (2) or (3);
provided
that any such extension, renewal, replacement or refunding of such Indebtedness shall be
created within 360 days of repaying the Indebtedness referred to in this clause or clauses (1), (2) or (3) above and the principal amount of the Indebtedness shall not exceed the principal amount of Indebtedness plus any premium or fee
payable in connection with any such extension, renewal, replacement or refunding, so secured at the time of such extension, renewal, replacement or refunding; and
(5) Indebtedness in respect of a Receivables Facility.
Notwithstanding the restrictions described above, AK Steel and any of its Restricted Subsidiaries may create, incur, issue, assume or
Guarantee Non-Guarantor Subsidiary Debt, without Guaranteeing the notes, if at the time of such creation, incurrence, issuance, assumption or Guarantee, after giving effect thereto and to the retirement of any Indebtedness which is concurrently
being retired, the aggregate amount of all such Non-Guarantor Subsidiary Debt which would otherwise be subject to such restrictions (other than Non-Guarantor Subsidiary Debt which is described in clauses (1) through (5) of the immediately
preceding paragraph) plus the aggregate amount (without duplication) of (x) all Indebtedness secured by Liens (not including any such Indebtedness secured by Liens described in clauses (1) through (8) of the second paragraph under the
heading Limitation on Liens) and (y) all Attributable Debt of AK Steel and any of its Subsidiaries in respect of Sale and Leaseback Transactions (with the exception of such transactions which are permitted under clauses
(1) through (4) of the first sentence of the first paragraph under Limitation on Sale and Leaseback Transactions below) does not exceed an amount equal to (x) 15% of Consolidated Net Tangible Assets less (y) the
aggregate principal amount of the initial notes outstanding at such time and the amount of any Indebtedness incurred to extend, renew, replace or refund the initial notes secured by Liens pursuant to clause (8) of the second paragraph of the
provision Limitation on Liens.
Limitation on Sale and Leaseback Transactions
The Indenture provides that AK Steel will not, and will not permit any of its Subsidiaries to, enter into any Sale and Leaseback
Transaction unless:
(1) the Sale and Leaseback Transaction is solely with AK Steel or any of its Subsidiaries;
(2) the lease is for a period not in excess of 24 months, including renewals;
(3) AK Steel or such Subsidiary would (at the time of entering into such arrangement) be entitled as described in clauses
(1) through (8) of the second paragraph under the heading Limitation on Liens, to create, incur, issue, assume or guarantee Indebtedness secured by a Lien on such property or assets in the amount of the Attributable Debt
arising from such Sale and Leaseback Transaction;
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(4) AK Steel or such Subsidiary, within 360 days after the sale of property
or assets in connection with such Sale and Leaseback Transaction is completed, applies an amount equal to the greater of (A) the net proceeds of the sale of such Principal Property or (B) the fair market value of such Principal Property to
(i) the retirement of notes, other Funded Debt of AK Steel ranking on a parity with the notes or Funded Debt of a Subsidiary of AK Steel or (ii) the purchase of property or assets used or useful in its business or to the retirement of
long-term indebtedness; or
(5) the Attributable Debt of AK Steel and its Subsidiary in respect of such Sale
and Leaseback Transaction and all other Sale and Leaseback Transactions entered into after the Closing Date (other than any such Sale and Leaseback Transaction as would be permitted as described in clauses (1) through (4) of this
sentence), plus the aggregate principal amount (without duplication) of (x) Indebtedness secured by Liens then outstanding (not including any such Indebtedness secured by Liens described in clauses (1) through (7) of the second
paragraph under the heading Limitation on Liens) which do not equally and ratably secure the notes (or secure notes on a basis that is prior to other Indebtedness secured thereby) and (y) Non-Guarantor Subsidiary Debt (with
the exception of Non-Guarantor Subsidiary Debt which is described in clauses (1) through (5) of the second paragraph under the heading Limitation on Subsidiary Debt), would not exceed an amount equal to (x) 15% of
Consolidated Net Tangible Assets less (y) the aggregate principal amount of the initial notes outstanding at such time and the amount of any Indebtedness incurred to extend, renew, replace or refund the initial notes secured by Liens pursuant
to clause (8) of the second paragraph of the provision Limitation on Liens.
Limitation on Notes Collateral Asset
Sales
The Indenture provides that AK Holding will not, and will not permit any Restricted Subsidiary to, make any
Notes Collateral Asset Sale unless the following conditions are met:
(1) The Notes Collateral Asset Sale is
for at least fair market value (such fair market value to be determined on the date of contractually agreeing to such asset sale), as determined in good faith by the Board of Directors.
(2) At least 75% of the consideration consists of cash or Cash Equivalents or assets described in clause (3) below of
the type constituting Notes Collateral received at closing;
provided
,
however
, the non-cash consideration received is pledged as Notes Collateral under the Security Documents substantially simultaneously with such sale, in accordance
with the requirements set forth in the Indenture. For purposes of this clause (2), (a) the assumption by the purchaser of Indebtedness or other obligations (other than Subordinated Indebtedness) of AK Steel or a Guarantor pursuant to a
customary novation agreement and (b) instruments or securities received from the purchaser that are promptly, but in any event within 30 days of the closing, converted by AK Steel or a Guarantor to cash, to the extent of the cash actually so
received, shall be considered cash received at closing).
(3) Within 365 days after the receipt of any Net Cash
Proceeds from a Notes Collateral Asset Sale, the Net Cash Proceeds may be used (x) to acquire all or substantially all of the assets of a Permitted Business or a majority of the Voting Stock of another Person that thereupon becomes a Restricted
Subsidiary engaged in a Permitted Business, (y) to make capital expenditures or otherwise acquire long-term assets that are to be used in a Permitted Business;
provided
that any assets acquired pursuant to subclauses (x) or
(y) of a type constituting Notes Collateral are pledged as Notes Collateral under the Security Documents substantially simultaneously with such acquisition in accordance with the requirements of the Indenture, or (z) to repay Indebtedness
secured by parity Liens on the Notes Collateral;
provided
that if AK Steel shall so reduce Obligations under Indebtedness secured by parity Liens on the Notes Collateral pursuant to this clause (3), AK Steel will equally and ratably reduce
Obligations under the notes as provided under Optional Redemption, through open market purchases (provided that such purchases are at or above 100% of the principal amount thereof) and/or by making an Offer to Purchase to all Holders of
notes at a purchase price equal to 100% of the principal amount thereof, plus accrued interest to but excluding the date of purchase.
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(4) The Net Cash Proceeds of a Notes Collateral Asset Sale not applied
pursuant to clause (3) within 365 days of the Notes Collateral Asset Sale constitute Excess Proceeds. Excess Proceeds of less than $15.0 million will be carried forward and accumulated. When accumulated Excess Proceeds equals or
exceeds such amount, AK Holding must, within 30 days, make an Offer to Purchase notes having a principal amount equal to
(A) accumulated Excess Proceeds, multiplied by
(B) a fraction
(x) the numerator of which is equal to the outstanding principal amount of the notes and (y) the denominator of which is equal to the outstanding principal amount of the notes and all
pari passu
Indebtedness secured by parity Liens
on the Notes Collateral similarly required to be repaid, redeemed or tendered for in connection with the Notes Collateral Asset Sale, rounded down to the nearest $1,000. The purchase price for the notes will be 100% of the principal amount plus
accrued interest to but excluding the date of purchase. If the Offer to Purchase is for less than all of the aggregate principal amount of the outstanding notes and notes in an aggregate principal amount in excess of the purchase amount are tendered
and not withdrawn pursuant to the offer, AK Holding will purchase notes having an aggregate principal amount equal to the purchase amount on a pro rata basis, with adjustments so that only notes in multiples of $1,000 principal amount will be
purchased;
provided
, that no notes of $2,000 or less may be purchased in part. Upon completion of the Offer to Purchase, Excess Proceeds will be reset at zero, and any Excess Proceeds remaining after consummation of the Offer to Purchase may
be used for any purpose not otherwise prohibited by the Indenture.
Consolidation, Merger and Sale of Assets
The Indenture provides that neither AK Steel nor AK Holding will consolidate with, merge with or into, directly or indirectly, or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets (as an entirety or substantially an entirety in one transaction or a series of related transactions) to, any Person, or permit any Person to
merge with or into it, unless:
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(1)
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it shall be the continuing Person, or the Person (if other than it) formed by such consolidation or into which it is merged or that acquired or leased such property and
assets (the Surviving Person), shall be a corporation organized and validly existing under the laws of the United States of America or any jurisdiction thereof, and shall expressly assume, by a supplemental indenture or other instrument,
executed and delivered to the Trustee, all of its obligations under the Indenture, the notes, the Registration Rights Agreements and the Security Documents;
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(2)
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immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and
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(3)
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it delivers to the Trustee an Officers Certificate and Opinion of Counsel, in each case stating that such consolidation, merger or transfer and such supplemental
indenture or other instrument complies with this provision and that all conditions precedent provided for herein relating to such transaction have been complied with.
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It is understood that AK Holding may merge with or into AK Steel pursuant to the provisions described above. In addition, notwithstanding
the foregoing, AK Steel or AK Holding may transfer its property or assets to a Guarantor.
The Surviving Person will succeed
to, and except in the case of a lease be substituted for, AK Steel or AK Holding, as applicable, under the Indenture and the notes.
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Restrictions on Activities of AK Holding
The Indenture provides that AK Holding (a) shall not engage in any activities or hold any assets other than (i) the issuance of
Capital Stock, (ii) holding 100% of the Capital Stock of AK Steel and debt securities of AK Steel that were held by AK Holding at the date of the Indenture and (iii) those activities incidental to maintaining its status as a public
company, and (b) will not incur any liabilities other than liabilities relating to its Guarantee of the notes, its Guarantee of any other debt of AK Steel, any other Indebtedness it may incur and any other obligations or liabilities incidental
to holding 100% of the Capital Stock of AK Steel and its liabilities incidental to its status as a public company;
provided
, however, that for purposes of this covenant only, the term liabilities shall not include any liability
for the declaration and payment of dividends on any Capital Stock of AK Holding; and
provided further
that if AK Holding merges with or into AK Steel, this covenant shall no longer be applicable.
SEC Reports and Reports to Holders
Whether or not AK Steel is then required to file reports with the SEC, AK Steel shall file with the SEC all such reports and other information as it would be required to file with the SEC by
Section 13(a) or 15(d) under the Exchange Act if it were subject thereto within the time periods specified by the SECs rules and regulations. AK Steel shall supply the Trustee and each Holder who so requests or shall supply to the Trustee
for forwarding to each such Holder, without cost to such Holder, copies of such reports and other information. AK Steel shall be deemed to have complied with this covenant to the extent that AK Holding files all reports and other information
required to be filed with the SEC by Section 13(a) or 15(d) under the Exchange Act relating to AK Holding and its consolidated subsidiaries, including AK Steel.
Events of Default
The Indenture provides that each of the following
constitutes an Event of Default with respect to the notes:
(a) default in the payment of principal of (or
premium, if any, on) any note when the same becomes due and payable at maturity, upon acceleration, redemption or otherwise;
(b) default in the payment of interest (including additional interest) on any note when the same becomes due and payable, and such default continues for a period of 30 days;
(c) AK Steel defaults in the performance of or breaches any other covenant or agreement in the Indenture applicable to the
notes or under the notes (other than a default specified in clause (a) or (b) above) and such default or breach continues for a period of 90 consecutive days (or, in the case of a default in the performance of or breach of the covenant
described under Certain CovenantsSEC Reports and Reports to Holders, such default or breach continues for a period of 120 consecutive days) after written notice by the Trustee or the Holders of 25% or more in aggregate
principal amount of the notes;
(d) there occurs with respect to any issue or issues of Indebtedness of AK
Holding, AK Steel or any Significant Subsidiary having an outstanding principal amount of $75 million or more in the aggregate for all such issues of all such Persons, whether such Indebtedness now exists or shall hereafter be created, (I) an
event of default that has caused the holder thereof to declare such Indebtedness to be due and payable prior to its stated maturity and such Indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled within
30 days of such acceleration and/or (II) the failure to make a principal payment at the final (but not any interim) fixed maturity and such defaulted payment shall not have been made, waived or extended within 30 days of such payment default;
(e) any final judgment or order (not covered by insurance) for the payment of money in excess of $75 million
in the aggregate for all such final judgments or orders against all such Persons (treating any deductibles, self-insurance or retention as not so covered) shall be rendered against AK Holding, AK Steel or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 60 consecutive days following entry of the final judgment or order that causes the aggregate amount for all
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such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed $75 million during which a stay of enforcement of such final judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect;
(f) a court having jurisdiction in the premises
enters a decree or order for (A) relief in respect of AK Holding, AK Steel or any Significant Subsidiary in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (B) appointment of
a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of AK Holding, AK Steel or any Significant Subsidiary or for all or substantially all of the property and assets of AK Holding, AK Steel or any Significant
Subsidiary or (C) the winding-up or liquidation of the affairs of AK Holding, AK Steel or any Significant Subsidiary and, in each case, such decree or order shall remain unstayed and in effect for a period of 60 consecutive days;
(g) AK Holding, AK Steel or any Significant Subsidiary (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (B) consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of AK Holding, AK Steel or any Significant Subsidiary or for all or substantially all of the property and assets of AK Holding, AK Steel or any Significant Subsidiary or
(C) effects any general assignment for the benefit of creditors;
(h) any Guarantor repudiates its
obligations under its Note Guarantee or, except as permitted by the Indenture, any Note Guarantee is determined to be unenforceable or invalid or shall for any reason cease to be in full force and effect; or
(i) with respect to Notes Collateral having a fair market value of $75 million, the Liens created by the Security
Documents shall at any time not constitute a valid and perfected Lien on such Notes Collateral (to the extent perfection by filing, registration, recordation or possession is required by the Indenture or the Security Documents), or, except for
expiration in accordance with its terms or amendment, modification, waiver, termination or release in accordance with the terms of the Indenture, any of the Security Documents shall for whatever reason be terminated or cease to be in full force and
effect, if in either case, such default continues for a period of 30 consecutive days after notice, or the enforceability thereof shall be contested by AK Steel or any Subsidiary Guarantor.
If an Event of Default (other than an Event of Default specified in clause (f) or (g) above that occurs with respect to AK
Steel) occurs and is continuing under the Indenture, the Trustee or the Holders of at least 25% in aggregate principal amount of the notes then outstanding, by written notice to AK Steel (and to the Trustee if such notice is given by the Holders),
may declare the principal of, premium, if any, and accrued interest on the notes to be immediately due and payable. Upon a declaration of acceleration, such principal of, premium, if any, and accrued interest shall be immediately due and payable. In
the event of a declaration of acceleration because an Event of Default set forth in clause (d) above has occurred and is continuing, such declaration of acceleration shall be automatically rescinded and annulled if the event of default
triggering such Event of Default pursuant to clause (d) shall be remedied or cured by AK Holding, AK Steel or the relevant Significant Subsidiary or waived by the holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default specified in clause (f) or (g) above occurs with respect to AK Steel, the principal of, premium, if any, and accrued interest on the notes then outstanding shall automatically
become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of at least a majority in principal amount of the outstanding notes by written notice to AK Steel and to the
Trustee, may waive all past defaults and rescind and annul a declaration of acceleration and its consequences if (x) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the notes that
have become due solely by such declaration of acceleration, have been cured or waived and (y) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. For information as to the waiver of defaults, see
Modification and Waiver.
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The Holders of at least a majority in aggregate principal amount of the outstanding notes
may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or
the Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders of notes not joining in the giving of such direction and may take any other action it
deems proper that is not inconsistent with any such direction received from Holders of notes. A Holder may not pursue any remedy with respect to the Indenture or the notes unless:
(1) the Holder gives the Trustee written notice of a continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of outstanding notes make a written request to the Trustee
to pursue the remedy;
(3) such Holder or Holders offer the Trustee indemnity satisfactory to the Trustee
against any costs, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) during such 60-day period, the Holders of a
majority in aggregate principal amount of the outstanding notes do not give the Trustee a direction that is inconsistent with the request.
However, such limitations do not apply to the right of any Holder of a note to receive payment of the principal of, premium, if any, or interest on, such note or to bring suit for the enforcement of any
such payment, on or after the due date expressed in the notes, which right shall not be impaired or affected without the consent of the Holder.
An officer of AK Steel must certify, on or before a date not more than 90 days after the end of each fiscal year, that a review has been conducted of the activities of AK Steel and its Subsidiaries and AK
Steels and its Subsidiaries performance under the Indenture and that AK Steel has fulfilled all obligations thereunder, or, if there has been a default in the fulfillment of any such obligation, specifying each such default and the
nature and status thereof. AK Steel will also be obligated to notify the Trustee of any default or defaults in the performance of any covenants or agreements under the Indenture.
Satisfaction and Discharge; Defeasance
The Indenture shall be satisfied
and discharged if (i) AK Steel shall deliver to the Trustee all notes then outstanding for cancellation or (ii) all notes not delivered to the Trustee for cancellation shall have become due and payable, are to become due and payable within
one year or are to be called for redemption within one year and AK Steel shall deposit an amount sufficient to pay the principal, premium, if any, and interest to the date of maturity, redemption or deposit (in the case of notes that have become due
and payable),
provided
that in either case AK Steel shall have paid all other sums payable under the Indenture.
Defeasance and
Discharge
The Indenture provides that AK Steel will be deemed to have paid and will be discharged from any and all
obligations in respect of the notes after the deposit referred to below, and the provisions of the Indenture will no longer be in effect with respect to the notes (except for, among other matters, certain obligations to register the transfer or
exchange of the notes, to replace stolen, lost or mutilated notes, to maintain paying agencies and to hold monies for payment in trust) if, among other things:
(A) AK Steel has deposited with the Trustee, in trust, money and/or U.S. Government Obligations that through the payment of interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient without consideration of any reinvestment of such principal and interest, as certified by the chief financial officer of AK Steel in a written certification delivered to the Trustee, to pay the principal of,
premium, if any, and accrued interest on the notes (i) on the stated maturity of such
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payments in accordance with the terms of the Indenture and the notes or (ii) on any earlier Redemption Date pursuant to the terms of the Indenture and the notes;
provided
that AK
Steel has provided the Trustee with irrevocable instructions to redeem all of the outstanding notes on such Redemption Date;
(B) AK Steel has delivered to the Trustee (1) either (x) an Opinion of Counsel to the effect that Holders will not recognize income, gain or loss for federal income tax purposes as a result of
AK Steels exercise of its option under this Defeasance provision and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and
discharge had not occurred, which Opinion of Counsel must be based upon (and accompanied by a copy of) a ruling of the Internal Revenue Service to the same effect unless there has been a change in applicable federal income tax law after the Closing
Date such that a ruling is no longer required or (y) a ruling directed to the Trustee received from the Internal Revenue Service to the same effect as the aforementioned Opinion of Counsel and (2) an Opinion of Counsel to the effect that
the creation of the defeasance trust does not violate the Investment Company Act of 1940; and
(C) immediately
after giving effect to such deposit on a pro forma basis, no Event of Default, or event that after the giving of notice or lapse of time or both would become an Event of Default, and such deposit shall not result in a breach or violation of, or
constitute a default under, any other material agreement or instrument to which AK Steel or any of its Subsidiaries is a party or by which AK Steel or any of its Subsidiaries is bound.
Defeasance of Certain Covenants and Certain Events of Default
The
Indenture further provides that the provisions of the Indenture will no longer be in effect with respect to the provisions of the Indenture described herein under Change of Control, and all the covenants described herein under
Certain Covenants, clauses (c), (d), (e), (h) and (i) under Events of Default, shall be deemed not to be Events of Default, in each case with respect to the notes, upon, among other things, the deposit
with the Trustee, in trust, of money and/or U.S. Government Obligations that through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient without consideration of any
reinvestment of such principal and interest, as certified by the chief financial officer of AK Steel in a written certification delivered to the Trustee, to pay the principal of, premium, if any, and accrued interest on the notes (i) on the
Stated Maturity of such payments in accordance with the terms of the Indenture and the notes or (ii) on any earlier Redemption Date pursuant to the terms of the Indenture and the notes;
provided
that AK Steel has provided the Trustee
with irrevocable instructions to redeem all of the outstanding notes on such Redemption Date, the satisfaction of the provisions described in clauses (B)(2) and (C) of the preceding paragraph and the delivery by AK Steel to the Trustee of an
Opinion of Counsel to the effect that, among other things, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance of certain covenants and Events of Default and will be subject
to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred.
In the event AK Steel exercises its option to omit compliance with certain covenants and provisions of the Indenture with respect to the notes as described in the immediately preceding paragraph and the
notes are declared due and payable because of the occurrence of an Event of Default that remains applicable, the amount of money and/or U.S. Government Obligations on deposit with the Trustee will be sufficient to pay amounts due on the notes at the
time of their Stated Maturity but may not be sufficient to pay amounts due on the notes at the time of the acceleration resulting from such Event of Default. However, AK Steel will remain liable for such payments and AK Holdings Note Guarantee
with respect to such payments will remain in effect.
Modification and Waiver
The Indenture or the Security Documents may be amended, with respect to the notes, without the consent of any Holder, to:
(1) cure any ambiguity, defect or inconsistency in the Indenture,
provided
that such amendments shall not adversely
affect the interests of Holders in any material respect;
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(2) comply with the provisions described under Certain
CovenantsConsolidation, Merger and Sale of Assets;
(3) comply with any requirements of the SEC in
connection with the qualification of the Indenture under the Trust Indenture Act or in order to maintain such qualification;
(4) evidence and provide for the acceptance of appointment by a successor Trustee;
(5) provide for the issuance of Additional Notes;
(6) make any
change that, in the good faith opinion of the board of directors of AK Steel, does not materially and adversely affect the rights of any Holder under the Indenture or the Security Documents;
(7) to conform any provision to the Description of the Notes in the offering memorandum for the original
offering of initial notes; or
(8) to provide for any Guarantee of the notes, to secure the notes or any
Guarantee of the notes or to confirm and evidence the release, termination or discharge of any Guarantee of or Lien securing the notes when such release, termination or discharge is permitted by the Indenture.
In addition, the Security Documents may be amended without any Holders consent to add additional secured creditors holding other
Parity Lien Obligations so long as such obligations (and the Liens securing them) are not prohibited by the Indenture.
Modifications and amendments of the Indenture affecting the notes or the Security Documents may be made with the consent of the Holders
of not less than a majority in aggregate principal amount of the outstanding notes;
provided
,
however
, that no such modification or amendment may, without the consent of each Holder affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of interest on, any note;
(2) reduce the principal amount of, or premium, if any, or interest on, any note;
(3) change the optional redemption dates or optional redemption prices of the notes from that stated under the caption
Optional Redemption;
(4) change the place or currency of payment of principal of, or
premium, if any, or interest on, any note;
(5) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption, on or after the Redemption Date) of any note;
(6) waive a default in the payment of principal of, premium, if any, or interest on the notes;
(7) modify any of the provisions of this Modification and Waiver requiring the consent of a requisite number of Holders, except to increase any percentage requiring consent or to provide that
certain other provisions of the Indenture cannot be modified or waived without the consent of the Holder of each outstanding note;
(8) release any Guarantor from its Note Guarantee, except as provided in the Indenture;
(9) amend, change or modify the obligation of AK Steel to make and consummate an Offer to Purchase under the Change of Control covenant after a Change of Control Repurchase Event has occurred,
including, in each case, amending, changing or modifying any definition relating thereto;
(10) reduce the
percentage or aggregate principal amount of outstanding notes the consent of whose Holders is necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults;
(11) modify or change any provision of the Indenture affecting the ranking of the notes or any Note Guarantee in a manner
adverse to any Holder; or
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(12) make any change in the provisions of the Security Documents dealing
with the application of the proceeds of Notes Collateral from the Lien under the Indenture and the Security Documents with respect to the notes that would adversely affect the Holders.
Without the consent of the Holders of at least two-thirds in aggregate principal amount of the notes then outstanding, no amendment or
waiver may release from the Lien of the Indenture and the Security Documents all or substantially all of the Notes Collateral.
Definitions
Set forth below are defined terms used in the covenants and other provisions of the Indenture insofar as relevant to the
notes. Reference is made to the Indenture for other capitalized terms used in this Description of the Registered Notes for which no definition is provided.
ABL Collateral means (a) all inventory (as defined in the New York UCC), (b) all receivables (meaning, all accounts (as defined in the New York UCC) owned by AK Steel and all other
rights, titles or interests that, in accordance with GAAP, would be included in receivables on its balance sheet (including any such account and/or rights, titles or interests that might be characterized as chattel paper, documents, instruments or
general intangibles under the UCC in any jurisdiction), in each case arising from the sale, lease, exchange or other disposition of inventory, and all of AK Steels rights to any goods, services or other property related to any of the foregoing
and all collateral security and supporting obligations of any kind given by any Person with respect to any of the foregoing), (c) all contracts for sale, lease, exchange or other disposition of inventory, whether or not performed and whether or
not subject to termination upon a contingency or at the option of any party thereto, (d) all documents (as defined in the UCC) covering inventory, (e) each deposit account (as defined in the Credit Agreement)(excluding the Concentration
Account, as defined in the Credit Agreement) in which proceeds of inventory or receivables or ABL Collateral are deposited, (f) all trademarks, servicemarks, trade names and similar intangible property owned or used by AK Steel in its business,
together with the goodwill of the business symbolized thereby and all rights relating thereto,
provided
that the rights of the agent under the Credit Agreement, on behalf of the lenders under the Credit Agreement, shall be limited to the use
of such collateral to manufacture process and sell the inventory, (g) all books and records (including customer lists, credit files, computer programs, printouts and other computer materials and records) of AK Steel pertaining to any of the
collateral, and (h) all other proceeds of the collateral described in the foregoing clauses (a) through (g).
Affiliate means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such Person. For purposes of this definition, control (including, with correlative meanings, the terms controlling, controlled by and under common control with),
as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
Attributable Debt, in respect of any Sale and Leaseback Transaction, means, as of the time of determination, the
total obligation (discounted to present value at the rate per annum equal to the discount rate which would be applicable to a capital lease obligation with like term in accordance with GAAP) of the lessee for rental payments (other than amounts
required to be paid on account of property taxes, maintenance, repairs, insurance, water rates and other items which do not constitute payments for property rights) during the remaining portion of the initial term of the lease included in such Sale
and Leaseback Transaction.
Bank Obligations means all Indebtedness under the Credit Agreement, and all
Obligations in respect thereof.
Board of Directors means the board of directors of AK Holding.
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Capital Stock means, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on the Closing Date or issued thereafter, including, without limitation, all common stock and preferred stock but
excluding any convertible or exchangeable debt securities.
Cash Equivalents means
(1) U.S. dollars, or money in other currencies received in the ordinary course of AK Steels business,
(2) U.S. Government Obligations or certificates representing an ownership interest in U.S. Government Obligations with
maturities not exceeding one year from the date of acquisition,
(3) (i) demand deposits, (ii) time
deposits and certificates of deposit with maturities of one year or less from the date of acquisition, (iii) bankers acceptances with maturities not exceeding one year from the date of acquisition, and (iv) overnight bank deposits,
in each case with any bank or trust company organized or licensed under the laws of the United States or any state thereof having capital, surplus and undivided profits in excess of $500 million whose short-term debt is rated A-2 or
higher by S&P or P-2 or higher by Moodys,
(4) repurchase obligations with a term of not
more than seven days for underlying securities of the type described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above,
(5) commercial paper rated at least P-1 by Moodys or A-1 by S&P and maturing within one year after the date of
acquisition, and
(6) money market funds at least 95% of the assets of which consist of investments of the type
described in clauses (1) through (5).
Change of Control means such time as:
(1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or substantially all of the properties or assets of AK Steel and its Subsidiaries, taken as a whole, to any person (as that term is used in Section 13(d)(3) of the Exchange Act);
(2) a person or group (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act) becomes the ultimate beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the Voting Stock of AK Holding on a fully diluted basis;
(3) the adoption of a plan relating to the liquidation or dissolution of AK Holding or AK Steel;
(4) individuals who on the Closing Date constitute the Board of Directors (together with any new directors whose election
by the Board of Directors or whose nomination by the Board of Directors for election by AK Holdings stockholders was approved by a vote of a majority of the members of the Board of Directors then in office who either were members of the Board
of Directors on the Closing Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the Board of Directors then in office;
(5) AK Holding or AK Steel consolidates with, or merges with or into, any Person, or any Person consolidates with, or
merges with or into AK Holding or AK Steel, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of AK Holding or AK Steel, as the case may be, or such other Person is converted into or exchanged for cash,
securities or other property, other than any such transaction where (A) the Voting Stock of AK Holding or AK Steel outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance) and (B) immediately after such transaction, no person
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or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes, directly or indirectly, the Beneficial Owner of 50% or more of the voting power of the
Voting Stock of the surviving or transferee Person; or
(6) AK Holding fails to own 100% of the Capital Stock
of AK Steel;
provided
, however, that it shall not be deemed a Change of Control if AK Holding merges into AK Steel, except that in such case, AK Steel shall be substituted for AK Holding for purposes of this definition of Change of
Control, and this clause (6) shall no longer be applicable.
Change of Control Repurchase Event means
the occurrence of both a Change of Control and a Ratings Event.
Closing Date means the date on which the initial
notes were issued under the Indenture.
Collateral Agent means the Trustee in its capacity as the Collateral Agent
or any collateral agent appointed by the Trustee pursuant to the Indenture and the Security Documents.
Consolidated Net
Tangible Assets means the total assets of AK Holding and its Subsidiaries after deducting therefrom all intangible assets, current liabilities (excluding any thereof which are by their terms extendible or renewable at the option of the obligor
thereon to a time more than 12 months after the time as of which the amount thereof is being computed) and minority interests, if any, in any assets of the Subsidiaries, all as would be set forth on the most recently available quarterly or annual
consolidated balance sheet of AK Holding and its Subsidiaries, prepared in conformity with GAAP.
Credit Agreement
means the loan and security agreement dated as of April 28, 2011, among AK Steel, the lenders party thereto and Bank of America, N.A., as agent, together with any related documents, as such agreement may be amended, modified, supplemented,
extended, renewed, refinanced or replaced or substituted from time to time.
Default means any event that is, or
after notice or passage of time or both would be, an Event of Default.
Equity Interests means all Capital Stock
and all warrants or options with respect to, or other rights to purchase, Capital Stock, but excluding Indebtedness convertible into equity.
Foreign Subsidiary means any Subsidiary that is not organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof.
Funded Debt means all Indebtedness having a maturity of more than 12 months from the date as of which the
determination is made or having a maturity of 12 months or less but by its terms being renewable or extendable beyond 12 months from such date at the option of the borrower, but excluding any such Indebtedness owed to AK Holding or a Subsidiary of
AK Holding.
GAAP means generally accepted accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a
significant segment of the accounting profession which are in effect on the date of the Indenture.
Guarantee
means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise,
of such Person (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services (unless
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such purchase arrangements are on arms-length terms and are entered into in the ordinary course of business), to take-or-pay, or to maintain financial statement conditions or otherwise) or
(2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);
provided
that the term
Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term Guarantee used as a verb has a corresponding meaning.
Guarantor means AK Steel Holding Corporation and any Subsidiary that Guarantees the notes.
Holder means each holder of the notes.
Indebtedness means indebtedness for borrowed money.
Investment
Grade means a rating of Baa3 or better by Moodys (or its equivalent under any successor Rating Categories of Moodys), a rating of BBB- or better by S&P (or its equivalent under any successor Rating Categories of S&P) and
the equivalent Investment Grade credit rating from any additional Rating Agency or Rating Agencies selected by AK Steel.
Lien means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment,
security interest, lien, encumbrance, or any other security arrangement of any kind or nature whatsoever on or with respect to such property or assets (including any conditional sale or other title retention agreement having substantially the same
economic effect as any of the foregoing).
Moodys means Moodys Investors Service Inc. or its
successor.
Net Cash Proceeds means, with respect to any Notes Collateral Asset Sale, the proceeds of such Notes
Collateral Asset Sale in the form of cash (including (i) payments in respect of deferred payment obligations to the extent corresponding to, principal, but not interest, when received in the form of cash, and (ii) proceeds from the
conversion of other consideration received when converted to cash), net of
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(1)
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brokerage commissions and other fees and expenses related to such Notes Collateral Asset Sale, including fees and expenses of counsel, accountants and investment
bankers;
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(2)
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provisions for taxes payable by AK Steel, AK Holding or their Restricted Subsidiaries as a result of such Notes Collateral Asset Sale taking into account the
consolidated results of operations of AK Steel, AK Holding and their Restricted Subsidiaries; and
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(3)
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appropriate amounts to be provided as a reserve against liabilities associated with such Notes Collateral Asset Sale, including pension and other post-employment
benefit liabilities, liabilities related to environmental matters and indemnification obligations associated with such Notes Collateral Asset Sale, with any subsequent reduction of the reserve other than by payments made and charged against the
reserved amount to be deemed a receipt of cash.
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Note Guarantee means a Guarantee of the obligations
of AK Steel under the Indenture and the notes by a Guarantor.
Notes Collateral means the real property, plant and
equipment that are owned or hereafter acquired by AK Steel or any Subsidiary Guarantor, and all proceeds thereof, other than Excluded Property.
Notes Collateral Asset Sale means any sale, lease, transfer or other disposition of any Notes Collateral outside the ordinary course of business by AK Steel or any Subsidiary Guarantor,
including by means of a merger, consolidation or similar transaction (each of the above referred to as a disposition),
provided
that the following are not included in the definition of Notes Collateral Asset Sale:
(1) a disposition to AK Steel or any Subsidiary Guarantor;
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(2) the disposition by AK Steel or any Subsidiary Guarantor of damaged, worn
out or obsolete assets;
(3) a transaction covered by Certain CovenantsConsolidation, Merger
and Sale of Assets or that constitutes a Change of Control;
(4) the granting of a Lien, other than in
connection with a Sale and Leaseback Transaction, if the Lien is granted in compliance with the covenant described under Certain CovenantsLimitation on Liens;
(5) the surrender or waiver of contract rights in connection with a settlement of claims by AK Steel, AK Holding or any
Restricted Subsidiary;
(6) the transfer of property subject to casualty or condemnation proceedings (including
in lieu thereof) upon the receipt of the net cash proceeds thereof;
provided
that such net cash proceeds are deemed to be Net Cash Proceeds and are applied in accordance with the provision described under Certain
CovenantsLimitation on Notes Collateral Asset Sales;
(7) the sale and leaseback of any assets
within 90 days of the acquisition thereof;
provided
that any Lien incurred in connection therewith is permitted pursuant clause (5) to the provision described under Certain Covenants Limitation on Liens and the
provision described under Certain Covenants Limitation on Sale and Leaseback Transactions;
(8) the sale of assets by AK Steel or any Subsidiary Guarantor upon the foreclosure of a Lien; and
(9) any disposition in a transaction or series of related transactions of assets with a fair market value of less than
$5.0 million.
Obligations means, with respect to any Indebtedness, all obligations (whether in existence on the
date of the Indenture or arising afterwards, absolute or contingent, direct or indirect) for or in respect of principal (when due upon acceleration, upon redemption, upon mandatory repayment or repurchase pursuant to a mandatory offer to purchase,
or otherwise), premium, interest, penalties, fees, indemnification, reimbursement and other amounts payable and liabilities with respect to such Indebtedness, including all interest accrued or accruing after the commencement of any bankruptcy,
insolvency or reorganization or similar case or proceeding at the contract rate (including, without limitation, any contract rate applicable upon default) specified in the relevant documentation whether or not the claim for such interest is allowed
as a claim in such case or proceeding.
Offer to Purchase means an offer to purchase notes by AK Steel from the
Holders commenced by mailing a notice to the Trustee and each Holder stating:
(1) that all notes validly
tendered will be accepted for payment on a pro rata basis;
(2) the purchase price and the date of purchase
(which shall be a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the Payment Date);
(3) that any note not tendered will continue to accrue interest pursuant to its terms;
(4) that, unless AK Steel defaults in the payment of the purchase price, any note accepted for payment pursuant to the Offer to Purchase shall cease to accrue interest on and after the Payment Date;
(5) that Holders electing to have a note purchased pursuant to the Offer to Purchase will be required to
surrender the note, together with the form entitled Option of the Holder to Elect Purchase on the reverse side of the note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the
Business Day immediately preceding the Payment Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business on the third Business Day immediately preceding the Payment Date, a telegram, facsimile transmission or letter setting forth the name of such Holder, the principal amount of
notes delivered for purchase and a statement that such Holder is withdrawing his election to have such notes purchased; and
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(7) that Holders whose notes are being purchased only in part will be issued
new notes equal in principal amount to the unpurchased portion of the notes surrendered;
provided
that each note purchased and each new note issued shall be in a principal amount of $2,000 or integral multiples of $1,000 in excess thereof.
On the Payment Date, AK Steel shall (a) accept for payment on a pro rata basis notes or portions thereof tendered
pursuant to an Offer to Purchase; (b) deposit with the Paying Agent money sufficient to pay the purchase price of all notes or portions thereof so accepted; and (c) deliver, or cause to be delivered, to the Trustee all notes or portions
thereof so accepted together with an Officers Certificate specifying the notes or portions thereof accepted for payment by AK Steel. The Paying Agent shall promptly mail to the Holders of notes so accepted payment in an amount equal to the
purchase price, and the Trustee shall promptly authenticate and mail to such Holders a new note equal in principal amount to any unpurchased portion of the note surrendered;
provided
that each note purchased and each new note issued shall be
in a principal amount of $2,000 or integral multiples of $1,000 in excess thereof. AK Steel will publicly announce the results of an Offer to Purchase as soon as practicable after the Payment Date. The Trustee shall act as the Paying Agent for an
Offer to Purchase. AK Steel will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable. in the event that AK Steel is required to repurchase
notes pursuant to an Offer to Purchase.
Permitted Business means any of the businesses in which AK Steel, AK
Holding and the Restricted Subsidiaries are engaged on the date of the Indenture and any business reasonably related, incidental, complementary or ancillary thereto or that is a reasonable extension, development or expansion thereof.
Person means any individual, corporation, limited liability company, partnership, joint venture, trust, unincorporated
organization or government or any agency or political subdivision thereof .
Principal Property means any domestic
blast furnace or steel producing facility, or casters that are part of a plant that includes such a facility, in each case located in the United States, having a net book value in excess of 1% of Consolidated Net Tangible Assets at the time of
determination.
Rating Agency means (1) each of Moodys and S&P and (2) if either of
Moodys or S&P ceases to rate the notes or fails to make a rating of the notes publicly available for reasons outside of the control of AK Steel, a nationally recognized statistical rating organization within the meaning of Rule
15c3-l(e)(2)(vi)(F) under the Exchange Act, selected by AK Steel (as certified by a resolution of the board of directors of AK Steel) as a replacement agency for Moodys or S&P, or both, as the case may be.
Rating Category means (i) with respect to S&P, any of the following categories: BBB, BB, B, CCC, CC, C and D (or
equivalent successor categories); (ii) with respect to Moodys, any of the following categories: Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and (iii) the equivalent of any such category of S&P or
Moodys used by another Rating Agency. In determining whether the rating of the notes has decreased by one or more gradations, gradations within Rating Categories (+ and for S&P; 1, 2 and 3 for Moodys; or the equivalent
gradations for another Rating Agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as from BB- to B+, will constitute a decrease of one gradation).
Rating Date means the date that is 60 days prior to the earlier of (i) a Change of Control or (ii) public notice of
the occurrence of a Change of Control or of the intention by AK Steel or AK Holding, as applicable, to effect a Change of Control.
Ratings Event means the occurrence of the events described in (a) or (b) of this definition on, or within 60 days after the earlier of, (i) the occurrence of a Change of Control
or (ii) public notice of the occurrence of a Change of Control or the intention by AK Steel or AK Holding, as applicable, to effect a Change of Control (which period shall be extended so long as the rating of the notes is under publicly
announced consideration for a
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possible downgrade by any of the Rating Agencies): (a) if the notes are rated by both Rating Agencies on the Rating Date as Investment Grade, the rating of the notes shall be reduced so that
the notes are rated below Investment Grade by both Rating Agencies, or (b) if the notes are rated below Investment Grade by at least one Rating Agency, the ratings of the notes by both Rating Agencies shall be decreased by one or more
gradations (including gradations within Rating Categories, as well as between Rating Categories) and the notes are then rated below Investment Grade by both Rating Agencies.
Notwithstanding the foregoing, a Ratings Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus
shall not be deemed a Ratings Event for purposes of the definition of Change of Control Repurchase Event hereunder) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly
confirm or inform the Trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not
the applicable Change of Control shall have occurred at the time of the Ratings Event).
Receivables Facility
means one or more receivables financing facilities, as amended, supplemented, modified, extended, renewed, restated or refunded from time to time, the obligations of which are non-recourse (except for customary representations, warranties, covenants
and indemnities made in connection with such facilities) to AK Steel or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) pursuant to which AK Steel or any of its Restricted Subsidiaries sells their accounts receivable to
either (a) a Person that is not a Restricted Subsidiary or (b) a Receivables Subsidiary that in turn sells its accounts receivable to a Person that is not a Restricted Subsidiary.
Receivables Subsidiary means any Subsidiary formed for the purpose of, and that solely engages only in one or more
Receivables Facilities or other activities reasonably related thereto.
Registration Rights Agreements means,
collectively, (i) that certain registration rights agreement entered into on the Original Issue Date among AK Steel, AK Holding and the initial purchasers of the initial notes and (ii) that certain registration rights agreement entered
into on June 24, 2012 among AK Steel, AK Holding and the initial purchaser of the add-on notes.
Restricted
Subsidiary means any Subsidiary other than an Unrestricted Subsidiary.
S&P means Standard &
Poor Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. or its successor.
Sale and Leaseback
Transaction means any arrangement with any Person providing for the leasing to AK Steel or any Subsidiary of AK Steel of any Principal Property, which Principal Property has been or is to be sold or transferred by AK Steel or any Subsidiary of
AK Steel to such Person.
Security Documents means (i) the Collateral Trust Agreement and (ii) the
security documents granting a security interest in any assets of any Person to secure the Obligations under the notes and the Note Guarantee as each may be amended, restated, supplemented or otherwise modified from time to time.
Significant Subsidiary means (a) any Restricted Subsidiary of AK Holding that, at the time of determination would be a
significant subsidiary of AK Holding pursuant to Rule 1-02 of Regulation S-X as in effect on the Closing Date or (b) any group of Restricted Subsidiaries that, taken together, would be a Significant Subsidiary under clause
(a) above.
Subsidiary means with respect to any specified Person, any corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary voting power for the election of directors of such corporation (irrespective of whether or not at the time stock of any other class or classes of such corporation shall
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have or might have voting power by reason of the happening of any contingency) is, or other entity of which at least a majority of the common equity interests are, at the time directly or
indirectly owned by that Person, or by one or more other Subsidiaries of that Person, or by that Person and one or more other Subsidiaries of that Person.
Subsidiary Guarantor means each Subsidiary that Guarantees the notes under the Indenture.
Subordinated Indebtedness means any Indebtedness of AK Steel, AK Holding or any Guarantor that is subordinated in right of payment to the notes or the Note Guarantee, as applicable, pursuant
to a written agreement to that effect.
U.S. Government Obligations means securities that are (1) direct
obligations of the United States of America for the payment of which its full faith and credit is pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the
full and timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof at any time prior to the
stated maturity of the notes, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of the holder of a depository receipt;
provided
that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt.
Unrestricted Subsidiary means (i) any Foreign Subsidiary, (ii) any Receivables Subsidiary and (iii) any
Subsidiary of AK Holding created after the Closing Date, at least 10% of the Voting Stock of which is owned by Persons other than AK Holding or a Subsidiary thereof;
provided
that (a) such Subsidiary does not engage in the business of AK
Steel as conducted on the Closing Date (but shall engage in any extension thereof or activities incidental or related thereto) and (b) in the event (1) any such Subsidiary Guarantees Indebtedness of AK Steel in an aggregate amount in
excess of $50 million or (2) AK Steel or any of its Subsidiaries (other than an Unrestricted Subsidiary) contributes or otherwise transfers (other than a sale for fair market value) any Principal Property (including shares of stock of a
Subsidiary that owns the Principal Property) or the proceeds of any sale of Principal Property to such Subsidiary, in either case such Subsidiary shall cease to be an Unrestricted Subsidiary.
Voting Stock means with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the
election of directors, managers or other voting members of the governing body of such Person.
No Personal Liability of Incorporators,
Stockholders, Officers, Directors, or Employees
No recourse for the payment of the principal of, premium, if any, or
interest on any of the notes or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of AK Steel in the Indenture, or in any of the notes or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator, stockholder, officer, director, employee or controlling person of AK Steel or of any successor Person thereof. Each Holder, by accepting the notes, waives and releases all such
liability. The waiver and release are part of the consideration for the issuance of the notes. Such waiver may not be effective to waive liabilities under the federal securities laws.
Concerning the Trustee
Except during the continuance of an Event of
Default, the Trustee need perform only such duties as are specifically set forth in the Indenture. If an Event of Default has occurred and is continuing, the Trustee will use
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the same degree of care and skill in its exercise of the rights and powers vested in it under the Indenture as a prudent person would exercise under the circumstances in the conduct of such
persons own affairs. The Indenture and provisions of the Trust Indenture Act of 1939, as amended, incorporated by reference therein contain limitations on the rights of the Trustee, should it become a creditor of AK Steel, to obtain payment of
claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Trustee is permitted to engage in other transactions;
provided
,
however
, that if it acquires any
conflicting interest as defined by the Trust Indenture Act of 1939, as amended, it must eliminate such conflict or resign as provided therein.
Form of Registered Notes
The certificates representing the registered notes will be issued in fully registered form, without coupons. Except as described in the
next paragraph, the registered notes will be deposited with, or on behalf of, DTC, and registered in the name of Cede & Co., as DTCs nominee, in the form of a global note. Holders of the registered notes will own book-entry
interests in the global note evidenced by records maintained by DTC.
Book-entry interests may be exchanged for certificated
notes of like tenor and equal aggregate principal amount, if:
(1) DTC notifies us that it is unwilling or
unable to continue as depositary or we determine that DTC is unable to continue as depositary and we fail to appoint a successor depositary within 90 days,
(2) we provide for the exchange pursuant to the terms of the Indenture, or
(3) we determine that the book-entry interests will no longer be represented by global notes and we execute and deliver to the trustee instructions to that effect.
As of the date of this prospectus, no certificated notes are issued and outstanding.
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