DESCRIPTION OF NOTES
AK Steel will issue the notes under an indenture (the Indenture), dated as of June 20, 2016, among AK Steel, as issuer, AK
Holding, AK Tube LLC and AK Steel Properties, Inc. as guarantors, and U.S. Bank National Association, as trustee (the Trustee). The terms of the notes include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended.
The following is a summary of the material provisions of the Indenture insofar
as relevant to the notes but such summary does not restate the Indenture in its entirety. You can find the definitions of certain capitalized terms used in the following summary under the subheading Definitions. We urge you to read the
Indenture because it, and not this description, defines your rights as holders of the notes. A copy of the Indenture has been filed as an exhibit to the registration statement of which this prospectus supplement forms a part.
For purposes of this Description of 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, a Delaware corporation, and its successors under the Indenture, excluding its
subsidiaries.
General
The notes
will be secured unsubordinated obligations of AK Steel, and will mature on July 15, 2023. AK Steel will initially issue $380 million of notes, but 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 7.50% per annum from the most recent interest payment date to which interest has been paid on
the notes or, if interest has not been paid, from the issue date. Interest on the notes will be payable on January 15 and July 15 of each year beginning on January 15, 2017. Interest will be paid to Holders of record at the close of
business on January 1 or July 1 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.
The notes may be exchanged or transferred at the office or agency of AK Steel. Initially, the paying agent office of the Trustee will serve as
such office. The notes will be issued only in fully registered form, without coupons, in denominations of $2,000 of principal amount and multiples of $1,000 in excess thereof. See Book-Entry; Delivery and Form. No service charge
will be made for any registration of transfer or exchange of notes, but AK Steel may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith.
The notes will not be entitled to the benefit of any sinking fund.
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
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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 July 15, 2019, 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 July 15, 2019 (such redemption price set forth in the table below), plus (ii) all
required interest payments due on such note through July 15, 2019 (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.
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 July 15, 2019; provided, however,
that if the period from the redemption date to July 15, 2019, 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.
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We may redeem the notes, in whole or in part, at any time on or after July 15, 2019, 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 July 15 of the years indicated
below:
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Year
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Redemption
Price
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2019
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103.750
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%
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2020
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101.875
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%
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2021 and thereafter
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100.000
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%
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In addition, at any time prior to July 15, 2019, 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 107.500%, 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 guaranteed on an unsecured unsubordinated basis by AK Holding, our direct parent and by our subsidiaries AK Tube and AK Steel Properties.
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 Subsidiary 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 (except that this shall not apply to AK Tube and AK Steel Properties, which shall only be released pursuant to this provision if such Guarantor has no outstanding Indebtedness other than Indebtedness described in clauses (1),
(2), (3) or (5) under Limitation on Subsidiary Debt or permitted under the last paragraph thereunder), 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 and the
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 the 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, (or endorsements to existing title insurance), surveys and opinions in respect thereof to the
extent required in the Indenture and the Security Documents within 180 days after such event.
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.
Certain security will not be put in place on the Issue Date or will not be perfected on the Issue Date. In particular, we will be required to
use commercially reasonable efforts to provide security and record mortgages (or mortgage amendments to a mortgage) over real property and deliver corresponding documentation as promptly as practicable, but in any event no later than 180 days after
the Issue Date.
The initial Notes Collateral will 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 Issue Date or acquired following the Issue Date);
(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.
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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.
AK Steel and the 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) or a junior lien basis (Junior 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
Except as noted above in General with respect to mortgages over real property, on the Issue Date, AK
Steel and the Collateral Agent will become party to one or more Security Documents defining the terms of the security interests that secure the notes and the Note Guarantees and any other future Parity Lien Obligations. These security interests will
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 will 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 will enter 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 Issue Date, AK Steel, the Trustee, and the Collateral Agent will become party to the Collateral Trust Agreement. The Collateral Trust
Agreement will set 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) will acknowledge and agree 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.
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Enforcement of Liens; Voting
The Collateral Trust Agreement will provide 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 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. Upon the Issue Date, the Trustee will be the Applicable Authorized Representative, and the Trustee 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 has not conducted appraisals of the Notes Collateral in connection with the offering of the notes. The book value of the Notes
Collateral as of March 31, 2016 was approximately $1,548.4 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 Notes and this OfferingThe 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
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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 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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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 Commission 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 Commission 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
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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.
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 will be 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 will provide 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
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
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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;
(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;
(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), (7) or (9) or incurred pursuant to the next succeeding paragraph;
provided that (A) 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), (7) or (9) or
within 30 days in the case of the next succeeding paragraph; (B) the principal amount of the Indebtedness secured thereby and not otherwise authorized by clauses (1), (2), (3), (5), (7) or (9) or the next succeeding paragraph shall
not exceed the principal amount of Indebtedness plus any premium or fee or accrued and unpaid interest payable (any such principal in respect of premium, fees or interest, the Additional Refinancing Amount) in connection with any such
extension, renewal, replacement or refunding, so secured at the time of such extension, renewal, replacement or refunding; and (C) any extension renewal, replacement or refunding of any Junior Lien Obligations are in the form of Junior Lien
Obligations; and
(9) Liens on Notes Collateral securing Junior Lien Obligations, provided that the aggregate principal amount of Junior
Lien Obligations so secured does not exceed, together with any Junior Lien Obligations
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incurred pursuant to clause (8) to extend, renew, replace or refund any Junior Lien Obligations incurred pursuant to this clause (9) (but excluding any Additional Refinancing Amount), (x)
$500.0 million or (y) if greater, an amount which after giving effect to the incurrence of such Junior Lien Obligations so secured, would not cause AK Holdings Fixed Charge Coverage Ratio to be less than 2.0 to 1.0.
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 (9) 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 (6) 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 notes offered hereunder outstanding at such time and the amount of (i) any Indebtedness incurred to extend, renew, replace or refund the notes secured by Liens pursuant to clause (8) above, (ii) any
Indebtedness incurred pursuant to clause (8) above to refinance Indebtedness incurred pursuant to this paragraph and (iii) any Indebtedness incurred pursuant to clause (6) under Limitation on Subsidiary Debt to refinance
Indebtedness incurred pursuant to the last paragraph of such covenant (but excluding any Additional Refinancing Amount).
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
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.
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) or incurred pursuant to the next succeeding paragraph; provided that any such extension, renewal, replacement or
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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 or within 30 days in the case of
the next succeeding paragraph 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;
(5) Indebtedness in respect of a Receivables Facility; and
(6) Indebtedness in an amount of not more than $5.0 million at any time outstanding.
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 (6) 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 (9) 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 notes offered hereunder outstanding at such time and the amount of (i) any Indebtedness incurred to extend, renew, replace or refund the notes secured by Liens pursuant to clause (8) of the second
paragraph of the provision Limitation on Liens, (ii) any Indebtedness incurred pursuant to such clause (8) of such second paragraph to refinance Indebtedness incurred pursuant to the penultimate paragraph under the
heading Limitation on Liens and (iii) any Indebtedness incurred pursuant to clause (6) above to refinance Indebtedness incurred pursuant to this paragraph (but excluding any Additional Refinancing Amount).
Limitation on Sale and Leaseback Transactions
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
(9) 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;
(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
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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 (9) 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 (6) 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 notes offered hereunder outstanding at such time and the amount of (i) any Indebtedness incurred to extend, renew, replace or refund the notes secured by Liens pursuant to clause (8) of the second paragraph of the provision
Limitation on Liens, (ii) any Indebtedness incurred pursuant to such clause (8) of such second paragraph to refinance Indebtedness incurred pursuant to the penultimate paragraph under the heading Limitation on
Liens and (iii) any Indebtedness incurred pursuant to clause (6) under Limitation on Subsidiary Debt to refinance Indebtedness incurred pursuant to the last paragraph of such covenant (but excluding any Additional
Refinancing Amount).
Limitation on Notes Collateral Asset Sales
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 90 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.
(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
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(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. The Company may satisfy the foregoing obligations with respect to any Net Cash Proceeds from a Notes Collateral Asset Sale by making a Notes
Collateral Asset Sale Offer (an
Advance Offer
) with respect to all or a portion of any Net Cash Proceeds (the
Advance Portion
) prior to the expiration of the relevant 365 days or with respect to Net Cash
Proceeds of $15.0 million or less. 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. Additionally, upon consummation or expiration of any Advance Offer, any remaining Net Cash Proceeds shall not be deemed Excess Proceeds and the Company may use such Net Cash Proceeds in any manner not prohibited by the Indenture.
Consolidation, Merger and Sale of Assets
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:
(1) 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 and the Security Documents;
(2) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and
(3) 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.
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.
Restrictions on Activities of AK
Holding
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
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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 following events
will be defined as Events of Default in the Indenture 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 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
SEC 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 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;
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(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.
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
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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;
provided
, (i) upon any redemption that requires the payment of the Applicable Premium, the amount deposited will be sufficient for purposes of the Indenture to the extent that an amount is deposited with the
Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any deficit as of the applicable redemption date (the
Applicable Premium Deficit
) only required to be deposited with the Trustee
on or prior to the date of redemption and (ii) any Applicable Premium Deficit will be set forth in an Officers Certificate delivered to the Trustee
simultaneously with the deposit of such Applicable Premium Deficit that confirms
that such Applicable Premium Deficit will be applied toward such redemption.
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
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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 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;
provided
, (i) upon any redemption that requires the payment of the Applicable Premium, the amount deposited will be sufficient for purposes of the
Indenture to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any Applicable Premium Deficit only required to be deposited with the Trustee on or
prior to the date of redemption and (ii) any Applicable Premium Deficit will be set forth in an Officers Certificate delivered to the Trustee simultaneously with the deposit of such Applicable Premium Deficit that confirms that such
Applicable Premium Deficit will be applied toward such redemption.
(B) AK Steel has delivered to the Trustee (1) either
(x) an Opinion of Counsel to the effect that beneficial owners of the notes 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 amounts 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 other than may arise from making such deposit.
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 beneficial owners of the notes 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 amounts and in the same manner and at the
same times as would have been the case if such deposit and defeasance had not occurred.
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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;
(2) comply with the provisions described under Consolidation, 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 this Description of 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 or Junior 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;
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(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
(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 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 or AK Tube 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 and AK
Tubes 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 or AK Tube 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
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materials and records) of AK Steel or AK Tube 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.
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);
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(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 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 notes are 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. For purposes of calculating Consolidated Net Tangible Assets, pro forma effect shall be given on the date of calculation to the items set forth in Fixed Charge Coverage Ratio.
Credit Agreement means the amended and restated loan and security agreement dated as of March 17, 2014, 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.
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EBITDA shall be determined on a last-in first-out inventory method and consolidated
basis for AK Holding and its subsidiaries in conformity with GAAP, as the sum, without duplication, of net income, calculated before interest expense, provision for income taxes, depreciation and amortization expense, losses arising from the sale of
capital assets, other non-cash losses and charges deducted in the calculation of net income (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period), any non-recurring,
unusual or extraordinary losses or charges, all plant consolidation, shut-down or idling costs or charges, including any contract termination or union settlement charges, all write-offs and write-downs and all non-cash corridor charges associated
with pensions and other post-retirement benefit obligations (in each case, only to the extent included in determining net income), less non-cash gains included in the calculation of net income (other than any such non-cash item to the extent that it
will result in the receipt of cash payments within 12 months after the date on which it was accrued), gains arising from the sale of capital assets, gains arising from the write-up of assets, any non-recurring, unusual or extraordinary gains and all
non-cash corridor gains associated with pensions and other postretirement benefit obligations (in each case, only to the extent included in determining net income).
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.
Fixed Charge Coverage Ratio means, on any date (the transaction
date), the ratio of (a) the aggregate amount of EBITDA for the most recent four fiscal quarters immediately prior to the transaction date for which internal financial statements are available (the reference period) to
(b) the aggregate Fixed Charges during such reference period.
In making the foregoing calculation,
(1) the Fixed Charge Coverage Ratio shall be calculated for AK Holding and its subsidiaries on a consolidated basis;
(2) pro forma effect will be given to any Indebtedness Incurred during or after the reference period and on or prior to such date of
determination to the extent the Indebtedness is outstanding or is to be Incurred on such date as if the Indebtedness had been Incurred on the first day of the reference period;
(3) pro forma calculations of interest on Indebtedness bearing a floating interest rate will be made as if the rate in effect on the
transaction date (taking into account any hedging agreement applicable to the Indebtedness if the hedging agreement has a remaining term of at least 12 months) had been the applicable rate for the entire reference period;
(4) Fixed Charges related to any Indebtedness no longer outstanding or to be repaid or redeemed on the transaction date, except for interest
expense accrued during the reference period under a revolving credit to the extent of the commitment thereunder (or under any successor revolving credit) in effect on the transaction date, will be excluded; and
(5) Any acquisitions, dispositions, amalgamations, mergers (including the Transactions), consolidations and discontinued operations (as
determined in accordance with GAAP), that the Company or any of its Subsidiaries has made during the reference period or subsequent to such reference period and on or prior to or simultaneously with the Fixed Charge Coverage Ratio calculation date
shall be calculated on a pro forma basis assuming that all such acquisitions, dispositions, amalgamations, mergers, consolidations and discontinued operations (and the change in any associated fixed charge obligations and the change in EBITDA
resulting therefrom) had occurred on the first day of the reference period in accordance with Article 11 of Regulation S-X under the Securities Exchange Act of 1934 (the Exchange Act). If since the beginning of such period any Person
that subsequently became a Subsidiary or was merged, amalgamated or consolidated with or into the Company or any of its Subsidiaries since the beginning of such period shall have made any acquisition,
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disposition, amalgamation, merger, consolidation or discontinued operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect thereto for such period as if such acquisition, disposition, discontinued operation, merger, amalgamation or consolidation or had occurred at the beginning of the applicable four-quarter period.
Fixed Charges means the sum of consolidated cash interest expense as determined in accordance with GAAP and cash dividends on any
preferred stock.
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 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.
Junior Intercreditor Agreement means an intercreditor agreement entered into among AK Steel, the Guarantors, the Trustee, the
Collateral Agent, on behalf of itself, the holders of other Parity Lien Obligations (if any) and the Holders, and the authorized representative of any Junior Lien Obligations, on behalf of itself and the holders of such Junior Lien Obligations,
which agreement shall be on customary terms and establish that the Liens on any Notes Collateral securing such Junior Lien Obligations shall rank junior to the Liens on such Notes Collateral securing any obligations under this Indenture, the notes
and the Guarantees.
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Junior Lien Obligations means any Indebtedness of AK Steel or any Guarantor which is
or will be secured by a Lien on the Notes Collateral on a basis that is junior to the notes and the Guarantees pursuant to the Junior Intercreditor Agreement.
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
(1) brokerage commissions and other fees and expenses related to such Notes Collateral Asset
Sale, including fees and expenses of counsel, accountants and investment bankers;
(2) 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
(3) 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.
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;
(2) the disposition by AK Steel or any Subsidiary Guarantor of damaged, worn out or obsolete assets;
(3) a transaction covered by Consolidation, Merger or Sale of AssetsAK Steel and AK Holding 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 Limitation 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;
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(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 CovenantsLimitation on Liens and the provision described under Certain CovenantsLimitation 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 Issue Date 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
(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.
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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 Issue Date 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 as defined in Section 3(a)(62) of 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 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
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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.
Restricted Subsidiary means any Subsidiary other than an Unrestricted Subsidiary.
S&P means Standard & Poor Financial Services LLC, a subsidiary of S&P Global 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 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.
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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 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.
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