UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2012
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-35573
TRONOX LIMITED
(ACN 153 348 111)
(Exact Name of Registrant as Specified in its Charter)
Western Australia, Australia | 98-1026700 | |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification Number) |
One Stamford Plaza
263 Tresser Boulevard, Suite 1100
Stamford, Connecticut 06901
(Address of principal executive offices)
Registrants telephone number, including area code: (203) 705-3800
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | x | Smaller reporting company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of October 31, 2012, there were 113,254,634 shares of the Registrants Class A ordinary shares and Class B ordinary shares outstanding.
Item 1. | Financial Statements (Unaudited) |
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* | On September 25, 2011, Tronox Incorporated entered into a definitive agreement (the Transaction Agreement) with Exxaro Resources Limited (Exxaro) and certain of its affiliated companies, to acquire 74% of its South African mineral sands operations, including its Namakwa and KwaZulu-Natal (KZN) Sands mines, separation facilities and slag furnaces, along with Exxaros 50% share of the Tiwest Joint Venture in Western Australia (together the mineral sands business) (the Transaction). In anticipation of the consummation of the Transaction, Tronox Incorporated formed an Australian subsidiary, Tronox Limited. |
Pursuant to a Registration Statement on Form S-4 (File No. 333-178835) declared effective by the Securities and Exchange Commission (the SEC) on May 4, 2012 (the Registration Statement), Tronox Limited registered up to 16,445,827 Class A ordinary shares (Class A Shares) to be issued to stockholders in Tronox Incorporated in connection with the completion of the Transaction.
On June 15, 2012, the date of the Transaction, the existing business of Tronox Incorporated was combined with the mineral sands business under Tronox Limited. The Transaction was effectuated in two primary steps. In the first step, Tronox Incorporated became a subsidiary of Tronox Limited, with Tronox Incorporated stockholders receiving one Class A Share and $12.50 in cash for each share of Tronox Incorporated common stock. In the second step, Tronox Limited issued 9,950,856 Class B ordinary shares (Class B Shares) to Exxaro and one of its subsidiaries in consideration for the mineral sands business. Upon completion of the Transaction, former Tronox Incorporated stockholders held 15,413,083 Class A Shares and Exxaro held 9,950,856 Class B Shares, respectively, representing approximately 60.8% and 39.2%, respectively, of the voting interest in Tronox Limited.
These unaudited condensed consolidated financial statements reflect the historical results of operations and financial position of Tronox Limited and the mineral sands business for all periods after June 15, 2012. Prior to June 15, 2012, the date of the Transaction, the unaudited condensed consolidated financial statements included herein represent the financial statements of Tronox Incorporated.
2
TRONOX LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions of dollars, except share and per share data)
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
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Current Assets |
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Cash and cash equivalents |
$ | 774.4 | $ | 154.0 | ||||
Accounts receivable, net of allowance for doubtful accounts of $1.2 and $0.4 |
364.4 | 277.8 | ||||||
Inventories |
1,033.1 | 311.2 | ||||||
Prepaid and other assets |
31.2 | 21.7 | ||||||
Deferred income taxes |
19.2 | 4.3 | ||||||
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Total Current Assets |
2,222.3 | 769.0 | ||||||
Noncurrent Assets |
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Property, Plant and Equipment, Net |
1,555.8 | 504.3 | ||||||
Mineral Leaseholds, Net |
1,342.8 | 38.4 | ||||||
Intangible Assets, Net |
312.0 | 325.1 | ||||||
Long-Term Deferred Tax Assets |
169.9 | 9.0 | ||||||
Other Long-Term Assets |
63.1 | 11.6 | ||||||
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Total Assets |
$ | 5,665.9 | $ | 1,657.4 | ||||
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Current Liabilities |
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Accounts payable: |
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Third party |
$ | 164.7 | $ | 126.9 | ||||
Related party |
| 74.8 | ||||||
Accrued liabilities |
177.1 | 45.7 | ||||||
Short-term debt |
30.4 | | ||||||
Long-term debt due within one year |
11.0 | 5.9 | ||||||
Income taxes payable |
29.0 | 27.6 | ||||||
Deferred income taxes |
22.9 | | ||||||
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Total Current Liabilities |
435.1 | 280.9 | ||||||
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Noncurrent Liabilities |
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Long-term debt |
1,607.7 | 421.4 | ||||||
Pension and postretirement healthcare benefits |
122.9 | 142.7 | ||||||
Asset retirement obligations |
100.4 | 29.2 | ||||||
Deferred income taxes |
229.2 | 19.1 | ||||||
Other |
27.4 | 11.8 | ||||||
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Total Liabilities |
2,522.7 | 905.1 | ||||||
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Contingencies and Commitments (Note 14) |
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Shareholders Equity |
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Tronox Limited Class A ordinary shares, par value $0.01 64,624,924 shares issued and 63,486,889 shares outstanding at September 30, 2012(1) |
0.6 | | ||||||
Tronox Limited Class B ordinary shares, par value $0.01 49,754,280 shares issued and outstanding at September 30, 2012(1) |
0.5 | | ||||||
Tronox Incorporated common stock, par value $0.01 100,000,000 shares authorized, 15,406,803 shares issued and 15,076,691 shares outstanding at December 31, 2011 |
| 0.1 | ||||||
Capital in excess of par value |
1,426.1 | 579.2 | ||||||
Retained earnings |
1,434.5 | 241.5 | ||||||
Accumulated other comprehensive loss |
(21.9 | ) | (57.0 | ) | ||||
Tronox Incorporated treasury stock, at cost 94,513 shares at December 31, 2011 |
| (11.5 | ) | |||||
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Total Shareholders Equity |
2,839.8 | 752.3 | ||||||
Noncontrolling interest |
303.4 | | ||||||
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Total Equity |
3,143.2 | 752.3 | ||||||
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Total Liabilities and Shareholders Equity |
$ | 5,665.9 | $ | 1,657.4 | ||||
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(1) | On June 26, 2012, the Board of Directors of Tronox Limited approved a 5-to-1 stock split for holders of its Class A ordinary shares and Class B ordinary shares at the close of business on July 20, 2012, by issuance of four additional shares for each share of the same class by way of bonus issue. All references to number of shares and per share data in the Successors unaudited condensed consolidated financial statements have been adjusted to reflect the stock split, unless otherwise noted. See Note 19 for additional information regarding the Companys stock split. |
See notes to unaudited condensed consolidated financial statements.
3
TRONOX LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Millions of dollars, except share and per share data)
Successor | Predecessor | |||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One
Month Ended January 31, 2011 |
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Net Sales |
$ | 487.3 | $ | 465.4 | $ | 1,349.8 | $ | 1,160.8 | $ | 107.6 | ||||||||||
Cost of goods sold |
(465.8 | ) | (322.4 | ) | (1,048.2 | ) | (862.1 | ) | (82.3 | ) | ||||||||||
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Gross Margin |
21.5 | 143.0 | 301.6 | 298.7 | 25.3 | |||||||||||||||
Selling, general and administrative expenses |
(59.6 | ) | (53.8 | ) | (206.2 | ) | (111.2 | ) | (5.4 | ) | ||||||||||
Litigation/arbitration settlement |
| 9.8 | | 9.8 | | |||||||||||||||
Provision for environmental remediation and restoration, net of reimbursements |
| 0.2 | | 4.5 | | |||||||||||||||
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Income (Loss) from Operations |
(38.1 | ) | 99.2 | 95.4 | 201.8 | 19.9 | ||||||||||||||
Interest and debt expense |
(18.1 | ) | (8.0 | ) | (39.0 | ) | (21.5 | ) | (2.9 | ) | ||||||||||
Other income (expense) |
0.2 | (1.3 | ) | (4.8 | ) | (1.7 | ) | 1.6 | ||||||||||||
Gain on bargain purchase |
| | 1,045.6 | | | |||||||||||||||
Reorganization income |
| | | | 613.6 | |||||||||||||||
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Income (Loss) from Continuing Operations before Income Taxes |
(56.0 | ) | 89.9 | 1,097.2 | 178.6 | 632.2 | ||||||||||||||
Income tax benefit (provision) |
38.0 | 9.0 | 127.5 | (3.3 | ) | (0.7 | ) | |||||||||||||
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Income (Loss) from Continuing Operations |
(18.0 | ) | 98.9 | 1,224.7 | 175.3 | 631.5 | ||||||||||||||
Loss from discontinued operations, net of income tax benefit |
| | | | (0.2 | ) | ||||||||||||||
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Net Income (Loss) |
(18.0 | ) | 98.9 | 1,224.7 | 175.3 | 631.3 | ||||||||||||||
Income (loss) attributable to noncontrolling interest |
(1.3 | ) | | (0.8 | ) | | | |||||||||||||
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Net Income (Loss) attributable to Tronox Limited |
$ | (16.7 | ) | $ | 98.9 | $ | 1,225.5 | $ | 175.3 | $ | 631.3 | |||||||||
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Income (Loss) per Share, Basic and Diluted(1): |
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Basic |
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Continuing operations |
$ | (0.14 | ) | $ | 1.32 | $ | 12.94 | $ | 2.39 | $ | 15.29 | |||||||||
Discontinued operations |
| | | | (0.01 | ) | ||||||||||||||
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Net income (loss) per share |
$ | (0.14 | ) | $ | 1.32 | $ | 12.94 | $ | 2.39 | $ | 15.28 | |||||||||
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Diluted |
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Continuing operations |
$ | (0.14 | ) | $ | 1.25 | $ | 12.57 | $ | 2.26 | $ | 15.25 | |||||||||
Discontinued operations |
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Net income (loss) per share |
$ | (0.14 | ) | $ | 1.25 | $ | 12.57 | $ | 2.26 | $ | 15.25 | |||||||||
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Weighted Average Shares Outstanding (in thousands): |
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Basic |
122,352 | 74,910 | 94,193 | 73,325 | 41,311 | |||||||||||||||
Diluted |
122,352 | 79,175 | 96,903 | 77,660 | 41,399 |
(1) | On June 26, 2012, the Board of Directors of Tronox Limited approved a 5-to-1 stock split for holders of its Class A ordinary shares and Class B ordinary shares at the close of business on July 20, 2012, by issuance of four additional shares for each share of the same class by way of bonus issue. All references to number of shares and per share data in the Successors unaudited condensed consolidated financial statements have been adjusted to reflect the stock split, unless otherwise noted. See Note 19 for additional information regarding the Companys stock split. |
See notes to unaudited condensed consolidated financial statements.
4
TRONOX LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Millions of dollars)
Successor | Predecessor | |||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
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Net Income: |
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Net Income (Loss) |
$ | (18.0 | ) | $ | 98.9 | $ | 1,224.7 | $ | 175.3 | $ | 631.3 | |||||||||
Other Comprehensive Income (Loss): |
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Foreign currency translation adjustments |
14.8 | (5.5 | ) | 48.2 | (3.3 | ) | 0.9 | |||||||||||||
Retirement and postretirement plans: |
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Amortization of actuarial gains, net of taxes of nil, nil, nil, nil and nil |
| | | | 0.5 | |||||||||||||||
Amortization of prior service cost, net of taxes of nil, nil, nil, nil and nil |
| | | | (1.1 | ) | ||||||||||||||
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Other comprehensive income (loss) |
14.8 | (5.5 | ) | 48.2 | (3.3 | ) | 0.3 | |||||||||||||
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Total comprehensive income (loss) |
$ | (3.2 | ) | $ | 93.4 | $ | 1,272.9 | $ | 172.0 | $ | 631.6 | |||||||||
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Comprehensive income (loss) attributable to noncontrolling interest: |
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Net income (loss) |
(1.3 | ) | | (0.8 | ) | | | |||||||||||||
Foreign currency translation adjustments |
2.8 | | 13.1 | | | |||||||||||||||
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Comprehensive income (loss) attributable to noncontrolling interest |
1.5 | | 12.3 | | | |||||||||||||||
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Comprehensive income (loss) attributable to Tronox Limited |
$ | (4.7 | ) | $ | 93.4 | $ | 1,260.6 | $ | 172.0 | $ | 631.6 | |||||||||
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See notes to unaudited condensed consolidated financial statements.
5
TRONOX LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions of dollars)
Successor | Predecessor | |||||||||||
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
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Cash Flows from Operating Activities: |
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Net income |
$ | 1,224.7 | $ | 175.3 | $ | 631.3 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Depreciation, depletion and amortization |
120.2 | 56.8 | 4.1 | |||||||||
Deferred income taxes |
(154.1 | ) | (1.5 | ) | 0.8 | |||||||
Amortization of debt issuance costs |
7.5 | 0.6 | 0.3 | |||||||||
Pension and postretirement healthcare benefit (income) expense, net |
3.6 | 3.2 | (0.4 | ) | ||||||||
Share-based compensation expense |
28.6 | 7.7 | | |||||||||
Gain on bargain purchase, net of cash received |
(1,160.4 | ) | | | ||||||||
Other noncash items affecting net income |
152.3 | 4.2 | (0.2 | ) | ||||||||
Reorganization items |
| (14.3 | ) | (953.7 | ) | |||||||
Contributions to employee pension and postretirement plans |
(29.9 | ) | (5.2 | ) | | |||||||
Changes in assets and liabilities (net of effects of acquisition): |
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(Increase) decrease in accounts receivable |
53.3 | (69.7 | ) | (10.2 | ) | |||||||
(Increase) decrease in inventories |
(216.9 | ) | 29.6 | (15.3 | ) | |||||||
(Increase) decrease in prepaids and other assets |
6.5 | 20.9 | 35.4 | |||||||||
Increase (decrease) in accounts payable and accrued liabilities |
22.4 | (20.3 | ) | 23.6 | ||||||||
Increase (decrease) in taxes payable |
8.5 | (1.6 | ) | 0.2 | ||||||||
Other, net |
1.7 | 31.9 | 1.0 | |||||||||
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Cash provided by (used in) operating activities |
68.0 | 217.6 | (283.1 | ) | ||||||||
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Cash Flows from Investing Activities: |
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Capital expenditures |
(91.2 | ) | (120.7 | ) | (5.5 | ) | ||||||
Cash received in acquisition of minerals sands business |
114.8 | | | |||||||||
Proceeds from sale of assets |
| 0.5 | | |||||||||
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Cash provided by (used in) investing activities |
23.6 | (120.2 | ) | (5.5 | ) | |||||||
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Cash Flows from Financing Activities |
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Reductions of debt |
(582.6 | ) | (43.6 | ) | | |||||||
Proceeds from borrowings |
1,689.8 | 22.0 | 25.0 | |||||||||
Debt issuance costs and commitment fees |
(20.3 | ) | (5.5 | ) | (2.4 | ) | ||||||
Merger consideration |
(192.6 | ) | | | ||||||||
Class A ordinary share repurchases, including commissions paid |
(326.2 | ) | | | ||||||||
Shares purchased for the Employee Participation Program |
(14.6 | ) | | | ||||||||
Dividends paid |
(31.5 | ) | | | ||||||||
Proceeds from conversion of warrants |
0.6 | 1.3 | | |||||||||
Proceeds from rights offering |
| | 185.0 | |||||||||
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Cash provided by (used in) financing activities |
522.6 | (25.8 | ) | 207.6 | ||||||||
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Effects of Exchange Rate Changes on Cash and Cash Equivalents |
6.2 | (2.0 | ) | 0.3 | ||||||||
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Net Increase (Decrease) in Cash and Cash Equivalents |
620.4 | 69.6 | (80.7 | ) | ||||||||
Cash and Cash Equivalents at Beginning of Period |
154.0 | 61.0 | 141.7 | |||||||||
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Cash and Cash Equivalents at End of Period |
$ | 774.4 | $ | 130.6 | $ | 61.0 | ||||||
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See notes to unaudited condensed consolidated financial statements.
6
TRONOX LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(Unaudited)
(Millions of dollars)
Tronox Limited Class A Ordinary Shares |
Tronox Limited Class B Ordinary Shares |
Tronox Incorporated Common Stock |
Capital in Excess of par Value |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total Shareholders Equity |
Non- controlling Interest |
Total Equity |
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Successor: Nine Months Ended September 30, 2012 |
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Balance at December 31, 2011 |
$ | | $ | | $ | 0.1 | $ | 579.2 | $ | 241.5 | $ | (57.0 | ) | $ | (11.5 | ) | $ | 752.3 | $ | | $ | 752.3 | ||||||||||||||||||
Fair value of noncontrolling interest on Transaction Date |
| | | | | | | | 291.1 | 291.1 | ||||||||||||||||||||||||||||||
Net income (loss) |
| | | | 1,225.5 | | | 1,225.5 | (0.8 | ) | 1,224.7 | |||||||||||||||||||||||||||||
Other comprehensive income (loss) |
| | | | | 35.1 | | 35.1 | 13.1 | 48.2 | ||||||||||||||||||||||||||||||
Merger consideration paid |
| | | (192.6 | ) | | | | (192.6 | ) | | (192.6 | ) | |||||||||||||||||||||||||||
Issuance/exchange of Tronox Limited shares |
0.1 | 0.1 | (0.1 | ) | 1,370.0 | | | | 1,370.1 | | 1,370.1 | |||||||||||||||||||||||||||||
Tronox Limited share-based compensation |
| | | 1.6 | | | | 1.6 | | 1.6 | ||||||||||||||||||||||||||||||
Class A Shares repurchased |
(0.1 | ) | | | (326.1 | ) | | | | (326.2 | ) | | (326.2 | ) | ||||||||||||||||||||||||||
Shares purchases for the Employee Participation Plan |
| | | (14.3 | ) | | | | (14.3 | ) | | (14.3 | ) | |||||||||||||||||||||||||||
Issuance of Tronox Limited shares in stock-split |
0.6 | 0.4 | | | (1.0 | ) | | | | | | |||||||||||||||||||||||||||||
Class A and Class B Share dividend declared |
| | | | (31.5 | ) | | | (31.5 | ) | | (31.5 | ) | |||||||||||||||||||||||||||
Tronox Incorporated warrants exercised |
| | | 0.6 | | | | 0.6 | | 0.6 | ||||||||||||||||||||||||||||||
Tronox Incorporated stock-based compensation |
| | | 27.0 | | | (7.8 | ) | 19.2 | | 19.2 | |||||||||||||||||||||||||||||
Tronox Incorporated common stock cancelled |
| | | (19.3 | ) | | | 19.3 | | | | |||||||||||||||||||||||||||||
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Balance at September 30, 2012 |
$ | 0.6 | $ | 0.5 | $ | | $ | 1,426.1 | $ | 1,434.5 | $ | (21.9 | ) | $ | | $ | 2,839.8 | $ | 303.4 | $ | 3,143.2 | |||||||||||||||||||
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(1) | On June 26, 2012, the Board of Directors of Tronox Limited approved a 5-to-1 stock split for holders of its Class A ordinary shares and Class B ordinary shares at the close of business on July 20, 2012, by issuance of four additional shares for each share of the same class by way of bonus issue. All references to number of shares and per share data in the Successors unaudited condensed consolidated financial statements have been adjusted to reflect the stock split, unless otherwise noted. See Note 19 for additional information regarding the Companys stock split. |
Tronox Incorporated Common Stock |
Tronox Class A Common Stock |
Tronox Class B Common Stock |
Capital in Excess of par Value |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total Stockholders Equity |
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Predecessor: One Month Ended January 31, 2011 |
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Balance at December 31, 2010 |
$ | | $ | 0.2 | $ | 0.2 | $ | 496.2 | $ | (1,128.2 | ) | $ | 8.8 | $ | (7.2 | ) | $ | (630.0 | ) | |||||||||||||
Net income |
| | | | 631.3 | | | 631.3 | ||||||||||||||||||||||||
Other comprehensive income |
| | | | | 0.3 | | 0.3 | ||||||||||||||||||||||||
Stock-based compensation |
| | | 0.1 | | | | 0.1 | ||||||||||||||||||||||||
Fresh-start reporting adjustments: |
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Elimination of predecessor common stock, capital in excess of par value, and accumulated deficit |
| (0.2 | ) | (0.2 | ) | (496.3 | ) | 496.9 | (9.1 | ) | 7.2 | (1.7 | ) | |||||||||||||||||||
Issuance of new common stock |
0.1 | | | 564.1 | | | | 564.2 | ||||||||||||||||||||||||
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Balance at January 31, 2011 |
$ | 0.1 | $ | | $ | | $ | 564.1 | $ | | $ | | $ | | $ | 564.2 | ||||||||||||||||
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Successor: Eight Months ended September 30, 2011 |
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Balance at February 1, 2011 |
$ | 0.1 | $ | | $ | | $ | 564.1 | $ | | $ | | $ | | $ | 564.2 | ||||||||||||||||
Net income |
| | | | 175.3 | | | 175.3 | ||||||||||||||||||||||||
Other comprehensive income |
| | | | | (3.3 | ) | | (3.3 | ) | ||||||||||||||||||||||
Shares withheld for claims |
| | | | | | (6.9 | ) | (6.9 | ) | ||||||||||||||||||||||
Warrants exercised |
| | | 1.3 | | | | 1.3 | ||||||||||||||||||||||||
Stock-based compensation |
| | | 7.7 | | | (2.7 | ) | 5.0 | |||||||||||||||||||||||
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Balance at September 30, 2011 |
$ | 0.1 | $ | | $ | | $ | 573.1 | $ | 175.3 | $ | (3.3 | ) | $ | (9.6 | ) | $ | 735.6 | ||||||||||||||
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See notes to unaudited condensed consolidated financial statements.
7
TRONOX LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars, except share and per share data or unless otherwise noted)
1. The Company
Tronox Limited, a public limited company registered under the laws of the State of Western Australia, Australia, and its subsidiaries (collectively referred to as Tronox or the Company) is a global leader in the production and marketing of titanium bearing mineral sands and titanium dioxide pigment (TiO2). The Companys world-class, high performance TiO2 products are critical components of everyday applications such as coatings, plastics, paper and other applications. The Companys mineral sands business consists primarily of two product streamstitanium feedstock and zircon. Titanium feedstock is used primarily to manufacture TiO2. Zircon, a hard, glossy mineral, is used for the manufacture of ceramics, refractories, TV glass and a range of other industrial and chemical products. Tronox has global operations in North America, Europe, South Africa and the Asia-Pacific region. The Company operates three TiO2 facilities at the following locations: Hamilton, Mississippi, Botlek, The Netherlands, and Kwinana, Western Australia, representing approximately 465,000 tonnes of annual TiO2 production capacity. Additionally, Tronox operates three separate mining operations: KwaZulu-Natal (KZN) Sands located in South Africa, Namakwa Sands located in South Africa and the Tiwest Joint Venture located in Western Australia, which have a combined annual production capacity of approximately 723,000 tonnes of titanium feedstock and approximately 265,000 tonnes of zircon.
Tronox Limited was formed on September 21, 2011 for the purpose of the Transaction (see below). Prior to the completion of the Transaction, the Company was wholly-owned by Tronox Incorporated, and had no operating assets or operations. On September 25, 2011, Tronox Incorporated, a Delaware corporation formed on May 17, 2005, in preparation for the contribution and transfer by Kerr-McGee Corporation (Kerr-McGee or KM) of certain entities, including those comprising substantially all of its chemical business (Tronox Incorporated), entered into a definitive agreement (as amended, the Transaction Agreement) with Exxaro Resources Limited (Exxaro) and certain of its affiliated companies, to acquire 74% of its South African mineral sands operations, including its Namakwa and KZN Sands mines, separation facilities and slag furnaces, along with its 50% share of the Tiwest Joint Venture (together the mineral sands business) (the Transaction). On June 15, 2012, the date of the Transaction (the Transaction Date), the existing business of Tronox Incorporated was combined with the mineral sands business.
Pursuant to a Registration Statement on Form S-4 (File No. 333-178835) declared effective by the Securities and Exchange Commission (the SEC) on May 4, 2012 (the Registration Statement), Tronox Limited registered Class A ordinary shares (Class A Shares) to be issued to stockholders of Tronox Incorporated in connection with the completion of the Transaction. On the Transaction Date, Tronox Limited issued 15,413,083 Class A Shares to stockholders in Tronox Incorporated. In addition, on the Transaction Date, Tronox Limited issued 9,950,856 Class B ordinary shares (Class B Shares) to Exxaro and one of its subsidiaries in consideration for the mineral sands business. As part of the Transaction, Exxaro and its subsidiaries retained a 26.0% ownership interest in each of Tronox KZN Sands Pty Ltd and Tronox Mineral Sands Pty Ltd in order to comply with the ownership requirements of the Black Economic Empowerment (BEE) legislation in South Africa. Immediately following the Transaction, Tronox Incorporated stockholders and Exxaro held approximately 60.8% and 39.2%, respectively, of the voting securities of Tronox Limited. Under the terms of the Transaction Agreement, Exxaro agreed that for a three-year period after the completion of the Transaction, it would not engage in any transaction or other action, that would result in its beneficial ownership of the voting stock of Tronox Limited exceeding 45.0% of the total issued shares of Tronox Limited.
On June 26, 2012, the Board of Directors of Tronox Limited approved a 5-to-1 stock split for holders of its Class A Shares and Class B Shares at the close of business on July 20, 2012, by issuance of four additional shares for each share of the same class by way of bonus issue. All references to the number of shares and per share data in the Successors condensed consolidated financial statements and notes thereto have been adjusted to reflect the stock split, unless otherwise noted or as the context otherwise acquires. See Note 19 for additional information regarding the Companys stock split.
During the second and third quarters of 2012, the Company repurchased approximately 12.6 million Class A Shares, which was approximately 10% of the total voting securities. As a result of such buyback, Exxaro held approximately 43.5% of the voting securities of Tronox Limited.
On October 4, 2012, Exxaro and J.P. Morgan Securities LLC (JPMS) entered into a Purchase Plan Agreement (the JPMS Tronox Class A Trading Plan) authorizing JPMS to purchase up to 1,400,000 Class A Shares (approximately 2.2% of Tronox Limiteds outstanding Class A Shares and approximately 1.2% of Tronox Limiteds voting securities) on Exxaros behalf beginning on October 5, 2012. The Companys constitution provides that, subject to certain exceptions, when Exxaro acquires a Class A Share, it automatically converts to a Class B Share. As such, Exxaro generally will not hold Class A Shares. During October 2012, Exxaro purchased 1,400,000 Class A Shares in market purchases pursuant to the JPMS Tronox Class A Trading Plan.
8
2. Acquisition of the Mineral Sands Business
As discussed above, on September 25, 2011, Tronox Incorporated entered into the Transaction Agreement with Exxaro to acquire the mineral sands business. On June 15, 2012, the existing business of Tronox Incorporated was combined with the mineral sands business under Tronox Limited. The Transaction was effectuated in two primary steps. In the first step, Tronox Incorporated became a subsidiary of Tronox Limited, with Tronox Incorporated stockholders receiving one Class A Share and $12.50 in cash (Merger Consideration) for each share of Tronox Incorporated common stock. In the second step, Tronox Limited issued Class B Shares to Exxaro and one of its subsidiaries in consideration for the mineral sands business. Exxaro retained an approximate 26% ownership interest in the South African operations that are part of the mineral sands business in order to comply with the BEE legislation of South Africa. The ownership interest in the South African operations may be exchanged for Class B Shares under certain circumstances.
Prior to the Transaction Date, Tronox Incorporated and Exxaro Australia Sands Pty Ltd., a subsidiary of Exxaro, operated the Tiwest Joint Venture, which operated a chloride process TiO2 plant located in Kwinana, Western Australia (the Kwinana Facility), a mining operation in Cooljarloo, Western Australia, and a mineral separation plant and a synthetic rutile processing facility, both in Chandala, Western Australia. As noted above, in the second step of the Transaction, the Company acquired the mineral sands business, which included Exxaros 50.0% interest in the Tiwest Joint Venture. As a result, as of the Transaction Date, the Company owns 100% of the Tiwest Joint Venture.
Purchase price and fair value of assets acquired and liabilities assumed
The Company accounted for the Transaction under Accounting Standards Codification (ASC) 805, Business Combinations (ASC 805), which requires recording assets and liabilities at fair value. Under the acquisition method of accounting, each tangible and separately identifiable intangible asset acquired and liabilities assumed were recorded based on their preliminary estimated fair values on the Transaction Date.
Because the total consideration transferred was less than the fair value of the net assets acquired, the excess of the value of the net assets acquired over the fair value of net assets acquired was recorded as an initial bargain purchase gain of approximately $1,061.1 million during the second quarter of 2012. The initial valuations were derived from estimated fair value assessments and assumptions used by management, and were preliminary. While management believes that its preliminary estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could have resulted in different values being assigned to individual assets acquired and liabilities assumed. Subsequent to the Transaction, the Company adjusted its initial valuation, which reduced the gain on bargain purchase to $1,045.6 million. The valuation process remains in progress. The final valuations are pending appraisals of certain tangible and intangible assets acquired, which will result in further adjustments to the amounts recorded and the gain on bargain purchase, which could be material. The bargain purchase gain is not taxable for income tax purposes. See Note 17 for a discussion of the tax impact of the transaction.
Initial Valuation |
Adjustments | Adjusted Valuation |
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Consideration: |
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Number of Class B Shares(1) |
9,950,856 | | 9,950,856 | |||||||||
Fair value of Class B Shares on the Transaction Date |
$ | 137.70 | $ | | $ | 137.70 | ||||||
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Fair value of equity issued |
$ | 1,370.1 | $ | | $ | 1,370.1 | ||||||
Noncontrolling interest |
291.1 | | 291.1 | |||||||||
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$ | 1,661.2 | $ | | $ | 1,661.2 | |||||||
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Fair Value of Assets Acquired and Liabilities Assumed: |
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Current Assets: |
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Cash |
$ | 114.8 | $ | | $ | 114.8 | ||||||
Accounts receivable |
199.0 | | 199.0 | |||||||||
Inventories(2) |
621.7 | (7.8 | ) | 613.9 | ||||||||
Prepaid and other assets |
24.1 | | 24.1 | |||||||||
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Total Current Assets |
959.6 | | 951.8 | |||||||||
Property, plant and equipment, net, including mineral leaseholds of $1,366.0 |
2,319.2 | | 2,319.2 | |||||||||
Deferred tax asset |
26.4 | | 26.4 | |||||||||
Other long-term assets |
19.1 | | 19.1 | |||||||||
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Total Assets |
$ | 3,324.3 | $ | (7.8 | ) | $ | 3,316.5 | |||||
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9
Current Liabilities: |
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Accounts payable |
36.4 | | 36.4 | |||||||||
Accrued liabilities |
156.9 | | 156.9 | |||||||||
Short-term debt |
76.0 | | 76.0 | |||||||||
Current deferred tax liability |
28.3 | | 28.3 | |||||||||
Income taxes payable |
2.1 | | 2.1 | |||||||||
Other current liabilities |
8.5 | | 8.5 | |||||||||
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Total Current Liabilities |
308.2 | | 308.2 | |||||||||
Long-term debt |
18.7 | | 18.7 | |||||||||
Deferred tax liability |
211.5 | (3.0 | ) | 208.5 | ||||||||
Pension and postretirement healthcare benefits |
5.4 | | 5.4 | |||||||||
Asset retirement obligations |
57.1 | | 57.1 | |||||||||
Other(3) |
1.1 | 10.7 | 11.8 | |||||||||
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Total Liabilities |
602.0 | 7.7 | 609.7 | |||||||||
Net Assets (Liabilities) |
$ | 2,722.3 | $ | (15.5 | ) | $ | 2,706.8 | |||||
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Gain on Bargain Purchase |
$ | 1,061.1 | $ | (15.5 | ) | $ | 1,045.6 | |||||
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(1) | The number of Class B Shares issued in connection with the Transaction has not been restated to affect for the 5-for-1 stock split as discussed in Note 19. |
(2) | The valuation of certain inventories has been adjusted to more accurately reflect the fair value at the Transaction Date. |
(3) | The Company completed the valuation of a Long-Term Incentive Plan for certain employees in South Africa and Australia (see Note 20). |
Mineral Sands Business Results of Operations
The following table includes the amount of net sales and earnings from the acquired mineral sands business included in the Companys results since June 15, 2012.
Mineral | Pigment | Corporate and Other |
Eliminations | Total | ||||||||||||||||
Net Sales |
$ | 237.6 | $ | 32.7 | $ | | $ | (14.7 | ) | $ | 255.6 | |||||||||
Loss from Operations |
$ | (5.2 | ) | $ | (8.7 | ) | $ | (0.1 | ) | $ | (7.2 | ) | $ | (21.2 | ) |
The following table includes the amount of net sales and earnings from the acquired mineral sands business included in the Companys results for the three months ended September 30, 2012.
Mineral | Pigment | Corporate and Other |
Eliminations | Total | ||||||||||||||||
Net Sales |
$ | 207.1 | $ | 23.7 | $ | | $ | (14.7 | ) | $ | 216.1 | |||||||||
Loss from Operations |
$ | (9.6 | ) | $ | (7.6 | ) | $ | (0.1 | ) | $ | (7.2 | ) | $ | (24.5 | ) |
For the three and nine months ended September 30, 2012, Income (Loss) from Operations includes $85.2 million and $108.8 million, respectively, of amortization of inventory step-up and unfavorable ore sales contracts from purchase accounting. The amortization of inventory step-up from purchase accounting is based on the fair values assigned, which are not final.
Supplemental Pro forma financial information
The following unaudited pro forma information gives effect to the Transaction as if it had occurred on the first day of the first quarter of fiscal 2011 (January 1, 2011). The unaudited pro forma financial information reflects certain adjustments related to the acquisition, such as (1) converting the mineral sands business financial statements to accounting principles generally accepted in the United States (U.S. GAAP), (2) conforming the mineral sands business accounting policies to those applied by Tronox Incorporated, (3) to record certain incremental expenses resulting from purchase accounting adjustments, such as incremental depreciation expense in connection with fair value adjustments to property, plant and equipment, (4) to eliminate intercompany transactions between Tronox Incorporated and the mineral sands business, (5) to record the effect on interest expense related to borrowings in connection with the transaction and (6) to record the related tax effects. The unaudited pro forma financial information also includes adjustments for certain non-recurring items as of the first day of the first quarter of fiscal 2011 (January 1, 2011) such as (1) the impact of transaction costs of approximately $95.1 million, (2) the impact of the adjusted bargain purchase gain of $1,045.6 million and (3) the impact of reorganization income arising from Tronox Incorporateds emergence from bankruptcy in the one month ended January 31, 2011 of approximately $613.6 million. The unaudited pro forma financial information is for illustrative purposes only and should not be relied upon as being indicative of the historical results that would have been obtained if the Transaction had actually occurred on that date, nor the results of operations in the future.
10
In accordance with ASC 805, the supplemental pro forma results of operations for the three and nine months ended September 30, 2012 and 2011, as if the mineral sands business had been acquired on January 1, 2011, are as follows:
Successor | Successor | |||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Nine Months Ended September 30, 2011 |
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Net Sales |
$ | 487.3 | $ | 664.6 | $ | 1,637.1 | $ | 1,751.1 | ||||||||
Income (Loss) from Operations |
$ | (27.6 | ) | $ | 166.2 | $ | 364.3 | $ | 223.0 | |||||||
Net Income (Loss) |
$ | (7.5 | ) | $ | 150.5 | $ | 339.5 | $ | 1,870.7 | |||||||
Net Income (Loss) attributable to Tronox Limited |
$ | (7.8 | ) | $ | 149.1 | $ | 310.9 | $ | 1,871.4 | |||||||
Basic Net Income (Loss) attributable to Tronox Limited per share |
$ | (0.06 | ) | $ | 1.18 | $ | 2.50 | $ | 14.86 | |||||||
Diluted Net Income (Loss) attributable to Tronox Limited per share |
$ | (0.06 | ) | $ | 1.16 | $ | 2.44 | $ | 14.52 |
3. Basis of Presentation
The unaudited condensed consolidated balance sheet as of September 30, 2012 relates to Tronox Limited. The unaudited condensed consolidated balance sheet as of December 31, 2011 relates to Tronox Incorporated. The unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2012 and the unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2012 reflect the consolidated operating results of Tronox Incorporated prior to June 15, 2012, and, from June 15, 2012 through September 30, 2012, reflect the consolidated operating results of Tronox Limited. The unaudited condensed consolidated statements of operations for the three and eight months ended September 30, 2011 and one month ended January 31, 2011 and the unaudited condensed consolidated statements of cash flows for the eight months ended September 30, 2011 and one month ended January 31, 2011 reflect the consolidated operating results of Tronox Incorporated.
As stated above, prior to the Transaction Date, Tronox Incorporated operated the Tiwest Joint Venture with Exxaro Australia Sands Pty Ltd. The Tiwest Joint Venture was a contractual relationship between Tronox Incorporated and Exxaro whereby each party held an undivided interest in each asset of the joint venture, and each party was proportionally liable for each of the joint ventures liabilities. The Tiwest Joint Venture was not a separate legal entity and did not enter into any transactions. Transactions were entered into by the joint venture partners who had the right to sell their own product, collect their proportional share of the revenues and absorb their share of costs. As such, Tronox Incorporated did not account for the Tiwest Joint Venture under the equity method. Instead, Tronox Incorporated accounted for its share of the Tiwest Joint Ventures assets that were jointly controlled and its share of liabilities for which it was jointly responsible on a proportionate gross basis in its unaudited Consolidated Balance Sheet. Additionally, Tronox Incorporated accounted for the revenues generated from its share of the products sold and its share of the expenses of the joint venture on a gross basis in its unaudited Condensed Consolidated Statements of Operations. As of the Transaction Date, the Company owns 100% of the Tiwest Joint Venture operations. As such, the unaudited condensed consolidated balance sheet as of September 30, 2012 includes 100% of the joint venture assets and liabilities, while the unaudited condensed consolidated balance sheet as of December 31, 2011 includes Tronox Incorporateds 50% undivided interest in each asset and liability of the joint venture. Additionally, the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2012 reflect Tronox Incorporateds revenues generated from its share of the products sold and its share of the expenses of the joint venture on a gross basis prior to June 15, 2012, and, from June 15, 2012 through September 30, 2012, reflect 100% of the revenues and expenses of the joint venture. The unaudited condensed consolidated statements of operations for the three and eight months ended September 30, 2011 and one month ended January 31, 2011 reflect Tronox Incorporateds revenues generated from its share of the products sold and its share of the expenses of the joint venture on a gross basis.
The accompanying unaudited condensed consolidated financial statements are unaudited and have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Registration Statement. The December 31, 2011 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP for complete financial statements.
11
Tronox Limited is registered under the laws of the State of Western Australia, Australia, and is considered a domestic company in Australia. As a result, Tronox Limited is required to report in Australia under International Financial Reporting Standards (IFRS). Additionally, as Tronox Limited is not considered a foreign private issuer, the Company is required to comply with the reporting and other requirements imposed by the U.S. securities laws on U.S. domestic issuers, which, among other things, requires reporting in the United States under U.S. GAAP. We publish our consolidated financial statements, both U.S. GAAP and IFRS, in U.S. dollars.
The Companys unaudited condensed consolidated financial statements include the accounts of all majority-owned subsidiary companies. Investments in affiliated companies that are 20% to 50% owned are carried as a component of Other Long-Term Assets on the unaudited Condensed Consolidated Balance Sheets at cost adjusted for equity in undistributed earnings. Except for dividends and changes in ownership interest, changes in equity in undistributed earnings are included in Other income (expense) on the unaudited Condensed Consolidated Statements of Operations. All intercompany transactions have been eliminated.
In connection with the Transaction, Exxaro and its subsidiaries retained a 26.0% ownership interest in each of Tronox KZN Sands Pty Ltd and Tronox Mineral Sands Pty Ltd in order to comply with the ownership requirements of the BEE legislation in South Africa. The Company accounts for such ownership interest as Noncontrolling interest on the unaudited Condensed Consolidated Balance Sheets.
On January 26, 2011, material conditions to Tronox Incorporateds plan of reorganization were resolved and it subsequently emerged from bankruptcy protection (see Note 5). In connection with its emergence from bankruptcy, Tronox Incorporated applied fresh-start accounting under ASC 852, Reorganizations (ASC 852) as of January 31, 2011. Tronox Incorporated evaluated the activity between January 26, 2011 and January 31, 2011 and, based upon the immateriality of such activity, concluded that the use of January 31, 2011 to reflect the fresh-start accounting adjustments was appropriate for financial reporting purposes. Accordingly, the financial information of Tronox Incorporated set forth in this report, unless otherwise expressly set forth or as the context otherwise indicates, reflects the consolidated results of operations and financial condition on a fresh-start basis for the period beginning February 1, 2011 (Successor), and on a historical basis for the period through January 31, 2011 (Predecessor). In applying fresh-start accounting on January 31, 2011, Tronox Incorporated recorded assets and liabilities at estimated fair value, except for deferred income taxes and certain liabilities associated with employee benefits, which were recorded in accordance with ASC 852 and ASC 740, Income Taxes (ASC 740), respectively. Additionally, Tronox Incorporated recorded gains relating to executing the Plan, gains related to revaluation of assets and resetting retained earnings and accumulated other comprehensive income to zero.
In managements opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. It is at least reasonably possible that the effect on the financial statements of a change in estimate within one year of the date of the financial statements due to one or more future confirming events could have a material effect on the financial statements. The consolidated results of operations for interim periods are not necessarily indicative of results for the entire year.
Certain prior period amounts have been reclassified to conform to the manner and presentation in the current period. Such reclassifications did not have an impact on the Companys net income (loss) or consolidated results of operations.
4. Recent Accounting Pronouncements
Other Comprehensive IncomeIn the first quarter of 2012, the Company adopted the amended guidance issued by the Financial Accounting Standards Board (the FASB) regarding the presentation of comprehensive income. Such guidance was designed to improve comparability, consistency and transparency. The amendment required that all changes in comprehensive income be presented either in (i) a single continuous statement of comprehensive income or in (ii) two separate but consecutive statements. The Company elected the two-statement method. The amendment was effective for interim and annual periods beginning after December 15, 2011, and is applied retrospectively.
Fair Value Measurements In the first quarter of 2012, the Company adopted the amended fair value measurements guidance issued by the FASB, which (i) changes certain fair value measurement and disclosure requirements, (ii) clarifies the application of existing fair value measurement and disclosure requirements and (iii) provides consistency to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way. The amended guidance was effective for interim and annual periods beginning after December 15, 2011, and is applied prospectively. The adoption of the amended guidance did not have a material impact on the Companys unaudited condensed consolidated financial statements.
12
5. Bankruptcy Proceedings and Emergence from Chapter 11
On January 12, 2009 (the Petition Date), Tronox Incorporated and certain of its subsidiaries (collectively, the Debtors) filed voluntary petitions in the U.S. Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) seeking reorganization relief under the provisions of Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code). The Debtors Chapter 11 cases were consolidated for the purpose of joint administration.
On November 30, 2010 (the Confirmation Date), the Bankruptcy Court entered an order (the Confirmation Order) confirming the Debtors First Amended Joint Plan of Reorganization pursuant to Chapter 11 of the Bankruptcy Code, dated November 5, 2010 (as amended and confirmed, the Plan). Under Chapter 11 of the Bankruptcy Code, a debtor may reorganize its business for the benefit of its stakeholders with the consummation of a plan of reorganization being the principal objective. Among other things (subject to certain limited exceptions and except as otherwise provided in the Plan or the Confirmation Order), the Confirmation Order discharged the Debtors from any debt arising before the Petition Date, terminated all of the rights and interests of pre-bankruptcy equity security holders and substituted the obligations set forth in the Plan and new common stock for those pre-bankruptcy claims. Under the Plan, claims and equity interests were divided into classes according to their relative priority and other criteria.
Material conditions to the Plan were resolved during the period from the Confirmation Date until January 26, 2011, and subsequently on February 14, 2011 (the Effective Date), the Debtors emerged from bankruptcy and continued operations as reorganized Tronox Incorporated.
The Plan was designed to accomplish, and was premised on, a resolution of the Debtors legacy environmental (the Legacy Environmental Liabilities) and legacy tort liabilities (the Legacy Tort Liabilities and collectively, with the Legacy Environmental Liabilities, the KM Legacy Liabilities). The Plan ensured that the Debtors emerged from Chapter 11 free of the significant KM Legacy Liabilities and were sufficiently capitalized. A final settlement was reached in November 2010 with respect to the Legacy Environmental Liabilities (the Environmental Settlement) and the Legacy Tort Liabilities (the Tort Settlement and, together with the Environmental Settlement, the Settlement). In exchange, claimants provided the Debtors and the reorganized Tronox Incorporated with discharges and/or covenants not to sue subsequent to the Effective Date with respect to the Debtors liability for the Legacy Environmental Liabilities. The Settlement established certain environmental response and tort claims trusts that are now responsible for the KM Legacy Liabilities in exchange for cash, certain non-monetary assets, and the rights to the proceeds of certain ongoing litigation and insurance and other third party reimbursement agreements. The Plan also provided for the creation and funding of a torts claim trust (the Tort Claims Trust), which was the sole source of distributions to holders of Legacy Tort Liabilities claims, who were paid in accordance with the terms of such trusts governing documentation. As a result of the settlement of the Debtors pre-petition debt and termination of the rights and interests of pre-bankruptcy equity, the Plan enabled Tronox Incorporated to reorganize around its existing operating locations, including: (a) its headquarters and technical facility at Oklahoma City, Oklahoma; (b) the TiO2 facilities at Hamilton, Mississippi and Botlek, the Netherlands; (c) the electrolytic chemical businesses at Hamilton, Mississippi and Henderson, Nevada (except that the real property and buildings associated with the Henderson business were transferred to an environmental response trust and reorganized Tronox Incorporated is not responsible for environmental remediation related to historic contamination at such site); and (d) its interest in the Tiwest Joint Venture in Australia.
As part of the Debtors emergence from the Chapter 11 proceedings, Tronox Incorporated relied on a combination of debt financing and money from new equity issued to certain existing creditors. Specifically, such funding included: (i) total funded exit financing of no more than $470.0 million; (ii) the proceeds of a $185.0 million rights offering (the Rights Offering) open to substantially all unsecured creditors and backstopped by certain groups; (iii) settlement of government claims related to the Legacy Environmental Liabilities through the creation of certain environmental response trusts and a litigation trust; (iv) settlement of claims related to the Legacy Tort Liabilities through the establishment of a torts claim trust; (v) issuance of common stock whereby holders of the allowed general unsecured claims received their pro rata share of 50.9% of the Tronox Incorporated common stock on the Effective Date, and the opportunity to participate in the Rights Offering for an aggregate of 49.1% of the Tronox Incorporated common stock, also issued on the Effective Date; and (vi) issuance of warrants, on the Effective Date, to the holders of equity in the Predecessor to purchase their pro rata share of a combined total of 7.5% of the Tronox Incorporated common stock, after and including the issuance of any Tronox Incorporated common stock upon exercise of such warrants.
13
6. Accounts Receivable
Accounts receivable, net of allowance for doubtful accounts, consisted of the following:
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
Accounts receivable trade |
$ | 346.0 | $ | 268.7 | ||||
Related parties |
0.3 | 6.9 | ||||||
Other |
19.3 | 2.6 | ||||||
|
|
|
|
|||||
Total |
365.6 | 278.2 | ||||||
Allowance for doubtful accounts |
(1.2 | ) | (0.4 | ) | ||||
|
|
|
|
|||||
Net |
$ | 364.4 | $ | 277.8 | ||||
|
|
|
|
7. Inventories
Minerals inventories are determined using the weighted-average cost to produce or acquire, while finished goods pigment inventories are determined using the first-in, first-out method. At September 30, 2012, the fair value of inventory from the acquired mineral sands business was $613.9 million.
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
Raw materials |
$ | 227.7 | $ | 123.5 | ||||
Work-in-process |
164.9 | 9.0 | ||||||
Finished goods(1) |
554.3 | 130.3 | ||||||
Materials and supplies, net(2) |
86.2 | 48.4 | ||||||
|
|
|
|
|||||
Total |
$ | 1,033.1 | $ | 311.2 | ||||
|
|
|
|
(1) | Includes inventory on consignment to others of approximately $33.1 million at September 30, 2012 and $12.0 million at December 31, 2011. |
(2) | Materials and supplies consist of processing chemicals, maintenance supplies and spare parts, which will be consumed directly and indirectly in the production of the Companys products. |
8. Property, Plant and Equipment and Mineral Leaseholds
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
Land and land improvements |
$ | 93.2 | $ | 50.5 | ||||
Buildings |
208.0 | 44.9 | ||||||
Machinery and equipment |
1,229.1 | 405.3 | ||||||
Construction-in-progress |
145.2 | 49.1 | ||||||
Furniture and fixture |
4.0 | |||||||
Other |
8.7 | 2.8 | ||||||
|
|
|
|
|||||
Total |
1,684.2 | 556.6 | ||||||
Less accumulated depreciation, depletion and amortization |
(128.4 | ) | (52.3 | ) | ||||
|
|
|
|
|||||
Net |
$ | 1,555.8 | $ | 504.3 | ||||
|
|
|
|
Depreciation expense related to property, plant and equipment for the three months ended September 30, 2012 and 2011 was $47.7 million and $15.3 million, respectively. Depreciation expense related to property, plant and equipment and for the nine months ended September 30, 2012, eight months ended September 30, 2011 and one month ended January 31, 2011 was $84.4 million, $34.9 million, and $3.8 million, respectively.
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
Mineral leaseholds |
$ | 1,370.7 | $ | 42.0 | ||||
Less accumulated depreciation, depletion and amortization |
(27.9 | ) | (3.6 | ) | ||||
|
|
|
|
|||||
Net |
$ | 1,342.8 | $ | 38.4 | ||||
|
|
|
|
14
Depreciation expense related to mineral leaseholds for the three months ended September 30, 2012 and 2011 was $13.2 million and $0.8 million, respectively. Depreciation expense related to mineral leaseholds for the nine months ended September 30, 2012, eight months ended September 30, 2011 and one month ended January 31, 2011 was $17.2 million, $2.6 million and nil, respectively.
9. Intangible Assets
The gross cost and accumulated amortization of intangible assets, by major intangible asset category, were as follows:
Successor | ||||||||||||
September 30, 2012 | ||||||||||||
Gross Cost |
Accumulated Amortization |
Net Carrying Amount |
||||||||||
Customer relationships |
$ | 293.9 | $ | (33.8 | ) | $ | 260.1 | |||||
TiO2 technology |
31.9 | (2.7 | ) | 29.2 | ||||||||
Internal-use software |
17.4 | (0.9 | ) | 16.5 | ||||||||
In-process research and development |
5.0 | (1.7 | ) | 3.3 | ||||||||
Trade names |
3.6 | (1.2 | ) | 2.4 | ||||||||
Other |
0.6 | (0.1 | ) | 0.5 | ||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 352.4 | $ | (40.4 | ) | $ | 312.0 | |||||
|
|
|
|
|
|
|||||||
Successor | ||||||||||||
December 31, 2011 | ||||||||||||
Gross Cost |
Accumulated Amortization |
Net Carrying Amount |
||||||||||
Customer relationships |
$ | 293.9 | $ | (18.6 | ) | $ | 275.3 | |||||
TiO2 technology |
31.9 | (1.5 | ) | 30.4 | ||||||||
Internal-use software |
11.8 | | 11.8 | |||||||||
In-process research and development |
5.0 | (0.9 | ) | 4.1 | ||||||||
Trade names |
3.6 | (0.7 | ) | 2.9 | ||||||||
Other |
0.7 | (0.1 | ) | 0.6 | ||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 346.9 | $ | (21.8 | ) | $ | 325.1 | |||||
|
|
|
|
|
|
Internal-use software relates to internal and external costs incurred during the development stage, which were being capitalized at December 31, 2011. During the second quarter of 2012, the Company began amortizing such costs. Amortization expense related to intangible assets for the three months ended September 30, 2012 and 2011 was $6.4 million and $6.0 million, respectively. Amortization expense related to intangible assets for the nine months ended September 30, 2012 and eight months ended September 30, 2011 was $18.6 million and $15.8 million, respectively. There was no amortization expense related to intangible assets for the one month ended January 31, 2011.
Estimated future amortization expense related to intangible assets is as follows:
Total Amortization |
||||
2012 |
$ | 6.3 | ||
2013 |
25.4 | |||
2014 |
24.6 | |||
2015 |
24.6 | |||
2016 |
23.0 | |||
Thereafter |
208.1 | |||
|
|
|||
Total |
$ | 312.0 | ||
|
|
15
10. Accrued Liabilities
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
Unfavorable sales contracts(1) |
$ | 68.6 | $ | | ||||
Taxes other than income taxes(2) |
39.8 | 5.2 | ||||||
Employee-related costs and benefits |
45.9 | 26.3 | ||||||
Sales rebates |
11.0 | 8.2 | ||||||
Asset retirement obligations |
1.9 | 0.9 | ||||||
Interest |
7.5 | 1.3 | ||||||
Other |
2.4 | 3.8 | ||||||
|
|
|
|
|||||
Total |
$ | 177.1 | $ | 45.7 | ||||
|
|
|
|
(1) | In connection with the Transaction, the Company acquired sales contracts at unfavorable market terms, which were valued at $83.0 million on the Transaction Date. See Note 2. |
(2) | Includes transfer taxes incurred as a result of the Transaction which were recorded in selling, general and administrative expenses on the unaudited Condensed Consolidated Statements of Operation. |
11. Debt
Short-term Debt
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
UBS Revolver(1) |
$ | | $ | | ||||
ABSA Revolver(2) |
30.4 | | ||||||
Wells Revolver(3) |
| | ||||||
|
|
|
|
|||||
Short-term debt |
$ | 30.4 | $ | | ||||
|
|
|
|
(1) | Average effective interest rate of 3.9% in 2012. |
(2) | Average effective interest rate of 8.7% in 2012. |
(3) | Average effective interest rate of 4.7% in 2011 and 5.25% in 2012. |
UBS Revolver
On June 18, 2012, in connection with the closing of the Transaction, the Company entered into a global senior secured asset-based syndicated revolving credit agreement with UBS AG, Stamford branch (the UBS Revolver) with a maturity date of the fifth anniversary of the closing date. The UBS Revolver provides the Company with a committed source of capital with a principal borrowing amount of up to $300.0 million, subject to a borrowing base. The borrowing base is related to certain eligible inventory and accounts receivable held by the Companys U.S., Australia and Netherlands subsidiaries. Obligations under the UBS Revolver are secured by a first priority lien on substantially all of the Companys existing, and future deposit accounts, inventory and account receivables and certain related assets, excluding those held by its South African subsidiaries, Netherlands subsidiaries and Bahamian subsidiary, and a second priority lien on all of the Companys other assets, including capital stock which serve as security under the Term Facility. At September 30, 2012, the Companys borrowing base was $268.0 million.
The UBS Revolver bears interest at the Companys option at either (i) the administrative agents corporate base rate (defined to mean a rate that is the greatest of (a) the lenders prime rate, (b) the Federal funds effective rate plus 0.50% and (c) the adjusted LIBOR rate for a one-month period plus 1.00%) or (ii) the adjusted LIBOR rate, in each case plus the applicable margin. The applicable margin ranges from 1.50% to 2.00% for borrowings at the adjusted LIBOR rate, and from 0.50% to 1.00% for borrowings at the alternate base rate, based upon the average daily borrowing availability. For the first six months following the closing date, the applicable margins shall be deemed to be 1.75% for borrowings at the adjusted LIBOR rate and 0.75% for borrowings at the alternate base rate. In connection with obtaining the ABSA Revolver, the Company incurred debt issuance costs of $6.5 million.
16
ABSA Revolving Credit Facility
In connection with the Transaction, the Company entered into a R900.0 million (approximately $110.0 million as of September 30, 2012) revolving credit facility with ABSA Bank Limited acting through its ABSA Capital Division (the ABSA Revolver) with a maturity date of June 14, 2017. During the third quarter of 2012, the Company had repayments of R200.0 million (approximately $24.1 million) and borrowings of R250.0 million (approximately $30.4 million). As of September 30, 2012, the Company had drawn down 250.0 million Rand (approximately $30.4 million) on the ABSA Revolver.
The ABSA Revolver bears interest at (i) the base rate (defined as one month JIBAR, which is the mid-market rate for deposits in South African Rand for a period equal to the relevant period which appears on the Reuters Screen SAFEY Page alongside the caption YLD) as of 11h00 Johannesburg time on the first day of the applicable period, plus (ii) the Margin, which is 3.50%. In connection with obtaining the ABSA Revolver, the Company incurred debt issuance costs of $1.5 million.
Wells Revolver
On February 14, 2011, Tronox Incorporated entered into a $125.0 million senior secured asset-based revolving credit agreement with Wells Fargo Capital Finance, LLC (the Wells Revolver). The Wells Revolver had a maturity date of February 14, 2015. The Wells Revolver provided the Company with a committed source of capital with a principal borrowing amount of up to $125.0 million subject to a borrowing base. Borrowing availability under the Wells Revolver was subject to a borrowing base, which was related to certain eligible inventory and receivables held by the Companys U.S. subsidiaries. On February 8, 2012, the Company amended the Wells Revolver to facilitate the Transaction while keeping the revolver in force. In connection with refinancing the Wells Revolver, the Company incurred fees of $0.6 million. On June 18, 2012, the Company refinanced the Wells Revolver with the UBS Revolver.
During 2012, the Company borrowed $30.0 million against the Wells Revolver, which was repaid with borrowings under the UBS Revolver. During 2011, to facilitate its exit from bankruptcy and help pay for the buy-in of its 50% share of the Kwinana Facility TiO2 expansion, the Company borrowed $39.0 million against the Wells Revolver, which by December 31, 2011, was fully repaid using cash generated from operations.
Long-Term Debt
Initial | Successor | |||||||||||||||
Principal Amount |
Maturity Date |
September 30, 2012 |
December 31, 2011 |
|||||||||||||
Secured bonds |
$ | 900.0 | 8/15/2020 | $ | 900.0 | $ | | |||||||||
Term Facility(1) |
$ | 700.0 | 2/8/2018 | 692.1 | | |||||||||||
Exit Financing Facility(2) |
$ | 425.0 | 10/21/2015 | | 420.8 | |||||||||||
Co-generation Unit Financing Arrangement |
$ | 16.0 | 2/1/2016 | 11.0 | 6.5 | |||||||||||
Lease financing |
15.6 | | ||||||||||||||
|
|
|
|
|||||||||||||
Total debt |
1,618.7 | 427.3 | ||||||||||||||
Less: Long-term debt due in one year |
(11.0 | ) | (5.9 | ) | ||||||||||||
|
|
|
|
|||||||||||||
Long-term debt |
$ | 1,607.7 | $ | 421.4 | ||||||||||||
|
|
|
|
(1) | Average effective interest rate of 5.1% in 2012. |
(2) | Average effective interest rate of 7.1% and 7.2% in 2012 and 2011, respectively. |
The Companys debt is recorded at historical amounts. At September 30, 2012 the fair value of the secured notes and the term facility was $916.3 million and $707.0 million, respectively. The Company determined the fair value of both the secured notes and the term facility using the Bloomberg market price as of September 28, 2012. At December 31, 2011, the total carrying value of long-term debt approximated its fair value due to the variable interest rates and frequent repricing of such instruments. The fair value hierarchy for long-term debt is a Level 2 input.
At September 30, 2012, the scheduled maturities of the Companys long-term debt were as follows:
Total Debt | ||||
2012 |
$ | 2.8 | ||
2013 |
10.7 | |||
2014 |
10.6 | |||
2015 |
10.6 | |||
2016 |
7.6 | |||
Thereafter |
1,582.5 | |||
|
|
|||
Total debt |
$ | 1,624.8 | ||
|
|
17
On August 20, 2012, Tronox Limiteds wholly-owned subsidiary, Tronox Finance LLC, issued $900.0 million aggregate principal amount of 6.375% senior notes due 2020 (the Senior Notes). The Senior Notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. The Senior Notes bear interest semiannually at a rate equal to 6.375% and were sold at par value. The Senior Notes are fully and unconditionally guaranteed on a senior, unsecured basis by Tronox Limited and certain of its subsidiaries. The Senior Notes are redeemable at any time at the Companys discretion. The Senior Notes and related guarantees have not been registered under the Securities Act, or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws.
Approximately $326.2 million of the proceeds from the Senior Notes were used for returns of shareholder capital, in the form of share buybacks. The remainder of the proceeds will be used for general corporate purposes, and subject to required approvals may also be used for further returns of capital to shareholders from time to time (including by way of dividend).
The Company recorded debt issuance fees of $16.9 million, which are being amortized over the life of the debt, and are included in other long-term assets on the unaudited Condensed Consolidated Balance Sheet. During the three and nine months ended September 30, 2012, amortization expense amounted to$0.3 million.
Term Facility
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
Term Facility |
$ | 698.2 | $ | | ||||
Discount |
(6.1 | ) | | |||||
|
|
|
|
|||||
Secured bonds, net |
$ | 692.1 | $ | | ||||
|
|
|
|
On February 8, 2012, Tronox Incorporateds wholly-owned subsidiary, Tronox Pigments (Netherlands) B.V., entered into a term loan facility with Goldman Sachs Bank USA comprised of a $550.0 million Senior Secured Term Loan and a $150.0 million Senior Secured Delayed Draw Term Loan (together, the Term Facility). The Term Facility has a maturity date of February 8, 2018. The Term Facility was issued net of an original issue discount of $7.0 million, or 1.0% of the initial principal amount, which is being amortized over the life of the Term Facility. At September 30, 2012, the original issue discount was $6.1 million. On June 14, 2012, in connection with the closing of the Transaction, Tronox Pigments (Netherlands) B.V. drew down the $150.00 million Senior Secured Delayed Draw Term. During 2012, the Company has made principal repayments of $1.8 million.
The Term Facility bears interest at a base rate plus a margin of 2.25% or adjusted Eurodollar rate plus a margin of 3.25% (in each case with a possible 0.25% increase or decrease based on the Companys public credit rating). The base rate is defined as the greater of (i) the prime lending rate as quoted in the print edition of The Wall Street Journal, (ii) the Federal funds rate plus 0.50%, or (iii) 2%.
The Term Facility is secured by a first priority lien on substantially all of the Companys and the subsidiary guarantors existing and future property and assets. This includes, upon the consummation of the Transaction, certain assets acquired in the Transaction. The terms of the Term Facility provide for customary representations and warranties, affirmative and negative covenants and events of default. The terms of the covenants, subject to certain exceptions, restrict, among other things: (i) debt incurrence; (ii) lien incurrence; (iii) investments, dividends and distributions; (iv) dispositions of assets and subsidiary interests; (v) acquisitions; (vi) sale and leaseback transactions; and (vii) transactions with affiliates and shareholders.
In connection with obtaining the Term Facility, Tronox Incorporated incurred debt issuance costs of $17.2 million, of which $5.5 million was paid in 2011 and $11.7 million was paid in 2012. Such costs are recorded in Prepaid and other assets on the unaudited Condensed Consolidated Balance Sheet and are being amortized through the maturity date.
Exit Financing Facility
On February 14, 2011, Tronox Incorporateds senior secured super-priority DIP and Exit Credit Agreement with Goldman Sachs Lending Partners, in accordance with its terms, converted into a $425.0 million exit facility with a maturity date of October 21, 2015 (the Exit Financing Facility).
18
The Exit Financing Facility bore interest at the greater of a base rate plus a margin of 4.0% or adjusted Eurodollar rate plus a margin of 5.0%. The base rate was defined as the greater of (i) the prime lending rate as quoted in the print edition of The Wall Street Journal, (ii) the Federal Funds Rate plus 0.50%, or (iii) 3%. The adjusted Eurodollar rate is defined as the greater of (i) the LIBOR rate in effect at the beginning of the interest period, or (ii) 2.0%. Interest was payable quarterly or, if the adjusted Eurodollar rate applied, it was payable on the last day of each interest period. On February 8, 2012, Tronox Incorporated refinanced the Exit Facility with the Term Facility, as discussed above.
Co-generation Unit Financing Arrangement
In March 2011, the Tiwest Joint Venture acquired a steam and electricity gas fired co-generation plant, adjacent to its Kwinana pigment plant, through a five year financing arrangement. Tronox Western Australia Pty Ltd, the Companys wholly owned subsidiary, owned a 50% undivided interest in the co-generation plant through the Tiwest Joint Venture. In order to finance its share of the asset purchase, Tronox Incorporated incurred debt totaling $8.0 million. In connection with the Transaction, the Company acquired the remaining 50% undivided interest in the co-generation plant from Exxaro, along with its debt of $5.8 million. Under the financing arrangement, monthly payments are required and interest accrues on the remaining balance owed at the rate of 6.5% per annum.
Lease Financing
In connection with the Transaction, the Company acquired capital lease obligations, which are payable through 2032 at a weighted average interest rate of approximately 19.1%. At September 30, 2012, such obligations had a net book value of assets recorded under capital leases aggregating $9.1 million.
Financial Covenants
At September 30, 2012, the Company had financial covenants in the UBS Revolver, the ABSA Revolver and the Term Facility.
The terms of the UBS Revolver provide for customary representations and warranties, affirmative and negative covenants and events of default. The terms of the covenants, subject to certain exceptions, restrict, among other things: (i) debt incurrence; (ii) lien incurrence; (iii) investments, dividends and distributions; (iv) dispositions of assets and subsidiary interests; (v) acquisitions; (vi) sale and leaseback transactions; and (vii) transactions with affiliates and shareholders. The UBS Revolver requires the Company to maintain a Consolidated Fixed Charge Coverage Ratio of not less than 1.0 to 1.0 calculated on a quarterly basis only if excess availability on the UBS Revolver is less than the greater of (A) $20.0 million and (B) 10% of the lesser of (x) the aggregate commitments in effect at such time and (y) the borrowing base at such time. If the Company is required to maintain the Consolidated Fixed Charge Coverage Ratio then it will be required to maintain such ratio until, during the preceding 60 consecutive days, borrowing availability would have been at all times greater than the greater of (i) $20.0 million and (ii) 10% of the aggregate commitments in effect at such time.
The ABSA Revolver requires the ratio of (i) South African Consolidated EBITDA, as defined in the agreement, to South African Net Interest Expense shall not be less than 5.00: 1.00 and (ii) South African Consolidated Net Debt to South African Consolidated EBITDA, as defined in the agreement, shall be less than 2.00:1.00.
The Term Facility requires that a leverage ratio, as defined in the agreement, not exceed, as of the last day of any fiscal quarter, the correlative ratio as follows:
Fiscal Quarter Ending |
Total Leverage Ratio | |||
June 30, 2012 through December 31, 2015 |
3.00:1.00 | |||
March 31, 2016 and thereafter |
2.75:1.00 |
The Term Facility and the UBS Revolver are subject to an intercreditor agreement pursuant to which the lenders respective rights and interests in the security are set forth.
The Company was in compliance with its financial covenants at September 30, 2012. A breach of any of the covenants imposed on the Company by the terms of the UBS Revolver or the Term Facility could result in a default under the agreement. In the event of a default, the lenders could terminate their commitments to the Company and could accelerate the repayment of all of the Companys indebtedness under the agreement. In such case, the Company may not have sufficient funds to pay the total amount of accelerated obligations, and its lenders could proceed against the collateral pledged.
19
Interest Expense
Successor | Predecessor | |||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
||||||||||||||||||
Interest expense |
$ | 16.3 | $ | 8.0 | $ | 31.1 | $ | 21.1 | $ | 2.6 | ||||||||||||
Amortization of deferred debt issuance costs and discount on debt |
1.2 | 0.3 | 7.5 | 0.6 | 0.3 | |||||||||||||||||
Other |
0.7 | | 1.0 | 0.4 | | |||||||||||||||||
Capitalized interest |
(0.1 | ) | (0.3 | ) | (0.6 | ) | (0.6 | ) | | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Interest and debt expense |
$ | 18.1 | $ | 8.0 | $ | 39.0 | $ | 21.5 | $ | 2.9 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
For the one month ended January 31, 2011, interest expense excludes $2.8 million, which would have been payable under the terms of the Companys $350.0 million 9.5% senior unsecured notes.
12. Asset Retirement Obligations
To the extent a legal obligation exists, an asset retirement obligation (ARO) is recorded at its estimated fair value and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. Fair value is measured using expected future cash outflows discounted at Tronoxs credit-adjusted risk-free interest rate. The Companys unaudited condensed consolidated financial statements classify accretion expense related to asset retirement obligations as a production cost, which is included in Cost of goods sold on the unaudited Consolidated Statements of Operations.
The Companys AROs are as follows:
| the KZN mine and the Namakwa Sands mine, both in South Africa, to restore the areas that have been disturbed as required under the mining leases; |
| mine closure and rehabilitation costs in Western Australia to restore the area that has been disturbed, as required under the mining lease; |
| plant closure and exit costs associated with certain industrial sites in Western Australia, whereby the Company is required to return the sites to their original states under licensing conditions: |
| plant closure and exit costs associated with the Botlek, the Netherlands facility, whereby the Company is required to return the site back to its original state at the end of its long-term lease; and |
| landfill closure costs at the Hamilton, Mississippi facility to address one-time closure costs (cap with liner and cover with soil) and annual monitoring costs of the closed landfill under applicable state environmental laws in Mississippi, which is expected to be completed in 2015. |
A summary of the changes in the AROs during the nine months ended September 30, 2012 is as follows:
Balance, December 31, 2011 |
$ | 30.1 | ||
AROs acquired in the acquisition of the minerals sands business |
57.1 | |||
Additions |
5.8 | |||
Settlements/payments |
(1.2 | ) | ||
Accretion expense |
2.0 | |||
Other, including changes in estimates and remeasurement |
8.5 | |||
|
|
|||
Balance, September 30, 2012 |
$ | 102.3 | ||
|
|
|||
Current portion included in accrued liabilities |
$ | 1.9 | ||
|
|
|||
Noncurrent portion |
$ | 100.4 | ||
|
|
20
A summary of the AROs by site is included in the table below:
Australia |
$ | 57.0 | ||
South Africa |
34.0 | |||
Botlek |
10.2 | |||
Hamilton |
1.1 | |||
|
|
|||
Total AROs |
$ | 102.3 | ||
|
|
13. Other Assets and Other Liabilities
Prepaid and Other Current Assets
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
Prepaid expenses |
$ | 21.5 | $ | 10.2 | ||||
Cash collateralized letters of credit and surety bonds |
1.4 | 4.9 | ||||||
Other |
8.3 | 6.6 | ||||||
|
|
|
|
|||||
Total |
$ | 31.2 | $ | 21.7 | ||||
|
|
|
|
Other Long-Term Assets
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
Debt issuance costs, net |
$ | 39.2 | $ | 8.4 | ||||
Environmental rehabilitation trust(1) |
20.7 | | ||||||
Other, net |
3.2 | 3.2 | ||||||
|
|
|
|
|||||
Total |
$ | 63.1 | $ | 11.6 | ||||
|
|
|
|
(1) | The Company has established an environmental rehabilitation trust in respect of the prospecting and mining operations in South Africa in accordance with applicable regulations. Subsequent to the Transaction Date, Exxaro has transferred the South African assets of the mineral sands business from its existing environmental rehabilitation trust to the new environmental rehabilitation trust. |
Noncurrent Liabilities Other
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
Long-term incentive plan (see Note 20) |
$ | 9.7 | $ | | ||||
Reserve for workers compensation and general liability claims |
8.7 | 8.5 | ||||||
Reserve for uncertain tax positions |
3.4 | 0.9 | ||||||
Other |
5.6 | 2.4 | ||||||
|
|
|
|
|||||
Total |
$ | 27.4 | $ | 11.8 | ||||
|
|
|
|
14. Commitments and Contingencies
Letters of CreditAt September 30, 2012, the Company had outstanding letters of credit in the amount of approximately $36.9 million, of which $29.4 million were issued under the Wells Revolver and were backstopped by a letter of credit issued under the UBS Revolver.
Other Commitments Tronox Incorporated entered into certain agreements prior to the bankruptcy that required it to indemnify third parties for losses related to environmental matters, litigation and other claims. No material obligations are presently known and, thus, no reserve has been recorded in connection with such indemnification agreements.
21
Environmental ContingenciesIn accordance with ASC 450, Contingencies, and ASC 410, Asset Retirement and Environmental Obligations, the Company recognizes a loss and records an undiscounted liability when litigation has commenced or a claim or an assessment has been asserted, or, based on available information commencement of litigation or assertion of a claim or assessment is probable, and the associated costs can be estimated. It is not possible for the Company to reliably estimate the amount and timing of all future expenditures related to environmental matters because, among other reasons, environmental laws and regulations, as well as enforcement policies and clean up levels, are continually changing, and the outcome of court proceedings, alternative dispute resolution proceedings (including mediation) and discussions with regulatory agencies are inherently uncertain.
The Company believes that it has reserved adequately for the probable and reasonably estimable costs of known contingencies. There is no environmental litigation, claim or assessment that has been asserted nor is there any probability of an assessment or a claim for which the Company has not recorded a liability. However, additions to the reserves may be required as additional information is obtained that enables the Company to better estimate its liabilities. The Company cannot reliably estimate the amount of future additions to the reserves at this time. In certain situations, reserves may be probable but not estimable. Additionally, sites may be identified in the future where the Company could have potential liability for environmental related matters. If a site is identified, the Company will evaluate to determine what reserve, if any, should be established.
Legal The Western Australia Office of State Revenue (the OSR) continues to review their technical position on the imposition of stamp duty on the transfer of Tronox Incorporateds shares related to Kerr-McGees restructuring in 2002 and from the share transfer related to the spinoff of Tronox Incorporated from Kerr-McGee in 2005. On January 17, 2012, the OSR contacted the Company seeking additional information related to the 2005 spinoff. In addition, the OSR informed the Company that it has made a preliminary determination that the Company was land rich at the time of the 2002 share transfers and, as a result, the Company may be liable for stamp duty and penalties arising from that share transfer. A company is considered land rich if the value of its land, goods, wares and merchandise is greater than 60% of the total value of all the property that the entity owns. The OSR has not made an assessment at this time and continues discussions with the Company and its legal advisors. The Company has accrued stamp duty on the 2002 transaction in the amount of $3.2 million based upon its position that the Company was not land rich at the time of the share transfers. The Company intends to exercise all of its legal and administrative remedies in the event that the OSR makes an assessment based upon its claim that it is land rich.
In August 2011, the outstanding legal disputes between the Company and RTI Hamilton, Inc. dating back to 2008 came to a close with the parties reaching an agreement in principle. The agreement reflects a compromise and settlement of disputed claims in complete accord and satisfaction thereof. RTI Hamilton paid Tronox the sum of $10.5 million within five business days of receipt of the Bankruptcy Court Approval. Of the total payment, $0.7 million constitutes payment for capital costs incurred by Tronox in relation to the agreement, plus interest.
Registration Rights AgreementOn the Effective Date, Tronox Incorporated entered into a Registration Rights Agreement (the Registration Rights Agreement) with certain stockholders of Tronox Incorporated party thereto. Pursuant to the Registration Rights Agreement, among other things, Tronox Incorporated was required to file with the SEC, pursuant to Section 13(a) of the Exchange Act, a registration statement for its common stock prior to September 30, 2011. Tronox Incorporated did not meet the September 30, 2011 deadline, and therefore, was subject to liquidation damages of approximately $2.0 million. Tronox Incorporated accrued $2.0 million related to such liability during 2011 and, as of December 31, 2011, Tronox Incorporated received and paid claims in the amount of $0.6 million. The remaining $1.4 million of claims were received and paid during the first quarter of 2012.
Other MattersFrom time to time, the Company may be party to a number of legal and administrative proceedings involving environmental and/or other matters in various courts or agencies. These proceedings, individually and in the aggregate, may have a material adverse effect on the Company. These proceedings may be associated with facilities currently or previously owned, operated or used by the Company and/or its predecessors, some of which may include claims for personal injuries, property damages, cleanup costs and other environmental matters. Current and former operations of the Company may also involve management of regulated materials, which are subject to various environmental laws and regulations including the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), the Resource Conservation and Recovery Act (RCRA) or state equivalents. Similar environmental laws and regulations and other requirements exist in foreign countries in which the Company operates.
15. Noncontrolling Interest
In connection with the Transaction, Exxaro and its subsidiaries retained a 26.0% ownership interest in each of Tronox KZN Sands (Pty) Ltd and Tronox Mineral Sands (Pty) Ltd in order to comply with the ownership requirements of the BEE legislation in South Africa. Exxaro is entitled to exchange this interest for approximately 3.2% in additional Class B Shares under certain circumstances (i.e., the earlier of the termination of the Empowerment Period or the tenth anniversary of completion of the Transaction).
22
A reconciliation of the beginning and ending balances of noncontrolling interest on the Companys unaudited Condensed Consolidated Balance Sheets is presented below.
Balance at January 1, 2012 |
$ | | ||
Fair value of noncontrolling interest on the Transaction Date(1) |
291.1 | |||
Earnings attributable to noncontrolling interest |
(0.8 | ) | ||
Effect of exchange rate changes |
13.1 | |||
|
|
|||
Balance at September 30, 2012 |
$ | 303.4 | ||
|
|
|||
|
||||
(1) The fair value of noncontrolling interest is preliminary and based upon valuations derived from estimated fair value assessments and assumptions used by management. While management believes that its preliminary estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different values being assigned. |
|
16. Other Income (Expense)
Successor | Predecessor | |||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
||||||||||||||||||
Net unrealized and realized foreign currency gain (loss) |
$ | (1.6 | ) | $ | (0.6 | ) | $ | (6.3 | ) | $ | (1.1 | ) | $ | 1.5 | ||||||||
Interest income |
0.5 | 0.2 | 0.9 | 0.4 | 0.1 | |||||||||||||||||
Other |
1.3 | (0.9 | ) | 0.6 | (1.0 | ) | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 0.2 | $ | (1.3 | ) | $ | (4.8 | ) | $ | (1.7 | ) | $ | 1.6 | |||||||||
|
|
|
|
|
|
|
|
|
|
17. Income Taxes
The following table presents the income tax provisions, along with income from continuing operations and the effective tax rates:
Successor | Predecessor | |||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
||||||||||||||||||
Income tax benefit (provision) |
$ | 38.0 | $ | 9.0 | $ | 127.5 | $ | (3.3 | ) | $ | (0.7 | ) | ||||||||||
Income (Loss) from Continuing Operations Before Income Taxes |
(56.0 | ) | 89.9 | 1,097.2 | 178.6 | 632.2 | ||||||||||||||||
Effective Tax Rate |
67.9 | % | (10.0 | )% | (11.6 | )% | 1.8 | % | 0.1 | % |
The negative effective tax rate for the 2012 Successor nine months ended September 30, 2012, differs from the U.S. statutory rate of 35% primarily as a consequence of the Company re-domiciling in Australia. Because the Australian tax laws provide for a resetting of the tax basis of the business assets to market value, the Company recorded a tax benefit related to this market value basis adjustment. The overall tax benefit from this basis adjustment increase was partially offset by a valuation allowance established for the portion of the tax benefit which the Company believes will not be realized. Because this basis change did not pertain to an entity acquired in the Transaction, this net tax benefit was recorded through tax expense and did not impact the Companys gain on bargain purchase.
Additionally, the effective tax rate for the nine months ended September 30, 2012, was impacted by the release of a valuation allowance in the Netherlands, continuing valuation allowances in the United States, income in foreign jurisdictions taxed at rates lower than 35%, and the Companys gain on the bargain purchase, which was recorded net of the financial tax impact and is not subject to income tax in any jurisdiction.
The high effective tax rate for the three months ended September 30, 2012, differs from the U.S. statutory rate of 35% primarily because the Company incurred a book operating loss for the quarter while recording a tax benefit from the release of a valuation allowance in the Netherlands.
23
The effective tax rates for the 2011 Successor periods differ from the U.S. statutory rate of 35% primarily due to valuation allowances in the United States, income in foreign jurisdictions taxed at rates lower than 35% and statute lapses in a foreign jurisdiction which released significant liabilities related to uncertain tax positions. In the one month ended January 31, 2011, the effective tax rate for the Predecessor period differs from the U.S. statutory rate of 35% primarily due to fresh-start adjustments, which were recorded net of tax. Additionally, the Predecessor period effective tax rate was impacted by valuation allowances in multiple jurisdictions and income in foreign jurisdictions taxed at rates lower than 35%.
The application of business combination accounting on June 15, 2012 resulted in the re-measurement of deferred income taxes associated with recording the assets and liabilities of acquired entities at fair value pursuant to ASC 805. As a result, deferred income taxes of $202.3 million were recorded at amounts determined in accordance with ASC 740 as part of the Companys gain on bargain purchase.
The application of fresh-start accounting on January 31, 2011, resulted in the re-measurement of deferred income tax liabilities associated with the revaluation of Tronox Incorporateds assets and liabilities pursuant to ASC 852. As a result, deferred income taxes were recorded at amounts determined in accordance with ASC 740 of $11.8 million as part of reorganization income. Additionally, during 2011, Tronox Incorporated released valuation allowances against certain of its deferred tax assets in the Netherlands and Australia resulting from this re-measurement.
For U.S. federal income tax purposes, typically the amount of cancellation of debt income (CODI) recognized, and accordingly the amount of tax attributes that may be reduced, depends in part on the fair market value of non-cash consideration given to creditors. On Tronox Incorporateds date of emergence, the fair market value of non-cash consideration given was such that the creditors received consideration in excess of their claims. For this reason, Tronox Incorporated did not recognize any CODI and retained all of its U.S. tax attributes. In addition, Tronox Incorporated reflected a tax deduction for the premium paid to the creditors of $1,129.7 million. This deduction will increase the Companys net operating losses (NOLs) in the United States and in various states where the Company has filing requirements. The resulting federal tax benefit of $395.4 million and the estimated corresponding state tax benefit of $51.0 million, net of the deferred federal effect, have been fully offset by a valuation allowance in accordance with ASC 740, after considering all available positive and negative evidence. Because the financial offset for the consideration given to creditors was recorded through equity, neither the tax benefits nor the offsetting valuation allowance impacts were shown in the effective tax rate calculations. Instead, the excess tax benefit, which netted to zero with the valuation allowance, was reflected as an equity adjustment.
The Company does not believe an ownership change occurred as a result of the Transaction. Upon the Companys emergence from bankruptcy in the period ended January 31, 2011 the Company experienced an ownership change resulting in a limitation under IRC Sections 382 and 383 related to its U.S. NOLs generated prior to emergence from bankruptcy. The Company does not expect that the application of these limitations will have any material affect upon its U.S. federal or state income tax liabilities.
Earnings of certain foreign subsidiaries of Tronox Incorporated, which were undistributed to the U.S., totaled $144.0 million at December 31, 2011. Under the new Australian holding company, it is expected that undistributed earnings of certain subsidiaries will continue to increase. At September 30, 2012, no provision for deferred U.S. or Australian income taxes has been made for these earnings because they were considered to be indefinitely reinvested outside of the parents taxing jurisdictions. The distribution of these earnings in the form of dividends or otherwise may subject the Company to U.S. federal and state or foreign income taxes and, possibly, foreign withholding taxes. However, because of the complexities of taxation of foreign earnings, it is not practicable to estimate the amount of additional tax that might be payable on the eventual remittance of these earnings to their parent corporations.
The Company continues to maintain a valuation allowance related to the net deferred tax assets in the United States. Future provisions for income taxes will include no tax benefits with respect to losses incurred and tax expense only to the extent of current alternative minimum tax and state tax payments until the valuation allowance in the United States is eliminated. ASC 740 requires that all available positive and negative evidence be weighted to determine whether a valuation allowance should be recorded.
18. Earnings Per Share
Certain unvested awards issued under the Tronox Limited Management Equity Incentive Plan and the T-Bucks Employee Participation Plan, as further discussed in Note 20, contain non-forfeitable rights to dividends declared on Class A Shares. Any unvested shares that participate in dividends are considered participating securities, and are included in the Companys computation of basic and diluted earnings per share using the two-class method, unless the effect of including such shares would be antidilutive. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of ordinary shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.
24
Basic earnings per share is computed utilizing the two-class method, and is calculated based on weighted-average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for nonvested restricted shares, warrants and options. As we recognized a net loss for the three months ended September 30, 2012, the unvested share-based payments and options were not recognized in the diluted earnings per share calculations as they were antidilutive.
The following table sets forth the number of shares utilized in the computation of basic and diluted earnings per share from continuing operations for the periods indicated. The weighted average shares outstanding, potentially dilutive shares, earnings per share and anti-dilutive shares of the Successor have been restated to affect the 5-for-1 stock split discussed in Note 19.
Successor | Predecessor | |||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
||||||||||||||||||
Numerator Basic and Diluted: |
||||||||||||||||||||||
Income (Loss) from Continuing Operations |
$ | (18.0 | ) | $ | 98.9 | $ | 1,224.7 | $ | 175.3 | $ | 631.5 | |||||||||||
Less: Income attributable to noncontrolling interest |
(1.3 | ) | | (0.8 | ) | | | |||||||||||||||
Less: Dividends paid |
| | 31.5 | | | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Undistributed earnings (losses) |
(16.7 | ) | 98.9 | 1,194.0 | 175.3 | 631.5 | ||||||||||||||||
Percentage allocated to common shares |
100 | % | 100 | % | 99.42 | % | 100 | % | 100 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Undistributed earnings allocated to common shares |
(16.7 | ) | 98.9 | 1,187.1 | 175.3 | 631.5 | ||||||||||||||||
Add: Dividends declared allocated to common shares |
| | 31.4 | | | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Earnings available to common shares |
$ | (16.7 | ) | $ | 98.9 | $ | 1,218.5 | $ | 175.3 | $ | 631.5 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Denominator Basic: |
||||||||||||||||||||||
Weighted-average common shares (In thousands) |
122,352 | 74,910 | 94,193 | 73,325 | 41,311 | |||||||||||||||||
Add: Effect of Dilutive Securities: |
||||||||||||||||||||||
Restricted shares |
| 1,120 | 66 | 1,200 | 88 | |||||||||||||||||
Warrants |
| 3,145 | 2,638 | 3,135 | | |||||||||||||||||
Options |
| | 6 | | | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Denominator Diluted |
122,352 | 79,175 | 96,903 | 77,660 | 41,399 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Earnings per Share: |
||||||||||||||||||||||
Basic Income (Loss) per Share |
$ | (0.14 | ) | $ | 1.32 | $ | 12.94 | $ | 2.39 | $ | 15.29 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Diluted Income (Loss) per Share |
$ | (0.14 | ) | $ | 1.25 | $ | 12.57 | $ | 2.26 | $ | 15.25 | |||||||||||
|
|
|
|
|
|
|
|
|
|
In computing diluted earnings per share under the two-class method, the Company considered potentially dilutive shares. For the three months ended September 30, 2012, 308,555 options with an average exercise price of $27.91 were not recognized in the diluted earnings per share calculation as they were antidilutive. For the one month ended January 31, 2011, 1,152,408 options with an average exercise price of $9.54 were anti-dilutive because they were not in the money. There were no options outstanding during the three and eight months ended September 30, 2011.
During the third quarter of 2012, the Company created the T-Bucks Employee Purchase Plan for the benefit of certain employees at Tronox subsidiaries in South Africa. Shares held by the Trust are not considered outstanding for purposes of computing earnings per share. See Note 20 for additional information on the T-Bucks Employee Purchase Plan.
25
19. Shareholders Equity
Stock Split Declared
On June 26, 2012, the Board approved a 5-to-1 stock split for holders of its Class A Shares and Class B Shares at the close of business on July 20, 2012, by issuance of four additional shares for each share of the same class. As a result of the stock split, the Company recorded an increase to Tronox Limited Class A ordinary shares of $0.6 million and an increase to Tronox Limited Class B ordinary shares of $0.4 million, with corresponding decreases to Retained earnings on the unaudited Condensed Consolidated Balance Sheets.
Ordinary Shares and Common Stock
The changes in ordinary shares and common stock outstanding and treasury shares for the nine months ended September 30, 2012 were as follows:
Tronox Limited Class A Shares outstanding: |
||||
Balance at December 31, 2011 |
| |||
Shares issued in connection with the Transaction(1) |
76,644,650 | |||
Shares issued for share-based compensation |
7,550 | |||
Shares issued for warrants exercised |
9,323 | |||
Shares purchased by the T-Bucks Trust(2) |
(548,234 | ) | ||
Shares repurchased/cancelled(3) |
(12,626,400 | ) | ||
|
|
|||
Balance at September 30, 2012 |
63,486,889 | |||
|
|
Tronox Limited Class B Shares outstanding: |
||||
Balance at December 31, 2011 |
| |||
Shares issued in connection with the Transaction(1) |
49,754,280 | |||
|
|
|||
Balance at September 30, 2012 |
49,754,280 | |||
|
|
|||
Tronox Incorporated common stock outstanding: |
||||
Balance at December 31, 2011 |
75,383,455 | |||
Shares issued for stock-based compensation |
570,785 | |||
Shares issued for warrants exercised |
690,385 | |||
Shares issued for claims |
25 | |||
Shares exchanged in connection with the Transaction(1) |
(76,644,650 | ) | ||
|
|
|||
Balance at September 30, 2012 |
| |||
|
|
|||
Tronox Incorporated common stock held as treasury: |
||||
Balance at December 31, 2011 |
472,565 | |||
Shares issued for stock-based compensation |
239,360 | |||
Shares cancelled in connection with the Transaction(3) |
(711,925 | ) | ||
|
|
|||
Balance at September 30, 2012 |
| |||
|
|
(1) | Shares issued in connection with the Transaction have been adjusted for the 5-for-1 stock split. On the Transaction Date, the Company issued 15,328,930 Class A Shares and 9,950,856 Class B Shares. |
(2) | During the third quarter of 2012, the Company created the T-Bucks Employee Participation Plan for the benefit of certain employees at Tronox subsidiaries in South Africa. See Note 20 for additional information on the Employee Participation Plan. |
(3) | In accordance with Australian law, the Company is not permitted to hold its own ordinary shares. As such, all Class A Shares that were repurchased by the Company have been cancelled. Additionally, all shares of Tronox Incorporated common stock that were held by Tronox Incorporated on the Transaction date were cancelled in connection with the Transaction. The number of Class A Shares repurchased has been adjusted for the 5-for-1 stock split. |
26
Warrants
As part of its emergence from bankruptcy, Tronox Incorporated issued warrants to existing holders of its equity in two tranches, Series A warrants and Series B warrants (collectively, the Tronox Incorporated Warrants), to purchase up to an aggregate of 1,216,216 shares, or 7.5%, of Tronox Incorporateds common stock. In connection with the Transaction, and pursuant to the terms of the Tronox Incorporated Warrant Agreement, Tronox Limited entered into an amended and restated warrant agreement, dated as of the Transaction Date, whereby the holders of the Tronox Limited Warrants were entitled to purchase one Class A Share and receive $12.50 in cash at the initial exercise prices of $62.13 for each Series A Warrant (the Series A Warrants) and $68.56 for each Series B Warrant (the Series B Warrants, collectively with the Series A Warrants, the Warrants). On the Transaction Date, there were 841,302 Warrants outstanding. The Warrants have a seven-year term from the date initially issued and will expire on February 14, 2018. A holder may exercise the Warrants by paying the applicable exercise price in cash or on a cashless basis. The Warrants are freely transferable by the holder thereof.
In connection with the stock split, holders of the Warrants are entitled to purchase five Class A Shares and receive $12.50 in cash at the initial exercise prices of $62.13 for each Series A Warrant and $68.56 for each Series B Warrants. As a result of the dividend declared on June 26, 2012, the exercise price of the Series A and Series B Warrants were reduced to $61.84 and $68.24, respectively, as of the close of business on July 13, 2012. As of September 30, 2012 there were 364,819 Series A Warrants and 474,425 Series B Warrants outstanding.
Share Repurchases
On June 26, 2012, the Board authorized the repurchase of 10% of Tronox Limiteds Class A shares in open market transactions. During the three months and nine months ended September 30, 2012, the Company repurchased 12,541,400 Class A Shares, affected for the 5-for-1 stock split, at an average price of $25.85 per share, inclusive of commissions, for a total cost of $324.2 million and 12,626,400 Class A Shares, affected for the 5-for-1 stock split, at an average price of $25.84 per share, inclusive of commissions, for a total cost of $326.2 million, respectively. Repurchased shares were subsequently cancelled in accordance with Australian law. On September 27, 2012, the Company announced the successful completion of its share repurchase program.
20. Share-Based Compensation
Compensation expense related to employee restricted share awards was $1.1 million and $1.4 million for the three months ended September 30, 2012 and 2011, respectively, and $24.1 million and $6.6 million for the nine months ended September 30, 2012 and the eight months ended September 30, 2011, respectively. Compensation expense related to restricted share awards granted to the Board of Directors was $0.3 million and $0.4 million for the three months ended September 30, 2012 and 2011, respectively, and $3.4 million and $1.1 million for the nine months ended September 30, 2012 and the eight months ended September 30, 2011, respectively. Compensation expense related to the Companys nonqualified option awards for the three and nine months ended September 30, 2012 was $0.2 million and $1.1 million, respectively.
Tronox Limited Management Equity Incentive Plan
On the Transaction Date, Tronox Limited adopted the Tronox Limited management equity incentive plan (the Tronox Limited MEIP), which permits the grant of awards that constitute incentive options, nonqualified options, share appreciation rights, restricted shares, restricted share units, performance awards and other share-based awards, cash payments and other forms such as the compensation committee of the Board in its discretion deems appropriate, including any combination of the above. Subject to further adjustment, the maximum number of shares which may be the subject of awards (inclusive of incentive options) is 12,781,225 Class A Shares.
Restricted Shares
During 2012, the Company granted 161,411 restricted share awards to employees, which have both time requirements and performance requirements. The time provisions are graded vesting, while the performance provisions are cliff vesting and have a variable payout. During 2012, the Company granted 23,160 restricted share awards with graded vesting to members of its Board of Directors. In accordance with ASC 718, Compensation Stock Compensation, the restricted share awards issued during 2012 are classified as equity awards and are accounted for using the fair value established at the grant date.
27
The following table summarizes restricted share activity with employees for the nine months ended September 30, 2012.
Number of Shares |
Fair Value(1) |
|||||||
Balance at December 31, 2011 |
| | ||||||
Awards converted from Tronox Incorporated to Tronox Limited in connection with the Transaction |
420,765 | 16.99 | ||||||
Awards granted |
161,411 | 27.28 | ||||||
Awards earned |
(7,550 | ) | 25.90 | |||||
Awards forfeited |
(7,985 | ) | 29.29 | |||||
|
|
|
|
|||||
Balance at September 30, 2012 |
566,641 | $ | 19.62 | |||||
|
|
|
|
|||||
Outstanding awards expected to vest |
559,727 | $ | 19.53 | |||||
|
|
|
|
(1) | Represents the weighted-average grant-date fair value. |
The following table summarizes restricted share activity with Tronox Limited Board of Directors for the nine months ended September 30, 2012.
Number of Shares |
Fair Value(1) |
|||||||
Balance at December 31, 2011 |
| | ||||||
Awards granted |
23,160 | 25.90 | ||||||
|
|
|
|
|||||
Balance at September 30, 2012 |
23,160 | $ | 25.90 | |||||
|
|
|
|
|||||
Outstanding awards expected to vest |
23,160 | $ | 25.90 | |||||
|
|
|
|
(1) | Represents the weighted-average grant-date fair value. |
Options
During 2012, the Company granted 158,960 options to employees to purchase Class A Shares, which vest over a three year period. The following table presents a summary of activity for the Tronox Limited options for the nine months ended September 30, 2012:
Number of Options |
Price (1) | Contractual Life Years (1) |
Intrinsic Value(2) |
|||||||||||||
Balance at December 31, 2011 |
| $ | | | $ | | ||||||||||
Options converted to Tronox Limited in connection with the Transaction |
517,330 | 24.56 | 9.34 | | ||||||||||||
Options issued |
158,960 | 25.62 | 9.75 | | ||||||||||||
Options forfeited |
(152,320 | ) | 22.38 | | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Outstanding at September 30, 2012 |
523,970 | $ | 25.52 | 9.49 | $ | 0.1 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Outstanding options expected to vest |
488,791 | $ | 25.59 | 9.50 | $ | 0.1 | ||||||||||
|
|
|
|
|
|
|
|
(1) | Represents weighted average exercise price and weighted average remaining contractual life, as applicable. The fair value of awards granted in connection with the stock split has been adjusted to reflect the estimated fair value on the date of such stock split. |
(2) | Reflects aggregate intrinsic value based on the difference between the market price of the Companys share at September 30, 2012 and the options exercise price. Options issued in connection with the stock split had no effect on the intrinsic value of outstanding options. |
July 31, 2012 Grant
Valuation and Cost Attribution Methods. The fair value of the options issued was determined on the date of grant using the Black-Scholes option-pricing model and is recognized in earnings on a straight-line basis over the employee service period of three years necessary to earn the awards.
28
The Company ran the Black-Scholes option-pricing model for the 15,808 options granted on July 31, 2012 and used the following assumptions:
2012 | ||||
Risk-free interest rate |
0.83 | % | ||
Expected dividend yield |
4.32 | % | ||
Expected volatility |
56 | % | ||
Expected term (years) |
10.0 | |||
Per-unit fair value of options granted |
$ | 8.21 |
The Company used the fair market value and exercise price of $23.17, which was the closing price of Class A Shares, New York Stock Exchange symbol TROX, recorded on July 31, 2012.
Expected Volatility In setting the volatility assumption, the Company considered the most recent reported volatility of each compensation peer company. For the 2012 valuation, the peer company group included the following companies: Cabot Corporation, Celanese Corporation, Cliffs Natural Resources Inc., Cytec Industries Inc., Eastman Chemical Company, FMC Corporation, Freeport-McMoRan Copper & Gold Inc., Georgia Gulf Corporation, Huntsman Corporation, Kronos Worldwide, Inc., PPG Industries, Inc., Rockwood Holdings, Inc., RPM International Inc., The Sherwin-Williams Company, Southern Copper Corporation, Teck Resources Limited, The Valspar Corporation, W.R. Grace & Co, and Westlake Chemical Corporation.
Risk-free interest rate The Company used a risk-free interest rate of 0.83%, which was the risk-free interest rate based on U.S. Treasury Strips available with maturity period consistent with expected life assumption.
August 31, 2012 Grant
Valuation and Cost Attribution Methods. Options fair value was determined on the date of grant using the Black-Scholes option-pricing model and is recognized in earnings on a straight-line basis over the employee service period of three years necessary to earn the awards. The Company ran the Black-Scholes option-pricing model for the 7,257 options granted on August 31, 2012 and used the following assumptions:
2012 | ||||
Risk-free interest rate |
0.85 | % | ||
Expected dividend yield |
3.88 | % | ||
Expected volatility |
56 | % | ||
Expected term (years) |
10.0 | |||
Per-unit fair value of options granted |
$ | 9.51 |
The Company used the fair market value and exercise price of $25.79, which was the closing price of Class A Shares, New York Stock Exchange symbol TROX, recorded on August 31, 2012.
Expected Volatility In setting the volatility assumption, the Company considered the most recent reported volatility of each compensation peer company. For the 2012 valuation, the peer company group included the following companies: Cabot Corporation, Celanese Corporation, Cliffs Natural Resources Inc., Cytec Industries Inc., Eastman Chemical Company, FMC Corporation, Freeport-McMoRan Copper & Gold Inc., Georgia Gulf Corporation, Huntsman Corporation, Kronos Worldwide, Inc., PPG Industries, Inc., Rockwood Holdings, Inc., RPM International Inc., The Sherwin-Williams Company, Southern Copper Corporation, Teck Resources Limited, The Valspar Corporation, W.R. Grace & Co, and Westlake Chemical Corporation.
Risk-free interest rate The Company used a risk-free interest rate of 0.85%, which was the risk-free interest rate based on U.S. Treasury Strips available with maturity period consistent with expected life assumption.
T-Bucks Employee Participation Plan (T-Bucks EPP)
During the third quarter of 2012, the Company created the T-Bucks EPP for the benefit of certain qualifying employees (the Participants) of Tronox subsidiaries in South Africa (the Employer Companies). In accordance with the terms of the Trust Deed of the T-Bucks Trust (the T-Bucks Trust Deed), the Employer Companies funded the T-Bucks Trust (the Trust) in the amount of R123.8 million (approximately $14.6 million), which represents a capital contribution equal to R75,000 for each Participant. The funded amount was used to acquire 548,234 Class A Shares. Additional contributions may be made in the future at the discretion of the Board.
29
On September 3, 2012, the Participants were awarded shares units in the Trust which entitles them to receive shares of Tronox Limited upon completion of the vesting period on May 31, 2017. The Participants are also entitled to receive dividends on the Tronox shares during the vesting period. Forfeited shares are retained by the Trust and are allocated to future participants in accordance with the Trust Deed. Under certain conditions, as outlined in the Trust Deed, Participants may receive share units awarded before May 31, 2017. The fair value of the awards is the fair value of the shares determined at the Grant Date. Compensation costs are recognized over the vesting period using the straight-line method. Compensation expense for the three months ended September 30, 2012 was $0.2 million. In accordance with ASC 718, the T-Bucks EPP is classified as an equity-settled shared-based payment plan.
Number of Shares |
Fair Value(1) |
|||||||
Balance at December 31, 2011 |
| | ||||||
Shares acquired by the Trust |
548,234 | 25.79 | ||||||
|
|
|
|
|||||
Balance at September 30, 2012 |
548,234 | $ | 25.79 | |||||
|
|
|
|
|||||
Outstanding awards expected to vest |
548,234 | $ | 25.79 | |||||
|
|
|
|
(1) | Represents the fair value on the date of purchase by the Trust. |
Long-Term Incentive Plan
In connection with the Transaction, the Company acquired a long-term incentive plan (the LTIP) for the benefit of certain qualifying employees of Tronox subsidiaries in South Africa and Australia. The LTIP is classified as cash settled compensation plan and is re-measured to fair value at each reporting date. At the Transaction Date, the fair value of the LTIP plan was $10.5 million.
Tronox Incorporated Management Equity Incentive Plan
On the Effective Date, Tronox Incorporated adopted the Tronox Incorporated management equity incentive plan (the Tronox Incorporated MEIP), which permitted the grant of awards that constitute incentive options, nonqualified options, share appreciation rights, restricted share, restricted share units, performance awards and other share-based awards, cash payments and other forms such as the compensation committee of the Tronox Incorporated Board of Directors in its discretion deems appropriate, including any combination of the above. The number of shares available for delivery pursuant to the awards granted under the Tronox Incorporated MEIP was 1.2 million shares.
On the Transaction Date, 748,980 shares of Tronox Incorporated restricted stock vested in connection with the Transaction. The remaining shares of Tronox Incorporated restricted stock were converted to Tronox Limited restricted shares.
Grants to Tronox Incorporated Board Members
As noted above, the Tronox Incorporated MEIP authorized the issuance of restricted shares to eligible directors who were serving on the Tronox Incorporated Board of Directors on the Effective Date.
The following table summarizes restricted shares activity with Board of Directors of Tronox Incorporated members for the nine months ended September 30, 2012.
Primary Award | Secondary Award | |||||||||||||||
Restricted Shares |
Number Of Shares |
Weighted-Avg. Grant Date Fair Value |
Number of Shares |
Weighted-Avg. Grant Date Fair Value |
||||||||||||
Balance at December 31, 2011 |
50,040 | $ | 24.50 | 122,485 | $ | 24.50 | ||||||||||
Awards earned |
(50,040 | ) | 24.50 | (122,485 | ) | 24.50 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at September 30, 2012 |
| $ | | | $ | | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Outstanding awards expected to vest |
| $ | | | $ | | ||||||||||
|
|
|
|
|
|
|
|
Grants to employees
During 2012, Tronox Incorporated granted 52,915 shares to employees, which have graded vesting provisions. The plan allows Tronox Incorporated to withhold, for tax purposes, the highest combined maximum rate imposed under all applicable federal, state, local and foreign tax laws on behalf of the employees that have received these awards. In accordance with ASC 718, such restricted share awards were classified as liability awards and were re-measured to fair value at each reporting date. The following table summarizes restricted share activity with employees for the nine months ended September 30, 2012.
30
Number of Shares |
Fair Value(1) |
|||||||
Balance at December 31, 2011 |
1,005,470 | $ | 21.58 | |||||
Awards granted |
52,915 | 24.36 | ||||||
Awards earned |
(637,620 | ) | 24.21 | |||||
Awards converted to Tronox Limited restricted shares in connection with the Transaction |
(420,765 | ) | 16.99 | |||||
|
|
|
|
|||||
Balance at September 30, 2012 |
| $ | | |||||
|
|
|
|
(1) | Represents the weighted-average grant-date fair value. |
Options
The following table presents a summary of activity for the Tronox Incorporated options for the nine months ended September 30, 2012:
Number of Options |
Price (1) |
Contractual Life Years (1) |
Intrinsic Value(2) |
|||||||||||||
Balance at December 31, 2011 |
345,000 | $ | 22.00 | 9.95 | $ | 0.7 | ||||||||||
Options issued |
172,330 | 29.69 | 9.87 | | ||||||||||||
Options converted to Tronox Limited in connection with the Transaction |
(517,330 | ) | 24.56 | 9.59 | 0.7 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Outstanding at September 30, 2012 |
| $ | | | $ | | ||||||||||
|
|
|
|
|
|
|
|
(1) | Represents weighted average exercise price and weighted average remaining contractual life, as applicable. |
(2) | Reflects aggregate intrinsic value based on the difference between the market price of the Companys shares at September 30, 2012 and the options exercise price. |
Predecessor
Upon emergence from bankruptcy, all predecessor common stock equivalents, including but not limited to stock options and restricted stock units of Tronox Incorporated were vested and immediately cancelled with the Plan.
Overview Tronox Incorporateds Long Term Incentive Plan (the Predecessor LTIP) authorized the issuance of shares of Tronox Incorporated common stock to certain employees and non-employee directors any time prior to November 16, 2015, in the form of fixed-price stock options, restricted stock, stock appreciation rights or performance awards. As of the Effective Date, all stock-based awards previously issued under the Predecessors LTIP plan vested and were immediately cancelled.
For the one month ended January 31, 2011, Tronox Incorporated recognized $0.1 million of compensation expense related to restricted stock-based awards, which was based on the fair value of the awards. During the one month ended January 31, 2011, the tax benefit associated with compensation expense had a corresponding offset to the valuation allowance, yielding no overall income tax benefit.
The following table summarizes information about restricted stock award, performance award and stock option activity for the one month ended January 31, 2011:
Restricted Stock Awards
& Stock Opportunity Grants |
Performance Awards |
Stock Options | ||||||||||||||||||||||||||
Restricted Shares |
Number of Shares |
Fair Value(1) |
Number Of Units |
Number of Options |
Price(2) | Contractual Life (Years)(2) |
Intrinsic Value(3) |
|||||||||||||||||||||
Balance at December 31, 2010 |
148,053 | $ | 4.92 | 2,689,150 | 1,152,408 | $ | 9.54 | 5.31 | $ | 9.54 | ||||||||||||||||||
Awards vested/cancelled |
(148,053 | ) | | (2,689,150 | ) | (1,152,408 | ) | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at January 31, 2011 |
| $ | | | | $ | | | $ | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Represents the weighted average grant date fair value. |
(2) | Represents weighted average exercise price and weighted average remaining contractual life, as applicable. |
(3) | Reflects aggregate intrinsic value based on the difference between the market price of the Companys stock and the options exercise price. |
31
21. Cash Flows Statement Data
Other noncash items included in the reconciliation of net income (loss) to net cash flows from operating activities include the following:
Successor | Predecessor | |||||||||||||
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
||||||||||||
Amortization of fair value inventory step-up and unfavorable ore sales contracts |
$ | 108.8 | $ | | $ | | ||||||||
Accrued transfer taxes |
37.0 | | | |||||||||||
Other net adjustments |
6.5 | 4.2 | (0.2 | ) | ||||||||||
|
|
|
|
|
|
|||||||||
Total |
$ | 152.3 | $ | 4.2 | $ | (0.2 | ) | |||||||
|
|
|
|
|
|
Reorganization items included in the reconciliation of net income (loss) to net cash flows from operating activities include the following:
Successor | Predecessor | |||||||||||||
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
||||||||||||
Noncash reorganization items |
$ | | $ | | $ | (636.6 | ) | |||||||
Environmental settlement funding |
| | (270.0 | ) | ||||||||||
Claims paid with cash |
| (14.3 | ) | (18.6 | ) | |||||||||
Tort settlement funding |
| | (16.5 | ) | ||||||||||
Professional and legal fees |
| | (12.0 | ) | ||||||||||
|
|
|
|
|
|
|||||||||
Total |
$ | | $ | (14.3 | ) | $ | (953.7 | ) | ||||||
|
|
|
|
|
|
Other, net, included in the reconciliation of net income to net cash flows from operating activities includes the following:
Successor | Predecessor | |||||||||||||
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
||||||||||||
Environmental expenditures, net of reimbursements |
$ | | $ | 33.1 | $ | | ||||||||
Other net adjustments |
1.7 | (1.2 | ) | 1.0 | ||||||||||
|
|
|
|
|
|
|||||||||
Total |
$ | 1.7 | $ | 31.9 | $ | 1.0 | ||||||||
|
|
|
|
|
|
22. Pension and Other Postretirement Healthcare Benefits
Defined Benefit Retirement Plans
The Company is the sponsor of noncontributory defined benefit retirement plans in the United States, a contributory defined benefit retirement plan in the Netherlands and a U.S. contributory postretirement plan for health care insurance. Substantially all U.S. employees may become eligible for the postretirement healthcare benefits if they reach retirement age while working for the Company.
32
The components of net periodic pension and postretirement healthcare cost for the three months ended September 30, 2012 and 2011, and the nine months ended September 30, 2012, eight months ended September 30, 2011 and one month ended January 31, 2011 were as follows:
Retirement Plans | ||||||||||||||||||||
Successor | Predecessor | |||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
||||||||||||||||
Net periodic cost: |
||||||||||||||||||||
Service cost |
$ | 0.6 | $ | 0.8 | $ | 1.9 | $ | 2.0 | $ | 0.2 | ||||||||||
Interest cost |
5.4 | 6.0 | 16.3 | 15.7 | 1.9 | |||||||||||||||
Expected return on plan assets |
(5.0 | ) | (5.6 | ) | (15.2 | ) | (14.8 | ) | (2.0 | ) | ||||||||||
Net amortization: |
||||||||||||||||||||
Net amortization Actuarial (gain) loss |
0.1 | | 0.1 | | 0.5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net periodic cost |
$ | 1.1 | $ | 1.2 | $ | 3.1 | $ | 2.9 | $ | 0.6 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Postretirement Healthcare Plans | ||||||||||||||||||||
Successor | Predecessor | |||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
||||||||||||||||
Net periodic cost: |
||||||||||||||||||||
Service cost |
$ | | $ | 0.1 | $ | 0.2 | $ | 0.2 | $ | | ||||||||||
Interest cost |
0.1 | 0.1 | 0.3 | 0.3 | | |||||||||||||||
Net Amortization: |
||||||||||||||||||||
Net amortization Prior service cost (credit) |
| | | | (1.1 | ) | ||||||||||||||
Net amortization Actuarial (gain) loss |
| | | | 0.1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net periodic cost (income) |
$ | 0.1 | $ | 0.2 | $ | 0.5 | $ | 0.5 | $ | (1.0 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
Post-Employment Health Care
In connection with the Transaction, the Company provides post-employment health care benefits to certain Namakwa Sands employees, retired employees and their registered dependants. Members can participate in the Anglo Medical Scheme, Bonitas Medical Fund or Discovery Health Medical Scheme. The Company provides benefits as follows: (i) members employed before March 1, 1994 receive 100% post-retirement and death-in-service benefits, (ii) members employed on or after March 1, 1994 but before January 1, 2002 receive 2% per year of completed service subject to a maximum of 50% post-retirement and death-in-service benefits, and (iii) members employed on or after January 1, 2002 receive 0% post-retirement and death-in-service benefits.
In anticipation of the Transaction, the Companys actuaries performed a valuation report as of May 31, 2012.
The post-employment health care liabilities have been valued by the Companys independent actuaries using the Projected Unit Credit Method, which was used to determine the past-service liability at the valuation date and projected annual expense in the year following the valuation date.
The components of net periodic post-employment healthcare cost for the three and nine months ended September 30, 2012 was $0.2 million.
33
The following key assumptions as of May 31, 2012 were used in the Companys calculations:
Rate | ||||
Discount rate assumption |
9.65 | % | ||
Health care cost inflation assumption |
8.15 | % |
A 1% increase in the assumed health care cost trend rate for each future year would increase the past-service contractual liability at May 31, 2012 by 23.3%, while the aggregate of the service and interest cost components would increase by 24.3% million. A 1% decrease in the trend rate for each future year would reduce the past-service contractual liability at May 31, 2012 by 18.1%, while the aggregate of the service and interest cost components would decrease by 18.8%.
Expected Benefit PaymentsThe expected cash benefit payments for the next five years and in the aggregate for the years 2012 through 2017 are estimated to be less than $0.5 million.
23. Related Party Transactions
Prior to the Transaction Date, Tronox Incorporated conducted transactions with Exxaro Australia Sands Pty Ltd, Tronox Incorporateds 50% partner in the Tiwest Joint Venture. Tronox Incorporated purchased, at open market prices, raw materials used in its production of TiO2, as well as Exxaro Australia Sands Pty Ltds share of TiO2 produced by the Tiwest Joint Venture. Tronox Incorporated also provided administrative services and product research and development activities, which were reimbursed by Exxaro. From January 1, 2012 through the Transaction Date, Tronox Incorporated made payments of $173.0 million and received payments of $9.2 million. During the three months ended September 30, 2011, the company made payments of $87.7 million and received payments of $2.7 million, and during the eight months ended September 30, 2011 and one month ended January 31, 2011, Tronox Incorporated made payments of $232.7 million and $44.0 million, respectively, and received payments of $6.4 million and nil, respectively. The total payments to Exxaro of $232.7 million in the eight months ended September 30, 2011 includes $79.1 million related to the Companys purchase of its 50% share of the Tiwest Joint Venture Kwinana Facility expansion in June 2011. Subsequent to the Transaction Date, such transactions are considered intercompany transactions and are eliminated in consolidation.
Subsequent to the Transaction, the Company began purchasing transition services from Exxaro, which amounted to $1.2 million since the Transaction Date.
24. Segment Information
Prior to the Transaction, Tronox Incorporated had one reportable segment representing its pigment business. The pigment segment primarily produced and marketed TiO2, and included heavy minerals production. The heavy minerals production was integrated with its Australian pigment plant, but also had third-party sales of minerals not utilized by its pigment operations. In connection with the Transaction, the Company acquired 74% of Exxaros South African mineral sands operations, including its Namakwa and KZN Sands mines, separation facilities and slag furnaces, along with its 50% share of the Tiwest Joint Venture in Western Australia. As such, the Company evaluated its new operations under ASC 280, Segments, and determined that the mineral sands operations qualify as a separate segment.
Subsequent to the Transaction, the Company has two reportable segments, minerals and pigment. The minerals segment includes the exploration, mining and beneficiation of mineral sands deposits, as well as heavy mineral production. These operations produce titanium feedstock, including ilmenite, chloride slag, slag fines and rutile, as well as pig iron and zircon. The pigment segment primarily produces and markets TiO2, and has production facilities in the United States, Australia, and the Netherlands. Corporate and Other is comprised of corporate activities and businesses that are no longer in operation, as well as its electrolytic manufacturing and marketing operations, all of which are located in the United States.
Segment performance is evaluated based on segment operating profit (loss), which represents the results of segment operations before unallocated costs, such as general corporate expenses not identified to a specific segment, environmental provisions, net of reimbursements, related to sites no longer in operation, interest expense, other income (expense) and income tax expense or benefit.
34
Minerals | Pigment | Corporate And Other |
Eliminations | Total | ||||||||||||||||
Successor: Three Months Ended September 30, 2012 |
||||||||||||||||||||
Net Sales |
$ | 271.7 | $ | 279.8 | $ | 38.6 | $ | (102.8 | ) | $ | 487.3 | |||||||||
Income (Loss) from operations |
19.4 | (13.2 | ) | (25.6 | ) | (18.7 | ) | (38.1 | ) | |||||||||||
Interest and debt expense |
(18.1 | ) | ||||||||||||||||||
Other income (expense) |
0.2 | |||||||||||||||||||
Income (Loss) from Continuing Operations before Income Taxes |
$ | (56.0 | ) | |||||||||||||||||
Total Assets |
$ | 3,128.4 | $ | 1,710.0 | $ | 858.4 | $ | (30.9 | ) | $ | 5,665.9 | |||||||||
Depreciation, Depletion and Amortization |
43.1 | 20.1 | 4.1 | | 67.3 | |||||||||||||||
Capital Expenditures |
27.2 | 9.8 | 6.7 | | 43.7 | |||||||||||||||
Successor: Three Months Ended September 30, 2011 |
||||||||||||||||||||
Net Sales |
$ | 44.0 | $ | 399.4 | $ | 37.5 | $ | (15.5 | ) | $ | 465.4 | |||||||||
Income (Loss) from operations |
13.3 | 111.6 | (25.7 | ) | | 99.2 | ||||||||||||||
Interest and debt expense |
(8.0 | ) | ||||||||||||||||||
Other income |
(1.3 | ) | ||||||||||||||||||
Income from Continuing Operations before Income Taxes |
$ | 89.9 | ||||||||||||||||||
Total Assets |
$ | 224.8 | $ | 1,154.1 | $ | 211.0 | $ | (2.0 | ) | $ | 1,587.9 | |||||||||
Depreciation, Depletion and Amortization |
4.2 | 14.6 | 3.8 | | 22.6 | |||||||||||||||
Capital Expenditures |
2.8 | 6.0 | 4.8 | | 13.6 | |||||||||||||||
Successor: Nine Months Ended September 30, 2012 |
||||||||||||||||||||
Net Sales |
$ | 443.6 | $ | 990.1 | $ | 96.6 | $ | (180.5 | ) | $ | 1,349.8 | |||||||||
Income (Loss) from operations |
110.4 | 137.4 | (129.7 | ) | (22.7 | ) | 95.4 | |||||||||||||
Interest and debt expense |
(39.0 | ) | ||||||||||||||||||
Other income (expense) |
(4.8 | ) | ||||||||||||||||||
Gain on bargain purchase |
1,045.6 | |||||||||||||||||||
Income (Loss) from Continuing Operations before Income Taxes |
$ | 1,097.2 | ||||||||||||||||||
Total Assets |
$ | 3,128.4 | $ | 1,710.0 | $ | 858.4 | $ | (30.9 | ) | $ | 5,665.9 | |||||||||
Depreciation, Depletion and Amortization |
58.7 | 50.7 | 10.8 | | 120.2 | |||||||||||||||
Capital Expenditures |
$ | 46.7 | $ | 25.2 | $ | 19.3 | $ | | $ | 91.2 | ||||||||||
Successor: Eight Months Ended September 30, 2011 |
||||||||||||||||||||
Net Sales |
$ | 107.9 | $ | 1,002.2 | $ | 93.3 | $ | (42.6 | ) | $ | 1,160.8 | |||||||||
Income (Loss) from operations |
24.3 | 219.4 | (41.3 | ) | (0.6 | ) | 201.8 | |||||||||||||
Interest and debt expense |
(21.5 | ) | ||||||||||||||||||
Other income (expense) |
(1.7 | ) | ||||||||||||||||||
Income (Loss) from Continuing Operations before Income Taxes |
$ | 178.6 | ||||||||||||||||||
Total Assets |
$ | 224.8 | $ | 1,154.1 | $ | 211.0 | $ | (2.0 | ) | $ | 1,587.9 | |||||||||
Depreciation, Depletion and Amortization |
11.7 | 36.1 | 9.0 | | 56.8 | |||||||||||||||
Capital Expenditures |
5.4 | 104.6 | 10.7 | | 120.7 | |||||||||||||||
Predecessor: January 1 through January 31, 2011 |
||||||||||||||||||||
Net Sales |
$ | 7.6 | $ | 88.5 | $ | 14.5 | $ | (3.0 | ) | $ | 107.6 | |||||||||
Income (Loss) from operations |
1.9 | 20.3 | (1.4 | ) | (0.9 | ) | 19.9 | |||||||||||||
Interest and debt expense |
(2.9 | ) | ||||||||||||||||||
Other income |
1.6 | |||||||||||||||||||
Reorganization income |
613.6 | |||||||||||||||||||
Income from Continuing Operations before Income Taxes |
$ | 632.2 | ||||||||||||||||||
Total Assets |
$ | 221.0 | $ | 987.2 | $ | 241.3 | $ | (1.4 | ) | $ | 1,448.1 | |||||||||
Depreciation, Depletion and Amortization |
0.6 | 2.7 | 0.8 | | 4.1 | |||||||||||||||
Capital Expenditures |
| 4.2 | 1.3 | | 5.5 |
35
Successor | Successor | Predecessor | ||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Eight Months Ended Eight 30, 2011 |
One Month Ended January 31, 2011 |
||||||||||||||||
Net Sales(1) |
||||||||||||||||||||
U.S. operations |
$ | 211.0 | $ | 229.7 | $ | 670.1 | $ | 585.9 | $ | 60.1 | ||||||||||
International operations: |
||||||||||||||||||||
Australia |
102.3 | 150.4 | 345.3 | 372.7 | 32.4 | |||||||||||||||
The Netherlands |
58.5 | 85.3 | 195.1 | 202.2 | 15.1 | |||||||||||||||
South Africa |
115.5 | | 139.3 | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 487.3 | $ | 465.4 | $ | 1,349.8 | $ | 1,160.8 | $ | 107.6 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Based on country of production. |
Successor | ||||||||
September 30, 2012 |
December 31, 2011 |
|||||||
Net Property, Plant and Equipment |
||||||||
U.S. operations |
$ | 193.4 | $ | 196.7 | ||||
International operations: |
||||||||
South Africa |
728.3 | | ||||||
Australia |
580.9 | 303.5 | ||||||
The Netherlands |
53.2 | 54.3 | ||||||
|
|
|
|
|||||
Total |
$ | 1,555.8 | $ | 554.5 | ||||
|
|
|
|
25. Subsequent Events
On November 8, 2012, our Board of Directors declared a quarterly dividend of $0.25 per share to holders of our Class A Shares and Class B Shares, totaling approximately $28.3 million, payable on December 3, 2012 to shareholders of record at the close of business on November 23, 2012.
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the information contained in Tronox Incorporateds audited Consolidated Financial Statements for the years ended December 31, 2011, 2010 and 2009 and the related notes thereto. This discussion contains forward-looking statements that involve risks and uncertainties, and actual results could differ materially from those discussed in the forward-looking statements as a result of numerous factors. See Cautionary Note Regarding Forward-Looking Statements.
This Managements Discussion and Analysis of Financial Condition and Results of Operations contains certain financial measures, in particular the presentation of Income from Operations, EBITDA and Adjusted EBITDA, which are not presented in accordance with accounting principles generally accepted in the United States (U.S. GAAP). We are presenting these non-U.S. GAAP financial measures because they provide us and readers of this quarterly statement with additional insight into our operational performance relative to earlier periods and relative to our competitors. We do not intend for these non-U.S GAAP financial measures to be a substitute for any U.S. GAAP financial information. Readers of these statements should use these non-U.S. GAAP financial measures only in conjunction with the comparable U.S. GAAP financial measures. A reconciliation of Income from Operations to Income from Continuing Operations, the most comparable U.S. GAAP measure is provided herein. A reconciliation of Net income to EBITDA and Adjusted EBITDA is also provided herein.
Executive Overview
We are a global leader in the production and marketing of titanium bearing mineral sands and titanium dioxide pigment (TiO2). We are the third largest global producer and marketer of TiO2 manufactured via chloride technology, as well as the second largest global producer of titanium feedstock and the second largest global producer of zircon. We have operations in North America, Europe, South Africa and the Asia-Pacific region. We operate three TiO2 facilities at the following locations: Hamilton, Mississippi; Botlek, the Netherlands; and Kwinana, Western Australia representing approximately 465,000 tonnes of annual TiO2 production capacity. Additionally, we operate three separate mining operations: KwaZulu-Natal (KZN) Sands located in South Africa, Namakwa Sands located in South Africa and Cooljarloo Sands located in Western Australia, which have a combined annual production capacity of approximately 723,000 tonnes of titanium feedstock and approximately 265,000 tonnes of zircon.
We have two reportable operating segments, minerals and pigment. Corporate and other is comprised of our electrolytic manufacturing and marketing operations, as well as our corporate activities, including businesses that are no longer in operation.
The minerals segment includes the exploration, mining and beneficiation of mineral sands deposits. These operations produce titanium feedstock, including ilmenite, chloride slag, slag fines and rutile, as well as zircon, pig iron and activated charcoal. Titanium feedstock is used primarily to manufacture TiO2. Zircon is a mineral which is primarily used as an opacifier in ceramic glazes for tiles, plates, dishes and industrial products.
The pigment segment primarily produces and markets TiO2, and has production facilities in the United States, Australia, and the Netherlands. TiO2 is used in a wide range of products due to its ability to impart whiteness, brightness and opacity. TiO2 is used extensively in the manufacture of coatings, plastics and paper and in a wide range of other applications, including inks, fibers, rubber, food, cosmetics and pharmaceuticals. TiO2 is a critical component of everyday consumer applications due to its superior ability to cover or mask other materials effectively and efficiently relative to alternative white pigments and extenders. We believe that, at present, TiO2 has no effective substitute because no other white pigment has the physical properties for achieving comparable opacity and brightness or can be incorporated in as cost-effective a manner.
Acquisition of Exxaro Mineral Sands Operations
Consistent with our strategy to become a fully integrated global producer of mineral sands and TiO2 with production facilities and sales and marketing presence strategically positioned throughout the world, we acquired 74% of Exxaro Resources Ltds (Exxaro) South African mineral sands operations, including its Namakwa and KZN Sands mines, separation and slag furnaces, along with its 50% share of the Tiwest Joint Venture in Western Australia (together the mineral sands business) (the Transaction). On June 15, 2012, the date of the Transaction (the Transaction Date), the existing business of Tronox Incorporated was combined with the mineral sands business under Tronox Limited.
The Transaction was effectuated in two primary steps. In the first step, Tronox Incorporated became a subsidiary of Tronox Limited, with Tronox Incorporated stockholders receiving one Class A ordinary share (Class A Shares) and $12.50 in cash (Merger Consideration) for each share of Tronox Incorporated common stock. In the second step, Tronox Limited issued 9,950,856 Class B ordinary shares (Class B Shares) to Exxaro and one of its subsidiaries in consideration for the mineral sands business. Upon completion of the Transaction, former Tronox Incorporated stockholders and Exxaro held 15,413,083 Class A Shares and 9,950,856 Class B Shares, respectively, representing approximately 60.8% and 39.2%, respectively, of the voting power in Tronox Limited.
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Exxaro retained a 26% ownership interest in the South African operations that are part of the mineral sands business in order to comply with the Black Economic Empowerment (BEE) legislation of South Africa.
Prior to the Transaction Date, Tronox Incorporated operated the Tiwest Joint Venture with Exxaro Australia Sands Pty Ltd., a subsidiary of Exxaro, which operated a chloride process TiO2 plant located in Kwinana, Western Australia (the Kwinana Facility), a mining operation in Cooljarloo, Western Australia, and a mineral separation plant and a synthetic rutile processing facility, both in Chandala, Western Australia. As noted above, in the second step, we acquired the mineral sands business, which was comprised of (i) 74% of Exxaro Sands and Exxaro TSA Sands in South Africa, and (ii) Exxaros 50.0% interest in the Tiwest Joint Venture. As such, as of the Transaction Date, we own 100% of the Tiwest Joint Venture.
We accounted for the Transaction using the acquisition method of accounting guidance for business combinations included in ASC 805, Business Combinations (ASC 805), which required recording assets and liabilities at fair value. The acquisition resulted in a bargain purchase gain of $1,045.6 million. See Note 2 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information on the fair value of assets acquired and liabilities assumed, as well as the bargain purchase gain recorded.
Emergence from Chapter 11
On January 12, 2009 (the Petition Date), Tronox Incorporated and certain of its subsidiaries (collectively, the Debtors) filed voluntary petitions in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) seeking reorganization relief under the provisions of Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code). On November 30, 2010 (the Confirmation Date), the Bankruptcy Court confirmed (the Confirmation Order) the Debtors First Amended Joint Plan of Reorganization pursuant to Chapter 11 of the Bankruptcy Code, dated November 5, 2010 (as amended and confirmed, the Plan). Material conditions to the Plan were resolved during the period from the Confirmation Date until January 26, 2011. Subsequently, on February 14, 2011 (the Effective Date), Tronox Incorporated emerged from bankruptcy and continued operations as reorganized Tronox Incorporated.
The consummation of the Plan resulted in a substantial realignment of the interests in Tronox Incorporated between existing prepetition creditors and stockholders. As a result, Tronox Incorporated was required to adopt fresh-start accounting. Having resolved the material contingencies related to implementing the Plan on January 26, 2011 and due to the proximity to the end of month accounting period, which closed on January 31, 2011, Tronox Incorporated applied fresh-start accounting as of January 31, 2011. Tronox Incorporated evaluated the activity between January 26, 2011 and January 31, 2011 and, based upon the immateriality of such activity, concluded that the use of January 31, 2011 to reflect the fresh-start accounting adjustments was appropriate for financial reporting purposes. The use of the January 31, 2011 date is for financial reporting purposes only and does not affect the Effective Date of the Plan. Accordingly, the financial information set forth in this report, unless otherwise expressly set forth or as the context otherwise indicates, reflects the consolidated results of operations and financial condition of Tronox Incorporated and its subsidiaries on a fresh-start basis for the period following January 31, 2011 (Successor), and of Tronox Incorporated and its subsidiaries on a historical basis for the periods through January 31, 2011 (Predecessor).
Recent Developments
Dividends DeclaredOn November 8, 2012, our Board of Directors declared a quarterly dividend of $0.25 per share to holders of our Class A Shares and Class B Shares, totaling approximately $28.3 million, payable on December 3, 2012 to shareholders of record at the close of business on November 23, 2012. On June 26, 2012, our Board of Directors declared a quarterly dividend of $0.25 per share to holders of our Class A Shares and Class B Shares, totaling $31.5 million, which was paid on August 13, 2012 to shareholders of record at the close of business on July 13, 2012.
Exxaro Class A Share Purchase AgreementOn October 4, 2012, Exxaro and J.P. Morgan Securities LLC (JPMS) entered into a Rule 10b5-1/Rule 10b-18 Purchase Plan Agreement (the JPMS Tronox Class A Trading Plan) authorizing JPMS to purchase up to 1,400,000 Class A Shares (which represents approximately 2.2% of all outstanding Tronox Limited Class A Shares and approximately 1.2% of Tronox Limiteds voting securities) on Exxaros behalf beginning on October 5, 2012 in compliance with all applicable securities laws and regulations, including Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the Exchange Act), and the rules, policies and procedures of the markets where the transactions are placed. During October 2012, Exxaro purchased 1,400,000 Class A Shares in market purchases pursuant to the JPMS Tronox Class A Trading Plan.
Executive Management DepartureOn September 30, 2012, we entered into a Separation Letter Agreement with Robert C. Gibney, former Senior Vice President and Chief Administrative Officer of Tronox Limited. Mr. Gibneys resignation was effective on September 29, 2012 (the Separation Date). Pursuant to his agreement, among other things, Mr. Gibney will receive severance in the amount of $650,000 payable biweekly over the 365 days following the Separation Date. We accrued for Mr. Gibneys severance as of the Separation Date. Additionally, 7,500 shares of restricted stock vested immediately and all remaining unvested awards were immediately forfeited and cancelled without any consideration being paid.
38
T-Bucks Employee Participation Plan (T-Bucks EPP)During the third quarter of 2012, we created the T-Bucks EPP for the benefit of certain of our employees in South Africa (the Participants). We made an initial capital contribution to the T-Bucks Trust (the Trust) of R123.8 million (approximately $14.6 million), which represents a capital contribution equal to R75,000 for each Participant. Contributions to the plan were used to acquire 548,234 Class A Shares of Tronox Limited. On September 3, 2012, the Participants were awarded shares units in the Trust which entitles them to receive shares of Tronox Limited upon completion of the vesting period on May 31, 2017. Compensation expense will be recognized over the life of the plan based upon the Grant Date fair value of the Tronox Limited shares acquired by the plan. See Note 20 of Notes to Unaudited Condensed Consolidated Financial Statements.
Regulatory ApprovalDuring September 2012, the South African Department of Mineral Resources approved our amendment application to the Environmental Management Program for our KZN Sands Fairbreeze mine project. This, together with the National Environmental Management Act authorization received earlier this year, allows us to commence with selected construction activities while awaiting further authorizations. During October 2012, the Mtunzini Conservatory filed an application for an injunction to halt the early-phase construction at our KZN Fairbreeze mine. We opposed the injunction and remain strong in our belief that the early-phase construction, is within the required legislative framework.
Secured BondsOn August 20, 2012, Tronox Limiteds wholly-owned subsidiary, Tronox Finance LLC, issued $900.0 million aggregate principal amount of 6.375% senior notes due 2020 (the Senior Notes). The Senior Notes bear interest semiannually at a rate equal to 6.375% and were sold at par value. See Note 10 of Notes to Unaudited Condensed Consolidated Financial Statements.
Stock Split DeclaredOn June 26, 2012, our Board of Directors approved a 5-to-1 stock split for holders of our Class A Shares and Class B Shares at the close of business on July 20, 2012, by issuance of four additional shares for each share of the same class. See Note 19 of Notes to Unaudited Condensed Consolidated Financial Statements.
Repurchase AuthorizedOn June 26, 2012, the Board authorized the repurchase 10% of Tronox Limiteds Class A and Class B shares in open market transactions, which will subsequently be cancelled in accordance with Australian law. During the three months and nine months ended September 30, 2012, the Company repurchased 12,541,400 Class A Shares, affected for the 5-for-1 stock split, at an average price of $25.85 per share, inclusive of commissions, for a total cost of $324.2 million and 12,626,400 Class A Shares, affected for the 5-for-1 stock split, at an average price of $25.84 per share, inclusive of commissions, for a total cost of $326.2 million, respectively. On September 27, 2012, the Company announced the successful completion of its share repurchase program.
UBS RevolverOn June 18, 2012, in connection with the closing of the Transaction, we entered into a global senior secured asset-based revolving credit agreement with UBS AG, Stamford branch (the UBS Revolver) with a maturity date of June 18, 2017. The UBS Revolver provides us with a committed source of capital with a principal borrowing amount of up to $300.0 million, subject to a borrowing base. See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements.
Refinancing of the Wells Revolver On February 8, 2012, Tronox Incorporated amended the Wells Revolver to facilitate the Transaction while keeping the revolver in force. On June 18, 2012, in connection with the Transaction, we utilized the UBS Revolver to refinance the $125.0 million senior secured credit agreement with Wells Fargo Capital Finance, LLC (the Wells Revolver). See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements.
ABSA RevolverIn connection with the Transaction, we entered into a R900.0 million revolving credit facility with ABSA Bank Limited acting through its ABSA Capital Division with a maturity date of June 14, 2017 (the ABSA Revolver). See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements.
Term Loan Draw DownOn June 14, 2012, in connection with the closing of the Transaction, we drew down the $150.0 million on the Senior Secured Delayed Draw Term Loan (as discussed below). See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements.
Exit Facility RefinancingOn February 8, 2012, Tronox Incorporated refinanced its $425.0 million exit facility due October 21, 2015 (the Exit Financing Facility), and obtained a new Goldman Sachs facility comprised of a $550.0 million Senior Secured Term Loan and a $150.0 million Senior Secured Delayed Draw Term Loan (together, the Term Facility). The Term Facility expressly permitted the Transaction and, together with existing cash, funded the cash needs of the combined business, including cash needs in the Transaction. See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements.
39
Business Environment
The following discussion includes trends and factors that may affect future operating results.
Supply and DemandHistorically, the majority of our revenue has come from the sale of TiO2 (86% and 93% in the three and nine months ended September 30, 2011, respectively), however, with the acquisition of the mineral sands business in June 2012, our revenue has become more diversified. During the three and nine months ended September 30, 2012, revenue generated from the sale of TiO2 decreased to 57% and 73%, respectively. During 2012, we saw a softening of TiO2 sales volumes due to continued customer destocking and decline in global demand, primarily as a result of weaker residential and commercial construction markets in Europe and Asia. While we are encouraged by signs of recovery in U.S. housing and increasingly stimulative national policy in China, we are expecting market conditions for TiO2 pigment in the fourth quarter of 2012 to be similar to those of the third quarter. We believe that we are in an advantaged strategic position in our industry under any macro-economic conditions and across business cycles. Vertical integration gives us enduring advantages such as our low-cost position which is enabled by capturing feedstock margin on pigment sales and selling the most attractively-priced feedstock in the merchant market, which we believe will result in higher margins, lower earnings volatility and significant free cash flow generation.
Raw MaterialsTitanium feedstock ores, the primary raw materials used in the production of TiO2, experienced a significant rise in selling prices during 2011 and continuing into 2012. The vertical integration of titanium feedstock and TiO2 production provides us with a secure and cost competitive supply of high grade titanium feedstock over the long term. Our ability to supply all of the feedstock that our pigment operations require enables us to balance our consumption and sales in ways that our competitors cannot. This low cost position should enable us to achieve higher margins, significantly reduced earnings volatility and strong cash generation under any market conditions by selling feedstock indirectly into the market and by consuming feedstock at the cost of extraction and beneficiation for our pigment business.
CompetitionWe believe that we are in an advantaged strategic position, more so than our competitors in this industry under any macro-economic conditions and across business cycles. Vertical integration gives us enduring advantages. Our low-cost position is enabled by capturing feedstock margin on pigment sales and selling the most attractively-priced feedstock in the merchant market, which has resulted in higher margins, lower earnings volatility and significant free cash flow generation. By demonstrating these advantages through our performance in subsequent quarters, in combination with our strong financial position, we will continue our focus on driving shareholder value and cash return to address our current undervaluation in the equity market.
PricingDuring the third quarter, average selling prices of TiO2 were approximately 6 percent lower than those in the second quarter. Given the softening of sales volumes in our pigment segment, we expect further, modest price declines in average global pigment markets in the fourth quarter relative to the third quarter.
However, with the exception of zircon sales, we anticipate that sales volumes of our other mineral sands products will remain steady and, as such, prices will be higher in the second half of 2012 compared to 2011. As the largest vertically integrated company in our industry, we now benefit from the same rising ore prices that TiO2 producers will face as advantaged ore contracts expire. We believe that we are built to optimize market swings on either side of the supply chain and are well positioned to thrive in changing market conditions.
SeasonalityThe demand for TiO2 during a given year is subject to seasonal fluctuations. TiO2 sales are generally higher in the second and third quarters of the year primarily due to the increase in paint production to meet demand resulting from the spring and summer painting season in North America and Europe.
Currency Exchange RatesThe financial condition and results of operations of our operating entities in the Netherlands, South Africa and Australia are reported in various foreign currencies and then converted into U.S. dollars at the applicable exchange rate for inclusion in our unaudited condensed consolidated financial statements. As a result, any volatility of the U.S. dollar against these foreign currencies creates uncertainty for and may have a positive or negative impact on reported sales and operating results. Foreign currency effects appear in our financial statements in several ways. First, they impact reported amounts of revenues and expenses and are embedded in each line item of the financial statements. Second, for changes in reported asset and liability amounts, changes are reported in either other income (expense) on the unaudited Condensed Consolidated Statements of Operations or in cumulative translation adjustments in Accumulated other comprehensive income (loss) on the unaudited Condensed Consolidated Balance Sheets.
EnvironmentalWe currently report and manage greenhouse gas (GHG) emissions as required by law for sites located in areas (European Union/Australia) requiring such managing and reporting. While the United States has not adopted any federal climate change legislation, the EPA has introduced some GHG programs. For example, under the EPAs GHG Tailoring Rule, expansions or new construction could be subject to the Clean Air Acts Prevention of Significant Deterioration (PSD) requirements. Some of
40
our facilities are currently subject to GHG emissions monitoring and reporting. Changes or additional requirements due to GHG regulations could impact our capital and operating costs. However, it is not possible at the present time to estimate any financial impacts to these U.S. operating sites. Also, some in the scientific community believe that increasing concentrations of GHGs in the atmosphere may result in climatic changes. Depending on the severity of climatic changes, our operations could be adversely affected. The Western Australian operations are subject to a new Australian carbon tax law that went into effect in July 2012, resulting in an approximate A$10.0 million impact annually.
Political and social unrest in South AfricaSouth Africa has been experiencing political and social unrest in the platinum and gold industries. Changes to or instability in the economic or political environment in South Africa or neighboring countries, especially if such changes create political instability, actual or potential shortages of production materials or labor unrest, could result in production delays and production shortfalls and materially impact our production and results of operations. We have recently negotiated new labor contracts with the unions in South Africa. We consider relations with our employees to be good.
Consolidated Results of Operations
The following discussion presents the results of operations for the periods indicated. References to 2011 refer to the combined nine month period ended September 30, 2011, which includes the Successor period and the Predecessor period, unless otherwise indicated.
Net Sales
Successor | Successor | Predecessor | ||||||||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Quarter Change |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
YTD Change |
||||||||||||||||||||||
Net Sales |
$ | 487.3 | $ | 465.4 | $ | 21.9 | $ | 1,349.8 | $ | 1,160.8 | $ | 107.6 | $ | 81.4 |
| Net sales increased 5% during the third quarter of 2012 as compared to the third quarter of 2011 and 6% during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. |
| During the third quarter of 2012 and 2011, 57% and 86%, respectively, of our net sales were generated from the sale of TiO2, and during the nine months ended September 30, 2012 and the nine month period ended September 30, 2011 73% and 93%, respectively, of our net sales were generated from the sale of TiO2. |
| The increases in net sales for the three and nine months ended September 30, 2012 and 2011 as compared to the three and nine month period ended September 30, 2011 reflect the additional revenues from the acquired business as well as higher prices in all of our businesses offset by lower sales volumes. |
| The acquired businesses had $216.1 million and $255.6 million of net sales for the third quarter and nine months ended September 30, 2012, respectively. |
| During 2012, we have experienced decreased sales volumes in both the minerals and pigment businesses due to simultaneous market weakness in China, Europe, and North America. |
| The impact of foreign currency exchange rate changes decreased net sales by $26.9 million during the third quarter of 2012 as compared to the third quarter of 2011 and $52.3 million during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. |
An analysis of net sales for each business unit is included in the Operations Review of Segment Revenue and Profit section below.
Cost of Goods Sold
Successor | Successor | Predecessor | ||||||||||||||||||||||||||
Three
Months Ended September 30, 2012 |
Three
Months Ended September 30, 2011 |
Quarter Change |
Nine
Months Ended September 30, 2012 |
Eight
Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
YTD Change |
||||||||||||||||||||||
Cost of goods sold |
$ | 465.8 | $ | 322.4 | $ | 143.4 | $ | 1,048.2 | $ | 862.1 | $ | 82.3 | $ | 103.8 | ||||||||||||||
Cost of goods sold as a percentage of net sales |
95.6 | % | 69.3 | % | 77.7 | % | 74.3 | % | 76.5 | % |
41
| Cost of goods sold increased 44% during the third quarter of 2012 as compared to the third quarter of 2011 and 11% during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. |
| The increases reflect the inclusion of the acquired business, higher pigment production costs, primarily for raw materials and chemical products, as well as higher per unit costs due to lower capacity utilization during the third quarter of 2012, partially offset by a decrease in sales volumes. |
| Cost of goods sold for the three and nine month period ended September 30, 2012 includes $85.2 million and $108.8 million respectively of non-cash amortization of inventory step-up and unfavorable ore sales contracts as a result of purchase accounting. |
| During 2012, we have reduced pigment production volumes in response to decreased sales volumes, which are primarily due to customer destocking and global economic concerns. Reduced capacity utilization increases the cost per unit for products produced and sold during the period. |
| Unfavorable exchange rate changes primarily due to movements in the Australian dollar versus the U.S dollar increased cost of sales by $36.1 million during the third quarter of 2012 as compared to the third quarter of 2011 and $51.7 million during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. |
Gross Margin
Successor | Successor | Predecessor | ||||||||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Quarter Change |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One
Month Ended January 31, 2011 |
YTD Change |
||||||||||||||||||||||
Gross margin |
$ | 21.5 | $ | 143.0 | $ | (121.5 | ) | $ | 301.6 | $ | 298.7 | $ | 25.3 | $ | (22.4 | ) | ||||||||||||
Gross margin percentage |
4.4 | % | 30.7 | % | 22.3 | % | 25.7 | % | 23.5 | % |
| Gross margin decreased 85% during the third quarter of 2012 as compared to the third quarter of 2011 and 7% during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. |
| Gross margin for the third quarter and the nine months ended September 30, 2012 declined primarily due to lower sales volumes of TiO2 and zircon, as well as third party purchases of ore. Gross margin percentage declined due to higher costs for TiO2, as discussed above, as well as the effect of purchase accounting on the acquired mineral sands business, as discussed above. |
Selling, General and Administrative Expenses
Successor | Successor | Predecessor | ||||||||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Quarter Change |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
YTD Change |
||||||||||||||||||||||
Selling, general and administrative expenses |
$ | 59.6 | $ | 53.8 | $ | 5.8 | $ | 206.2 | $ | 111.2 | $ | 5.4 | $ | 89.6 |
| Selling, general and administrative expenses increased 11% during the third quarter of 2012 as compared to the third quarter of 2011 and 77% during the nine months ended September 30, 2012 compared to the combined nine month period ended September 30, 2011. |
| For the three and nine months ended September 30, 2012, the acquired entities accounted for approximately $10.3 million and $14.4 million, respectively, of our total selling, general and administrative costs. After adjusting for the acquired entities, selling, general and administrative expenses for the three months ended September 30, 2012 decreased $4.5 million and for the nine months ended September 30, 2012 increased $75.2 million. |
| For the three months ended September 30, 2012 versus the same quarter of the prior year the decrease is primarily due to legal and professional fees and other one-time costs related to the Transaction, which amounted to approximately $10.5 million during the third quarter of 2012 versus $26.0 million during the same period in 2011. Partially offsetting this decrease is increased costs for the new corporate headquarters, as well as additional staffing, including costs for salaries, benefits, relocation costs and variable compensation, for the new global organization. Included in the 2012 amounts are approximately $1.2 million of separation payments to employees whose positions have been eliminated after the Transaction. |
| For the nine months ended September 30, 2012 versus the same quarter of the prior year the increase is primarily due to: |
| Share-based awards of $28.6 million in the nine months ended September 30, 2012 compared to $7.7 million in the prior year period. The increase is due to the majority of emergence stock awards vesting to employees upon consummation of the Transaction. |
| Severance expense of $3.1 million during the nine months ended September 30, 2012 compared to nil for the prior year period. Severance in 2012 is related to the change in the Companys CEO, as well as other positions that have been eliminated as a result of the Transaction. |
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| Stamp duty taxes of $37.1 million recorded in the nine months ended September 30, 2012 related to stamp duty taxes payable based upon the transfer of the mineral sands business to Tronox. |
| Increased costs for the new corporate headquarters, as well as additional staffing, including costs for salaries, benefits, relocation costs and variable compensation, for the new global organization |
| Depreciation and amortization increased $2.6 million during the nine months ended September 30, 2012 compared to the combined nine month period ended September 30, 2011. The increase is due to the amortization of internal-use software during 2012, as well as additional depreciation on fixed assets acquired in the Transaction. |
Provision for environmental remediation and restoration
Provision for environmental remediation and restoration was income of $0.2 million and $4.5 million during the third quarter of 2011 and the nine month period ended September 30, 2011, respectively, as a result of additional reimbursements received under the Predecessors environmental insurance policy related to its remediation efforts at the Henderson, Nevada site.
Interest and Debt Expense
Successor | Successor | Predecessor | ||||||||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Quarter Change |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
YTD Change |
||||||||||||||||||||||
Interest expense |
$ | (18.1 | ) | $ | (8.0 | ) | $ | (10.1 | ) | $ | (39.0 | ) | $ | (21.5 | ) | $ | (2.9 | ) | $ | (14.6 | ) |
Interest and debt expense increased $10.1 million, or 126% during the third quarter of 2012 as compared to the third quarter of 2011 and $14.6 million, or 60% during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. The increase is primarily attributable to interest expense on the Senior Notes and the Term Facility, as well as an increase in the amortization of deferred debt issuance costs. Interest expense related to the Senior Notes was $6.7 million for both the three and nine months ended September 30, 2012, and interest expense related to the Term Facility was $8.0 million and $18.2 million for the three and nine months ended September 30, 2012, respectively. Amortization of deferred debt issuance costs and discount on debt increased to $1.2 million in the third quarter of 2012 from $0.3 million in the third quarter of 2011, and $7.5 million in the nine months ended September 30, 2012 compared to $0.9 million in the nine month period ended September 30, 2011. In connection with obtaining the Term Facility, we incurred debt issuance costs of $17.2 million, of which $5.5 million was paid in 2011 and $11.7 million was paid in 2012. Additionally, we incurred $16.9 million of issuance costs in connection with the issuance of the Senior Notes.
See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information on interest and debt expense.
Other income (expense)
Successor | Successor | Predecessor | ||||||||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Quarter Change |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
YTD Change |
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Other income (expense) |
$ | 0.2 | $ | (1.3 | ) | $ | (1.5 | ) | $ | (4.8 | ) | $ | (1.7 | ) | $ | 1.6 | $ | 4.7 |
During the third quarter of 2012, we had income of $0.2 million as compared to an expense of $1.3 million for the third quarter 2011. The income was primarily the result of interest and other non-operating income of $1.8 million, offset by foreign currency losses of $1.6 million during the third quarter of 2012 compared to interest income received of $0.2 million, offset by foreign currency losses of $0.6 million and other non-operating expenses of $0.9 million during the third quarters of 2011.
Other expense increased $4.7 million, to an expense of $4.8 million for the nine months ended September 30, 2012 from an expense of $0.1 million for the combined nine month period ended September 30, 2011. The change was primarily due to foreign currency losses of $6.3 million during 2012 compared to foreign currency gains of $0.4 million in 2011. The remaining increase is attributable to increases and decreases in other miscellaneous items such as interest income and other non-operating income.
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Gain on Bargain Purchase
The acquisition of the mineral sands business resulted in a one-time gain on bargain purchase of $1,045.6, which was based on the estimated fair value of the assets and liabilities assumed and was a result of the net fair value of assets acquired exceeding the purchase price. See Note 2 of Notes to Unaudited Condensed Consolidated Financial Statements.
Reorganization income
Tronox Incorporated recognized reorganization income of $613.6 million during the nine months ended September 30, 2011. The 2011 income was primarily the result of the application of fresh-start accounting as of January 31, 2011, which resulted in a $659.1 million gain being recognized due to implementation of fresh-start accounting and the discharge of debt and satisfaction of claims that was only partially offset by $45.5 million of reorganization items including legal and professional fees, claims adjustments and other fees related to the rights offering and debt financing. As of emergence from bankruptcy, Tronox Incorporated no longer reports reorganization expense. Any residual reorganization costs are primarily included in selling, general and administrative expenses.
Income Tax Provision
Successor | Successor | Predecessor | ||||||||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Quarter Change |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
YTD Change |
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Income tax benefit (provision) |
$ | 38.0 | $ | 9.0 | $ | 29.0 | $ | 127.5 | $ | (3.3 | ) | $ | (0.7 | ) | $ | 131.5 | ||||||||||||
Effective tax rate on pre-tax income |
67.9 | % | (10.0 | )% | (11.6 | )% | 1.8 | % | 0.1 | % |
The negative effective tax rates for the 2012 Successor periods differ from the U.S. statutory rate of 35% primarily as a consequence of re-domiciling in Australia. Because the Australian tax laws provide for a resetting of the tax basis of the business assets to market value, we recorded a tax benefit related to this market value basis adjustment. The overall tax benefit from this basis adjustment was partially offset by a valuation allowance established for the portion of the tax benefit which we believe will not be realized. Because this basis change did not pertain to an entity acquired in the Transaction, this net tax benefit was recorded through tax expense and did not impact our gain on bargain purchase.
Additionally, the 2012 Successor periods shown above were impacted by valuation allowances in the United States, income in foreign jurisdictions taxed at rates lower than 35%, and the gain on bargain purchase which was recorded net of the financial tax impact and is not subject to income tax in any jurisdiction.
The effective tax rates for the 2011 Successor periods differ from the U.S. statutory rate of 35% primarily due to valuation allowances in the United States and income in foreign jurisdictions taxed at rates lower than 35%. In the one month ended January 31, 2011, the effective tax rate for the Predecessor period differs from the U.S. statutory rate of 35% primarily due to fresh start adjustments, which were recorded net of tax. Additionally, the Predecessor period effective tax rate was impacted by valuation allowances in multiple jurisdictions and income in foreign jurisdictions taxed at rates lower than 35%.
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA, which are used by management to measure performance, are non-GAAP financial measures. Management believes that EBITDA is useful to investors, as it is commonly used in the industry as a means of evaluating operating performance. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and do not purport to be an alternative to measures of our financial performance as determined in accordance with GAAP, such as net income (loss). Because other companies may calculate EBITDA and Adjusted EBITDA differently than we do, EBITDA may not be, and Adjusted EBITDA as presented herein is not, comparable to similarly titled measures reported by other companies.
Management believes these non-GAAP financial measures:
| Reflect our ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in our business, as they exclude income and expense that are not reflective of ongoing operating results; |
| Provide useful information in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods; |
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| Provide an additional view of our operating performance by adding interest expenses, taxes, depreciation and amortization to the net income. Further adjustments due to fresh-start accounting, purchase accounting, and stock-based compensation charges attempt to exclude items that are either non-cash or non-recurring in nature; |
| Enable investors to assess our compliance with financial covenants under our debt instruments. Our term loan has financial covenants that use consolidated Adjusted EBITDA as part of its compliance measures, e.g., consolidated leverage ratio, which is a ratio of indebtedness to consolidated Adjusted EBITDA; and consolidated interest coverage ratio which is a ratio of consolidated Adjusted EBITDA to interest expenses; and |
| In addition, consolidated Adjusted EBITDA is one of the primary measures management uses for planning and budgeting processes and to monitor and evaluate financial and operating results. |
The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA for the periods presented:
Successor | Predecessor | |||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
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Net income |
$ | (18.0 | ) | $ | 98.9 | $ | 1,224.7 | $ | 175.3 | $ | 631.3 | |||||||||
Interest and debt expense |
18.1 | 8.0 | 39.0 | 21.5 | 2.9 | |||||||||||||||
Income tax provision (benefit) |
(38.0 | ) | (9.0 | ) | (127.5 | ) | 3.3 | 0.7 | ||||||||||||
Depreciation and amortization expense |
67.3 | 22.6 | 120.2 | 56.8 | 4.1 | |||||||||||||||
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EBITDA |
29.4 | 120.5 | 1,256.4 | 256.9 | 639.0 | |||||||||||||||
Gain on bargain purchase |
| | (1,045.6 | ) | | | ||||||||||||||
Gain on fresh-start accounting |
| | | | (659.1 | ) | ||||||||||||||
Reorganization expense associated with bankruptcy(a) |
| | | | 45.5 | |||||||||||||||
Amortization of inventory step-up and unfavorable ore sales contracts from purchase accounting |
85.2 | | 108.8 | | | |||||||||||||||
Amortization of inventory step-up from fresh start accounting |
| | | 35.5 | | |||||||||||||||
Provision for environmental remediation and restoration, net of reimbursements |
| (0.2 | ) | | (4.5 | ) | | |||||||||||||
Litigation/arbitration settlement |
| (9.8 | ) | | (9.8 | ) | | |||||||||||||
Share-based compensation |
1.6 | 1.8 | 28.6 | 7.7 | | |||||||||||||||
Foreign currency remeasurement |
0.9 | 0.2 | 1.7 | 2.2 | (1.3 | ) | ||||||||||||||
Transaction costs and financial statement restatement costs (b) |
10.5 | 26.0 | 70.0 | 35.4 | | |||||||||||||||
Other items(c) |
3.5 | 2.4 | 8.8 | 6.2 | 0.2 | |||||||||||||||
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Adjusted EBITDA |
$ | 131.1 | $ | 140.9 | $ | 428.7 | $ | 329.6 | $ | 24.3 | ||||||||||
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(a) | Tronox Incorporated incurred costs related to the Chapter 11 bankruptcy proceedings. These items include cash and non-cash charges related to contract terminations, prepetition obligations, DIP financing costs, legal and professional fees. |
(b) | In the three and eight months ended September 30, 2011, transaction costs and financial statement restatement costs include expenses related to the Transaction, fresh-start accounting fees, costs associated with restating Tronox Incorporateds environmental reserves and the auditing of the historical financial statements. Costs associated with the Transaction include professional fees related to due diligence and transaction advice as well as investment banking fees. Additionally, Tronox Incorporated incurred legal fees associated with the exit from bankruptcy and the Transaction. In the three and nine months ended September 30, 2012, transaction costs consist of costs associated with the acquisition of the mineral sands business, including banker fees, legal and professional fees, as well as costs associated with the preparation and amending of the registration statement on Form S-4 filed with the SEC in connection with the Transaction and costs associated with the integration of the mineral sands business that will occur after the closing of the Transaction. |
(c) | Includes noncash pension and postretirement healthcare costs, accretion expense, fixed asset write-down and abandonment costs, gains and losses on the sale of assets and other unusual or non-recurring income or expenses. |
45
Operations Review of Segment Revenue and Profit
The following discussions present the results of operations for the periods indicated. References to 2011 refer to the combined nine month period ended September 30, 2011, which include the Successor period and the Predecessor period, unless otherwise indicated.
Net Sales
Successor | Successor | Predecessor | ||||||||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Quarter Change |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
YTD Change |
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Minerals segment |
$ | 271.7 | $ | 44.0 | $ | 227.7 | $ | 443.6 | $ | 107.9 | $ | 7.6 | $ | 328.1 | ||||||||||||||
Pigment segment |
279.8 | 399.4 | (119.6 | ) | 990.1 | 1,002.2 | 88.5 | (100.6 | ) | |||||||||||||||||||
Corporate and Other |
38.6 | 37.5 | (1.1 | ) | 96.6 | 93.3 | 14.5 | (11.2 | ) | |||||||||||||||||||
Eliminations |
(102.8 | ) | (15.5 | ) | (87.3 | ) | (180.5 | ) | (42.6 | ) | (3.0 | ) | (134.9 | ) | ||||||||||||||
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Net Sales |
$ | 487.3 | $ | 465.4 | $ | 21.9 | $ | 1,349.8 | $ | 1,160.8 | $ | 107.6 | $ | 81.4 | ||||||||||||||
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Minerals segment
| Net sales increased $227.7 million during the third quarter of 2012 as compared to the third quarter of 2011 and $328.1 million during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. |
| Feedstock volumes and pricing remained strong during the third quarter, while the demand for zircon remained soft. With the mineral sands acquisition completed in June, we acquired legacy feedstock sales contracts priced below market value. These contracts will expire across the next few quarters. Going forward, we will increasingly benefit from the same rising feedstock prices that non-integrated pigment producers will face as these advantaged contracts expire. |
| The acquired businesses contributed $207.1 million and $237.6 million of mineral segment net sales during three and nine months ended September 30, 2012. |
| The remaining increase of $20.6 million during the three months ended September 30, 2012 was primarily comprised of a $39.7 million increase in sales prices on the existing business, offset by a $20.5 million decrease in sales volumes on the existing business. |
| The remaining increase of $90.5 million during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011 was primarily comprised of a $156.4 million increase in sales prices on the existing business, offset by a $65.9 million decrease in sales volumes on the existing business. |
| We expect to realize the double benefit of higher selling prices on the long portion of feedstock we sell as well as the margin captured in the portion of feedstock we switch from sales to internal consumption by our pigment business. |
Pigment segment
| Pigment segment net sales decreased $119.6 million, or 30.0% quarter-over-quarter and $100.6 million, or 9.2% year-over-year. |
| Though pigment market conditions are currently soft, management sees reason for a recovery by mid-2013. Our paint and coating customers have completed or will soon complete destocking programs. Additionally, management believes that we will continue to see a modest recovery in the U.S. housing market and an increasingly stimulative national policy in China following a leadership change. We expect global supply and demand to return to more normalized conditions by mid-2013. |
| The decrease of $119.6 million during the third quarter of 2012 as compared to the third quarter of 2011 was primarily comprised of a $128.7 million decrease in sales volumes and a $9.3 million unfavorable impact of foreign currency exchange rate changes partially offset by $19.0 million increase in sales prices. Other revenue decreased $0.6 million. |
| The decrease of $100.6 million during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011 was primarily comprised of a $266.3 million decrease in sales volumes and a $32.4 million unfavorable impact of foreign currency exchange rate changes partially offset by a $198.5 million increase in sales prices. Other revenue decreased $0.4 million. |
| Pigment pricing, excluding the impact of foreign currency exchange rates, increased 7% over the third quarter last year and 24% over the prior year-to-date period. In North America, prices were significantly higher than a year ago, while selling prices in Europe and Asia were lower. |
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| TiO2 sales volumes decreased 32% during the third quarter of 2012 as compared to the third quarter of 2011 and 24% during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011 as customers continued destocking efforts and global demand remains soft, primarily in European and Asia Pacific markets. |
Corporate and Other
| Net sales increased $1.1 million, or 2.9% during the third quarter of 2012 as compared to the third quarter of 2011 and decreased $11.2 million, or 77% during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. |
| Corporate and other includes our electrolytic manufacturing business. Electrolytic and other chemical products net sales increased $2.6 million during the third quarter of 2012 as compared to the third quarter of 2011 and decreased $4.7 million during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. |
| The increase during the third quarter of 2012 and year-over-year 2012 as compared to 2011 was primarily due to increased demand brought on by an increase in battery purchases due to hurricane Isaac. Additionally, in the first half of 2012, our customers were taking down inventories; however, during the second half of 2012, they began the process of restocking. |
Income from Operations
The following table presents results of operations for the periods indicated. References to 2011 refer to the combined nine month period ended September 30, 2011, which include the Successor period and the Predecessor period, unless otherwise indicated.
Successor | Successor | Predecessor | ||||||||||||||||||||||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
Quarter Change |
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
YTD Change |
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Minerals segment |
$ | 19.4 | $ | 13.3 | $ | 6.1 | $ | 110.4 | $ | 24.3 | $ | 1.9 | $ | 84.2 | ||||||||||||||
Pigment segment |
(13.2 | ) | 111.6 | (124.8 | ) | 137.4 | 219.4 | 20.3 | (102.3 | ) | ||||||||||||||||||
Corporate and Other |
(25.6 | ) | (25.7 | ) | 0.1 | (129.7 | ) | (41.3 | ) | (1.4 | ) | (87.0 | ) | |||||||||||||||
Eliminations |
(18.7 | ) | | (18.7 | ) | (22.7 | ) | (0.6 | ) | (0.9 | ) | (21.2 | ) | |||||||||||||||
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Income from operations |
(38.1 | ) | 99.2 | (137.3 | ) | 95.4 | 201.8 | 19.9 | (126.3 | ) | ||||||||||||||||||
Interest and debt expense |
(18.1 | ) | (8.0 | ) | (39.0 | ) | (21.5 | ) | (2.9 | ) | ||||||||||||||||||
Other income (expense) |
0.2 | (1.3 | ) | (4.8 | ) | (1.7 | ) | 1.6 | ||||||||||||||||||||
Gain on bargain purchase |
| | 1,045.6 | | | |||||||||||||||||||||||
Reorganization income |
| | | | 613.6 | |||||||||||||||||||||||
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Income from Continuing |
(56.0 | ) | 89.9 | 1,097.2 | 178.6 | 632.2 | ||||||||||||||||||||||
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Income tax benefit (provision) |
38.0 | 9.0 | 127.5 | (3.3 | ) | (0.7 | ) | |||||||||||||||||||||
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Income from Continuing Operations |
$ | (18.0 | ) | $ | 98.9 | $ | 1,224.7 | $ | 175.3 | $ | 631.5 | |||||||||||||||||
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Minerals segment
| Income from operations increased $6.1 million during the third quarter of 2012 as compared to the third quarter of 2011 and $84.2 during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. |
| Profitability in the minerals segment was favorably impacted by higher selling prices on the existing business partially offset by lower volumes, as discussed above. The results for the acquired businesses were an operating loss for the three and nine months ended September 30, 2012 primarily due to lower capacity utilization in the Hillendale mine as it nears the end of its operating life and a less favorable sales mix as zircon sales remain soft, as well as the impact from purchase accounting, as discussed below. |
| Cost of goods sold for the three and nine month period ended September 30, 2012 includes $75.6 million and $92.3 million respectively of non-cash amortization of inventory step-up and unfavorable ore contracts as a result of purchase accounting. It also includes an additional $4.9 million and $27.8 million respectively of additional depreciation associated with the fair value step-up of fixed assets due to purchase accounting. |
47
Pigment segment
| Income from operations decreased $124.8 million, or over 100% during the third quarter of 2012 as compared to the third quarter of 2011 and $102.3 million, or over 100% during the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011. |
| During the third quarter of 2012 as compared to the third quarter of 2011 income from operations decreased $124.8 million primarily due to: |
| Lower sales volumes accounted for a decrease in operating profit of $41.3 million while higher costs accounted for $105.3 million. |
| Higher costs are primarily due to an increase in ore and other input costs, as well as the decrease in capacity utilization. Lower volumes are due to the reduced demand for TIO2 as discussed above. |
| Selling prices for the period were favorable $19.0 million primarily due to maintaining some of the prior year price increases despite the softer market. Pricing was stronger in the U.S. markets while the European and Asian markets were softer. |
| Included in the cost variance are $9.7 million of amortization of inventory fair value step-up related to the Transaction. |
| During 2012, we have reduced pigment production volumes in response to decreased sales volumes, which are primarily due to customer destocking and global economic concerns. Reduced capacity utilization increases the cost per unit for products produced and sold during the period. |
| Foreign currency effects on operating profit were favorable $3.2 million while selling, general and administrative expenses increased $1.0 million. |
| During the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011 income from operations decreased $102.3 million primarily comprised of: |
| Lower sales volumes and higher costs partially offset by higher selling prices are the primary reasons for the decrease in operating profit. |
| Lower sales volumes, as discussed above, accounted for a $70.7 million impact on operating profit while higher costs accounted for a $224.8 million decrease. Higher prices contributed $198.5 million, partially offsetting the increased costs. |
| Increased costs are primarily due to an increase in ore and other input prices as well as the lower capacity utilization discuss above. Included in costs is $9.7 million of amortization of inventory fair value step-up related to the Transaction. Freight and warehousing costs, also included in the cost variance, decreased $5.3 million primarily due to the lower sales volumes |
| During 2012, we have reduced pigment production volumes in response to decreased sales volumes, which are primarily due to customer destocking and global economic concerns. Reduced capacity utilization increases the cost per unit for products produced and sold during the period. |
| Foreign currency effects had a net $3.6 million impact on operating profit. |
| Selling, general and administrative expenses increased $4.4 million, and include the pigment segments share of share-based compensation and increased variable compensation, pension and postretirement healthcare benefits and agent commissions. |
Corporate and Other
| During the third quarter of 2012 as compared to the third quarter of 2011 income from operations increased $0.1 million primarily comprised of: |
| Increased revenues of $2.6 million primarily related to our electrolytic business (as discussed above) and decreased cost of goods sold of $2.8 million. |
| Selling, general and administrative expenses increased $1.4 million during the three months ended September 30, 2012 from the three months ended September 30, 2011. |
| Included in selling, general and administrative expenses are: |
| Costs associated with the acquisition of the mineral sands business, including banker fees, legal and professional fees, as well as costs associated with the preparation and amending of the Form S-4 and costs associated with the integration of the mineral sands business that will occur after the closing of the transaction. |
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| During the nine months ended September 30, 2012 as compared to the combined nine month period ended September 30, 2011 income from operations decreased $87.0 million primarily comprised of: Decreased revenues of $4.7 million primarily related to the electrolytic business (as discussed above) and decreased cost of goods sold of $6.1 million. |
| Selling, general and administrative expenses increased $5.3 million during the three months ended September 30, 2012 from the three months ended September 30, 2011. |
| Included in selling, general and administrative expenses are: |
| Costs associated with the acquisition of the mineral sands business, including banker fees, legal and professional fees, as well as costs associated with the preparation and amending of the Registration Statement on Form S-4 and costs associated with the integration of the mineral sands business that will occur after the closing of the Transaction. |
Financial Condition and Liquidity
The following table provides information for the analysis of our historical financial condition and liquidity:
September 30, 2012 |
December 31, 2011 |
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(Millions of dollars) | ||||||||
Cash and cash equivalents |
$ | 774.4 | $ | 154.0 | ||||
Working capital(1) |
$ | 1,787.2 | $ | 488.1 | ||||
Total assets |
$ | 5,665.9 | $ | 1,657.4 | ||||
Total long-term debt |
$ | 1,618.7 | $ | 427.3 |
(1) | Represents excess of current assets over current liabilities. |
As of September 30, 2012, our total liquidity was $1,124.1 million, which was comprised of $270.6 million available under the $300.0 million UBS Revolver, $79.1 million available under the ABSA Revolver and $774.4 million in cash and cash equivalents. As of September 30, 2012, we had $30.4 million drawn on the ABSA Revolver and a $29.4 million of letter of credit issued against the UBS Revolver. In 2012, cash and cash equivalents increased $620.4 million, reflecting issuance of $900.0 million bonds, less fees paid of $16.9 million, and the refinancing of our $425.0 million Exit Financing Facility to a $700.0 million Term Loan, partially offset by cash used in operations, costs associated with the acquisition of the mineral sands business, and cash used to pay the fees associated with the refinancing.
At September 30, 2012, we held cash and cash equivalents in the respective jurisdictions: $670.9 million in the United States, $30.5 million in Europe, $19.1 million in South Africa, and $53.9 million in Australia. Our credit facilities limit transfers of funds from subsidiaries in the United States to foreign subsidiaries. Foreign subsidiaries do not have limits on transferring funds to the United States or between themselves. We have in place intercompany financing agreements that enable the movement of cash to the United States, if needed.
The use of our cash will also include servicing our interest and debt repayment obligations, making pension contributions and funding certain capital expenditures for innovative initiatives, productivity enhancements and maintenance and safety requirements.
Cash Flows
The following table presents cash flow for the periods indicated:
Successor | Predecessor | |||||||||||||
Nine Months Ended September 30, 2012 |
Eight Months Ended September 30, 2011 |
One Month Ended January 31, 2011 |
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Net cash provided by (used in) operating activities |
$ | 68.0 | $ | 217.6 | $ | (283.1 | ) | |||||||
Net cash provided by (used in) investing activities |
23.6 | (120.2 | ) | (5.5 | ) | |||||||||
Net cash provided by (used in) financing activities |
522.6 | (25.8 | ) | 207.6 | ||||||||||
Effect of exchange rate changes on cash |
6.2 | (2.0 | ) | 0.3 | ||||||||||
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Net increase (decrease) in cash and cash equivalents |
$ | 620.4 | $ | 69.6 | $ | (80.7 | ) | |||||||
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49
Cash Flows from Operating Activities - Cash flows from operating activities for the nine months ended September 30, 2012 were a source of funds of $68.0 million compared to a use of funds of $65.5 million for the nine month period ended September 30, 2011. The source of funds during 2012 was primarily attributable to positive year-to-date operating results and the collection of accounts receivable, partially offset by increased inventories. Inventories increased due to a slowdown in demand and higher input prices. The source of funds in the eight month period ended September 30, 2011 reflects the strong operating performance during 2011 as pricing increased throughout the year, while the use of funds during the one month ended January, 31, 2011, reflects our emergence from bankruptcy, including the funding of the environmental and tort trusts, the payment of claims and professional fees in cash, and clearance of our liabilities subject to compromise.
Cash Flows from Investing Activities - Net cash provided by investing activities during 2012 primarily reflects $114.8 million of cash received in the Transaction, offset by $91.2 million of capital expenditures. Capital expenditures for the remainder of 2012 are expected to be in the range of $40.0 million to $50.0 million.
Cash Flows from Financing ActivitiesNet cash provided by financing activities was $522.6 million compared $181.8 million in 2011.
Cash inflows were comprised of the following:
| Issuance of $900.0 million aggregate principal bonds, net of $16.9 million discount, resulting in a cash inflow of $883.1 million; |
| Refinancing of the Exit Facility with a $700.0 million Term Facility, less a $7.0 million discount, resulting in a cash inflow of $693.0 million; and |
| Draw down of $30.0 million on the Wells Revolver, $30.1 million on the UBS Revolver and $53.6 million on the ABSA Revolver. |
Cash outflows were primarily comprised of the following:
| Repurchased 12,626,400 Class A Shares, affected for the 5-for-1 stock split, at an average price of $25.84 per share, inclusive of commissions, for a total cost of $326.2 million; |
| Repayment of the Exit Financing Facility of $420.8 million; |
| Repayment of $30.0 million on the Wells Revolver, $30.1 million on the UBS Revolver and $24.1 million on the ABSA Revolver |
| Repayment of other debt of $77.6 million; |
| Dividends paid of $31.5 million; |
| Merger consideration paid in connection with the Transaction of $192.6 million, whereby Tronox Incorporated stockholders received one Class A Share and $12.50 in cash for each share of Tronox Incorporated common stock; |
| Share purchases for the Employee Participation Plan of $14.6 million; and |
| Payment of debt issuance costs in connection with the refinancing of the Exit Facility with the Term Loan of $11.7 million. |
Capital Resources
Short-Term Debt
On June 18, 2012, in connection with the closing of the Transaction, we entered into a $300.0 million revolving syndicated facility agreement with UBS AG, Stamford Branch. At September 30, 2012, the Company had outstanding letters of credit in the amount of approximately $36.9 million, of which $29.4 million were issued under the Wells Revolver and were backstopped by a letter of credit issued under the UBS Revolver.
During 2012, we had borrowings of $30.0 million against the Wells Revolver, which were repaid with borrowings under the UBS Revolver. On June 18, 2012, we refinanced the Wells Revolver with the UBS Revolver. The $30.0 million balance was repaid during the second quarter.
In connection with the Transaction, we entered into a R900.0 million revolving credit facility with ABSA Bank Limited acting through its ABSA Capital Division with a maturity date of June 14, 2012. At September 30, 2012, we had drawn down R250.0 million (approximately $30.4 million).
50
Long-Term Debt
On August 20, 2012, Tronox Limiteds wholly-owned subsidiary, Tronox Finance LLC, issued $900.0 million aggregate principal amount of 6.375% Senior Notes. The Senior Notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. The Senior Notes bear interest semiannually at a rate equal to 6.375% and were sold at par value.
On February 8, 2012, Tronox Incorporated obtained from Goldman Sachs Bank USA a Term Loan facility comprised of a $550.0 million Senior Secured Term Loan and a $150.0 million Senior Secured Delayed Draw Term Loan (together, the Term Facility). The Term Facility has a maturity date of February 8, 2018. The Term Facility was issued net of an original issue discount of $7.0 million, or 1.0%, which is being amortized over the life of the Term Facility. On June 14, 2012, in connection with the closing of the Transaction, Tronox Incorporated drew down the $150.0 million on the Senior Secured Delayed Draw Term Loan. At September 30, 2012, the original issue discount was $6.1 million.
See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information related our short-term and long-term debt.
Financial Covenants
We have financial covenants on the UBS Revolver, the ABSA Revolver and the Term Facility. At September 30, 2012, we were in compliance with our financial covenants. See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information related to our financial covenants
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions regarding matters that are inherently uncertain and that ultimately affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. The estimates and assumptions are based on managements experience and understanding of current facts and circumstances. These estimates may differ from actual results. Certain of our accounting policies are considered critical as they are both important to reflect our financial position and results of operations and require significant or complex judgment on the part of management. The following is a summary of certain accounting policies considered critical by management.
Long-Lived Assets
Key estimates related to long-lived assets include useful lives, recoverability of carrying values and existence of any retirement obligations. As a result of future decisions, such estimates could be significantly modified. The estimated useful lives of our property, plant and equipment range from three to forty years and depreciation is recognized on the straight-line basis. Useful lives are estimated based upon our historical experience, engineering estimates and industry information. Our estimates include an assumption regarding periodic maintenance and an appropriate level of annual capital expenditures to maintain the assets.
Long-lived assets are evaluated for potential impairment whenever events or changes in circumstances indicate that carrying value may be greater than future net cash flows. Such evaluations involve a significant amount of judgment since the results are based on estimated future events, such as sales prices, costs to produce the products, the economic and regulatory climates and other factors. We evaluate impairments by asset group for which the lowest level of independent cash flows can be identified. If the sum of these estimated future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized for the excess of the carrying amount of the asset over its estimated fair value.
Intangible Assets
Intangible assets with finite useful lives are amortized on the straight-line basis over their estimated useful lives. The amortization methods and remaining useful lives are reviewed annually. The carrying amounts are reviewed at each financial year-end to determine whether there is any indication of impairment.
Asset Retirement Obligations
To the extent a legal obligation exists, an asset retirement obligation (ARO) is recorded at its estimated fair value and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. Fair value is measured using expected future cash outflows discounted at our credit-adjusted risk-free interest rate. No market-risk premium has
51
been included in our calculation of ARO balances since we can make no reliable estimate. Our unaudited condensed consolidated financial statements classify accretion expense related to asset retirement obligations as a production cost, which is included in Cost of goods sold on the unaudited Condensed Consolidated Statements of Operations.
We used the following assumptions in determining asset retirement obligations associated with mine closure and rehabilitation costs:
| Inflation of 2.5%-5.0% per year; |
| Credit adjusted risk-free interest rate of 6.0%-9.0%; and |
| Life of mine over 14-29 years at September 30, 2012 |
Environmental Remediation and Other Contingency Reserves
Our management makes judgments and estimates in accordance with applicable accounting rules when it establishes reserves for environmental remediation, litigation and other contingent matters. Provisions for such matters are charged to expense when it is probable that a liability has been incurred and reasonable estimates of the liability can be made. Estimates of environmental liabilities, which include the cost of investigation and remediation, are based on a variety of matters, including, but not limited to, the stage of investigation; the stage of the remedial design; the availability of existing remediation technologies; presently enacted laws and regulations; and the state of any related legal or administrative investigation or proceedings.
Income Taxes
We have operations in several countries around the world and are subject to income and similar taxes in these countries. The estimation of the amounts of income tax involves the interpretation of complex tax laws and regulations and how foreign taxes affect domestic taxes, as well as the analysis of the realizability of deferred tax assets, tax audit findings and uncertain tax positions. Although we believe our tax accruals are adequate, differences may occur in the future, depending on the resolution of pending and new tax matters.
Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided against a deferred tax asset when it is more likely than not that all or some portion of the deferred tax asset will not be realized. We periodically assess the likelihood that we will be able to recover our deferred tax assets, and reflect any changes in our estimates in the valuation allowance, with a corresponding adjustment to earnings or other comprehensive income (loss), as appropriate. ASC 740, Income Taxes, requires that all available positive and negative evidence be weighted to determine whether a valuation allowance should be recorded.
The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which may result in proposed assessments. Our estimate for the potential outcome for any uncertain tax issue is highly judgmental. We assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. For those tax positions for which it is more likely than not that a tax benefit will be sustained, we record the amount that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. Interest and penalties are accrued as part of tax expense, where applicable. If we do not believe that it is more likely than not that a tax benefit will be sustained, no tax benefit is recognized.
Pension and Postretirement Accounting
We provide pension and postretirement benefits for qualifying employees worldwide. However, we froze our U.S. nonqualified and qualified benefit plans in 2008 and 2009, respectively, and cancelled our nonqualified benefit plans in 2010. These plans are accounted for and disclosed in accordance with ASC 715, CompensationRetirement Benefits.
Recent Accounting Pronouncements
See Note 4 of Notes to Unaudited Condensed Consolidated Financial Statements for recently issued accounting pronouncements.
52
Government Regulations and Environmental Matters
We are subject to extensive regulation by federal, state, local and foreign governments. Governmental authorities regulate the generation and treatment of waste and air emissions at our operations and facilities. At many of our operations, we also comply with worldwide, voluntary standards developed by the International Organization for Standardization (ISO) a nongovernmental organization that promotes the development of standards and serves as a bridging organization for quality and environmental standards, such as ISO 9002 for quality management and ISO 14001 for environmental management. We are in compliance with applicable environmental rules and regulations. Currently, we do not have any outstanding notices of violations or orders from regulatory agencies.
Contractual Obligations
The following table sets forth information relating to our contractual obligations as of September 30, 2012:
Contractual Obligation Payments Due by Year | ||||||||||||||||||||
Total | Less than 1 year |
1-3 years |
3-5 years |
More than 5 years |
||||||||||||||||
(Millions of dollars) | ||||||||||||||||||||
Long-term debt (including interest)(1) |
$ | 2,270.3 | $ | 101.7 | $ | 201.0 | $ | 194.4 | $ | 1,773.2 | ||||||||||
Ore contracts(2) |
935.8 | 264.8 | 599.0 | 72.0 | | |||||||||||||||
Other purchase obligations(3) |
427.2 | 126.1 | 171.1 | 22.3 | 107.7 | |||||||||||||||
Operating leases (excluding railcar leases) |
252.8 | 20.8 | 42.8 | 38.6 | 150.6 | |||||||||||||||
Railcar leases |
14.4 | 0.6 | 4.6 | 3.7 | 5.5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 3,900.5 | $ | 514.0 | $ | 1,018.5 | $ | 331.0 | $ | 2,037.0 | ||||||||||
|
|
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|
|
|
|
|
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(1) | We calculated the Term Facility interest at a base rate of 2% plus a margin of 2.25%. |
(2) | Approximately 60% of our 2012 purchases were acquired internally. |
(3) | Includes obligations to purchase requirements of process chemicals, supplies, utilities and services. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
We are exposed to various market, credit, operational and liquidity risks (see Financial Condition and Liquidity discussion above) in the normal course of business, which are discussed below. We manage these risks through normal operating and financing activities and, when appropriate, through the use of derivative instruments. We do not invest in derivative instruments for speculative purposes, but historically has entered into, and may enter into, derivative instruments for hedging purposes in order to reduce the exposure to fluctuations in interest rates, natural gas prices and exchange rates.
Commodity Price Risk
A substantial portion of our products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with changes in the business cycle and are expected to do so in the near term as ore prices are expected to increase rapidly over the next few years. The Company tries to protect against such instability through various business strategies. These include provisions in sales contracts allowing us to pass on higher raw material costs through timely price increases and formula price contracts to transfer or share commodity price risk.
Credit Risk
A significant portion of our liquidity is concentrated in trade accounts receivable that arise from sales of TiO2 to customers in the paint and coatings industry. The industry concentration has the potential to impact the Companys overall exposure to credit risk, either positively or negatively, in that its customers may be similarly affected by changes in economic, industry or other conditions. The Company performs ongoing credit evaluations of its customers, and uses credit risk insurance policies from time to time as deemed appropriate to mitigate credit risk but generally does not require collateral. The Company maintains allowances for potential credit losses based on historical experience.
53
Interest Rate Risk
The Company is exposed to interest rate risk with respect to its variable rate debt. Currently, we do not have interest rate swaps on this exposure. Using a sensitivity analysis and a hypothetical 1.0% increase in interest rates from those in effect at September 30, 2012, the increase in our annual interest expense on the variable-rate debt of $700.0 million would have increased net income by approximately $5.1 million.
Foreign Exchange Risk
The Company manufactures and markets its products in a number of countries throughout the world and, as a result, is exposed to changes in foreign currency exchange rates, particularly in Australia, South Africa and the Netherlands. Costs in Australia and South Africa are incurred, primarily, in local currencies other than the U.S. dollar. In Australia and South Africa, the majority of our revenues are in U.S. dollars. In Europe, however, a majority of our revenues and costs are in the local currency creating a partial natural hedge. This leaves the Company exposed to movements in the Australian dollar and South African Rand versus the U.S. dollar. In order to manage this risk, we have from time to time entered into forward contracts to buy and sell foreign currencies as economic hedges for these foreign currency transactions. As of September 30, 2012, we did not have any forward contracts in place.
Item 4. | Controls and Procedures |
Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this quarterly report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Item 1. | Legal Proceedings |
From time to time, the Company may be party to a number of legal and administrative proceedings involving environmental and/or other matters in various courts or agencies. These proceedings, individually and in the aggregate, may have a material adverse effect on the Company. These proceedings may be associated with facilities currently or previously owned, operated or used by the Company and/or its predecessors, some of which may include claims for personal injuries, property damages, cleanup costs and other environmental matters. Current and former operations of the Company may also involve management of regulated materials, which and are subject to various environmental laws and regulations including the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), the Resource Conservation and Recovery Act (RCRA) or state equivalents. Similar environmental laws and regulations and other requirements exist in foreign countries in which the Company operates.
The Western Australian Office of State Revenue (the OSR) continues to review their technical position on the imposition of stamp duty on the transfer of Tronox Incorporateds shares related to Kerr-McGees restructuring in 2002 and from the share transfer related to the spinoff of Tronox Incorporated from Kerr-McGee in 2005. The OSR contacted the Company seeking additional information related to the 2005 spinoff. In addition, the OSR informed the Company that it has made a preliminary determination that the Company was land rich at the time of the 2002 share transfers and, as a result, the Company may be liable for stamp duty and penalties arising from that share transfer. A company is considered land rich if the value of its land, goods, wares and merchandise is greater than 60% of the total value of all of the property that the entity owns. The OSR has not made an assessment at this time and continues discussions with the Company and its legal advisors. The Company has accrued stamp duty on the 2002 transaction in the amount of $3.2 million based upon its position that the Company was not land rich at the time of the share transfers. The Company intends to exercise all of its legal and administrative remedies in the event that the OSR makes an assessment based upon its claim that it is land rich.
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Item 1A. | Risk Factors |
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed Risk Factors included within our Registration Statement on Form S-1 (File No. 333-181842) declared effective by the SEC on July 11, 2012 (the Form S-1). The risks described in the Form S-1 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. There have been no material changes from the risk factors disclosed under the heading Risk Factors in our Form S-1.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
As part of its emergence from bankruptcy in 2011, Tronox Incorporated issued shares of its common stock, par value $0.01, for the settlement of certain claims filed in the bankruptcy. As a part of these claims settlements, Tronox Incorporated issued:
| 7,634,554 shares of Tronox Incorporated common stock for the settlement of certain general unsecured claims. |
| 6,819,857 shares of Tronox Incorporated common stock in exchange for a $185.0 million rights offering (the Rights Offering) open to certain general unsecured creditors and backstopped by certain groups. The backstop parties, a group of holders of Tronox Incorporateds $350.0 million 9.5% senior unsecured notes, committed to purchase any of the Tronox Incorporated common stock that was not subscribed to in the Rights Offering, thereby assuring that Tronox Incorporated received the full $185.0 million. In return for this commitment, the backstop parties received 545,589 shares of Tronox Incorporated common stock as consideration equal to 8.0% of the $185.0 million equity commitment. |
| 544,041 Series A Warrants and 672,175 Series B Warrants to holders of equity prior to its emergence from bankruptcy to purchase their pro rata share of a combined total of 7.5% of Tronox Incorporateds common stock. The Series A Warrants have an exercise price of $62.13 per share and the Series B Warrants have an exercise price of $68.56 per share. |
Share Repurchases
On June 26, 2012, the Board authorized the repurchase 10% of Tronox Limiteds Class A and Class B shares in open market transactions, which were subsequently cancelled in accordance with Australian law. On September 27, 2012, the Company announced the successful completion of its share repurchase program.
The following table sets forth information regarding Tronox Limiteds purchases of its Class A Shares on a monthly basis during 2012. Share repurchases are recorded on a trade date basis.
Period |
a) Total Number of Shares (or Units) Purchased |
(b) Average Price Paid per Share (or Unit) |
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
||||||||||||
July 1, 2012 July 31, 2012 |
909,000 | 23.22 | 909,000 | 11,717,400 | ||||||||||||
August 1, 2012 August 31, 2012 |
5,388,200 | 26.49 | 5,388,200 | 6,329,200 | ||||||||||||
September 1, 2012 September 30, 2012 |
6,329,200 | 25.66 | 6,329,200 | |
Item 3. | Defaults Upon Senior Securities |
None.
Item 4. | Mine Safety Disclosures. |
None.
Item 5. | Other Information |
None.
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Item 6. | Exhibits |
4.1* | Indenture, dated as of August, 20, 2012, among Tronox Finance LLC, Tronox Limited, the other guarantors named therein and Wilmington Trust, National Association, as Trustee. | |
4.2* | Registration Rights Agreement, dated as of August 20, 2012, among Tronox Finance LLC, Tronox Limited, the other guarantors named therein and Goldman, Sachs & Co., Credit Suisse Securities (USA) LLC and UBS Securities LLC, as representative of the initial purchasers. | |
4.3* | First Supplemental Indenture, dated August 29, 2012, to the Indenture, dated as of August, 20, 2012 among Tronox Finance LLC, Tronox Limited, the other guarantors named therein and Wilmington Trust, National Association, as Trustee. | |
31.1* | Rule 13a-14(a) Certification of Thomas Casey. | |
31.2* | Rule 13a-14(a) Certification of Daniel D. Greenwell. | |
32.1* | Section 1350 Certification for Thomas Casey. | |
32.2* | Section 1350 Certification for Daniel D. Greenwell |
* | Each document marked with an asterisk is filed herewith. |
56
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TRONOX LIMITED | ||||||
Date: November 14, 2012 | By: | /s/ Thomas Casey | ||||
Thomas Casey | ||||||
Chairman of the Board and Chief Executive Officer |
By: | /s/ Daniel D. Greenwell | |||||
Daniel D. Greenwell | ||||||
Chief Financial Officer |
57
Exhibit 4.1
EXECUTION VERSION
TRONOX FINANCE LLC
AND EACH OF THE GUARANTORS PARTY HERETO
6.375% SENIOR NOTES DUE 2020
INDENTURE
Dated as of August 20, 2012
Wilmington Trust, National Association
Trustee
CROSS-REFERENCE TABLE*
Trust Indenture Act Section |
Indenture Section | |
310(a)(1) |
7.10 | |
(a)(2) |
7.10 | |
(a)(3) |
N.A. | |
(a)(4) |
N.A. | |
(a)(5) |
7.10 | |
(b) |
7.10 | |
(c) |
N.A. | |
311(a) |
7.11 | |
(b) |
7.11 | |
(c) |
N.A. | |
312(a) |
2.05 | |
(b) |
12.03 | |
(c) |
12.03 | |
313(a) |
7.06 | |
(b)(1) |
N.A. | |
(b)(2) |
7.06; 7.07 | |
(c) |
7.06; 12.02 | |
(d) |
7.06 | |
314(a) |
4.03; 12.02; 12.05 | |
(b) |
N.A. | |
(c)(1) |
12.04 | |
(c)(2) |
12.04 | |
(c)(3) |
N.A. | |
(d) |
N.A. | |
(e) |
12.05 | |
(f) |
N.A. | |
315(a) |
7.01 | |
(b) |
7.05; 12.02 | |
(c) |
7.01 | |
(d) |
7.01 | |
(e) |
6.11 | |
316(a) (last sentence) |
2.09 | |
(a)(1)(A) |
6.05 | |
(a)(1)(B) |
6.04 | |
(a)(2) |
N.A. | |
(b) |
6.07 | |
(c) |
2.12 | |
317(a)(1) |
6.08 | |
(a)(2) |
6.09 | |
(b) |
2.04 | |
318(a) |
12.01 | |
(b) |
N.A. | |
(c) |
12.01 |
N.A. means not applicable.
* | This Cross Reference Table is not part of the Indenture. |
TABLE OF CONTENTS
Page | ||||||
ARTICLE 1 | ||||||
DEFINITIONS AND INCORPORATION | ||||||
BY REFERENCE | ||||||
Section 1.01 |
Definitions | 1 | ||||
Section 1.02 |
Other Definitions | 34 | ||||
Section 1.03 |
Incorporation by Reference of Trust Indenture Act | 35 | ||||
Section 1.04 |
Rules of Construction | 35 | ||||
ARTICLE 2 | ||||||
THE NOTES | ||||||
Section 2.01 |
Form and Dating | 36 | ||||
Section 2.02 |
Execution and Authentication | 37 | ||||
Section 2.03 |
Registrar and Paying Agent | 37 | ||||
Section 2.04 |
Paying Agent to Hold Money in Trust | 38 | ||||
Section 2.05 |
Holder Lists | 38 | ||||
Section 2.06 |
Transfer and Exchange | 38 | ||||
Section 2.07 |
Replacement Notes | 50 | ||||
Section 2.08 |
Outstanding Notes | 50 | ||||
Section 2.09 |
Treasury Notes | 51 | ||||
Section 2.10 |
Temporary Notes | 51 | ||||
Section 2.11 |
Cancellation | 51 | ||||
Section 2.12 |
Defaulted Interest | 51 | ||||
Section 2.13 |
CUSIP Numbers | 52 | ||||
ARTICLE 3 | ||||||
REDEMPTION AND PREPAYMENT | ||||||
Section 3.01 |
Notices to Trustee | 52 | ||||
Section 3.02 |
Selection of Notes to Be Redeemed or Purchased | 52 | ||||
Section 3.03 |
Notice of Redemption | 53 | ||||
Section 3.04 |
Effect of Notice of Redemption | 53 | ||||
Section 3.05 |
Deposit of Redemption or Purchase Price | 54 | ||||
Section 3.06 |
Notes Redeemed or Purchased in Part | 54 | ||||
Section 3.07 |
Optional Redemption | 54 | ||||
Section 3.08 |
Mandatory Redemption | 56 | ||||
Section 3.09 |
Offer to Purchase by Application of Excess Proceeds | 56 | ||||
ARTICLE 4 | ||||||
COVENANTS | ||||||
Section 4.01 |
Payment of Notes | 56 | ||||
Section 4.02 |
Maintenance of Office or Agency | 57 | ||||
Section 4.03 |
Reports | 57 | ||||
Section 4.04 |
Compliance Certificate | 59 | ||||
Section 4.05 |
Taxes | 59 |
Page | ||||||
Section 4.06 |
Stay, Extension and Usury Laws | 59 | ||||
Section 4.07 |
Limitation on Restricted Payments | 60 | ||||
Section 4.08 |
Limitation on Dividend and Other Restrictions Affecting Restricted Subsidiaries | 64 | ||||
Section 4.09 |
Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock | 66 | ||||
Section 4.10 |
Limitation on Asset Sales | 71 | ||||
Section 4.11 |
Limitation on Transactions with Affiliates | 73 | ||||
Section 4.12 |
Limitation on Liens | 75 | ||||
Section 4.13 |
Conduct of Business and Limitation on Certain Activities | 75 | ||||
Section 4.14 |
Corporate Existence | 75 | ||||
Section 4.15 |
Change of Control | 76 | ||||
Section 4.16 |
Additional Note Guarantees | 77 | ||||
Section 4.17 |
Designation of Restricted and Unrestricted Subsidiaries | 77 | ||||
Section 4.18 |
Payments for Consent | 77 | ||||
Section 4.19 |
Covenant Suspension | 78 | ||||
Section 4.20 |
Withholding Taxes | 78 | ||||
ARTICLE 5 | ||||||
SUCCESSORS | ||||||
Section 5.01 |
Merger, Consolidation or Sale of Assets | 80 | ||||
Section 5.02 |
Successor Person Substituted | 82 | ||||
ARTICLE 6 | ||||||
DEFAULTS AND REMEDIES | ||||||
Section 6.01 |
Events of Default | 82 | ||||
Section 6.02 |
Acceleration | 84 | ||||
Section 6.03 |
Other Remedies | 85 | ||||
Section 6.04 |
Waiver of Past Defaults | 85 | ||||
Section 6.05 |
Control by Majority | 85 | ||||
Section 6.06 |
Limitation on Suits | 85 | ||||
Section 6.07 |
Rights of Holders of Notes to Receive Payment | 86 | ||||
Section 6.08 |
Collection Suit by Trustee | 86 | ||||
Section 6.09 |
Trustee May File Proofs of Claim | 86 | ||||
Section 6.10 |
Priorities | 87 | ||||
Section 6.11 |
Undertaking for Costs | 87 | ||||
ARTICLE 7 | ||||||
TRUSTEE | ||||||
Section 7.01 |
Duties of Trustee | 87 | ||||
Section 7.02 |
Rights of Trustee | 89 | ||||
Section 7.03 |
Individual Rights of Trustee | 89 | ||||
Section 7.04 |
Trustees Disclaimer | 89 | ||||
Section 7.05 |
Notice of Defaults | 90 | ||||
Section 7.06 |
Reports by Trustee to Holders of the Notes | 90 | ||||
Section 7.07 |
Compensation and Indemnity | 90 | ||||
Section 7.08 |
Replacement of Trustee | 91 | ||||
Section 7.09 |
Successor Trustee by Merger, etc. | 92 | ||||
Section 7.10 |
Eligibility; Disqualification | 92 | ||||
Section 7.11 |
Preferential Collection of Claims Against Issuer | 92 |
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Page | ||||||
ARTICLE 8 | ||||||
LEGAL DEFEASANCE AND COVENANT DEFEASANCE | ||||||
Section 8.01 |
Option to Effect Legal Defeasance or Covenant Defeasance | 92 | ||||
Section 8.02 |
Legal Defeasance and Discharge | 92 | ||||
Section 8.03 |
Covenant Defeasance | 93 | ||||
Section 8.04 |
Conditions to Legal or Covenant Defeasance | 93 | ||||
Section 8.05 |
Deposited Money and Government Securities to be Held in Trust; Other | |||||
Miscellaneous Provisions | 95 | |||||
Section 8.06 |
Repayment to Issuer | 95 | ||||
Section 8.07 |
Reinstatement | 95 | ||||
ARTICLE 9 | ||||||
AMENDMENT, SUPPLEMENT AND WAIVER | ||||||
Section 9.01 |
Without Consent of Holders of Notes | 96 | ||||
Section 9.02 |
With Consent of Holders of Notes | 96 | ||||
Section 9.03 |
Compliance with Trust Indenture Act | 98 | ||||
Section 9.04 |
Revocation and Effect of Consents | 98 | ||||
Section 9.05 |
Notation on or Exchange of Notes | 98 | ||||
Section 9.06 |
Trustee to Sign Amendments, etc. | 98 | ||||
ARTICLE 10 | ||||||
NOTE GUARANTEES | ||||||
Section 10.01 |
Guarantee | 99 | ||||
Section 10.02 |
Limitation on Guarantor Liability | 100 | ||||
Section 10.03 |
Execution and Delivery of Note Guarantee | 100 | ||||
Section 10.04 |
Guarantors May Consolidate, etc., on Certain Terms | 100 | ||||
Section 10.05 |
Releases | 101 | ||||
ARTICLE 11 | ||||||
satisfaction and discharge | ||||||
Section 11.01 |
Satisfaction and Discharge | 102 | ||||
Section 11.02 |
Application of Trust Money | 103 | ||||
ARTICLE 12 | ||||||
MISCELLANEOUS | ||||||
Section 12.01 |
Trust Indenture Act Controls | 103 | ||||
Section 12.02 |
Notices | 103 | ||||
Section 12.03 |
Communication by Holders of Notes with Other Holders of Notes | 105 | ||||
Section 12.04 |
Certificate and Opinion as to Conditions Precedent | 105 | ||||
Section 12.05 |
Statements Required in Certificate or Opinion | 105 | ||||
Section 12.06 |
Rules by Trustee and Agents | 105 | ||||
Section 12.07 |
No Personal Liability of Directors, Officers, Employees and Stockholders | 105 | ||||
Section 12.08 |
Governing Law | 106 | ||||
Section 12.09 |
No Adverse Interpretation of Other Agreements | 106 | ||||
Section 12.10 |
Successors | 106 | ||||
Section 12.11 |
Severability | 106 |
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Page | ||||||
Section 12.12 |
Counterpart Originals | 106 | ||||
Section 12.13 |
Table of Contents, Headings, etc. | 106 | ||||
Section 12.14 |
Waiver of Jury Trial | 106 |
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EXHIBITS
Exhibit A1 | FORM OF NOTE | |
Exhibit A2 | FORM OF REGULATION S TEMPORARY GLOBAL NOTE | |
Exhibit B | FORM OF CERTIFICATE OF TRANSFER | |
Exhibit C | FORM OF CERTIFICATE OF EXCHANGE | |
Exhibit D | FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR | |
Exhibit E | FORM OF NOTATION OF GUARANTEE | |
Exhibit F | FORM OF SUPPLEMENTAL INDENTURE |
INDENTURE dated as of August 20, 2012 among Tronox Finance LLC, a Delaware limited liability company, as Issuer (as defined below), the Guarantors (as defined below) and Wilmington Trust, National Association, as Trustee (as defined below).
The Issuer, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined below) of the 6.375% Senior Notes due 2020 (the Notes):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 | Definitions. |
144A Global Note means a Global Note substantially in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.
ABL Facility means the senior secured asset based revolving syndicated credit facility, dated as of June 18, 2012, among Tronox Incorporated and certain of its subsidiaries, as U.S. borrowers and guarantors, the Parent and certain of its subsidiaries, as Australian borrowers and guarantors, the other guarantors party thereto, the lenders from time to time party thereto and UBS AG, Stamford branch, as administrative agent and collateral agent, as amended, supplemented, modified, extended, restructured, renewed, restated, refinanced or replaced in whole or in part from time to time, including, without limitation, by a Credit Facility.
Acquired Indebtedness means (1) with respect to any Person that becomes a Restricted Subsidiary after the Issue Date, Indebtedness, Disqualified Stock or Preferred Stock of such Person and its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary and (2) with respect to the Parent or any Restricted Subsidiary, any Indebtedness, Disqualified Stock or Preferred Stock of a Person (other than the Parent or a Restricted Subsidiary) existing at the time such Person is merged with or into the Parent or a Restricted Subsidiary, or Indebtedness, Disqualified Stock or Preferred Stock expressly assumed in connection with the acquisition of the stock or any asset or assets from another Person; provided that such Indebtedness, Disqualified Stock or Preferred Stock was not Incurred or issued by such Person in connection with or in contemplation of such merger or acquisition.
Additional Interest means all additional interest owing on the Notes pursuant to the Registration Rights Agreement.
Additional Notes means additional Notes (other than the Initial Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the Initial Notes.
Affiliate of any specified Person means (1) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (2) any executive officer or director of such specified Person. For purposes of this definition, control, as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms controlling, controlled by and under common control with have correlative meanings.
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Agent means any Registrar, co-registrar, Paying Agent or additional paying agent.
Alternative Facility means (i) one or more debt facilities or other financing arrangements with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit Incurred by any Subsidiary of Parent and secured solely by Liens upon one or more assets comprising collateral (A) of the relevant Subsidiary of Parent that is an obligor or provides credit support to such obligor under the relevant Alternative Facility and (B) that secures the ABL Facility, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time and (ii) any Credit Facility.
Applicable Premium means, with respect to a Note at any date of redemption, the greater of (i) 1% of the principal amount of such Note and (ii) the excess of (A) the present value at such date of redemption of (1) the redemption price of such Note at August 15, 2015 (such redemption price being set forth in the table appearing in Section 3.07(d) hereof) plus (2) all remaining required interest payments due on such Note through August 15, 2015 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such Note.
Applicable Procedures means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, any redemption or payment of any Global Note or any other actions with respect to Global Notes, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer, exchange, redemption, payment or action.
Asset Sale means:
(1) the sale, lease, conveyance, transfer or other disposition (each, a Transfer), whether in a single transaction or a series of related transactions (including by way of a Sale and Leaseback Transaction), of any assets or rights (excluding Equity Interests in the Parent) of the Parent or any Restricted Subsidiary; and
(2) the issuance or sale of Equity Interests by any Restricted Subsidiary or the Transfer by the Parent or any Restricted Subsidiary of Equity Interests in any of the Parents Subsidiaries (other than directors qualifying shares and shares issued to foreign nationals to the extent required by applicable law), whether in a single transaction or series of related transactions.
Notwithstanding the preceding, the following items will be deemed not to be Asset Sales:
(1) any single transaction or series of related transactions that involves assets or Equity Interests having a Fair Market Value of less than $10 million;
(2) sales of inventory in the ordinary course of business;
(3) the liquidation, winding-up or dissolution of Excluded Entities;
(4) a Transfer of assets in accordance with Section 4.15 hereof or permitted under Section 5.01 hereof;
(5) a Transfer of assets or Equity Interests between or among the Parent and the Restricted Subsidiaries;
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(6) an issuance of Equity Interests by a Restricted Subsidiary to the Parent or to another Restricted Subsidiary;
(7) a Transfer of cash and Cash Equivalents;
(8) a Transfer of accounts receivable in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings;
(9) a Transfer that constitutes a Restricted Payment that is permitted under Section 4.07 hereof or a Permitted Investment;
(10) a Transfer of any property or equipment that has become redundant, surplus, damaged, worn out, obsolete or no longer useful, and sales or other dispositions of intellectual property determined, in the reasonable judgment of the Parent, to be uneconomical, negligible or obsolete;
(11) the creation of a Lien not prohibited by this Indenture (but not the sale of property subject to a Lien);
(12) a grant of a license to use the Parents or any Restricted Subsidiarys patents, trade secrets, know-how or other intellectual property to the extent that such license does not limit the licensors use of the patent, trade secret, know-how or other intellectual property;
(13) sales, transfers or contributions of Receivables Assets (or a fractional undivided interest therein) to a Receivables Entity in a Qualified Receivables Transaction, provided that if such Receivables Entity is an Affiliate, such sale, transfer or contribution must be for the fair market value thereof (as determined in good faith by the Parent);
(14) transfers of Receivables Assets (or a fractional undivided interest therein) in a Qualified Receivables Transaction;
(15) any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under Section 4.07 hereof;
(16) foreclosure, condemnation or any similar action with respect to any property or other asset of the Parent or any of its Restricted Subsidiaries;
(17) any financing transaction with respect to property built or acquired by the Parent or any Restricted Subsidiary after the Issue Date, including any Sale and Leaseback Transaction or asset securitization permitted by this Indenture;
(18) to the extent they constitute an Asset Sale, the granting of a Lien that is permitted to be granted, and is granted, under Section 4.12 hereof;
(19) to the extent allowable under Section 1031 of the Internal Revenue Code of 1986, as amended, any exchange of like property (excluding any boot thereon) for use in a Permitted Business;
(20) the lease, assignment, sublease or license of any real or personal property in the ordinary course of business;
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(21) dispositions in connection with Permitted Liens;
(22) any issuance or sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary, including in connection with any merger or consolidation; and
(23) any surrender or waiver of contract rights or the settlement, release, recovery on or surrender of contract, tort or other claims of any kind.
Bankruptcy Law means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.
Beneficial Owner has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular person (as that term is used in Section 13(d)(3) of the Exchange Act), such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms Beneficially Owns and Beneficially Owned will have a corresponding meaning.
Board of Directors means:
(1) with respect to a corporation, the board of directors of the corporation or a duly authorized committee thereof;
(2) with respect to a partnership, the Board of Directors of the general partner of the partnership; and
(3) with respect to any other Person, the board or committee of such Person serving a similar function.
Board Resolution means a resolution certified by the Secretary or an Assistant Secretary of the Parent to have been duly adopted by the Board of Directors of the Parent and to be in full force and effect on the date of such certification.
Borrowing Base means, as of the date of determination, an amount equal to:
(1) 85% of the face amount of all accounts receivable owned by the Parent and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date; plus
(2) 75% of the book value of all inventory owned by the Parent and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date,
based on the most recent internal month-end financial statements available to the Parent, determined on a pro forma basis in a manner consistent with the pro forma basis contained in the definition of Fixed Charge Coverage Ratio.
Broker-Dealer has the meaning set forth in the Registration Rights Agreement.
Business Day means any day other than a Legal Holiday.
Capital Lease Obligation means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP; and the amount of Indebtedness represented thereby at any time shall be the amount of the liability in respect thereof that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.
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Capital Stock of any Person means any and all shares, interests (including general or limited partnership interests, limited liability company or membership interests or limited liability partnership interests), participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock.
Cash Equivalents means:
(1) United States dollars, Canadian dollars, Euro, any national currency of any Member State of the European Union as of December 31, 2003 and such foreign currencies held by the Parent or any Restricted Subsidiary from time to time in the ordinary course of business;
(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof), maturing, unless such securities are deposited to defease any Indebtedness, not more than twelve months from the date of acquisition;
(3) investments in time or demand deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any State thereof or any foreign country recognized by the United States, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $500 million (or the foreign currency equivalent thereof) and has outstanding debt which is rated A-2 or higher by Moodys, A or higher by S&P or the equivalent rating by any other nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act);
(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;
(5) commercial paper having a rating of at least A-1 from S&P or at least P-1 from Moodys and in each case maturing within one year after the date of acquisition;
(6) securities issued and fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, rated at least A by Moodys or S&P and having maturities of not more than two years from the date of acquisition;
(7) certificates of deposit or bankers acceptances (or, in the case of Non-US Entities, the foreign equivalent thereof) maturing within six months after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least adequately capitalized (as defined in the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in such regulations) of not less than $500,000,000 (or, in the case of a Non-U.S. Entity that is incorporated in Australia, issued or accepted by any Lender or commercial bank incorporated in Australia and which has a rating of at least A-1 from S&P or at least P-1 from Moodys) provided that, in the case of any Investment by a Non-U.S. Entity, Cash Equivalents shall also include: (i) direct obligations of the sovereign nation (or any agency thereof) in which such Non-U.S. Entity is organized and is conducting business or in obligations
5
fully and unconditionally guaranteed by such sovereign nation (or any agency thereof) and (ii) investments of the type and maturity described in clauses (i) through (v) above of obligors that are Non-US Entities, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies; and
(8) shares of any money market mutual fund rated at least AAA or the equivalent thereof by S&P, at least Aaa or the equivalent thereof by Moodys or any other mutual fund at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (7) of this definition.
Change of Control means the occurrence of any of the following:
(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 the Parent and its Subsidiaries, taken as a whole, to any person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder;
(2) the adoption of a plan relating to the liquidation or dissolution of the Parent (other than as permitted hereunder);
(3) the Parent becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any person or group (as defined above) other than a Permitted Holder, including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), directly or indirectly, of 50% or more of the total voting power of the Voting Stock of the Parent;
(4) the first day on which a majority of the members of the Board of Directors of the Parent are not Continuing Directors; or
(5) the first day on which the Parent ceases to own, directly or indirectly, 100% of the outstanding Equity Interests of the Issuer.
Change of Control Triggering Event means (i) during a Suspension Period, the occurrence of both a Change of Control and a Ratings Event and (ii) at any time other than during a Suspension Period, the occurrence of a Change of Control; provided, that solely for purposes of determining whether a Suspension Period is occurring with respect to the definition of Change of Control Triggering Event, a Covenant Suspension Event shall be any period of time that (i) the Notes have an Investment Grade Rating from at least one Rating Agency and (ii) no Default has occurred and is continuing under this Indenture.
Clearstream means Clearstream Banking, S.A.
Common Stock means, with respect to any Person, any Capital Stock (other than Preferred Stock) of such Person, whether outstanding on the Issue Date or issued thereafter.
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Consolidated EBITDA means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication:
(1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus
(3) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that any such Fixed Charges were deducted in computing such Consolidated Net Income; plus
(4) any foreign currency translation losses (including losses related to currency remeasurements of Indebtedness) of such Person and its Restricted Subsidiaries for such period, to the extent that such losses were taken into account in computing such Consolidated Net Income; plus
(5) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash charges and expenses (excluding any such non-cash charge or expense to the extent that it represents an accrual of or reserve for cash charges or expenses in any future period or amortization of a prepaid cash charge or expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash charges or expenses were deducted in computing such Consolidated Net Income; plus
(6) the amount of net cost savings and operating efficiencies projected by the Parent in good faith to be realized as a result of specified actions either taken or initiated prior to or during such period (calculated on a pro forma basis as though such cost savings and operating efficiencies had been realized on the first day of such period) and which are expected to be realized (i) within 18 months of the date thereof, with respect to specified actions taken or to be taken in connection with the Transaction (including the expected stand-alone cost savings from lower costs for certain services (including back office functions)), and (ii) within 12 months of the date thereof with respect to specified actions taken or to be taken in connection with future acquisitions and cost saving, restructuring and other similar initiatives, in each case, net of the amount of actual benefits realized during such period from such actions; provided that such cost savings are reasonably identifiable and factually supportable; minus
(7) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business; plus
(8) to the extent non-recurring, any fees, costs and expenses of such Person and its Restricted Subsidiaries Incurred as a result of Investments, Asset Sales permitted hereunder and the issuance, repayment or amendment of Equity Interests or Indebtedness permitted hereunder (in each case, whether or not consummated).
in each case, on a consolidated basis and determined in accordance with GAAP.
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Notwithstanding the preceding, the provision for taxes based on the income or profits of, the Fixed Charges of and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person (A) in the same proportion that the Net Income of such Restricted Subsidiary was added to compute such Consolidated Net Income of such Person and (B) only to the extent that a corresponding amount would be permitted at the date of determination to be dividended or distributed to such Person by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter or any agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.
Consolidated Net Income means, with respect to any specified Person for any period, the aggregate of the net income (loss) of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, (excluding the net income (loss) of any Unrestricted Subsidiary of such Person), determined in accordance with GAAP and without any reduction in respect of Preferred Stock dividends; provided that:
(1) all extraordinary gains (but not losses) and all gains (but not losses) realized in connection with any disposition of assets or securities, whether or not consummated, or the early extinguishment of Indebtedness, together with any related provision for taxes on any such gain, will be excluded;
(2) any net income (loss) of any Person if such Person is not a Restricted Subsidiary, except that Parents equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of Cash Equivalents actually distributed by such Person during such period to the Parent or a Restricted Subsidiary as a dividend or other distribution or return on investment (subject, in the case of a dividend or other distribution or return on investment to a Restricted Subsidiary, to the limitations contained in clause (3) below);
(3) solely for the purpose of determining the amount available for Restricted Payments pursuant to Section 4.07(a)(3), the net income (but not the net loss) of any Restricted Subsidiary (other than any Guarantor) will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that net income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its equityholders;
(4) any gain or loss, together with any related provision for taxes on such gain or loss less all fees and expenses or charges relating thereto, realized in connection with: (a) any sale of assets outside the ordinary course of business of the specified Person; or (b) the disposition of any securities by the specified Person or any of its Restricted Subsidiaries, will be excluded;
(5) any extraordinary, unusual or non-recurring gain, loss or expense, together with any related provision for taxes on such gain, loss or expense, will be excluded;
(6) any (i) non-cash compensation charge or expense arising from any grant of stock, stock options or other equity based awards and any non-cash deemed finance charges in respect of any pension liabilities or other provisions and (ii) income (loss) attributable to deferred compensation plans or trusts shall be excluded;
8
(7) the cumulative effect of a change in accounting principles will be excluded;
(8) non-cash gains and losses attributable to movement in the mark-to-market valuation of Hedging Obligations pursuant to Financial Accounting Standards Board Statement No. 133 will be excluded;
(9) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date will be excluded;
(10) to the extent the related loss is not added back in calculating such Consolidated Net Income, proceeds of business interruption insurance policies to the extent of such related loss will be excluded;
(11) fees and expenses related to a Qualified Receivables Transaction will be excluded;
(12) any net after-tax gains attributable to the termination of any employee pension benefit plan will be excluded;
(13) (a) any net after-tax income or loss from operating results of discontinued operations as defined by GAAP and (b) any net after-tax gains or losses from sales of discontinued operations, in each case will be excluded;
(14) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of Indebtedness, Hedging Obligations or other derivative instruments entered into in relation with the Indebtedness extinguished will be excluded;
(15) any non-cash impairment charges or asset write-downs or write-offs, in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP will be excluded; and
(16) any extraordinary, unusual or nonrecurring gain, loss, charge or expense or any charges, expenses or reserves in respect of any restructuring, redundancy or severance expense shall be excluded.
Consolidated Net Tangible Assets means, with respect to any Person, the Total Assets of such Person and its Restricted Subsidiaries less goodwill and intangibles (other than intangibles arising from, or relating to, intellectual property, licenses or permits (including, but not limited to, emissions rights) of such Person), in each case calculated in accordance with GAAP, provided that in the event that such Person or any of its Restricted Subsidiaries assumes or acquires any assets in connection with the acquisition by such Person and its Restricted Subsidiaries of another Person subsequent to the commencement of the period for which the Consolidated Net Tangible Assets is being calculated but prior to the event for which the calculation of the Consolidated Net Tangible Assets is made, then the Consolidated Net Tangible Assets shall be calculated giving pro forma effect to such assumption or acquisition of assets, as if the same had occurred at the beginning of the applicable period.
continuing means, with respect to any Default or Event of Default, that such Default or Event of Default has not been cured or waived.
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Continuing Directors means, as of any date of determination, any member of the Board of Directors of the Parent who:
(1) was a member of such Board of Directors on the date of this Indenture; or
(2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.
Corporate Trust Office of the Trustee means the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Issuer.
Credit Agreements means (i) the credit agreement governing the ABL Facility, (ii) a credit agreement governing any Alternative Facility and (iii) the credit agreement governing the Senior Secured Term Loan Facility, in each case including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, modified, renewed, refunded, replaced or refinanced from time to time, regardless of whether such amendment, restatement, modification, renewal, refunding, replacement or refinancing is with the same financial institutions or otherwise.
Credit Facilities means (i) the ABL Facility, (ii) an Alternative Facility, (iii) the Senior Secured Term Loan Facility and (iv) one or more debt facilities or other financing arrangements (including, without limitation, commercial paper facilities, overdraft facilities, receivables financing or indentures) including with banks, institutional lenders, noteholders or other investors or a trustee, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), letters of credit or issuances of notes, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.
Custodian means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.
Default means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default, provided that any Default that results solely from the taking of any action that would have been permitted but for the continuation of a previous Default will be deemed to be cured if such previous Default is cured prior to becoming an Event of Default.
Definitive Note means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A1 hereto except that such Note shall not bear the Global Note Legend and shall not have the Schedule of Exchanges of Interests in the Global Note attached thereto.
Depositary means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.
Designated Noncash Consideration means the Fair Market Value of non-cash consideration received by the Parent or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers Certificate, setting forth the basis of such valuation, less the amount of cash and Cash Equivalents received in connection with a subsequent sale of such Designated Noncash Consideration.
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Disinterested Member means, with respect to any transaction or series of related transactions, a member of the Parents Board of Directors who does not have any material direct or indirect financial interest (other than as a stockholder of the Parent) in or with respect to such transaction or series of related transactions and is not an Affiliate, or an officer, director, member of a supervisory, executive or management board or employee of any Person (other than the Parent or a Restricted Subsidiary) who has any direct or indirect financial interest in or with respect to such transaction or series of related transactions.
Disqualified Stock means any Capital Stock that, by its terms, or by the terms of any security into which it is convertible, or for which it is exchangeable, or by contract or otherwise, is, or upon the happening of any event or passage of time would be, required to be redeemed on or prior to the date that is one year after the earlier of the date on which the Notes mature and the date the Notes are no longer outstanding, or is redeemable at the option of the Holder thereof, or is convertible into or exchangeable for debt securities in any such case on or prior to such date. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Parent to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale will not constitute Disqualified Stock if such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Issuers repurchase of such Notes as are required to be repurchased pursuant to Sections 4.10 and 4.15 hereof. The term Disqualified Stock will also include any options, warrants or other rights that are convertible into Disqualified Stock or that are redeemable at the option of the holder, or required to be redeemed, prior to the date that is one year after the earlier of the date on which the Notes mature and the date the Notes are no longer outstanding.
Equity Interests means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
Equity Offering means any public or private sale of Equity Interests (other than Disqualified Stock) of the Parent or any of its Subsidiaries by the Parent or its Subsidiaries (other than pursuant to a registration statement on Form S-8 or otherwise relating to equity securities issuable under any employee benefit plan of the Parent) to any Person other than any Subsidiary of the Parent.
Euroclear means Euroclear Bank, S.A./N.V., as operator of the Euroclear system.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Exchange Notes means any notes issued in exchange for Notes pursuant to the Registration Rights Agreement.
Exchange Offer means the offer of the Issuer to issue and deliver to Holders that are not prohibited by law or policy of the SEC from participating in such offer in exchange for the Notes, a like aggregate principal amount of Exchange Notes.
Exchange Offer Registration Statement has the meaning set forth in the Registration Rights Agreement.
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Excluded Entities means:
(1) Tronox (Luxembourg) Holdings S.à.r.l., Tronox (Switzerland) Holding GmbH, Tronox Luxembourg S.à.r.l., Tronox Pigments International GmbH, Tronox GmbH, Tronox Pigments GmbH, Tronox Pigments (Savannah) Inc.;
(2) any one or more Restricted Subsidiaries organized under the laws of the United Kingdom that is (i) Tronox Sands LLP, a limited liability partnership organized in England and Wales (TSL) and (ii) any wholly-owned Subsidiary of TSL or its wholly-owned Subsidiaries;
(3) any one or more Restricted Subsidiaries organized under the laws of The Netherlands that has not received the unconditional positive advice of its works council and any prior corporate approvals, including the decision of its Board of Directors (or similar governing body), that it is in such Restricted Subsidiarys corporate interest (vennootschappelijk belang) to become a Guarantor of the Notes;
(4) any one or more Restricted Subsidiaries organized under the laws of the Republic of South Africa or any Restricted Subsidiary if, as a result of becoming a Guarantor of the Notes, such Restricted Subsidiary would violate any applicable South African Black Empowerment laws, any South African exchange control regulations or any other similar South African laws and regulations applicable to it; and
(5) any Receivables Entity.
Existing Indebtedness means the aggregate amount of Indebtedness of the Parent and the Restricted Subsidiaries (other than Indebtedness under the Credit Agreements, the Notes and the related Note Guarantees) in existence on the date of this Indenture until such amounts are repaid.
Fair Market Value means the price that would be paid in an arms-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Board of Directors of the Parent (unless otherwise provided in this Indenture).
Fixed Charge Coverage Ratio means with respect to any specified Person for any period, the ratio of the Consolidated EBITDA of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries Incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the Calculation Date), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such Incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of Preferred Stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) in the event that the specified Person or any of its Restricted Subsidiaries Incurs, repays, repurchases or redeems any Indebtedness or issues, repurchases or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio
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is being calculated but on or prior to the Calculation Date, then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such Incurrence, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock or Preferred Stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of such period;
(2) acquisitions and dispositions of business entities or property and assets constituting a division or line of business of any Person that have been made by the specified Person or any of its Restricted Subsidiaries (or by any Person that has subsequently become a Restricted Subsidiary or has subsequently merged or consolidated with or into the specified Person or any of its Restricted Subsidiaries), including through mergers or consolidations, and the designation or re-designation of Unrestricted Subsidiaries, in each case, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period, and Consolidated EBITDA for such reference period will be calculated on a pro forma basis, but without giving effect to clause (3) of the proviso set forth in the definition of Consolidated Net Income;
(3) the Consolidated EBITDA attributable to discontinued operations, as determined in accordance with GAAP, will be excluded;
(4) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;
(5) whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or chief accounting officer of the Parent (including cost savings and operating efficiencies that are reasonably identifiable and factually supportable). If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Parent to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP;
(6) interest on any Indebtedness under a revolving credit facility computed with a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period except as set forth in the first paragraph of this definition. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a Eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Parent may designate;
(7) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period;
(8) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and
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(9) Fixed Charges attributable to interest on any Indebtedness Incurred under a revolving credit facility computed on a pro forma basis will be calculated based on the average daily balance of such Indebtedness for the four fiscal quarters subject to the pro forma calculation to the extent that such Indebtedness was Incurred solely for working capital purposes.
Fixed Charges means, with respect to any specified Person for any period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges Incurred in respect of letter of credit or bankers acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus
(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus
(3) any interest on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus
(4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of Preferred Stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Parent (other than Disqualified Stock) or to the Parent or a Restricted Subsidiary of the Parent, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, determined on a consolidated basis in accordance with GAAP.
GAAP means generally accepted accounting principles in the United States which are in effect on the Issue Date. At any time after the Issue Date, the Parent may elect to apply International Financial Reporting Standards (IFRS) accounting principles in lieu of GAAP and, upon any such election, references herein to GAAP shall thereafter be construed to mean IFRS on the date of such election; provided that any such election, once made, shall be irrevocable; provided, further, that any calculation or determination in this Indenture that requires the application of GAAP for periods that include fiscal quarters ended prior to the Parents election to apply IFRS shall remain as previously calculated or determined in accordance with GAAP. The Parent shall give notice of any such election made in accordance with this definition to the Trustee.
Global Note Legend means the legend set forth in Section 2.06(g)(2) hereof, which is required to be placed on all Global Notes issued under this Indenture.
Global Notes means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the Depository or its nominee, substantially in the form of Exhibit A1 hereto and that bears the Global Note Legend and that has the Schedule of Exchanges of Interests in the Global Note attached thereto, issued in accordance with Section 2.01, 2.06(b)(3), 2.06(b)(4), 2.06(d)(2) or 2.06(f) hereof.
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Government Securities means securities that are direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged.
Guarantee means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).
Guarantors means the Parent and any Subsidiary of the Parent (other than the Issuer) that executes a Note Guarantee in accordance with the provisions of this Indenture, and their respective successors and assigns required to execute a Note Guarantee hereunder or succeeding directly in the case of conversion or similar transaction for the primary purpose of changing the form of incorporation or other type of formation of the Guarantor, in each case, until the Note Guarantee of such Person has been released in accordance with the provisions of this Indenture.
Hedging Obligations means, with respect to any specified Person, the obligations of such Person under:
(1) any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement;
(2) any commodity forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement; or
(3) any foreign exchange contract, currency swap agreement or other similar agreement or arrangement.
Holder means a Person in whose name a Note is registered.
IAI Global Note means a Global Note substantially in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors.
Income means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.
Incur means, with respect to any Indebtedness, to incur, create, issue, assume, enter into any Guarantee or otherwise become directly or indirectly liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness (and Incurrence and Incurred will have meanings correlative to the foregoing); provided that (1) any Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary will be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary and (2) neither the accrual of interest nor the accretion of original issue discount nor the payment of interest in the form of additional Indebtedness with the same terms or the payment of dividends on Disqualified Stock or Preferred Stock in the form of additional shares of the same class of Disqualified Stock or Preferred Stock (to the extent provided for when the Indebtedness or Disqualified Stock or Preferred Stock on which such interest or dividend is paid was originally issued) will be considered an Incurrence of Indebtedness.
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Indebtedness means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);
(3) in respect of bankers acceptances;
(4) representing Capital Lease Obligations;
(5) representing the balance deferred and unpaid of the purchase price of any property or services due more than one year after such property is acquired or such services are completed;
(6) representing any Hedging Obligations;
(7) all Disqualified Stock issued by such Person, valued at the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price plus accrued dividends; or
(8) all Preferred Stock issued by a Subsidiary of such Person, valued at the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price plus accrued dividends,
if and to the extent any of the preceding items (other than letters of credit, Hedging Obligations, Disqualified Stock and Preferred Stock) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term Indebtedness includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. Indebtedness shall be calculated without giving effect to the effects of Statement of Financial Accounting Standards No. 133 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness.
For purposes hereof, the maximum fixed repurchase price of any Disqualified Stock or Preferred Stock which does not have a fixed repurchase price will be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock, as applicable, as if such Disqualified Stock or Preferred Stock were repurchased on any date on which Indebtedness will be required to be determined pursuant to this Indenture.
The amount of any Indebtedness outstanding as of any date will be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation. The amount of any Indebtedness described in clauses (1) and (2) above will be:
(1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and
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(2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.
For purposes of determining any particular amount of Indebtedness, Guarantees, Liens or Obligations with respect to letters of credit supporting Indebtedness otherwise included in the determination of such particular amount shall not be included. The following items shall not be treated as Indebtedness: (i) any Liens granted pursuant to the equal and ratable provisions referred to in Section 4.12; (ii) contingent Obligations Incurred in the ordinary course of business and not in respect of borrowed money; (iii) deferred or prepaid revenues; (iv) deferred tax revenues and (v) obligations of the Parent or any Restricted Subsidiary pursuant to contracts for, options, puts or similar arrangements relating to the purchase of raw materials or the sale of inventory at a time in the future entered into in the ordinary course of business.
Indenture means this Indenture, as amended or supplemented from time to time.
Independent Financial Advisor means a firm: (1) which does not, and whose directors, officers or affiliates do not, have a material financial interest in the Parent or any of its Subsidiaries; and (2) which, in the judgment of the Board of Directors, is otherwise independent and qualified to perform the task for which it is to be engaged.
Indirect Participant means a Person who holds a beneficial interest in a Global Note through a Participant.
Initial Notes means the first $900,000,000 million aggregate principal amount of Notes issued under this Indenture on the date hereof.
Initial Purchasers means Goldman, Sachs & Co., Credit Suisse Securities (USA) LLC, UBS Securities LLC and RBC Capital Markets, LLC.
Institutional Accredited Investor means an institution that is an accredited investor as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs.
Inventory has the meaning set forth in the Uniform Commercial Code of the State of New York, as amended.
Investment Grade Rating means a rating equal to or higher than Baa3 (or the equivalent) by Moodys and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.
Investments in any Person means all direct or indirect investments in such Person in the form of loans or other extensions of credit (including Guarantees but excluding advances or extensions of credit to customers or suppliers made in the ordinary course of business), advances, capital contributions (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by such Person, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP (excluding the footnotes).
For purposes of the definition of Unrestricted Subsidiary, the definition of Restricted Payment and Section 4.07 hereof:
(1) Investment shall include the portion (proportionate to the Parents direct and indirect equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary;
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(2) any asset sold or otherwise disposed to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such sale or disposition; and
(3) if the Parent or any Restricted Subsidiary sells or otherwise disposes of any Capital Stock of any direct or indirect Restricted Subsidiary, or any Restricted Subsidiary issues Capital Stock, such that, after giving effect to any such sale, disposition or issuance, such Person is no longer a Restricted Subsidiary, the Parent shall be deemed to have made an Investment on the date of any such sale, disposition or issuance equal to the Fair Market Value of the Capital Stock of such Person held by the Parent or such Restricted Subsidiary immediately following any such sale, disposition or issuance.
The acquisition by the Parent or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Parent or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investment held by the acquired Person in such third Person unless such Investment in such third party was not made in anticipation or contemplation of the Investment by the Parent or such Restricted Subsidiary and such third party Investment is incidental to the primary business of such Person in whom the Parent or such Restricted Subsidiary is making such Investment.
Issue Date means the first date Notes are issued under this Indenture.
Issuer means Tronox Finance LLC, and any and all successors thereto.
Joint Venture means any joint venture entity, whether a company, unincorporated firm, association, partnership or any other entity which, in each case, is not a Subsidiary of the Parent or any of its Restricted Subsidiaries but in which the Parent or a Restricted Subsidiary has a direct or indirect equity or similar interest.
Legal Holiday means a Saturday, a Sunday or a day on which banking institutions in The City of New York or at a place of payment are authorized or required by law, regulation or executive order to remain closed.
Letter of Transmittal means the letter of transmittal to be prepared by the Issuer and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer.
Lien means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease, rights of set-off or netting arrangements in the ordinary course of business be deemed to constitute a Lien.
Moodys means Moodys Investors Service, Inc. or any successor to the rating agency business thereof.
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Net Available Cash means the aggregate proceeds, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not the interest component, thereof), received in cash and Cash Equivalents by the Parent or any Restricted Subsidiary in respect of any Asset Sale (including, without limitation, any cash and Cash Equivalents received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (1) the costs relating to such Asset Sale, including, without limitation, legal, accounting, investment banking and brokerage fees, and sales commissions, and any relocation expenses incurred as a result thereof, (2) taxes paid or payable as a result thereof, in each case, after taking into account tax credits or deductions determined by the Parent to be available and any tax sharing arrangements, (3) working capital adjustments, (4) in the case of any Asset Sale by a Restricted Subsidiary, payments to holders of Equity Interests in such Restricted Subsidiary in such capacity (other than such Equity Interests held by the Parent or any Restricted Subsidiary) to the extent that such payment is required to permit the distribution of such proceeds in respect of the Equity Interests in such Restricted Subsidiary held by the Parent or any Restricted Subsidiary and (5) appropriate amounts to be provided by the Parent or the Restricted Subsidiaries as a reserve against liabilities associated with such Asset Sale, including, without limitation, pension and other post- employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations or purchase price adjustment obligations associated with such Asset Sale, all as determined in accordance with GAAP; provided that (a) excess amounts set aside for payment of taxes pursuant to clause (2) above remaining after such taxes have been paid in full or the statute of limitations therefor has expired and (b) amounts initially held in reserve pursuant to clause (4) no longer so held, will, in the case of each of subclause (a) and (b), at that time become Net Available Cash.
Non-U.S. Entity means any Person that is not a U.S. Entity.
Non-U.S. Person means any Person who is not a U.S. Person.
Note Guarantee means a Guarantee of the Notes pursuant to this Indenture.
Notes has the meaning assigned to it in the preamble to this Indenture. The Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture, and unless the context otherwise requires, all references to the Notes shall include the Initial Notes and any Additional Notes.
Obligations with respect to any Indebtedness means any principal, interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not interest is an allowed claim under applicable state, federal or foreign law), penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers acceptances), damages and other liabilities payable under the documentation governing such Indebtedness; provided that Obligations with respect to the Notes shall not include fees or indemnifications in favor of the Trustee and other third parties other than the Holders of the Notes.
Offer to Purchase means an offer to purchase Notes by the Issuer from the Holders commenced by mailing a notice to the Trustee and each Holder stating:
(1) the provision of this Indenture pursuant to which the offer is being made and 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;
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(4) that, unless the Issuer 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 minimum principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.
On the Payment Date, the Issuer shall (a) accept for payment on a pro rata basis Notes or portions thereof (and, in the case of an Offer to Purchase made pursuant to Section 4.10 hereof, any Pari Passu Debt included in such Offer to Purchase) 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 the Issuer. 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 (or cause to be transferred by book-entry) 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 minimum principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. The Issuer 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. The Issuer will comply with Section 14(e) 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 the Issuer is required to repurchase Notes pursuant to an Offer to Purchase. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture relating to an Offer to Purchase, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under such provisions of this Indenture by virtue of such conflict.
Offering Circular means the offering circular, dated August 15, 2012, relating to the offering of the Initial Notes by the Issuer.
Officer means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Vice President or any Manager of such Person.
Officers Certificate means a certificate signed on behalf of the Parent or the Issuer (as required by this Indenture) by at least two Officers of the Parent or the Issuer (as required by this Indenture), one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Parent or the Issuer (as the case may be), that meets the requirements of Section 12.05 hereof.
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Opinion of Counsel means a written opinion from legal counsel who is reasonably acceptable to the Trustee (who may be counsel to or an employee of the Parent) that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or counsel to the Parent, any Subsidiary of the Parent or the Trustee.
Parent means Tronox Limited, a public limited company registered under the laws of the State of Western Australia, Australia.
Pari Passu Debt means (a) any Indebtedness of the Issuer that ranks equally in right of payment with the Notes or (b) any Indebtedness of a Guarantor that ranks equally in right of payment with such Guarantors Note Guarantee.
Participant means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).
Permitted Business means any business conducted or proposed to be conducted (as described in the Offering Circular) by the Parent and the Restricted Subsidiaries on the Issue Date and other businesses reasonably related or ancillary thereto or that are a reasonable extension or development thereof.
Permitted Holders means Exxaro Resources Limited, its successors and assigns, any Person in which it or such successors and assigns owns a majority of the voting power, and each of its Affiliates or the Affiliates of such successors or assigns.
Permitted Investments means:
(1) any Investment in the Parent or in a Restricted Subsidiary;
(2) any Investment by the Parent or any Restricted Subsidiary in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary; or
(b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Parent or a Restricted Subsidiary;
(3) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof or any other disposition of assets not constituting an Asset Sale;
(4) Hedging Obligations and customary cash management arrangements permitted under clauses (9) and (11), respectively, of Section 4.09(b) hereof;
(5) (i) stock, obligations or securities received in satisfaction of judgments, foreclosure of Liens or settlement of Indebtedness and (ii) any Investments received in compromise of obligations of any trade creditor or customer that were Incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any such Person;
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(6) advances to customers or suppliers in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable, prepaid expenses or deposits on the balance sheet of the Parent or the Restricted Subsidiaries and endorsements for collection or deposit arising in the ordinary course of business;
(7) commission, payroll, travel and similar loans and advances, including such loans and advances required by applicable employment laws, to officers, directors and employees of the Parent or any Restricted Subsidiary that are expected at the time of such advance ultimately to be recorded as an expense in conformity with GAAP;
(8) loans or advances to directors, officers and employees of the Parent or any Restricted Subsidiary that are made in the ordinary course of business of the Parent or such Restricted Subsidiary or to finance the purchase of Equity Interests of the Parent, in an aggregate amount, taken together with all other loans or advances made pursuant to this clause (8) that are at the time outstanding, not to exceed $15 million;
(9) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers;
(10) Investments consisting of take-or-pay obligations contained in supply agreements relating to products, services or commodities of a type that the Parent or any of its Subsidiaries uses or sells in the ordinary course of business;
(11) security deposits required by utility companies and other Persons in a similar line of business to that of utility companies and governmental authorities that are utility companies, in each case, made in the ordinary course of business of the Parent and its Subsidiaries;
(12) Investments consisting of or to finance purchases and acquisitions of inventory, supplies, materials, services or equipment or purchases of contract rights or licenses or leases of intellectual property;
(13) any Investment existing or pursuant to agreements or arrangements in effect on the Issue Date and any modification, replacement, renewal or extension thereof; provided that the amount of any such Investment may not be increased except (x) as required by the terms of such Investment as in existence on the Issue Date or (y) as otherwise permitted under this Indenture;
(14) Investments of a Restricted Subsidiary of the Parent acquired after the Issue Date or of an entity merged into, amalgamated with, or consolidated with the Parent or a Restricted Subsidiary of the Parent in a transaction that is not prohibited by Section 5.01 hereof after the Issue Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;
(15) Investments consisting of earnest money deposits required in connection with a purchase agreement or letter of intent permitted by this Indenture;
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(16) any Investment by the Parent or any of its Restricted Subsidiaries in a Permitted Business or Joint Ventures having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (16) that are at the time outstanding, not to exceed $100 million; provided, however, that if any Investment pursuant to this clause (16) is made in any Person that is not a Restricted Subsidiary of the Parent at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Parent after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (16) for so long as such Person continues to be a Restricted Subsidiary;
(17) any Investment to the extent made using Capital Stock of the Parent (other than Disqualified Stock);
(18) (i) Guarantees not prohibited by Section 4.09 hereof and (other than with respect to Indebtedness) guarantees, keepwells and similar arrangements in the ordinary course of business, and (ii) performance guarantees with respect to Obligations Incurred by the Parent or any of its Restricted Subsidiaries that are permitted by this Indenture; and
(19) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (19) since the Issue Date, not to exceed the greater of $150 million and 3% of the Consolidated Net Tangible Assets of the Parent, plus the amount of any distributions, dividends, payments or other returns in respect of such Investments (without duplication for purposes of Section 4.07 hereof of any amounts applied pursuant to Section 4.07(a)(3)); provided that if such Investment is in Capital Stock of a Person that subsequently becomes a Restricted Subsidiary, such Investment shall thereafter be deemed permitted under clause (1) or (3) above and shall not be included as having been made pursuant to this clause (19); and
(20) Investments relating to a Receivables Subsidiary that, in the good faith determination of the Parent, are necessary or advisable to effect any Receivables Facility.
Permitted Liens means:
(1) Liens in favor of the Issuer or any Restricted Subsidiary with respect to Indebtedness that was not Incurred in violation of Section 4.09 hereof;
(2) Liens on Capital Stock, assets or property of a Restricted Subsidiary that is not a Guarantor securing Indebtedness of such Restricted Subsidiary;
(3) Liens on property existing of a Person at the time such Person is merged with or into or consolidated with the Parent or any Restricted Subsidiary; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged with or into or consolidated with the Parent or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by the Parent or any Restricted Subsidiary of the Parent, provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any property other than the property so acquired by the Parent or the Restricted Subsidiary;
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(5) Liens securing Indebtedness Incurred under clause (1) of Section 4.09 hereof;
(6) Liens existing on the Issue Date (other than any Liens securing Indebtedness Incurred under clause (1) of Section 4.09 hereof);
(7) Liens securing Permitted Refinancing Indebtedness; provided that such Liens do not extend to any property or assets other than the property or assets that secure the Indebtedness being refinanced;
(8) Liens on property or assets securing Indebtedness used to defease or to satisfy and discharge the Notes; provided that (a) the Incurrence of such Indebtedness was not prohibited by this Indenture and (b) such defeasance or satisfaction and discharge is not prohibited by this Indenture;
(9) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of Section 4.09(b) hereof; provided that any such Lien covers only the assets acquired, constructed or improved with such Indebtedness;
(10) Liens on cash and Cash Equivalents securing Hedging Obligations of the Parent or any Restricted Subsidiary (a) that are Incurred in the ordinary course of business for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, or (b) securing letters of credit that support such Hedging Obligations;
(11) Liens Incurred or deposits made in the ordinary course of business in connection with workers compensation, pension plans, unemployment insurance or other social security obligations;
(12) Liens, deposits or pledges to secure the performance of bids, tenders, contracts (other than contracts for the payment of Indebtedness), leases, import duties or for the payment of rent or deposits as security for the payment of insurance-related obligations (including, but not limited to, in respect of deductibles, self-insured retention amounts and premiums and adjustments thereto) or other similar obligations, in each case, arising in the ordinary course of business;
(13) survey exceptions, encumbrances, easements or reservations of, or rights of others for, rights of way, zoning or other restrictions as to the use of properties, and defects in title which, in the case of any of the foregoing, were not Incurred or created to secure the payment of Indebtedness, and which in the aggregate do no materially adversely affect the value of such properties or materially impair the use for the purposes of which such properties are held by the Parent or any Restricted Subsidiary;
(14) judgment and attachment Liens not giving rise to an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;
(15) Liens, deposits or pledges to secure public or statutory obligations, surety, stay, appeal, indemnity, performance or other similar bonds or obligations; and Liens, deposits or pledges in lieu of such bonds or obligations, or to secure such bonds or obligations, or to secure letters of credit in lieu of or supporting the payment of such bonds or obligations;
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(16) Liens in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of the Parent or any Subsidiary thereof on deposit with or in possession of such bank;
(17) any interest or title of a lessor, licensor or sublicensor in the property subject to any lease, license or sublicense (other than any property that is the subject of a Sale and Leaseback Transaction);
(18) Liens for taxes, assessments and governmental charges not yet delinquent or being contested in good faith and for which adequate reserves have been established to the extent required by GAAP;
(19) Liens arising from precautionary UCC financing statements regarding operating leases or consignments;
(20) Liens of franchisors in the ordinary course of business not securing Indebtedness;
(21) Liens on assets of Restricted Subsidiaries that are not Guarantors securing Indebtedness of such Restricted Subsidiaries permitted to be Incurred under Section 4.09 hereof;
(22) pledges of or Liens on raw materials or on manufactured products as security for any drafts or bills of exchange drawn in connection with the importation of such raw materials or manufactured products;
(23) Liens on any property in favor of domestic or foreign governmental bodies to secure partial, progress, advance or other payments pursuant to any contract or statute, not yet due and payable;
(24) any obligations or duties affecting any property of the Parent or any Restricted Subsidiary to any municipality or public authority with respect to any franchise, grant, license or permit that do not materially impair the use of such property for the purposes for which it is held;
(25) Liens imposed by law that are Incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers, warehousemens, mechanics, landlords, materialmens, employees, laborers, employers, suppliers, banks, repairmens and other like Liens, in each case, for sums not yet due or that are being contested in good faith by appropriate proceedings and that are appropriately reserved for in accordance with GAAP if required by GAAP;
(26) Liens on receivables subject to factoring transactions;
(27) Liens on goods or Inventory, the purchase, shipment or storage price of which is financed by a documentary letter of credit or bankers acceptance issued or created for the account of the Parent or any Restricted Subsidiary; provided that such Lien secures only the obligations of the Parent or such Restricted Subsidiary in respect of such letter of credit or bankers acceptance;
(28) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods (including under Article 2 of the Uniform Commercial Code) and Liens that are contractual rights of set-off relating to purchase orders and other similar agreements entered into by the Parent or any of its Restricted Subsidiaries;
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(29) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto Incurred in the ordinary course of business;
(30) ground leases in respect of real property on which facilities owned or leased by the Parent or any of its Restricted Subsidiaries are located;
(31) any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of any Joint Venture or similar arrangement pursuant to any Joint Venture or similar agreement;
(32) Liens solely on any cash earnest money deposits made by the Parent or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement permitted under this Indenture;
(33) any netting or set-off arrangements entered into by the Parent or any Restricted Subsidiary of the Parent in the ordinary course of its banking arrangements (including, for the avoidance of doubt, cash pooling arrangements) for the purposes of netting debit and credit balances of the Parent or any Restricted Subsidiary of the Parent;
(34) Liens in favor of customs or revenue authorities arising as a matter of law to secure payment of customs duties in connection with importation of goods;
(35) Liens (A) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection and (B) attaching to commodity trading accounts or other commodities brokerage accounts Incurred in the ordinary course of business and consistent with past practice;
(36) Liens consisting of escrow arrangements with respect to escrow accounts, to the extent such escrow accounts hold deposits by any proposed buyer in connection with any sale or disposition of assets permitted under this Indenture;
(37) Liens consisting of an agreement to sell or otherwise dispose of any property in an Asset Sale permitted under Section 4.10 hereof in each case solely to the extent such Asset Sale would have been permitted on the date of the creation of such Lien;
(38) Liens on Cash and Cash Equivalents arising in connection with the cash collateralization of letters of credit in an amount not to exceed 105% of the aggregate face amount of the letters of credit permitted pursuant to clause (26) of Section 4.09(b) hereof;
(39) Liens securing Indebtedness in an aggregate amount not to exceed $25 million (or the foreign currency equivalent) at any one time outstanding; and
(40) other Liens securing Indebtedness so long as the Secured Indebtedness Leverage Ratio does not exceed 2.00 to 1.00, as of the date such Indebtedness was Incurred and after giving effect to the Incurrence of such Indebtedness and the application of proceeds therefrom on such date.
Permitted Refinancing Indebtedness means any Indebtedness of the Parent or any Restricted Subsidiary issued in exchange for, or the net cash proceeds of which are used to extend, refinance, renew, replace, defease or refund, other Indebtedness of the Parent or any Restricted Subsidiary (other than Indebtedness owed to the Parent or to any Subsidiary of the Parent); provided that:
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(1) the amount of such Permitted Refinancing Indebtedness does not exceed the amount of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued and unpaid interest thereon and the amount of any reasonably determined premium necessary to accomplish such refinancing and such reasonable expenses Incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes or the Note Guarantees, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes or the Note Guarantees, as applicable, on terms at least as favorable, taken as a whole, to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;
(4) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is Pari Passu Debt, such Permitted Refinancing Indebtedness ranks equally in right of payment with, or is subordinated in right of payment to, the Notes or such Note Guarantees; and
(5) such Indebtedness is Incurred by either (a) the Restricted Subsidiary that is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.
Person means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.
Preferred Stock means, with respect to any Person, any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions upon liquidation.
Private Placement Legend means the legend set forth in Section 2.06(g)(1) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.
QIB means a qualified institutional buyer as defined in Rule 144A.
Qualified Receivables Transaction means any transaction or series of transactions entered into by the Parent or any of its Subsidiaries pursuant to which the Parent or any of its Subsidiaries sells, conveys or otherwise transfers to (1) a Receivables Entity (in the case of a transfer by the Parent or any of its Subsidiaries) or (2) any other Person (in the case of a transfer by a Receivables Entity or by the Parent or any of its Subsidiaries in connection with a European securitization transaction), or transfers an undivided interest in or grants a security interest in, any Receivables Assets (whether now existing or arising in the future) of the Parent or any of its Subsidiaries.
Rating Agency means (1) S&P, (2) Moodys, or (3) if either or both of S&P and Moodys shall not then exist, or do not then rate the Notes, a nationally recognized securities rating agency or agencies, as the case may be, selected by the Parent, which shall be substituted for S&P or Moodys or both, as the case may be.
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Ratings Decline Period means the period that (i) begins on the earlier of (a) the date of the first public announcement of the occurrence of a Change of Control and (b) the occurrence of a Change of Control and (ii) ends 90 days following consummation of such Change of Control; provided that such period shall be extended for so long as the rating of the Notes, as noted by the applicable Rating Agency, is under publicly announced consideration for downgrade by the applicable Rating Agency.
Ratings Event means (x) a downgrade by one or more gradations (including gradations within ratings categories as well as between rating categories) or withdrawal of the rating of the Notes within the Ratings Decline Period by one or more Rating Agencies (unless the applicable Rating Agency shall have put forth a written statement to the effect that such downgrade is not attributable in whole or in part to the applicable Change of Control) and (y) the Notes do not have an Investment Grade Rating from either Rating Agency.
Receivables Assets means any accounts receivable and any assets related thereto, including, without limitation, all collateral securing such accounts receivable and assets and all contracts and contract rights including rights to returned or repossessed goods, all insurance policies, security deposits, indemnities, checks or other negotiable instruments relating to debtor(s) obligations, and all guarantees or other supporting obligations (within the meaning of the New York Uniform Commercial Code Section 9-102(a)(77)) (including Hedging Obligations), in respect of such accounts receivable and assets and all proceeds of the foregoing and other assets which are customarily transferred, or in respect of which security interests are customarily granted, in connection with asset securitization transactions involving Receivables Assets.
Receivables Entity means a Subsidiary of the Parent or another Person formed for the purposes of engaging in a Qualified Receivables Transaction or which is regularly engaged in receivables financings and to which the Parent or any of its Subsidiaries transfers Receivables Assets, and which is designated by the Board of Directors of the Parent or of such other Person (as provided below) to be a Receivables Entity (a) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (1) is guaranteed by the Parent or any Restricted Subsidiary of the Parent (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Receivables Undertakings), (2) is recourse to or obligates the Parent or any Restricted Subsidiary of the Parent (other than the Receivables Entity) in any way other than pursuant to Standard Receivables Undertakings or (3) subjects any property or asset of the Parent or any Restricted Subsidiary of the Parent (other than Receivables Assets and related assets as provided in the definition of Qualified Receivables Transaction), directly or indirectly, contingently or otherwise, to the satisfaction thereof other than pursuant to Standard Receivables Undertakings, (b) with which neither the Parent nor any Restricted Subsidiary of the Parent has any material contract, agreement, arrangement or understanding (other than on terms which the Parent reasonably believes to be no less favorable to the Parent or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Parent) other than fees payable in the ordinary course of business in connection with servicing Receivables Assets, and (c) with which neither the Parent nor any Restricted Subsidiary of the Parent has any obligation to maintain or preserve such entitys financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Board of Directors of the Parent or of such other Person will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors of the Parent or of such other Person giving effect to such designation, together with an Officers Certificate certifying that such designation complied with the foregoing conditions.
Receivables Repurchase Obligation means any obligation of a seller of Receivables Assets in a Qualified Receivables Transaction to repurchase Receivables Assets arising as a result of a breach of a Standard Receivables Undertaking, including as a result of a Receivables Asset or portion thereof becoming subject to any asserted defense, dispute, off set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.
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Registration Rights Agreement means (1) with respect to the Notes issued on the Issue Date, the Registration Rights Agreement, to be dated the Issue Date, among the Issuer, the Guarantors, and the Initial Purchasers and (2) with respect to any Additional Notes, any registration rights agreement between the Issuer and the other parties thereto relating to the registration by the Issuer of such Additional Notes under the Securities Act.
Regulation S means Regulation S promulgated under the Securities Act.
Regulation S Global Note means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate.
Regulation S Permanent Global Note means a permanent Global Note in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period.
Regulation S Temporary Global Note means a temporary Global Note in the form of Exhibit A2 hereto deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S.
Replacement Assets means (1) non-current assets that will be used or useful in a Permitted Business, (2) substantially all the assets of a Permitted Business, or (3) a majority of the Voting Stock of any Person engaged in a Permitted Business that will become on the date of acquisition thereof a Restricted Subsidiary.
Responsible Officer, when used with respect to the Trustee, means any Officer within the corporate trust administration of the Trustee (or any successor group of the Trustee) with direct responsibility for administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
Restricted Definitive Note means a Definitive Note bearing the Private Placement Legend.
Restricted Global Note means a Global Note bearing the Private Placement Legend.
Restricted Payment means, with respect to any Person, to:
(1) declare or pay any dividend or make any other payment or distribution with respect to any of the Parents or any Restricted Subsidiarys Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Parent or any Restricted Subsidiary) or to the direct or indirect holders of the Parents or any Restricted Subsidiarys Equity Interests in their capacity as such (other than dividends, payments or distributions (x) payable solely in Equity Interests (other than Disqualified Stock) of the Parent or in options, warrants or other rights to purchase such Equity Interests or (y) to the Parent or a Restricted Subsidiary);
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(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Parent or any Restricted Subsidiary) any Equity Interests of the Parent held by any Person (other than by a Restricted Subsidiary) or any Equity Interests of any Restricted Subsidiary (other than by the Parent or another Restricted Subsidiary);
(3) call for redemption or make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, prior to the Stated Maturity thereof, any Indebtedness that is subordinated in right of payment to the Notes or any Note Guarantee except (a) in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, purchase or other acquisition or (b) intercompany Indebtedness permitted to be Incurred pursuant to clause (6) of Section 4.09(b) hereof; or
(4) make any Investment (other than a Permitted Investment) in any Person, including any Investment in an Unrestricted Subsidiary (including by the designation of any Subsidiary as an Unrestricted Subsidiary).
Restricted Period means the 40-day distribution compliance period as defined in Regulation S.
Restricted Subsidiary means any Subsidiary of the Parent that is not an Unrestricted Subsidiary.
Rule 144 means Rule 144 promulgated under the Securities Act.
Rule 144A means Rule 144A promulgated under the Securities Act.
Rule 903 means Rule 903 promulgated under the Securities Act.
Rule 904 means Rule 904 promulgated under the Securities Act.
S&P means Standard & Poors Ratings Group or any successor to the rating agency business thereof.
Sale and Leaseback Transaction means, with respect to any Person, any transaction involving any of the assets or properties of such Person whether now owned or hereafter acquired, whereby such Person sells or otherwise transfers such assets or properties and then or thereafter leases such assets or properties or any part thereof or any other assets or properties which such Person intends to use for substantially the same purpose or purposes as the assets or properties sold or transferred.
SEC means the United States Securities and Exchange Commission.
Secured Indebtedness means any Indebtedness secured by a Lien.
Secured Indebtedness Leverage Ratio means, with respect to any Person, at any date the ratio of (i) outstanding Secured Indebtedness for borrowed money of such Person and its Restricted Subsidiaries as of such date of calculation (less the aggregate amount of cash and Cash Equivalents (other than restricted cash), in each case, that is held by such Person and its Restricted Subsidiaries as of such date free and clear of all Liens, other than Permitted Liens, in an amount not to exceed $150 million) determined on a consolidated basis in accordance with GAAP to (ii) Consolidated EBITDA of such Person for the four full fiscal quarters for which internal financial statements are available immediately preceding such date of such calculation. In the event that the Parent or any of its Restricted Subsidiaries
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Incurs, repays, repurchases or redeems any Indebtedness subsequent to the commencement of the period for which the Secured Indebtedness Leverage Ratio is being calculated but prior to the event for which the calculation of the Secured Indebtedness Leverage Ratio is made (the Secured Leverage Calculation Date), then the Secured Indebtedness Leverage Ratio shall be calculated giving pro forma effect to such Incurrence, repayment, repurchase or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter period; provided that the Issuer may elect pursuant to an Officers Certificate delivered to the Trustee to treat all or any portion of the commitment under any Indebtedness as being Incurred at such time, in which case any subsequent Incurrence of Indebtedness under such commitment shall not be deemed, for purposes of this calculation, to be an Incurrence at such subsequent time.
For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, amalgamations, consolidations and discontinued operations (as determined in accordance with GAAP), in each case with respect to an operating unit of a business, and any operational changes that the Parent or any of its Restricted Subsidiaries has determined to make and/or made during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Secured Leverage Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations, consolidations, discontinued operations and other operational changes (and the change of any associated Indebtedness and the change in Consolidated EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Parent or any Restricted Subsidiary since the beginning of such period shall have made any Investment, acquisition, disposition, merger, consolidation, amalgamation, discontinued operation or operational change, in each case with respect to an operating unit of a business, that would have required adjustment pursuant to this definition, then the Secured Indebtedness Leverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, discontinued operation, merger, amalgamation, consolidation or operational change had occurred at the beginning of the applicable four-quarter period.
For purposes of this definition, whenever pro forma effect is to be given to any event, the pro forma calculations shall be made in good faith by a responsible or accounting officer of the Issuer. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Issuer as set forth in an Officers Certificate, to reflect (1) operating expense reductions and other operating improvements or synergies reasonably expected to result from the applicable event and (2) all adjustments of the nature set forth as Conforming Adjustments and Pro Forma Adjustments under Unaudited Pro Forma Condensed Combined Financial Statements in the Offering Circular to the extent such adjustments, without duplication, continue to be applicable to such four-quarter period.
For the purposes of this definition, any amount in a currency other than U.S. dollars will be converted to U.S. dollars based on the average exchange rate for such currency for the most recent twelve-month period immediately prior to the date of determination or if any such Indebtedness is subject to any foreign exchange contract, currency swap agreement or other similar agreement or arrangement with respect to the currency in which such Indebtedness is denominated covering principal of, premium, if any, and interest on such Indebtedness, the amount of such Indebtedness and such interest and premium, if any, shall be determined after giving effect to all payments in respect thereof under such foreign exchange contract, currency swap agreement or other similar agreement or arrangement.
Securities Act means the Securities Act of 1933, as amended.
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Senior Secured Term Loan Facility means the senior secured term loan and the senior secured delayed draw term loan of Tronox Pigments (Netherlands) B.V., dated February, 8, 2012, as amended, supplemented, modified, extended, restructured, renewed, restated, refinanced or replaced in whole or in part from time to time, including, without limitation, by a Credit Facility.
Shelf Registration Statement means the Shelf Registration Statement as defined in the Registration Rights Agreement.
Significant Subsidiary means any Restricted Subsidiary that would constitute a significant subsidiary within the meaning of Article 1 of Regulation S-X under the Securities Act.
Standard Receivables Undertakings means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Parent or any Subsidiary of the Parent which are customary in a Qualified Receivables Transaction, including, without limitation, those relating to the servicing of the assets of a Receivables Entity, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Receivables Undertaking.
Stated Maturity means, with respect to any installment of interest on or principal of any series of Indebtedness, the date on which such installment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
Subsidiary means, with respect to any Person:
(1) a corporation a majority of whose Voting Stock is at the time owned or controlled, directly or indirectly, by such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof; and
(2) any other Person (other than a corporation), including, without limitation, a partnership, limited liability company, business trust or joint venture, in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof, has at least majority ownership interest entitled to vote in the election of directors, managers or trustees thereof (or other Person performing similar functions).
Tax means any tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and any other additions thereto). Taxes and Taxation shall be construed to have corresponding meanings.
TIA means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).
Total Assets means, with respect to any Person, the total consolidated assets of such Person and its Restricted Subsidiaries, without giving effect to any amortization of the amount of intangible assets since the Issue Date, as shown on the most recent balance sheet of such Person.
Transaction means the transactions contemplated by the Transaction Agreement dated as of September 25, 2011, as amended and restated on April 20, 2012 by and among Tronox Incorporated, Tronox Limited, Merger Sub One, Merger Sub Two, Exxaro, Exxaro Holdings Sands Proprietary Limited, a company organized under the laws of the Republic of South Africa and wholly-owned Subsidiary of Exxaro and Exxaro International BV, a company organized under the laws of the Netherlands and wholly-owned Subsidiary of Exxaro.
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Treasury Rate means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two Business Days prior to the date fixed for prepayment (or, if such Statistical Release is no longer published, any publicly available source for similar market data)) most nearly equal to the then-remaining term of the Notes to August 15, 2015; provided, however, that if the then-remaining term of the Notes to August 15, 2015, is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate will be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the then-remaining term of the Notes to August 15, 2015 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
Trustee means Wilmington Trust, National Association, until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.
U.S. Dollar Equivalent means with respect to any monetary amount in a currency other than U.S. dollars, at any time for determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency as published in The Wall Street Journal in the Exchange Rates column under the heading Currency Trading on the date two Business Days prior to such determination.
U.S. Entity means any Person organized under the laws of the United States of America, any State thereof or the District of Columbia.
U.S. Person means a U.S. Person as defined in Rule 902(k) promulgated under the Securities Act.
Unrestricted Definitive Note means a Definitive Note that does not bear and is not required to bear the Private Placement Legend.
Unrestricted Global Note means a Global Note that does not bear and is not required to bear the Private Placement Legend.
Unrestricted Subsidiary means (other than the Issuer, which shall be a Restricted Subsidiary at all times):
(1) any Subsidiary of the Parent that at the time of determination shall have been designated an Unrestricted Subsidiary by the Parent; and
(2) any Subsidiary of an Unrestricted Subsidiary.
Voting Stock of any Person as of any date means the Capital Stock of such Person that is ordinarily entitled to vote in the election of the Board of Directors of such Person.
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Weighted Average Life to Maturity means, when applied to any Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each then-remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof or similar payments with respect to such Disqualified Stock or Preferred Stock, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by
(2) the then-outstanding principal amount of such Indebtedness.
Section 1.02 | Other Definitions. |
Term |
Defined in Section | |
Additional Amounts |
4.20 | |
Additional Term Loan Debt |
4.07 | |
Affiliate Transaction |
4.11 | |
Authentication Order |
2.02 | |
Calculation Date |
1.01: Definition of Fixed Charge Coverage Ratio | |
Change in Tax Law |
3.07 | |
Change of Control Offer |
4.15 | |
Change of Control Payment |
4.15 | |
Change of Control Payment Date |
4.15 | |
Covenant Defeasance |
8.03 | |
Covenant Suspension Event |
4.19 | |
DTC |
2.03 | |
Event of Default |
6.01 | |
Excess Proceeds |
4.10 | |
IFRS |
1.01: Definition of GAAP | |
Legal Defeasance |
8.02 | |
maximum fixed repurchase price |
1.01: Definition of Indebtedness | |
Offer Amount |
3.09 | |
Offer Period |
3.09 | |
Paying Agent |
2.03 | |
Payment Date |
1.01: Definition of Offer to Purchase | |
Permitted Debt |
4.09 | |
Registrar |
2.03 | |
Reversion Date |
4.19 | |
Secured Leverage Calculation Date |
1.01: Definition of Secured Indebtedness Leverage Ratio | |
Suspended Covenants |
4.19 | |
Suspension Period |
4.19 | |
Tax Jurisdiction |
4.20 | |
Tax Redemption Date |
3.07 |
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Section 1.03 | Incorporation by Reference of Trust Indenture Act. |
Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
indenture securities means the Notes;
indenture security Holder means a Holder of a Note;
indenture to be qualified means this Indenture;
indenture trustee or institutional trustee means the Trustee; and
obligor on the Notes and the Note Guarantees means the Issuer and the Guarantors, respectively, and any successor obligor upon the Notes and the Note Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.
Section 1.04 | Rules of Construction. |
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) or is not exclusive;
(4) including is not limiting;
(5) words in the singular include the plural, and in the plural include the singular;
(6) will shall be interpreted to express a command;
(7) provisions apply to successive events and transactions; and
(8) references to sections of or rules under the Securities Act will be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time.
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ARTICLE 2
THE NOTES
Section 2.01 | Form and Dating. |
(a) General. The Notes and the Trustees certificate of authentication will be substantially in the form of Exhibits A1 and A2 hereto. The Notes may have notations, legends or endorsements in a form reasonably acceptable to the Issuer, provided that any such notations, legends or endorsements are required by law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The Notes shall be in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Issuer, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form will be substantially in the form of Exhibits A1 or A2 hereto (including the Global Note Legend thereon and the Schedule of Exchanges of Interests in the Global Note attached thereto). Notes issued in definitive form will be substantially in the form of Exhibit A1 hereto (but without the Global Note Legend thereon and without the Schedule of Exchanges of Interests in the Global Note attached thereto). Each Global Note will represent such of the outstanding Notes as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on Regulation S will be issued initially in the form of the Regulation S Temporary Global Note, which will be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as Custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided. The Restricted Period will be terminated upon the receipt by the Trustee of:
(1) a written certificate from the Depositary, together with copies of certificates from Euroclear and Clearstream certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note or an IAI Global Note bearing a Private Placement Legend, all as contemplated by Section 2.06(b) hereof); or
(2) an Officers Certificate from the Issuer.
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Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note will be exchanged for beneficial interests in the Regulation S Permanent Global Note pursuant to the Applicable Procedures. Simultaneously with the authentication of the Regulation S Permanent Global Note, the Trustee will cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interests therein as hereinafter provided.
(d) Euroclear and Clearstream Procedures Applicable. The provisions of the Operating Procedures of the Euroclear System and Terms and Conditions Governing Use of Euroclear and the General Terms and Conditions of Clearstream Banking and Customer Handbook of Clearstream will be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Note that are held by Participants through Euroclear or Clearstream.
Section 2.02 | Execution and Authentication. |
At least one Officer must sign the Notes for the Issuer by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be valid.
A Note will not be valid until authenticated by the manual signature of the Trustee. The signature will be conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee will, upon receipt of a written order of the Issuer signed by an Officer (an Authentication Order), authenticate Notes for original issue that may be validly issued under this Indenture, including any Additional Notes. The aggregate principal amount of Notes outstanding at any time may not exceed the aggregate principal amount of Notes authorized for issuance by the Issuer pursuant to one or more Authentication Orders, except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Issuer to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Issuer.
Section 2.03 | Registrar and Paying Agent. |
The Issuer will maintain an office or agency where Notes may be presented for registration of transfer or for exchange (Registrar) and an office or agency where Notes may be presented for payment (Paying Agent). The Registrar will keep a register of the Notes and of their transfer and exchange. The Issuer may appoint one or more co-registrars and one or more additional paying agents. The term Registrar includes any co-registrar and the term Paying Agent includes any additional paying agent. The Issuer may change any Paying Agent or Registrar without notice to any Holder. The Issuer will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Issuer fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Issuer or any of its Subsidiaries may act as Paying Agent or Registrar.
The Issuer initially appoints The Depository Trust Company (DTC) to act as Depositary with respect to the Global Notes.
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The Issuer initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04 | Paying Agent to Hold Money in Trust. |
The Issuer will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of, premium on, if any, or interest, if any, on, the Notes, and will notify the Trustee of any Default by the Issuer in making any such payment. While any such Default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Parent or a Subsidiary) will have no further liability for the money. If the Parent or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Issuer, the Trustee will serve as Paying Agent for the Notes.
Section 2.05 | Holder Lists. |
The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA §312(a). If the Trustee is not the Registrar, the Issuer will furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Issuer shall otherwise comply with TIA §312(a).
Section 2.06 | Transfer and Exchange. |
(a) Transfer and Exchange of Global Notes. A Global Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Issuer for Definitive Notes if:
(1) the Issuer delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Issuer within 120 days after the date of such notice from the Depositary;
(2) the Issuer in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Issuer for Definitive Notes prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or
(3) there has occurred and is continuing a Default or Event of Default with respect to the Notes and the Depositary or Holder so requests.
Upon the occurrence of any of the preceding events, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in
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exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. The Issuer shall not have any liability or responsibility for any records relating to or payments made on account of beneficial ownership interest in a Global Note, or the maintaining, supervision or reviewing of any records relating to such beneficial ownership interests. Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:
(1) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1).
(2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar either:
(A) both:
(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and
(ii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or
(B) both:
(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and
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(ii) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above;
provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act.
Upon consummation of an Exchange Offer by the Issuer in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(2) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(3) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Permanent Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any Holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) above and:
(A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Issuer;
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(B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(i) if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(ii) if the Holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Issuer or the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Issuer and the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Issuer shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any Holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
41
(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the Parent or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Issuer shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(2) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.06(c)(1)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.
(3) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A Holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder of such beneficial
42
interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Issuer;
(B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(i) if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
(ii) if the Holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Issuer or the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Issuer and the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(4) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any Holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate principal amount of the applicable Unrestricted Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Issuer will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(4) will be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(4) will not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial
43
interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to the Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note.
(2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Issuer;
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(B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(i) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(ii) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Issuer or the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Issuer and the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
(3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (2)(B), (2)(D) or (3) above at a time when an Unrestricted Global Note has not yet been issued, the Issuer will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holders compliance with the provisions of this Section 2.06(e), the Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly
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endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).
(1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Issuer;
(B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(i) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(ii) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
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and, in each such case set forth in this subparagraph (D), if the Issuer or the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Issuer and the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Issuer will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate:
(1) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes accepted for exchange in the Exchange Offer by Persons that certify in the applicable Letters of Transmittal that (A) they are not Broker-Dealers, (B) they are not participating in a distribution of the Exchange Notes and (C) they are not affiliates (as defined in Rule 144) of the Issuer; and
(2) Unrestricted Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer by Persons that certify in the applicable Letters of Transmittal that (A) they are not Broker-Dealers, (B) they are not participating in a distribution of the Exchange Notes and (C) they are not affiliates (as defined in Rule 144) of the Issuer.
Concurrently with the issuance of such Notes, the Trustee will cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Issuer will execute and the Trustee will authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Unrestricted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.
(1) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE SECURITIES ACT) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
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MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 OF REGULATION D UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(3), (c)(4), (d)(2), (d)(3), (e)(2), (e)(3) or (f) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend.
(2) Global Note Legend. Each Global Note will bear a legend in substantially the following form:
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
(3) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note will bear a legend in substantially the following form:
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THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
(h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(1) To permit registrations of transfers and exchanges, the Issuer will execute and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 hereof or at the Registrars request.
(2) No service charge will be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(3) The Registrar will not be required to register the transfer of or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes will be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(5) Neither the Registrar nor the Issuer will be required:
(A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before (i) the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection or (ii) any interest payment date and ending on the close of business on such interest payment date;
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(B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.
(6) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuer may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuer shall be affected by notice to the contrary.
(7) The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(8) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile, except when signature guarantees are required.
Section 2.07 | Replacement Notes. |
If any mutilated Note is surrendered to the Trustee or the Issuer and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuer will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note if the Trustees requirements are met. If required by the Trustee or the Issuer, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuer to protect the Issuer, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Issuer may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Issuer and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
Section 2.08 | Outstanding Notes. |
The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note; however, Notes held by the Issuer or a Subsidiary of the Issuer shall not be deemed to be outstanding for purposes of Section 3.07(a) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.
If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Issuer, the Parent, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest.
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Section 2.09 | Treasury Notes. |
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer or any Guarantor, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any Guarantor, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee knows are so owned will be so disregarded.
Section 2.10 | Temporary Notes. |
Until certificates representing Notes are ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes. Temporary Notes will be substantially in the form of certificated Notes but may have variations that the Issuer considers appropriate for temporary Notes and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Issuer will prepare and the Trustee will authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes will be entitled to all of the benefits of this Indenture.
Section 2.11 | Cancellation. |
The Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will destroy canceled Notes (subject to the record retention requirements of the Exchange Act). Certification of the cancellation of Notes will be delivered to the Issuer at its request. The Issuer may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12 | Defaulted Interest. |
If the Issuer defaults in a payment of interest on the Notes, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof; provided that if the Issuer pays the defaulted interest prior to the date that is 30 days after the date of the default in payment of interest, payment shall be made to the record Holders of the Notes as of the original record date. The Issuer will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Issuer will fix or cause to be fixed each such special record date and Payment Date; provided that no such special record date may be less than 10 days prior to the related Payment Date for such defaulted interest. At least 15 days before the special record date, the Issuer (or, upon the written request of the Issuer, the Trustee in the name and at the expense of the Issuer) will deliver or cause to be delivered to Holders a notice that states the special record date, the related Payment Date and the amount of such interest to be paid.
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Section 2.13 | CUSIP Numbers. |
The Issuer in issuing the Notes may use CUSIP numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any such notice shall not be affected by any defect in or omission of such numbers. The Issuer will promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01 | Notices to Trustee. |
If the Issuer elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it must furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers Certificate setting forth:
(1) the clause of this Indenture pursuant to which the redemption shall occur;
(2) the redemption date;
(3) the principal amount of Notes to be redeemed; and
(4) the redemption price.
Section 3.02 | Selection of Notes to Be Redeemed or Purchased. |
If less than all of the Notes issued under this Indenture are to be redeemed or purchased in an Offer to Purchase at any time, the selection of Notes for redemption or purchase will be made by the Trustee on a pro rata basis, by lot or by such other method as the Trustee deems fair and appropriate, subject to the Applicable Procedures; provided that no Notes of $2,000 or less will be redeemed in part. On and after the redemption date, unless the Issuer defaults in payment of the redemption price, interest will cease to accrue on Notes or portions thereof called for redemption.
In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase date by the Trustee from the outstanding Notes not previously called for redemption or purchase.
The Trustee will promptly notify the Issuer in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.
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Section 3.03 | Notice of Redemption. |
Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Issuer will send or cause to be sent, by first class mail or electronically pursuant to the Applicable Procedures, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be sent more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Articles 8 or 11 hereof.
The notice will identify the Notes to be redeemed and will state:
(1) the redemption date;
(2) the redemption price;
(3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(6) that, unless the Issuer defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Issuers written request, the Trustee will give the notice of redemption in the Issuers name and at its expense; provided, however, that the Issuer has delivered to the Trustee, at least 45 days (unless the Trustee shall consent to a shorter period) prior to the redemption date, an Officers Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
Section 3.04 | Effect of Notice of Redemption. |
Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price.
Any notice of redemption may be given prior to the completion of any event or transaction related to such redemption, and any such redemption or notice may, at the Issuers discretion, be subject to one or more conditions precedent, including in the case of any Equity Offering, completion of such Equity Offering. In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, such notice shall state that, in the Issuers discretion, the redemption date may be delayed until such time as any or all such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date, or by the redemption date so delayed.
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Section 3.05 | Deposit of Redemption or Purchase Price. |
One Business Day prior to the redemption or purchase date, the Issuer will deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued interest, if any, on all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent will promptly return to the Issuer any money deposited with the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption or purchase price of and accrued interest, if any, on all Notes to be redeemed or purchased.
If the Issuer complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Issuer to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.
Section 3.06 | Notes Redeemed or Purchased in Part. |
Upon surrender of a Note that is redeemed or purchased in part, the Issuer will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Issuer a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered.
Section 3.07 | Optional Redemption. |
(a) At any time prior to August 15, 2015, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under this Indenture, upon not less than 30 nor more than 60 days notice, at a redemption price equal to 106.375% of the principal amount of the Notes redeemed, plus accrued and unpaid interest and Additional Interest, if any, to the date of redemption (subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant interest payment date) , in an amount not to exceed the net proceeds from an Equity Offering by the Issuer; provided that:
(1) at least 65% of the aggregate principal amount of Notes originally issued under this Indenture (excluding Notes held by the Issuer and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and
(2) the redemption occurs within 45 days of the date of the closing of such Equity Offering.
(b) At any time prior to August 15, 2015, the Issuer may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Premium as of, and accrued and unpaid interest and Additional Interest, if any, to the applicable date of redemption, subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date.
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(c) Except pursuant to the preceding paragraphs, the Notes will not be redeemable at the Issuers option prior to August 15, 2015.
(d) On or after August 15, 2015, the Issuer may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Additional Interest, if any, on the Notes redeemed, to the applicable date of redemption, if redeemed during the twelve-month period beginning on September 1 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant interest payment date:
Year |
Percentage | |||
2015 |
104.781 | % | ||
2016 |
103.188 | % | ||
2017 |
101.594 | % | ||
2018 and thereafter |
100.000 | % |
Unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.
(e) The Issuer may redeem the Notes in whole, but not in part, at any time upon giving not less than 30 nor more than 60 days prior notice to the Holders of the Notes (which notice will be irrevocable) at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date fixed for redemption (a Tax Redemption Date) (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date) and all Additional Amounts, if any, then due and which will become due on the Tax Redemption Date as a result of the redemption or otherwise, if the Issuer determines in good faith that, as a result of:
(1) any change in, or amendment to, the law or treaties (or any regulations or rulings promulgated thereunder) of a Tax Jurisdiction affecting taxation; or
(2) any change in the official application, administration or written interpretation of such laws, treaties, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction) (each of the foregoing in clauses (1) and (2), a Change in Tax Law),
the Issuer, the Parent or any Guarantor (including any successor entity) with respect to the Guarantee, as the case may be, is, or on the next Interest Payment Date in respect of the Notes would be, required to pay more than de minimis Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to the Issuer, the Parent or such Guarantor (including, for the avoidance of doubt, the appointment of a new Paying Agent where this would be reasonable or, where such payment method would be reasonable under the circumstances, payment through another Guarantor or the Issuer or Parent). Such Change in Tax Law must not be publicly announced before and become effective after the Issue Date (or, if the relevant Tax Jurisdiction was not a Tax Jurisdiction on the Issue Date, the date on which such Tax Jurisdiction became a Tax Jurisdiction under this Indenture). Notice of redemption for taxation reasons will be published in accordance with the procedures described under Selection and Notice. Notwithstanding the foregoing, no such notice of redemption will be given (a) earlier than 60 days prior to the earliest date on which the Issuer, the Parent or Guarantor would be obliged to make such payment of Additional Amounts and (b) unless at the time such notice is given,
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such obligation to pay such Additional Amounts remains in effect. Prior to the publication or mailing of any notice of redemption of Notes pursuant to the foregoing, the Issuer will deliver to the Trustee (a) an Officers Certificate stating that it is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to its right so to redeem have been satisfied and (b) an opinion of an independent tax counsel of recognized standing and reasonably satisfactory to the Trustee to the effect that the Issuer, the Parent or Guarantor, as the case may be, is or will become obligated to pay Additional Amounts as a result of a Change in Tax Law. The Trustee will accept such Officers Certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent described above, without further inquiry, in which event it will be conclusive and binding on the Holders.
(f) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
Section 3.08 | Mandatory Redemption. |
The Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Issuer may be required to offer to purchase the Notes as described in Sections 4.10 and 4.15.
Section 3.09 | Offer to Purchase by Application of Excess Proceeds. |
In the event that, pursuant to Section 4.10 hereof, the Issuer is required to commence an Offer to Purchase, it will follow the procedures specified in the definition of Offer to Purchase.
The Offer to Purchase will remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the Offer Period). On the Payment Date, which shall be no later than three Business Days after the termination of the Offer Period, the Issuer will apply all Excess Proceeds (the Offer Amount) to the purchase of Notes and such Pari Passu Debt (on a pro rata basis based on the principal amount of Notes and such other Pari Passu Debt surrendered, if applicable) or, if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in response to the Offer to Purchase. Payment for any Notes so purchased will be made in the same manner as interest payments are made.
If the Payment Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest and Additional Interest, if any, will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
Section 4.01 | Payment of Notes. |
The Issuer will pay or cause to be paid the principal of, premium on, if any, interest and Additional Interest, if any, on, the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, interest and Additional Interest, if any, will be considered paid on the date due if the Paying Agent, if other than the Issuer or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the
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due date money deposited by the Issuer in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest, if any, then due. The Issuer will pay all Additional Interest, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Issuer shall provide prompt written notice to the Trustee if any Additional Interest is due and payable and the Trustee shall not be deemed to have knowledge of the Issuers obligation to pay Additional Interest, if any, unless a Responsible Officer of the Trustee has received such written notice from the Issuer.
The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at a rate that is 1% higher than the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Additional Interest, if any (without regard to any applicable grace period), at the same rate to the extent lawful. Whenever in this Indenture there is mentioned, in any context, the payment of interest on, or in respect of, the Notes, such mention shall be deemed to include mention of the payment of Additional Interest to the extent that Additional Interest would be payable in respect thereof pursuant to the provisions of the Registration Rights Agreement and express mention of the payment of Additional Interest in any provisions hereof shall not be construed as excluding Additional Interest in those provisions hereof where such express mention is not made.
Section 4.02 | Maintenance of Office or Agency. |
The Issuer will maintain an office or agency (which may be an office of the Trustee or an Affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be delivered. The Issuer will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or delivered at the Corporate Trust Office of the Trustee.
The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission will in any manner relieve the Issuer of its obligation to maintain an office or agency for such purposes. The Issuer will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Issuer hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Issuer in accordance with Section 2.03 hereof.
Section 4.03 | Reports. |
(a) Whether or not required by the SEC, so long as any Notes are outstanding, the Parent will furnish to the Trustee, or file electronically with the SEC through the SECs Next-Generation EDGAR System (or any successor system), within the time periods specified in the SECs rules and regulations that are then applicable to the Parent:
(1) all quarterly and annual information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Parent were required to file such reports, including a Managements Discussion and Analysis of Financial Condition and Results of Operations and, with respect to the annual information only, a report on the annual financial statements by the Parents certified independent accountants; and
(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Parent were required to file such reports.
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In addition, whether or not required by the SEC, the Parent will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods specified in the SECs rules and regulations (unless the SEC will not accept such a filing) and make such information available to prospective investors. In addition, the Parent agrees that, for so long as any Notes remain outstanding, if at any time it is not required to file with the SEC the reports referred to in clauses (1) and (2) above, it will furnish, or otherwise make publicly available, to the Trustee, securities analysts, Holders of Notes and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
If the SEC will not accept such information and reports referred to in clauses (1) and (2) above, the Parent will furnish, or otherwise make publicly available, to the Trustee, securities analysts, Holders of Notes and prospective investors, such information and reports; provided, however, that for so long as the SEC does not accept such information and reports, such reports (A) will not be required to comply with Section 302 or Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or related Items 307 and 308 of Regulation S-K, or Items 301 or 302 of Regulation S-K, or Item 10(e) of Regulation S-K (with respect to any non-GAAP financial measures contained therein) and (B) will not be required to contain the separate financial statements for Guarantors contemplated by Rule 3-10 of Regulation S-X (but will be required to comply with the condensed consolidating footnote presentation provided by Rule 3-10(b)-(f) of Regulation S-X).
The reports and financial information to be provided by the Parent pursuant to this Section 4.03 shall include consolidated statements for the Parent that include the Issuer and the Subsidiaries of the Parent. The Parents obligations under this Section 4.03 will be fulfilled if a successor to the Parent makes or provides the reports and financial information required hereunder, provided that such reports and financial information include consolidated statements for such successor that include the Issuer and the Subsidiaries of such successor in the same manner as with respect to the Parent.
(b) If the Parent has designated any Subsidiaries as Unrestricted Subsidiaries and such Unrestricted Subsidiaries, either individually or collectively, would otherwise have been a Significant Subsidiary of the Parent, then the quarterly and annual financial information required by paragraph (a) of this Section 4.03 shall include a reasonably detailed presentation, as determined in good faith by senior management of the Parent, either on the face of the financial statements or in the footnotes thereto, and in Managements Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of the Parent and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries.
(c) For so long as any Notes remain outstanding, if at any time they are not required to file with the SEC the reports required by paragraphs (a) and (b) of this Section 4.03, the Issuer and the Guarantors will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(d) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustees receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuers or Parents compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers Certificates).
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Section 4.04 | Compliance Certificate. |
(a) The Parent and the Issuer shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Parent beginning with the fiscal year ended December 31, 2012, an Officers Certificate stating that a review of the activities of the Issuer, the Parent and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Issuer and the Parent have kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Issuer and the Parent have kept, observed, performed and fulfilled each and every covenant contained in this Indenture and are not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Issuer is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of, premium on, if any, or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Issuer and/or Parent is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03 above shall be accompanied by a written statement of the Issuers independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Issuer has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation.
(c) So long as any of the Notes are outstanding, the Issuer will deliver to the Trustee, within ten (10) days, upon any Officer becoming aware of any Default or Event of Default, an Officers Certificate specifying such Default or Event of Default and what action the Issuer is taking or proposes to take with respect thereto.
Section 4.05 | Taxes. |
The Issuer will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.
Section 4.06 | Stay, Extension and Usury Laws. |
The Issuer and each of the Guarantors covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.
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Section 4.07 | Limitation on Restricted Payments. |
(a) The Parent will not, and will not permit any Restricted Subsidiary to, directly or indirectly, make a Restricted Payment unless, at the time of and after giving pro forma effect to the proposed Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or would be caused thereby;
(2) the Parent could Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a); and
(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Parent and the Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6), (9), (13)(a), and (14) of Section 4.07(b)), is less than the sum, without duplication, of:
(A) 50% of the Consolidated Net Income on a cumulative basis during the period (taken as one accounting period) beginning on July 1, 2012 and ending on the last day of the Parents last fiscal quarter ending prior to the date of such proposed Restricted Payment for which internal financial statements are available (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus
(B) 100% of the aggregate net cash proceeds or property received by the Parent after the date of this Indenture as a contribution to its equity capital or from the issue or sale of Equity Interests (other than Disqualified Stock) of the Parent and the amount of reduction of Indebtedness of the Parent or its Restricted Subsidiaries that has been converted into or exchanged for such Equity Interests (other than Equity Interests sold to, or Indebtedness held by, a Subsidiary of the Parent); provided that for purposes of determining the Fair Market Value of property received (other than of any asset with a public trading market) in excess of $50 million, such Fair Market Value shall be determined by an Independent Financial Advisor, which determination shall be evidenced by an opinion addressed to the Parent and delivered to the Trustee; plus
(C) 100% of the amount by which Indebtedness or Disqualified Stock Incurred or issued subsequent to date of this Indenture is reduced on the Parents consolidated balance sheet upon the conversion or exchange (other than by a Subsidiary of the Parent) into Equity Interests other than Disqualified Stock (less the amount of any cash distributed by the Parent or any Restricted Subsidiary upon such conversion or exchange); provided that such amount shall not exceed the aggregate net cash proceeds received by the Parent or any Restricted Subsidiary after the date of this Indenture from the issuance and sale (other than to a Subsidiary of the Parent) of such Indebtedness or Disqualified Stock; plus
(D) to the extent not included in the calculation of the Consolidated Net Income referred to in (a), an amount equal to, without duplication: (i) 100% of the aggregate net proceeds (including the Fair Market Value of assets) received by the Parent or any Restricted Subsidiary upon the sale or other disposition of any Investment (other than a Permitted Investment) made by the Parent or any Restricted Subsidiary since the date of this Indenture; plus (ii) the net reduction in Investments (other than Permitted Investments) in any Person resulting from dividends, repayments of loans or advances or
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other transfers of assets subsequent to the date of this Indenture, in each case to the Parent or any Restricted Subsidiary from such Person (including by way of such Person becoming a Restricted Subsidiary); plus (iii) if the sum of clauses (A), (B), (C) and (D) was reduced as the result of the designation of a Restricted Subsidiary as an Unrestricted Subsidiary, the portion (proportionate to the Parents equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary is re-designated, or liquidated or merged into, a Restricted Subsidiary.
(b) The provisions of Section 4.07(a) hereof will not prohibit (provided, in the case of clauses (7) and (8) below, that no Default or Event of Default has occurred and is continuing or would be caused thereby):
(1) the payment of any dividend or distribution within 90 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture, and the redemption of any Indebtedness that is subordinated in right of payment to the Notes or any Note Guarantees within 60 days after the date on which notice of such redemption was given, if at said date of the giving of such notice, such redemption would have complied with the provisions of this Indenture;
(2) the payment of any dividend by a Restricted Subsidiary to the holders of a class of its Equity Interests on a pro rata basis;
(3) the redemption, repurchase, defeasance or other acquisition or retirement for value of Indebtedness that is subordinated in right of payment to the Notes or the Note Guarantees in exchange for or with the net cash proceeds from a substantially concurrent Incurrence (other than to a Subsidiary of the Parent) of, Permitted Refinancing Indebtedness;
(4) the redemption, repurchase, defeasance or other acquisition or retirement for value of Preferred Stock of the Parent or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Preferred Stock of the Parent or a Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred pursuant to Section 4.09;
(5) the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants to the extent that such Capital Stock represents all or a portion of the exercise price thereof and applicable withholding taxes, if any;
(6) payments of cash, dividends, distributions, advances or other Restricted Payments by the Parent or any of its Restricted Subsidiaries to allow the payment of cash in lieu of the issuance of fractional shares upon (i) the exercise of options or warrants or (ii) the conversion or exchange of Capital Stock of any such Person;
(7) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Parent held by any future, current or former employee, director, officer or consultant of the Parent (or any Restricted Subsidiary) pursuant to the terms of any employee equity subscription agreement, stock option agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests in any calendar year will not exceed $5 million (with unused amounts in any calendar year being carried over to the next two succeeding calendar years);
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(8) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Parent or any Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary, in each case issued in accordance with Section 4.09, and provided that such dividends constitute Fixed Charges;
(9) other Restricted Payments in an aggregate amount not to exceed $150 million pursuant to this clause (9);
(10) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Parent or any Restricted Subsidiary issued in accordance with Section 4.09;
(11) the repurchase, redemption or other acquisition or retirement for value of any subordinated Indebtedness pursuant to the provisions similar to those described in Sections 4.10 and 4.15; provided that all Notes tendered by Holders of the Notes in connection with an Offer to Purchase in the event of a Change of Control or with respect to an Asset Sale have been repurchased, redeemed or acquired for value;
(12) payments or distributions to dissenting stockholders pursuant to applicable law, pursuant to or in connection with a consolidation, amalgamation, merger or transfer of all or substantially all of the assets of the Parent and its Restricted Subsidiaries, taken as a whole, that complies with the provisions of Section 5.01;
(13) the payment of cash dividends on the Parents Common Stock (a) in an annual amount not to exceed 6% of the net cash proceeds received by or contributed to the Parent from any public offering of Equity Interests, other than public offerings with respect to the Parents Common Stock registered on Form S-8 (or any successor form), and (b) in the aggregate amount per fiscal quarter not to exceed $0.25 per share for each share of Common Stock of the Parent outstanding as of the record date for dividends payable in respect of such fiscal quarter (as such amount shall be appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock consolidations and similar transactions);
(14) the declaration or payment of cash dividends on the Parents Common Stock or repurchases of the Parents Common Stock at one time or from time to time in an aggregate amount not to exceed the sum of (x) $850 million plus (y) the amount by which Indebtedness outstanding pursuant to Section 4.09(b)(1)(B) exceeds $700 million (the Additional Term Loan Debt) on the date of the declaration of such cash dividend or repurchase, minus, in each case, the amount of any prior cash dividend or repurchase funded with such Additional Term Loan Debt after the Issue Date; provided that, in the case of cash dividends or repurchases made pursuant to this clause 14(y), the payment of such cash dividends or repurchases is funded with such Additional Term Loan Debt; provided, further, that no cash dividends or repurchases shall be declared, paid or made pursuant to this clause (14) after the eighteenth full month following the Issue Date;
(15) the declaration or payment of distributions or dividends, as applicable, by any Restricted Subsidiary to, or the making of loans to, any direct or indirect parent of the Issuer, including the Parent (or, solely in the case of clause (b) below, to an Affiliate of the Parent that is the common parent of a consolidated, combined or unitary group including the Parent or any Restricted Subsidiary, as applicable, for the purpose of income tax liabilities under the laws of its jurisdiction of organization), in amounts required for any such direct or indirect parents (or such Affiliates) to pay, in each case without duplication:
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(A) franchise taxes and other fees, taxes and expenses required to maintain their corporate existence;
(B) federal, state and local income taxes, to the extent such income taxes are attributable to the income of such Restricted Subsidiary (as applicable) and, to the extent of the amount actually received by such Restricted Subsidiary from its Unrestricted Subsidiaries, in amounts required to pay such taxes to the extent attributable to the income of such Unrestricted Subsidiaries; provided, that in each case the amount of such payments in any taxable period does not exceed the amount that the Restricted Subsidiary would be required to pay in respect of federal, state and local income taxes for such taxable period were the Restricted Subsidiary and/or any Unrestricted Subsidiary (to the extent described above), as applicable, to pay such taxes separately from any such parent entity (or such Affiliate);
(C) customary salary, bonus, indemnification obligations and other benefits payable to directors, officers and employees of any direct or indirect parent company of the Issuer, including the Parent, to the extent such salaries, bonuses, indemnification obligations and other benefits are attributable to the ownership or operation of the Issuer and any Restricted Subsidiary;
(D) general corporate operating and overhead costs and expenses of any direct or indirect parent company of the Issuer, including the Parent, to the extent such costs and expenses are attributable to the ownership or operation of the Issuer and any Restricted Subsidiary;
(E) fees and expenses other than to Affiliates of the Issuer related to any unsuccessful equity or debt offering or other financing transaction of such parent entity;
provided, in each case, that other than due to applicable law or regulation prohibiting the payment by one or more Restricted Subsidiaries of their proportionate share of the Parents liabilities noted in this clause (15) (or if any such payment would render one or more Restricted Subsidiaries insolvent or reasonably likely to become insolvent), each Restricted Subsidiary may not pay more than its proportionate share of the Parents liabilities noted in this clause (15); and
(16) distributions or payments of Securitization Fees and other transfers of Receivables Assets and purchases of Receivables Assets in connection with a Qualified Receivables Transaction.
(c) For purposes of determining compliance with this Section 4.07, in the event that a Restricted Payment, when made, met the criteria of more than one of the categories described in clauses (1) through (16) of Section 4.07(b), or was permitted pursuant to Section 4.07(a), the Issuer will be entitled to classify such Restricted Payment (or portion thereof) on the date of its payment or later reclassify such Restricted Payment (or portion thereof) in any manner that complies with this Section 4.07.
(d) The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by the Parent or the Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this Section 4.07 will be determined by the Board of Directors of the Parent whose resolution with respect thereto will be delivered to the Trustee.
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Section 4.08 | Limitation on Dividend and Other Restrictions Affecting Restricted Subsidiaries. |
(a) The Parent will not, and will not permit any Restricted Subsidiary to, directly or indirectly, cause or suffer to exist or become effective or enter into any encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to the Parent or any Restricted Subsidiary;
(2) pay any liabilities owed to the Parent or any Restricted Subsidiary;
(3) make loans or advances to the Parent or any Restricted Subsidiary; or
(4) sell, lease or transfer any of its properties or assets to the Parent or any Restricted Subsidiary;
provided that (x) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common Equity Interests and (y) the subordination of (including the application of any standstill requirements to) loans or advances made to the Parent or any Restricted Subsidiary to other Indebtedness Incurred by the Parent or any Restricted Subsidiary shall not be deemed to constitute such an encumbrance or restriction.
(b) The restrictions in Section 4.08(a) hereof will not apply to encumbrances or restrictions:
(1) existing under, by reason of or with respect to the Existing Indebtedness and Credit Agreements as in effect on the Issue Date, and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof, provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings, taken as a whole, are not materially more restrictive with respect to dividend and payment restrictions (as determined by the Parent in good faith) than those contained in the Existing Indebtedness or Credit Agreements as in effect on the Issue Date;
(2) set forth in this Indenture, the Notes, the Exchange Notes in respect thereof and the related Note Guarantees;
(3) existing under, by reason of or with respect to agreements governing other Indebtedness permitted to be Incurred under the provisions of Section 4.09 and any amendments, restatements, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings of those agreements; provided that the encumbrances and restrictions therein, taken as a whole, (i) are not materially more restrictive than the agreements governing Indebtedness as in effect on the date hereof, or (ii) will not affect the Issuers ability to make principal or interest payments on the Notes (as determined by the Parent in good faith);
(4) existing under or by reason of applicable law, rule, regulation or order;
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(5) with respect to any Person, or the property or assets of a Person, acquired by the Parent or any Restricted Subsidiary existing at the time of such acquisition and not Incurred in connection with or in contemplation of such acquisition, which encumbrance or restriction is not applicable to any Person, or the property or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof; provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings, taken as a whole, are not materially more restrictive with respect to dividend and other payment restrictions than those in effect on the date of the acquisition;
(6) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset;
(7) existing under or by reason of Permitted Refinancing Indebtedness; provided that the encumbrances and restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive with respect to dividend and payment restrictions, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;
(8) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Parent or any Restricted Subsidiary not otherwise prohibited by this Indenture;
(9) arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Parent or any Restricted Subsidiary in any manner material to the Parent or any Restricted Subsidiary;
(10) existing under, by reason of or with respect to any agreement for the sale or other disposition of all or substantially all of the Capital Stock of, or property and assets of, a Restricted Subsidiary that restrict distributions or transfer by that Restricted Subsidiary pending such sale or other disposition;
(11) on cash or other deposits or net worth, which encumbrances or restrictions are imposed by customers or suppliers or required by insurance, surety or bonding companies, in each case, under contracts entered into in the ordinary course of business;
(12) arising from customary provisions in Joint Venture agreements and other similar agreements relating solely to such Joint Venture, which the Board of Directors of the Parent determines in good faith will not adversely affect the Issuers ability to make payments of principal of or interest on the Notes;
(13) existing under or by reason of Secured Indebtedness permitted to be Incurred pursuant to Sections 4.09 and 4.12 that limit the right of the Parent or any Restricted Subsidiary to dispose of the assets securing such Indebtedness;
(14) under purchase money obligations for property acquired and Capital Lease Obligations in the ordinary course of business;
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(15) existing under any agreement imposed in connection with consignment agreements entered into in the ordinary course of business;
(16) under provisions limiting the disposition or distribution of assets or property in Joint Venture agreements, asset sale agreements, sale and leaseback agreements, stock sale agreements and other similar agreements (or Investments), which limitation is applicable only to the assets that are the subject of such agreements;
(17) arising from customary provisions in Hedging Obligations permitted under this Indenture and entered into in the ordinary course of business;
(18) existing under, by reason of or with respect to any Restricted Payment not prohibited by Section 4.07 and any Permitted Investment; and
(19) restrictions created in connection with any Qualified Receivables Transaction that, in the good faith determination of the Parent, are necessary or advisable to effect such Qualified Receivables Transaction Facility.
Section 4.09 | Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock. |
(a) The Parent will not, and will not permit any Restricted Subsidiary to, Incur any Indebtedness (including the issuance of any shares of Disqualified Stock of the Parent or of Disqualified Stock or Preferred Stock by Restricted Subsidiaries); provided, however, that the Parent or any Restricted Subsidiary may Incur Indebtedness (including the issuance of any shares of Disqualified Stock of the Parent and of Disqualified Stock or Preferred Stock of any Restricted Subsidiary) if the Fixed Charge Coverage Ratio on a consolidated basis for the Parents most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness (including the issuance of Disqualified Stock or Preferred Stock) is Incurred would be at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been Incurred and the application of proceeds therefrom had occurred at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) hereof will not prohibit the Incurrence of any of the following items of Indebtedness (collectively, Permitted Debt):
(1) the Incurrence by the Parent or any Restricted Subsidiary of:
(A) additional (i) revolving credit Indebtedness and letters of credit under the ABL Facility and (ii) Indebtedness and letters of credit under an Alternative Facility (including in each case, without limitation, the Incurrence by the Guarantors of Guarantees thereof) in an aggregate principal amount at any one time outstanding under this clause (1)(A) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Parent and its Restricted Subsidiaries thereunder) not to exceed the greater of (i) $500 million or (ii) the amount of the Borrowing Base as of the date of such Incurrence; and
(B) additional Indebtedness and letters of credit under the Senior Secured Term Loan Facility and/or any Alternative Facility (including, without limitation, the Incurrence by the Guarantors of Guarantees thereof) in an aggregate principal amount at any one time outstanding under this clause (1)(B) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Parent and its Restricted Subsidiaries thereunder) not to exceed $900 million;
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(2) the Incurrence of Existing Indebtedness;
(3) the Incurrence by the Issuer and the Guarantors of Indebtedness represented by the Notes (other than Additional Notes) and the Exchange Notes in respect thereof and the related Note Guarantees;
(4) the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, Incurred for the purpose of financing (whether prior to or within 270 days after) all or any part of the purchase price, cost of design or cost of construction, installation, maintenance, upgrade or improvement of property (real or personal, or movable or immovable), plant or equipment used in the business of the Parent or such Restricted Subsidiary (including any reasonably related fees or expenses Incurred in connection with such acquisition, construction or improvement), whether through the direct purchase of assets or the Capital Stock of any Person owning such assets, in an aggregate amount, including all Indebtedness Incurred to extend the maturity of, refund, refinance, renew, defease, discharge or replace any Indebtedness Incurred pursuant to this clause (4), not to exceed the greater of (a) $100 million and (b) 3% of the Consolidated Net Tangible Assets of the Parent at any one time outstanding;
(5) the Incurrence by the Parent or any Restricted Subsidiary of Permitted Refinancing Indebtedness (including Disqualified Stock or Preferred Stock) in exchange for, or the net cash proceeds of which are used to extend the maturity of, refund, refinance, renew, defease, discharge or replace, Indebtedness (including Disqualified Stock or Preferred Stock) that was permitted by this Indenture to be Incurred or issued pursuant to Section 4.09(a) or clauses (2), (3), (5) or (16) of this Section 4.09(b), including any additional Indebtedness (including the issuance of Disqualified Stock or Preferred Stock) Incurred, to pay premiums (including tender premiums) and original issue discount, expenses, defeasance costs and fees in connection therewith;
(6) the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness owing to and held by the Parent or any Restricted Subsidiary; provided, however, that:
(A) if the Parent, the Issuer or any Restricted Subsidiary of the Parent that is a Guarantor is the obligor on such Indebtedness and the payee is not the Parent, the Issuer or such Restricted Subsidiary, such Indebtedness must be unsecured and expressly subordinated in right of payment to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Issuer, or the Note Guarantee, in the case of a Guarantor; and
(B) any event that results in any such Indebtedness being held by a Person other than the Parent or a Restricted Subsidiary (except for any pledge of such Indebtedness constituting a Permitted Lien until the pledgee commences actions to foreclose on such Indebtedness) will be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Parent or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
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(7) shares of Preferred Stock of a Restricted Subsidiary issued to the Parent or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Equity Interests or any other event which results in any Restricted Subsidiary that holds such shares of Preferred Stock of another Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Parent or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of shares of Preferred Stock not permitted by this clause (7);
(8) the Guarantee by the Parent or any Restricted Subsidiary of Indebtedness of the Parent or a Restricted Subsidiary that was permitted to be Incurred by another provision of this Section 4.09; provided that if the Indebtedness being Guaranteed is subordinated to or pari passu with the Notes or a Note Guarantee, then the Guarantee must be subordinated or pari passu, as applicable, to the same extent as the Indebtedness Guaranteed;
(9) the Incurrence by the Parent or any Restricted Subsidiary of Hedging Obligations that are Incurred in the ordinary course of business or Incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes (it being understood that Hedging Obligations Incurred for the purpose of fixing, hedging or swapping foreign currency exchange rate risk shall not be deemed to be for speculative purposes);
(10) the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness arising from agreements providing for indemnification, adjustment of purchase price, earn-outs or similar obligations, or Guarantees or letters of credit, surety, performance, bid or appeal bonds and other similar types of performance and completion guarantees securing any obligations of the Parent or any Restricted Subsidiary pursuant to such agreements, in any case Incurred or assumed (i) in connection with the disposition or acquisition of any business, assets or Capital Stock held by a Restricted Subsidiary (other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Capital Stock held by a Restricted Subsidiary for the purpose of financing such acquisition), so long as the amount does not exceed the gross proceeds actually received by the Parent or any Restricted Subsidiary in connection with such disposition or (ii) in the ordinary course of business;
(11) the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness arising from (i) the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds and related liabilities arising from treasury, depository and cash management services in the ordinary course of business (including intraday cash management lines relating thereto), provided, however, that such Indebtedness is extinguished within 30 Business Days of its Incurrence; (ii) bankers acceptances; and (iii) treasury, depository, cash management, cash pooling or netting or setting-off arrangements (including commercial credit card and merchant card services);
(12) the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers compensation claims, or other Indebtedness with respect to reimbursement obligations regarding workers compensation claims, health, disability or other benefits to employees or former employees or their families or property, casualty or liability insurance or self-insurance or similar requirements, and letters of credit in connection with the maintenance of, or pursuant to the requirements of, environmental or other permits or licenses from governmental authorities, or other Indebtedness with respect to reimbursement-type obligations regarding workers compensation claims; provided that, upon the drawing of such letters of credit or the Incurrence of such Indebtedness, such obligations are reimbursed within 30 Business Days following such drawing or Incurrence;
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(13) the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness to the extent the net cash proceeds thereof are promptly deposited to defease or to satisfy and discharge the Notes as described in Articles 8 and 11;
(14) Indebtedness (including Disqualified Stock) of the Parent or Indebtedness (including Disqualified Stock or Preferred Stock) of any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, including all Permitted Refinancing Indebtedness Incurred to extend the maturity of, refund, refinance, renew, defease, discharge or replace any Indebtedness Incurred pursuant to this clause (14), not to exceed the greater of (i) $200 million and (ii) 4% of Consolidated Net Tangible Assets, at any one time outstanding;
(15) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(16) the Incurrence of Acquired Indebtedness; provided that after giving effect to such acquisition or merger, either:
(A) the Parent would be permitted to Incur at least $1.00 of additional Indebtedness under Section 4.09(a); or
(B) the Fixed Charge Coverage Ratio of the Parent and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition or merger;
(17) Indebtedness consisting of take-or-pay obligations contained in supply agreements relating to products, services or commodities of a type that the Parent or any of its Subsidiaries uses or sells in the ordinary course of business;
(18) Indebtedness consisting of the financing of insurance premiums;
(19) Indebtedness consisting of guarantees Incurred in the ordinary course of business under repurchase agreements or similar agreements in connection with the financing of sales of goods in the ordinary course of business;
(20) customer deposits and advance payments received in the ordinary course of business from customers for goods purchased in the ordinary course of business;
(21) Indebtedness consisting of Indebtedness issued by the Parent or a Restricted Subsidiary of the Parent to future, current or former employees, directors and consultants thereof, or their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Parent to the extent described in Section 4.07(b)(6);
(22) Indebtedness Incurred on behalf of, or representing guarantees of Indebtedness of, Joint Ventures of the Parent or any Restricted Subsidiary not to exceed, at any one time outstanding, the greater of (i) $100 million and (ii) 2% of the Consolidated Net Tangible Assets of the Parent and any Indebtedness to exchange, extend, refinance, renew, replace, defease or refund such Indebtedness originally Incurred pursuant to subclause (ii) of this clause (22), provided that any such Indebtedness until reclassified in accordance with this Indenture shall remain Incurred pursuant to this clause prior to its maturity;
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(23) Indebtedness Incurred by the Parent or any Restricted Subsidiary of up to $25 million relating to funding of contributions to the foreign pension plans;
(24) Indebtedness which may be deemed to exist pursuant to any surety bonds, appeal bonds or similar obligations Incurred in connection with any judgment not constituting an Event of Default; and
(25) letters of credit issued for ordinary course of business purposes in an aggregate principal face amount not to exceed $35 million outstanding at any time.
For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness (including Disqualified Stock or Preferred Stock) (or any portion thereof) meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (25) above or is entitled to be Incurred or issued pursuant to Section 4.09(a), the Parent will, in its sole discretion, classify such item of Indebtedness (including Disqualified Stock or Preferred Stock) and may divide and classify such Indebtedness (including Disqualified Stock or Preferred Stock) in more than one of the categories of Permitted Debt described in clauses (1) through (25) above and/or Section 4.09(a), and may later reclassify such item into any one or more of such categories or such section (provided that at the time of reclassification it meets the criteria in such category or categories or such section). In determining the amount of Indebtedness outstanding under one of the clauses above, the outstanding principal amount of any particular Indebtedness of any Person shall be counted only once and any obligation of such Person or any other Person arising under any guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall be disregarded so long as it is permitted to be Incurred by the Person or Persons Incurring such obligation. Notwithstanding the foregoing, Indebtedness under Credit Facilities Incurred pursuant to clause (1) above or any refinancing thereof that, in each case, is secured by a Lien will, at all times, be deemed to have been Incurred in reliance on the exception provided by clause (1) above. Indebtedness under clauses (i) and (iii) of the definition of Credit Agreements outstanding on the date of this Indenture are deemed to have been Incurred pursuant to clause (1) above.
Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount, the payment of interest or dividends in the form of additional Indebtedness (including Disqualified Stock or Preferred Stock) of the same class, and the reclassification of Preferred Stock as Indebtedness due to a change in accounting principles will not be deemed to be an Incurrence of Indebtedness or a creation or allowance of a Lien with respect thereto.
For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this Section 4.09 any other obligation of the obligor on such Indebtedness (or of any other Person who could have Incurred such Indebtedness under this section) arising under any Note Guarantee, Lien or letter of credit, bankers acceptance or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such Note Guarantee, Lien or letter of credit, bankers acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness.
Notwithstanding the foregoing, but except as expressly permitted hereunder, the Parent will not, and will not permit the Issuer or any other Guarantor to, Incur any Indebtedness that purports to be by its terms (or by the terms of any agreement or instrument governing such Indebtedness) subordinated in right of payment to any other Indebtedness of the Parent, the Issuer or of such other Guarantor, as the case may be, unless such Indebtedness is also by its terms made subordinated in right of payment to the Notes or the Note Guarantee of such Guarantor, as applicable, to at least the same extent as such Indebtedness is subordinated in right of payment to such other Indebtedness of the Parent, the Issuer or such other Guarantor, as the case may be.
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For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the U.S. Dollar Equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred (or first committed, in the case of revolving credit debt) and at the Issuers election, the date of reclassification; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced.
The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing.
The maximum amount of Indebtedness that the Parent or any Restricted Subsidiary may Incur pursuant to this Section 4.09 will not be deemed to be exceeded solely as the result of fluctuations in the exchange rates of currencies.
Section 4.10 | Limitation on Asset Sales. |
(a) The Parent will not, and will not permit any Restricted Subsidiary to, directly or indirectly, consummate an Asset Sale unless:
(1) the Parent (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and
(2) at least 75% of the consideration therefor received by the Parent or such Restricted Subsidiary, as the case may be, is in the form of:
(A) cash or Cash Equivalents;
(B) Replacement Assets;
(C) any liabilities of the Parent or any Restricted Subsidiary as shown on the Parents or such Restricted Subsidiarys most recent balance sheet or in the notes thereto prepared in accordance with GAAP (other than contingent liabilities, Indebtedness that is by its terms subordinated in right of payment to the Notes or any Note Guarantee and liabilities to the extent owed to the Parent or any Restricted Subsidiary) that are assumed by the transferee of any such assets or Equity Interests and for which the Parent and all of the Restricted Subsidiaries have been released;
(D) any Designated Noncash Consideration received by the Parent or any Restricted Subsidiary in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Noncash Consideration received pursuant to this sub-
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clause (D) that is at the time outstanding and held by the Parent or any Restricted Subsidiary, not to exceed the greater of (x) $75 million and (y) 2.5% of Total Assets at the time of the receipt of such Designated Noncash Consideration (with the Fair Market Value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value); or
(E) any combination of the consideration specified in sub-clauses (A) through (D).
(b) Within 12 months after the receipt of any Net Available Cash from an Asset Sale, the Parent or a Restricted Subsidiary, as the case may be, may apply an amount equal to such Net Available Cash at its option:
(1) to repay or retire Indebtedness secured by such assets, Indebtedness of a Restricted Subsidiary that is not a Guarantor (other than Indebtedness owed to the Parent or another Restricted Subsidiary) or Indebtedness under the Credit Agreements and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto;
(2) to purchase Replacement Assets (or enter into a binding agreement to purchase such Replacement Assets; provided that (x) such purchase is consummated no later than the later of (i) the day that is 12 months after such Asset Sale and (ii) 90 days after the date of such binding agreement and (y) if such purchase is not consummated within the period set forth in subclause (x), the Net Available Cash not so applied will be deemed to be Excess Proceeds (as defined below));
(3) to make capital expenditures; or
(4) to make an Offer to Purchase as described below.
Pending the final application of any Net Available Cash from Asset Sales in accordance with clauses (1) through (4) in the preceding paragraph, the Parent and the Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise apply such Net Available Cash in any manner not prohibited by this Indenture.
(c) The amount of such Net Available Cash required to be applied (or to be committed to be applied) during such 12-month period as set forth above and not applied (or committed to be applied) as so required by the end of such period shall constitute Excess Proceeds. If, as of the first day of any calendar month, the aggregate amount of Excess Proceeds totals at least $25 million, the Issuer must commence, not later than the fifteenth Business Day of such month, and consummate an Offer to Purchase, from the Holders and, at the Issuers option, all holders of Pari Passu Debt containing provisions similar to those set forth in this Indenture with respect to offers to purchase with the proceeds of sales of assets, the maximum principal amount of Notes and such Pari Passu Debt, if any, that may be purchased out of the Excess Proceeds. The offer price in any such Offer to Purchase shall be equal to or greater than the amount of Excess Proceeds and shall be calculated as follows: 100% of the principal amount (or accreted value, if applicable) of the Notes and such Pari Passu Debt, plus accrued and unpaid interest and Additional Interest, if any up to, but excluding, the date of purchase (subject to the rights of Holders of Notes on a relevant record date to receive interest on an interest payment date that occurs prior to the purchase date) and will be payable in cash. To the extent that any Excess Proceeds remain after consummation of an Offer to Purchase pursuant to this Section 4.10, the Parent and the Restricted Subsidiaries may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture, and those Excess Proceeds shall no longer constitute Excess Proceeds.
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(d) The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Offer to Purchase. To the extent that the provisions of any securities laws or regulations conflict with the provisions of Section 3.09 hereof or this Section 4.10, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under Section 3.09 hereof or this Section 4.10 by virtue of such compliance.
Section 4.11 | Limitation on Transactions with Affiliates. |
(a) The Parent will not, and will not permit any Restricted Subsidiary to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into, make, amend, renew or extend any transaction or series of related transactions, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any of their Affiliates, in each case involving aggregate payments or consideration in excess of $5 million (each of the foregoing, an Affiliate Transaction), unless:
(1) such Affiliate Transaction is on terms that, taken as a whole, are not materially less favorable to the Parent or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arms-length transaction by the Parent or such Restricted Subsidiary with a Person that is not an Affiliate of the Parent or any Restricted Subsidiary (as determined by the Parent); and
(2) the Parent delivers to the Trustee:
(A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25 million, a Board Resolution set forth in an Officers Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this Section 4.11 and that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the Disinterested Members; and
(B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $50 million, an opinion issued by an Independent Financial Advisor stating that such Affiliate Transaction or series of related Affiliate Transactions is fair to the Parent or such Restricted Subsidiary from a financial point of view.
(b) The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a) hereof:
(1) transactions between or among the Parent and/or its Restricted Subsidiaries;
(2) Restricted Payments that are permitted by the provisions of Section 4.07 and Permitted Investments;
(3) any issuance or sale of Equity Interests (other than Disqualified Stock) of, or capital contributions to, the Parent;
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(4) transactions pursuant to agreements or arrangements in effect on the Issue Date and referenced in the Offering Circular, or any amendment, modification, or supplement thereto or replacement thereof, as long as such agreement or arrangement, as so amended, modified, supplemented or replaced, taken as a whole, is not materially more disadvantageous to the Parent and the Restricted Subsidiaries than the agreement or arrangement in existence on the Issue Date;
(5) payments by the Parent and its Subsidiaries pursuant to tax sharing agreements among the Parent and its Subsidiaries on customary terms to the extent attributable to the ownership or operation of the Parent and its Subsidiaries; provided that in each case the amount of such payments in any fiscal year does not exceed the amount that the Parent, its Restricted Subsidiaries and its Unrestricted Subsidiaries (to the extent of amounts received from Unrestricted Subsidiaries) would be required to pay in respect of foreign, federal, state and local taxes for such fiscal year were the Parent and its Subsidiaries (to the extent described above) to pay such taxes separately from any such parent entity;
(6) payment of reasonable and customary fees and reimbursement of expenses paid to, and reasonable and customary indemnification arrangements and similar payments on behalf of, directors of the Parent or any Subsidiary thereof;
(7) any employment, consulting, service or termination agreement, or reasonable and customary indemnification arrangements, entered into by the Parent or any Restricted Subsidiary with officers, employees and consultants of the Parent or any Subsidiary thereof and the payment of compensation, reimbursement of expenses paid or loans (or cancellation of loans) to officers, employees and consultants of the Parent or any Subsidiary thereof (including issuances of securities and other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employee benefit plans, employee stock option or similar plans), entered into in the ordinary course of business or otherwise approved by a majority of the Disinterested Members;
(8) purchases and sales of raw materials or Inventory in the ordinary course of business on market terms;
(9) (a) transactions with customers, clients, lessors, landlords, suppliers, contractors, purchasers or sellers of goods or services, or transactions otherwise relating to the purchase or sale of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture, which are fair to the Parent and its Restricted Subsidiaries in the reasonable determination of the Board of Directors or the senior management of the Parent, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party or (b) transactions with Joint Ventures or Unrestricted Subsidiaries entered into in the ordinary course of business;
(10) transactions with a Person (other than an Unrestricted Subsidiary of the Parent) that is an Affiliate of the Parent solely because the Parent or a Restricted Subsidiary of the Parent owns an equity interest in or otherwise controls such Person;
(11) the formation and maintenance of any consolidated group or subgroup for tax, accounting or cash pooling or management purposes in the ordinary course of business;
(12) transactions entered into by a Person prior to the time such Person becomes a Restricted Subsidiary or is merged or consolidated into the Parent or a Restricted Subsidiary (provided such transaction is not entered into in contemplation of such event);
(13) transactions permitted by, and complying with, the provisions of Section 5.01;
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(14) transactions in which the Parent or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee an opinion issued by an Independent Financial Advisor stating that such transaction or series of related transactions is fair to the Parent or such Restricted Subsidiary from a financial point of view and that the terms are not materially less favorable to the Parent or its relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Parent or such Restricted Subsidiary with an unrelated Person on an arms-length basis;
(15) transactions between the Parent or any of its Restricted Subsidiaries and any Person, a director of which is also a director of the Parent; provided, however, that such director abstains from voting as a director of the Parent on any matter involving such other Person; and
(16) any customary transaction with a Receivables Entity effected as part of a Qualified Receivables Transaction.
Section 4.12 | Limitation on Liens. |
The Parent will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, assume or allow to exist any Lien that secures Obligations under any Indebtedness (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under this Indenture and the Notes are secured by a Lien on such property or assets on an equal and ratable basis with the Obligations so secured (or, in the case of Indebtedness subordinated to the Notes or the Note Guarantees, senior in priority thereto, with the same relative priority as the Notes will have with respect to such subordinated Indebtedness) until such time as such Obligations are no longer secured by such Lien.
Section 4.13 | Conduct of Business and Limitation on Certain Activities. |
The Parent will not, and will not permit any Restricted Subsidiary to, engage in any business other than a Permitted Business, except to such extent as would not be material to the Parent and the Restricted Subsidiaries taken as a whole. The Parent will cause the Issuer or its successor to engage in only those business activities that are necessary, convenient or incidental to the offering, sale, issuance and servicing of the Notes or other Indebtedness (including any Additional Notes) of the Issuer permitted under this Indenture or lending of the proceeds of the Notes or any such other Indebtedness to the Parent or any of the Parents Restricted Subsidiaries, to refrain from engaging in any trade or business in the United States, to file a check the box election to be treated as a disregarded entity for United States federal income tax purposes, to be effective on or before the issuance of the Notes, to continue to be properly classified as a disregarded entity of the Parent for United States federal income tax purposes and to refrain from Incurring any Indebtedness other than the Notes and other Indebtedness permitted to be Incurred pursuant to Section 4.09.
The Parent shall continue to directly or indirectly maintain 100% ownership of the Capital Stock of the Issuer or any permitted successor of the Issuer, provided that any permitted successor of the Parent under this Indenture may succeed to the Parents ownership of such Capital Stock. For so long as any Notes are outstanding, the Parent will not commence or take any action to facilitate a winding-up, liquidation or other analogous proceeding in respect of the Issuer.
Section 4.14 | Corporate Existence. |
Subject to Articles 5 and 10 hereof, the Parent shall do or cause to be done all things necessary to preserve and keep in full force and effect:
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(1) the corporate, limited company or limited liability company existence of the Parent and the Issuer, and the corporate, partnership or other existence of each of the Restricted Subsidiaries (other than the Issuer), in accordance with the respective organizational documents (as the same may be amended from time to time) of the Parent, the Issuer or any such Restricted Subsidiary; and
(2) the rights (charter and statutory), licenses and franchises of the Parent and its Restricted Subsidiaries (subject to Section 4.10 hereof);
provided, however, that the Parent shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries (other than the Issuer), if the Parent shall determine in good faith that the preservation thereof is no longer desirable in the conduct of the business of the Parent and its Restricted Subsidiaries, taken as a whole.
Section 4.15 | Change of Control. |
(a) Unless the Issuer has previously or concurrently delivered a redemption notice with respect to all the outstanding Notes as described in Section 3.07 within ten days following any Change of Control Triggering Event, the Issuer will send a notice to each Holder (with a copy to the Trustee) describing the transaction or transactions that constitute the Change of Control Triggering Event and offering to repurchase all Notes then outstanding pursuant to an Offer to Purchase (a Change of Control Offer), at a purchase price in cash equal to 101% of the aggregate principal amount of the Notes, plus accrued and unpaid interest and Additional Interest, if any, thereon, up to, but excluding, the date of repurchase (subject to the rights of Holders of Notes on a relevant record date to receive interest due on an interest payment date that occurs prior to the repurchase date) (the Change of Control Payment) on a certain date (the Change of Control Payment Date) specified in such notice, pursuant to the procedures required by this Indenture and described in such notice. The Issuer must commence such Change of Control Offer within 30 days of the occurrence of a Change of Control Triggering Event. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.15, the Issuers compliance with such laws and regulations shall not in and of itself cause a breach of their obligations under this Section 4.15.
(b) The Issuer will not be required to make a Change of Control Offer upon a Change of Control Triggering Event if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.15 and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.
(c) Notwithstanding anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made.
(d) In the event that Holders of not less than 90% of the aggregate principal amount of the outstanding Notes accept a Change of Control Offer and the Issuer purchases all of the Notes held by such Holders, the Issuer will have the right, upon not less than 10 nor more than 60 days prior notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer described above, to redeem all of the Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest on the Notes that remain outstanding, to, but not including, the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).
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Section 4.16 | Additional Note Guarantees. |
(a) The Parent will not permit any Restricted Subsidiary that is not an Excluded Entity, directly or indirectly, to Incur or Guarantee any Indebtedness under Credit Facilities Incurred pursuant to Section 4.09(b)(1), unless such Restricted Subsidiary (a) is a Guarantor or (b) within 15 Business Days executes and delivers to the Trustee an Opinion of Counsel stating that such Guarantee is a valid, legal and binding obligation of such Guarantor enforceable against it, and a supplemental indenture in the form of Exhibit F hereto, providing for the Guarantee of the payment of the Notes by such Restricted Subsidiary, which Guarantee will rank senior in right of payment to or equally in right of payment with such Restricted Subsidiarys Guarantee of such other Indebtedness.
Section 4.17 | Designation of Restricted and Unrestricted Subsidiaries. |
The Parent may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on any assets of, the Parent or any other Subsidiary that is not a Subsidiary of the Subsidiary to be so designated; provided that:
(1) no Default has occurred and is continuing or would occur as a consequence thereof; or
(2) (x) the Parent could Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof or (y) the Fixed Charge Coverage Ratio of the Parent and the Restricted Subsidiaries is equal to or greater than immediately prior to such designation; and
(3) either (x) the Subsidiary to be so designated has Total Assets of $1,000 or less or (y) if such Subsidiary has assets greater than $1,000, such designation would be permitted under Section 4.07 hereof (treating the Fair Market Value of the Parents proportionate interest in the net worth of such Subsidiary on such date calculated in accordance with GAAP as the amount of the Investment).
The Parent may re-designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that:
(1) no Default has occurred and is continuing; and
(2) Indebtedness of such Unrestricted Subsidiary and all Liens on any asset of such Unrestricted Subsidiary outstanding immediately following such re-designation would, if Incurred at such time, be permitted to be Incurred under this Indenture.
Any designation of a Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary, as the case may be, shall be approved by the Board of Directors of the Parent.
Section 4.18 | Payments for Consent. |
The Parent will not, and will not permit any Restricted Subsidiary to, directly or indirectly, pay or cause to be paid any cash consent fee to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such cash consent fee is offered to be paid to all Holders that may legally participate in the transaction, as proposed by the Parent and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or amendment.
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Section 4.19 | Covenant Suspension. |
(a) During any period of time that (i) the Notes have Investment Grade Ratings from both Rating Agencies and (ii) no Default has occurred and is continuing under this Indenture (the events described in the foregoing clauses (i) and (ii) being collectively referred to as a Covenant Suspension Event), the Parent and the Restricted Subsidiaries will not be subject to the covenants (the Suspended Covenants) set forth in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.13, 4.16 and 5.01(a)(3).
(b) In the event that the Parent and the Restricted Subsidiaries are not subject to the Suspended Covenants under this Indenture for any period of time as a result of the foregoing, and on any subsequent date (the Reversion Date) (a) one or both of the Rating Agencies withdraw their Investment Grade Rating or downgrade the rating assigned to the Notes below an Investment Grade Rating or (b) the Issuer or any of its Affiliates enters into an agreement to effect a transaction that would result in a Change of Control and one or more of the Rating Agencies indicate that if consummated, such transaction (alone or together with any related recapitalization or refinancing transactions) would cause such Rating Agency to withdraw its Investment Grade Rating or downgrade the ratings assigned to the Notes below an Investment Grade Rating, then the Parent and the Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants under this Indenture with respect to future events. The period beginning on the day of a Covenant Suspension Event and ending on a Reversion Date is called a Suspension Period. The ability of the Parent and the Restricted Subsidiaries to make Restricted Payments after the time of such withdrawal, downgrade, Default or Event of Default will be calculated as if the covenant governing Restricted Payments had been in effect throughout the Suspension Period. Accordingly, Restricted Payments made during the Suspension Period will reduce the amount available to be made as Restricted Payments under Section 4.07(a). However, no Default or Event of Default will be deemed to have occurred on the Reversion Date as a result of any actions taken or announced by the Parent or its Restricted Subsidiaries during the Suspension Period.
(c) The Trustee shall have no duty to monitor the ratings of the Notes, shall not be deemed to have any knowledge of the ratings of the Notes and shall have no duty to notify Holders with respect thereto.
Section 4.20 | Withholding Taxes |
(a) All payments made under or with respect to the Notes (whether or not in the form of Definitive Notes) or the Note Guarantees will be made free and clear of and without withholding or deduction for, or on account of, any present or future Taxes unless the withholding or deduction of such Taxes is then required by applicable law. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of (i) any jurisdiction in which the Issuer, the Parent or any Guarantor (including any successor entity) is then incorporated, organized, engaged in business or resident for tax purposes, or any political subdivision thereof or therein, or (ii) any jurisdiction from or through which payment is made by or on behalf of the Issuer, the Parent or any Guarantor (including, without limitation, the jurisdiction of any Paying Agent) or any political subdivision thereof or therein (each a Tax Jurisdiction) will at any time be required to be made from any payments made by or on behalf of the Issuer or any Guarantor under or with respect to the Notes or any Note Guarantee, including, without limitation, payments of principal, redemption price, purchase price, interest or premium, the Issuer or the applicable Guarantor will pay such additional amounts (the Additional Amounts) as may be necessary in order that the net amounts received in respect of such payments by each Holder after such withholding or deduction (including any such withholding or deduction from such Additional Amounts)
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will equal the respective amounts that would have been received in respect of such payments in the absence of such withholding or deduction; provided, however, that no Additional Amounts will be payable with respect to:
(1) any Taxes that would not have been imposed but for the Holder of the Notes or beneficial owner of the Notes being a citizen or resident or national of, being incorporated or organized in or carrying on a business in, maintaining a permanent establishment in, or being physically present in, the relevant Tax Jurisdiction in which such Taxes are imposed, or due to the existence of any other present or former connection between the relevant Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, the relevant Holder, if the relevant Holder is an estate, nominee, trust, partnership, limited liability company or corporation) and the Tax Jurisdiction (but not including, in each case, any connection arising from the mere receipt, ownership, holding or disposition of any Note or Note Guarantee, or by reason of the receipt of any payments in respect of any Note or Note Guarantee, or the exercise or enforcement of rights under any Note or any Note Guarantee);
(2) any Taxes that are imposed or withheld as a result of the failure of the Holder of the Notes or beneficial owner of any Note to comply with any reasonable written request, made to it in writing at a time that would enable it acting reasonably to comply with such request and, in any event, at least 60 days before any withholding or deduction of such Taxes would be required, by the Issuer or applicable Guarantor to provide certification, information, documents or other evidence concerning the nationality, residence or identity of the Holder or such beneficial owner or to make any declaration or similar claim or satisfy any other reporting requirement relating to such matters which is required or imposed by a statute, treaty, regulation or administrative practice of the relevant Tax Jurisdiction as a precondition to any exemption from, or reduction in the rate of deduction or withholding of, Taxes imposed by the Tax Jurisdiction, but, in each case, only to the extent such Holder is legally entitled to do so;
(3) any Taxes imposed or withheld as a result of the presentation of any Note for payment (where Notes are in the form of Definitive Notes and presentation is required) more than 30 days after the relevant payment is first made available to the Holder (except to the extent that the Holder or beneficial owner of Notes would have been entitled to Additional Amounts had the Note been presented on the last day of such 30 day period);
(4) any estate, inheritance, gift, sale, transfer, personal property or similar Taxes;
(5) any Taxes withheld or deducted from a payment to an individual as required pursuant to European Council Directive 2003/48/EC or any other directive implementing the conclusions of the ECOFIN Council meeting of 26 and 27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive;
(6) any Taxes imposed or withheld as a result of the presentation of any Note for payment by or on behalf of a Holder of Notes or beneficial owner of Notes who would have been able to avoid such withholding or deduction by presenting the relevant Note to another Paying Agent in a member state of the European Union;
(7) any Taxes payable other than by deduction or withholding from payments under or with respect to the Note; or
(8) any combination of items (1) through (7) above.
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(b) In addition to the foregoing, the Issuer and the Guarantors will also pay and indemnify the Holders for any present or future stamp, issue, registration, court or documentary Taxes, or any other excise or property Taxes, charges or similar levies or Taxes, which are levied by any Tax Jurisdiction (other than the United States or any political subdivision thereof) on the execution, delivery, issuance, registration or enforcement of any of the Notes, this Indenture or the Note Guarantees or any other document or instrument referred to therein or the consummation of the transactions contemplated thereby or the receipt of any payments with respect thereto (other than a transfer of the Notes following the initial resale of the Notes by the Initial Purchasers).
(c) If the Issuer or any Guarantor becomes aware that it will be obligated to pay Additional Amounts with respect to any payment under or with respect to the Notes or any Note Guarantee, the Issuer or such Guarantor will deliver to the Trustee on a date that is at least 30 days prior to the date of that payment (unless the obligation to pay Additional Amounts arises after the 30th day prior to that Payment Date, in which case the Issuer or applicable Guarantor shall notify the Trustee promptly thereafter) an Officers Certificate stating the fact that Additional Amounts will be payable and the amount estimated to be so payable. The Officers Certificate must also set forth any other information reasonably necessary to enable the Paying Agents to pay Additional Amounts to Holders on the relevant Payment Date. The Trustee shall be entitled to rely, without investigation, solely on such Officers Certificate as conclusive proof that such payments are necessary.
(d) The Issuer or applicable Guarantor will provide the Trustee with documentation reasonably satisfactory to the Trustee evidencing the payment of Additional Amounts. The Issuer or applicable Guarantor will make all withholdings and deductions required by law and will remit the full amount deducted or withheld to the relevant tax authority in accordance with applicable law. The Issuer or applicable Guarantor will provide to the Trustee an official receipt or, if official receipts are not obtainable after the use of reasonable efforts, other documentation reasonably satisfactory to the Trustee evidencing the payment of any Taxes so deducted or withheld. Upon request, copies of those receipts or other documentation, as the case may be, will be made available by the Trustee to the Holders of the Notes.
(e) Whenever in this Indenture there is mentioned, in any context, the payment of amounts based upon the principal amount of the Notes or of principal, interest or of any other amount payable under, or with respect to, any of the Notes or Note Guarantees, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.
(f) The above obligations will survive any termination, defeasance or discharge of this Indenture and any transfer by a Holder or beneficial owner of its Notes. The above obligations will also apply, mutatis mutandis, to any jurisdiction in which any successor Person to the Issuer, the Parent or any Guarantor is incorporated, organized, engaged in business or resident for tax purposes and any jurisdiction from or through which any payment under or with respect to the Notes or Note Guarantees is made by or on behalf of such Person, including any political subdivision thereof or therein.
ARTICLE 5
SUCCESSORS
Section 5.01 | Merger, Consolidation or Sale of Assets. |
(a) The Parent will not, directly or indirectly: (1) consolidate or merge with or into another Person, or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties and assets of the Parent and its Restricted Subsidiaries, taken as a whole, in one or more related transactions, to another Person, unless:
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(1) immediately after giving effect to such transaction, no Default or Event of Default exists;
(2) either:
(A) the Parent is the surviving Person; or
(B) the Person formed by or surviving any such consolidation or merger (if other than the Parent) or to which such sale, assignment, transfer, conveyance or other disposition will have been made (i) is a Person organized or existing under the laws of Australia, Switzerland, any Member State of the European Union as of December 31, 2003 or the United States or, any state of the United States or the District of Columbia, provided that in the case where such Person is not a corporation, a co-obligor of the Notes is a corporation and (ii) assumes all the obligations of the Parent under the Notes and this Indenture pursuant to a supplemental indenture executed and delivered to the Trustee and under the Registration Rights Agreement;
(3) immediately after giving effect to such transaction on a pro forma basis, (a) the Parent or the Person formed by or surviving any such consolidation or merger (if other than the Parent), or to which such sale, assignment, transfer, conveyance or other disposition will have been made, will be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) or (b) the Fixed Charge Coverage Ratio for the Parent or surviving Person and its Restricted Subsidiaries will be greater than or equal to such ratio for the Parent and its Restricted Subsidiaries immediately prior to such transaction; and
(4) each Guarantor, unless such Guarantor is the Person with which the Parent has entered into a transaction under this Section 5.01, will have confirmed to the Trustee in writing that its Note Guarantee will apply to the obligations of the Parent or the surviving Person in accordance with the Notes and this Indenture.
provided, however, that clause (3) above will not apply (i) if, in the good faith determination of the Board of Directors of the Parent, whose determination shall be evidenced by a Board Resolution, the principal purpose of such transaction is to change the state of incorporation of the Parent, and any such transaction shall not have as one of its purposes the evasion of the foregoing limitations; or (ii) to any consolidation, merger, sale, assignment, transfer, conveyance or other disposition of assets between or among the Parent and any Restricted Subsidiary.
(b) Subject to Section 4.13 and Section 4.14 hereof, the Issuer and the Guarantors (other than the Parent) will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not such Issuer or Guarantor is the surviving Person), or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties and assets of the Issuer or the Guarantor, in one or more related transactions, to another Person, other than the Parent, the Issuer or another Guarantor, unless:
(1) immediately after giving effect to that transaction, no Default or Event of Default exists; and
(2) either:
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(A) the Issuer or the Guarantor is the surviving Person, or the Person formed by or surviving any such consolidation or merger (if other than the Issuer or the Guarantor) or to which such sale, assignment, transfer, conveyance or other disposition has been made (i) in the case of the Issuer, is organized or existing under the laws of any Member State of the European Union as of December 31, 2003 or the United States or any state of the United States or the District of Columbia and (ii) in each case, assumes all the obligations of that Issuer or Guarantor under this Indenture (including such Guarantors Note Guarantee) pursuant to a supplemental indenture executed and delivered to the Trustee and under the Registration Rights Agreement; or
(B) such sale, assignment, transfer, conveyance or other disposition or consolidation or merger complies with Section 4.10 hereof.
In addition, neither the Parent nor any Restricted Subsidiaries of the Parent may, directly or indirectly, lease all or substantially all of the properties or assets of the Parent and its Restricted Subsidiaries considered as one enterprise, in one or more related transactions, to any other Person.
In addition to the documents required by Sections 9.06 and 12.04, the Trustee shall receive an Opinion of Counsel stating that any supplemental indentures executed in furtherance of this Section 5.01 are valid, binding and enforceable obligations of the assuming party.
Section 5.02 | Successor Person Substituted. |
Upon any consolidation, merger, sale, assignment, transfer, conveyance or other disposition in accordance with Section 5.01(a) or Section 5.01(b)(2)(A), the successor Person formed by such consolidation or into or with which the Parent, the Issuer or the Guarantor is merged or to which such sale, assignment, transfer, conveyance or other disposition is made will succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, transfer, conveyance or other disposition, the provisions of this Indenture referring to the Parent, the Issuer or the Guarantor will refer instead to the successor Person and not to the Parent, the Issuer or the Guarantor), and may exercise every right and power of, the Parent, the Issuer or the Guarantor under this Indenture with the same effect as if such successor Person had been named as the Parent, the Issuer or the Guarantor in this Indenture.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 | Events of Default. |
Each of the following is an Event of Default:
(1) default in the payment in respect of the principal of (or premium, if any, on) any Note when due and payable (whether at Stated Maturity or upon repurchase, acceleration, optional redemption or otherwise);
(2) default in the payment of any interest upon any Note when it becomes due and payable, and continuance of such default for a period of 30 days thereafter;
(3) failure by the Parent or any Restricted Subsidiary to comply with the provisions of Sections 4.10(c), 4.15 and 5.01 hereof;
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(4) default in the performance, or breach, of any covenant or agreement of the Parent or any Restricted Subsidiary in this Indenture (other than a covenant or agreement a default in whose performance or whose breach is specifically dealt with in clauses (1), (2) or (3) above), and continuance of such default or breach for a period of 60 days after written notice thereof has been given to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in aggregate principal amount of the outstanding Notes, voting as a single class;
(5) a default or defaults under any mortgage, bonds, debentures, notes or other evidences of Indebtedness (other than the Notes) by the Parent or any Restricted Subsidiary having, individually or in the aggregate, a principal or similar amount outstanding of at least $50 million, whether such Indebtedness now exists or shall hereafter be created, which default or defaults either (a) shall have resulted in the acceleration of the maturity of such Indebtedness prior to its express maturity or (b) shall constitute a failure to pay principal of, or interest or premium on, such Indebtedness when due and payable after the expiration of any applicable grace period with respect thereto;
(6) the entry against the Parent or any Restricted Subsidiary of a final judgment(s) for the payment of money in an aggregate amount in excess of $50 million (net of amounts covered by (a) insurance for which the insurer thereof has been notified of such claim and has not challenged such coverage or (b) valid third-party indemnifications for which the indemnifying party thereof has been notified of such claim and has not challenged such indemnification), by a court or courts of competent jurisdiction, which judgment(s) remain undischarged, unwaived, unstayed, unbonded or unsatisfied for a period of 60 consecutive days;
(7) the Issuer, the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an involuntary case;
(C) consents to the appointment of a custodian of it or for all or substantially all of its property;
(D) makes a general assignment for the benefit of its creditors; or
(E) generally is not paying its debts as they become due;
(8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Issuer, the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary in an involuntary case;
(B) appoints a custodian of the Issuer, the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary or for all or
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substantially all of the property of the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary; or
(C) orders the liquidation of the Issuer, the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days; or
(9) except as permitted by this Indenture, any Note Guarantee ceases to be enforceable or ceases for any reason to be in full force and effect as against the Guarantors, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee.
In the event of a declaration of acceleration of the Notes solely because an Event of Default described in clause (5) above has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically rescinded and annulled if the Event of Default or payment default triggering such Event of Default pursuant to clause (5) shall be remedied or cured by the Parent or a Restricted Subsidiary or waived by the holders of the relevant Indebtedness within 20 Business Days after the declaration of acceleration with respect thereto and if the rescission and annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction obtained by the Trustee for the payment of amounts due on the Notes.
If an Event of Default specified in clause (8) above occurs with respect to the Parent or the Issuer, the principal of and any accrued interest on the Notes then outstanding shall ipso facto become immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.
The Parent and the Issuer shall within 120 days after the end of each fiscal year of the Parent deliver to the Trustee a statement regarding compliance with this Indenture. Each of the Parent and the Issuer shall notify the Trustee if it becomes aware of the occurrence of any Default or Event of Default within ten days thereafter.
Section 6.02 | Acceleration. |
In the case of an Event of Default specified in clause (7) or (8) of Section 6.01 hereof, with respect to the Issuer, the Parent, any Restricted Subsidiary of the Parent that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.
Upon any such declaration, the Notes shall become due and payable immediately.
The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of all of the Holders of all the Notes, rescind an acceleration and its consequences hereunder, if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal of, premium on, if any, or interest, if any, on the Notes that has become due solely because of the acceleration) have been cured or waived.
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If an Event of Default occurs on or after August 15, 2015 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Issuer with the intention of avoiding payment of the premium that the Issuer would have had to pay if the Issuer then had elected to redeem the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default occurs prior to August 15, 2015 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Issuer with the intention of avoiding the prohibition on redemption of the Notes prior to such date, then, upon acceleration of the Notes, the Applicable Premium shall also become and be immediately due and payable, to the extent permitted by law.
Section 6.03 | Other Remedies. |
If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of, premium on, if any, or interest, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.
Section 6.04 | Waiver of Past Defaults. |
The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of principal of, premium on, if any, interest or Additional Interest, if any, on, the Notes (including in connection with an Offer to Purchase). The Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
Section 6.05 | Control by Majority. |
Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. The Trustee will be under no obligation to exercise any of its rights or powers under this Indenture at the request of any Holders, unless such Holder has offered to the Trustee security and indemnity reasonably satisfactory to the Trustee against any loss, liability or expense that might be incurred by it in compliance with such request or direction.
Section 6.06 | Limitation on Suits. |
No Holder of a Note may pursue any remedy with respect to this Indenture or the Notes unless:
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(1) such Holder has previously given the Trustee written notice that an Event of Default is continuing;
(2) Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer and, if requested, provide to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with such request within 60 days after receipt of the request and the offer of security or indemnity; and
(5) during such 60-day period, Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with such request.
A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.
Section 6.07 | Rights of Holders of Notes to Receive Payment. |
Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal of, premium on, if any, interest or Additional Interest, if any, on the Note, on or after the respective due dates expressed in the Note (including in connection with an Offer to Purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08 | Collection Suit by Trustee. |
If an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount of principal of, premium on, if any, and interest, if any, remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.09 | Trustee May File Proofs of Claim. |
The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuer (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due to the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due to the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money,
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securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 | Priorities. |
If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:
First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, interest and Additional Interest, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, interest and Additional Interest, if any, respectively; and
Third: to the Issuer or to such party as a court of competent jurisdiction shall direct.
The Trustee, upon written notice to the Issuer, may fix a record date and Payment Date for any payment to Holders of Notes pursuant to this Section 6.10.
Section 6.11 | Undertaking for Costs. |
In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01 | Duties of Trustee. |
(a) If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such persons own affairs.
(b) Except during the continuance of an Event of Default:
(1) the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
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(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee will examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;
(2) the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01.
(e) No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights or powers under this Indenture at the request of any Holders, unless such Holder has offered to the Trustee security and indemnity reasonably satisfactory to the Trustee against any loss, liability or expense that might be incurred by it in compliance with such request or direction.
(f) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(g) The Trustee will not be liable for indirect, punitive, special or consequential damage or loss (including but not limited to lost profits) whatsoever, even if the Trustee has been informed of the likelihood of such loss or damage and regardless of the form of action.
(h) Except for (i) a default under Sections 6.01(1) or 6.01(2) hereof (other than Additional Interest, if the Issuer has not previously sent the Trustee notice under Section 4.01), or (ii) any other event of which a Responsible Officer of the Trustee has actual knowledge and which event constitutes or, with the giving of notice or the passage of time or both, would constitute an Event of Default under this Indenture, the Trustee shall not be deemed to have notice of any Default or Event of Default unless specifically notified in writing of such event by the Issuer or a Holder; as used herein, the term actual knowledge means the actual fact or statement of knowing, without any duty to make any investigation with regard thereto.
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Section 7.02 | Rights of Trustee. |
(a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers Certificate or Opinion of Counsel. The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer will be sufficient if signed by an Officer of the Issuer.
(f) The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security reasonably satisfactory to the Trustee against the losses, liabilities and expenses that might be incurred by it in compliance with such request or direction.
Section 7.03 | Individual Rights of Trustee. |
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee (if this Indenture has been qualified under the TIA) or resign. Any Agent may do the same with like rights and duties. The Trustee and any Agent are also subject to Sections 7.10 and 7.11 hereof.
Section 7.04 | Trustees Disclaimer. |
The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuers (or Parents, if applicable) use of the proceeds from the Notes or any money paid to the Issuer or upon the Issuers (or Parents, if applicable) direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
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Section 7.05 | Notice of Defaults. |
If a Default or Event of Default occurs and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee will send to Holders of Notes a notice of the Default or Event of Default within 90 days after the Trustee becomes aware of such Default or Event of Default. Except in the case of a Default or Event of Default in payment of principal of, premium on, if any, or interest, if any, on, any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. Notwithstanding the foregoing, if any Notes are held in the form of a Global Note, the notice required to be provided hereunder shall be conclusively presumed to have been given if delivered via facsimile, PDF or other electronic transmission to the Depositary or to the Persons who are registered Holders of Notes, as the case may be, with accompanying instructions directing such Depositary or such Persons who are registered Holders of Notes to forward such notice to the beneficial Holders of the Notes.
Section 7.06 | Reports by Trustee to Holders of the Notes. |
(a) Within 60 days after each August 15 beginning with the August 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee will send to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA §313(a) (but if no event described in TIA §313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also will comply with TIA §313(b)(2). The Trustee will also transmit all reports as required by TIA §313(c).
(b) A copy of each report at the time of its delivery to the Holders of Notes will be sent by the Trustee to the Issuer and filed by the Trustee with the SEC and each stock exchange on which the Notes are listed in accordance with TIA §313(d). The Issuer will promptly notify the Trustee when the Notes are listed on any stock exchange.
Section 7.07 | Compensation and Indemnity. |
(a) The Issuer will pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustees compensation will not be limited by any law on compensation of a trustee of an express trust. In addition to the compensation for its services, the Issuer will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in accordance with any provision of this Indenture, except to the extent any such disbursement, advance or expense is attributable to its negligence, bad faith or willful misconduct as determined by a court of competent jurisdiction in a final non-appealable judgment. Such expenses will include the reasonable compensation, disbursements and expenses of the Trustees agents and counsel.
(b) Each of the Parent, the Issuer and the Guarantors, jointly and severally, will indemnify the Trustee against any and all fees, losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the fees, costs and expenses of enforcing this Indenture against the Parent, the Issuer and the Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Parent, the Issuer, the Guarantors, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense is attributable to its negligence, bad faith or willful misconduct as determined by a court of competent jurisdiction in a final non-appealable judgment. The Trustee will notify the Issuer promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuer will not relieve the Parent, the Issuer or any of the Guarantors of their obligations hereunder. The Parent, the Issuer or such Guarantor will defend the claim and the Trustee will cooperate in the defense. The Trustee may have separate counsel and the Parent or Issuer will pay the reasonable fees and expenses of such counsel. None of the Parent, the Issuer or any Guarantor need pay for any settlement made without its consent, which consent will not be unreasonably withheld.
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(c) The obligations of the Parent, the Issuer and the Guarantors under this Section 7.07 will survive the satisfaction and discharge of this Indenture and any resignation or removal of the Trustee.
(d) To secure the Parents, Issuers and the Guarantors payment obligations in this Section 7.07, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal of, premium on, if any, interest or Additional Interest, if any, on, particular Notes. Such Lien will survive the satisfaction and discharge of this Indenture and any resignation or removal of the Trustee.
(e) When the Trustee incurs expenses or renders services after an Event of Default specified in clause (7) or (8) of Section 6.01 hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
(f) The Trustee will comply with the provisions of TIA §313(b)(2) to the extent applicable.
Section 7.08 | Replacement of Trustee. |
(a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustees acceptance of appointment as provided in this Section 7.08.
(b) The Trustee may resign at any time upon 30 days written notice to the Issuer and be discharged from the trust hereby created by so notifying the Issuer. The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuer in writing. The Issuer may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a custodian or public officer takes charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
(c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.
(d) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuer, or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.
(e) If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
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(f) A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee will send a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuers obligations under Section 7.07 hereof will continue for the benefit of the retiring Trustee.
Section 7.09 | Successor Trustee by Merger, etc. |
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another Person, the successor Person without any further act will be the successor Trustee.
Section 7.10 | Eligibility; Disqualification. |
There will at all times be a Trustee hereunder that is a corporation or national banking association organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100.0 million as set forth in its most recent published annual report of condition.
This Indenture will always have a Trustee who satisfies the requirements of TIA §310(a)(1), (2) and (5). The Trustee is subject to TIA §310(b).
Section 7.11 | Preferential Collection of Claims Against Issuer. |
The Trustee is subject to TIA §311(a), excluding any creditor relationship listed in TIA §311(b). A Trustee who has resigned or been removed shall be subject to TIA §311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01 | Option to Effect Legal Defeasance or Covenant Defeasance. |
The Parent may at any time, at the option of its Board of Directors evidenced by a resolution set forth in an Officers Certificate, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8.
Section 8.02 | Legal Defeasance and Discharge. |
Upon the Parents exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Issuer and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes (including the Note Guarantees) on the date the conditions set forth below are satisfied (hereinafter, Legal Defeasance). For this purpose, Legal Defeasance means that the Issuer and the Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Note Guarantees), which will thereafter be deemed to be outstanding only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2)
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below, and to have satisfied all their other obligations under such Notes, the Note Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Issuer, shall execute such instruments acknowledging the same as reasonably requested by the Issuer), except for the following provisions which will survive until otherwise terminated or discharged hereunder:
(1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium on, if any, interest and Additional Interest, if any, on such Notes when such payments are due from the trust referred to in Section 8.04 hereof;
(2) the Issuers obligations with respect to the Notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Issuers and the Guarantors obligations in connection therewith; and
(4) this Article 8.
Subject to compliance with this Article 8, the Parent may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03 | Covenant Defeasance. |
Upon the Parents exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Parent, the Issuer and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from each of their obligations under Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof and clause (4) of Section 5.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, Covenant Defeasance), and the Notes will thereafter be deemed not outstanding for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed outstanding for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Note Guarantees, the Parent, the Issuer and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes and Note Guarantees will be unaffected thereby. In addition, upon the Parents exercise under Section 8.01 hereof of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(3), (4), (5), (6) and (9) hereof will not constitute Events of Default.
Section 8.04 | Conditions to Legal or Covenant Defeasance. |
In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or 8.03 hereof:
(1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized investment bank,
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appraisal firm, or firm of independent public accountants, to pay the principal of, premium, if any, on interest and Additional Interest, if any, on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Issuer must specify whether the Notes are being defeased to such stated date for payment or to a particular redemption date;
(2) in the case of an election under Section 8.02 hereof, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee stating that:
(A) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling; or
(B) since the date of this Indenture, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(3) in the case of an election under Section 8.03 hereof, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit (and any similar concurrent deposit relating to other Indebtedness), and the granting of Liens to secure such borrowings);
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a Default under, any material agreement or instrument (other than this Indenture and the agreements governing any other Indebtedness being defeased, discharged or replaced) to which the Issuer or any of the Guarantors is a party or by which the Issuer or any of the Guarantors is bound;
(6) the Issuer must deliver to the Trustee an Officers Certificate stating that the deposit was not made by the Issuer with the intent of preferring the Holders of Notes over the other creditors of the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer or others; and
(7) the Issuer must deliver to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.
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Section 8.05 | Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. |
Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the Trustee) pursuant to Section 8.04 hereof in respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as Paying Agent), to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, interest and Additional Interest, if any, but such money need not be segregated from other funds except to the extent required by law.
The Issuer will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.
Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to the Issuer from time to time upon the request of the Issuer any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06 | Repayment to Issuer. |
Subject to abandoned property laws, any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of, premium on, if any, or interest, if any, on any Note and remaining unclaimed for two years after such principal, premium, if any, or interest, if any, has become due and payable shall be paid to the Issuer on its request or (if then held by the Issuer) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer.
Section 8.07 | Reinstatement. |
If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuers and the Guarantors obligations under this Indenture and the Notes and the Note Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Issuer makes any payment of principal of, premium on, if any, interest or Additional Interest, if any, on, any Note following the reinstatement of its obligations, the Issuer will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.
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ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 | Without Consent of Holders of Notes. |
Notwithstanding Section 9.02 of this Indenture, without the consent of any Holder of Notes, the Issuer, the Guarantors and the Trustee may amend or supplement this Indenture, the Notes or the Note Guarantees:
(1) to cure any ambiguity, omission, mistake, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;
(3) to provide for the assumption of the Issuers or a Guarantors obligations to the Holders of the Notes and Note Guarantees by a successor to the Issuer or such Guarantor pursuant to Article 5 or Article 10 hereof;
(4) to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not materially, in the good faith determination of the Board of Directors of the Parent, adversely affect the legal rights under this Indenture, the Note Guarantees or the Notes of any such Holder;
(5) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA;
(6) to comply with the provisions of Section 4.16 hereof;
(7) to evidence and provide for the acceptance of appointment by a successor Trustee;
(8) to provide for the issuance of Additional Notes in accordance with this Indenture; or
(9) to conform this Indenture, the Note Guarantees or the Notes to any provision of the Description of Notes in the Offering Circular.
Upon the request of the Issuer accompanied by a resolution of its Board of Directors authorizing the execution by the Issuer and the Guarantors of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Sections 9.06 and 12.04 hereof, the Trustee will join with the Issuer and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties, liabilities or immunities under this Indenture or otherwise.
Section 9.02 | With Consent of Holders of Notes. |
Except as provided below in this Section 9.02, the Issuer, the Guarantors and the Trustee may amend or supplement this Indenture (including, without limitation, Section 3.09, 4.10 and 4.15 hereof) and the Notes and the Note Guarantees with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, Additional Notes, if any)
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voting as a single class (including, without limitation, consents obtained in connection with a tender offer or Exchange Offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium on, if any, interest or Additional Interest, if any, on, the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, Additional Notes, if any) voting as a single class (including, without limitation, consents obtained in connection with a tender offer or Exchange Offer for, or purchase of, the Notes).
Upon the request of the Issuer accompanied by a resolution of its Board of Directors authorizing the execution by the Issuer and the Guarantors of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Sections 9.06 and 12.04 hereof, the Trustee will join with the Issuer and the Guarantors in the execution of such amended or supplemental indenture, but the Trustee will not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties, liabilities or immunities under this Indenture or otherwise.
It is not necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuer will send to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuer to send such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Issuer with any provision of this Indenture, the Notes or the Note Guarantees. However, without the consent of each Holder affected, an amendment, supplement or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;
(2) change the Stated Maturity of the principal of, or any installment of interest on, any Note;
(3) reduce the principal amount of, or premium, if any, or interest on, any Note;
(4) alter or waive any of the provisions with respect to the redemption of the Notes under Section 3.07 or waive any such redemption payment with respect to the Notes;
(5) waive a Default or Event of Default in the payment of principal of, or interest or premium and Additional Interest, if any, on, the Notes (except, upon a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes, a waiver of the payment default that resulted from such acceleration) or in respect of any other covenant or provision that cannot be amended or modified without the consent of all Holders;
(6) make any Note payable in money other than U.S. dollars;
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(7) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, or interest or premium and Additional Interest, if any, on, the Notes;
(8) make any change in the amendment and waiver provisions of this Indenture;
(9) release any Guarantor from any of its obligations under its Note Guarantee or this Indenture, except in accordance with the terms of this Indenture;
(10) impair the right to institute suit for the enforcement of any payment on or with respect to the Notes or the Note Guarantees (which, for the avoidance of doubt, shall not include a waiver of an Event of Default as described above); or
(11) except as otherwise permitted under Section 5.01 and 4.16, consent to the assignment or transfer by the Issuer or any Guarantor of any of their rights or obligations under this Indenture.
Section 9.03 | Compliance with Trust Indenture Act. |
Every amendment or supplement to this Indenture or the Notes will be set forth in an amended or supplemental indenture that complies with the TIA as then in effect.
Section 9.04 | Revocation and Effect of Consents. |
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holders Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.
Section 9.05 | Notation on or Exchange of Notes. |
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuer in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver.
Section 9.06 | Trustee to Sign Amendments, etc. |
The Trustee will sign any amended or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Issuer may not sign an amended or supplemental indenture until the Board of Directors of the Parent approves it. In executing any amended or supplemental indenture, the Trustee shall receive and (subject to Section 7.01 hereof) will be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officers Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.
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ARTICLE 10
NOTE GUARANTEES
Section 10.01 | Guarantee. |
(a) Subject to this Article 10, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Issuer hereunder or thereunder, that:
(1) the principal of, premium, if any, on, interest and Additional Interest, if any, on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of, premium on, if any, interest and Additional Interest, if any, on, the Notes, if lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and
(2) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
(b) The Guarantors hereby agree that their obligations hereunder are unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever and covenant that this Note Guarantee will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture.
(c) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.
(d) Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any Obligations guaranteed hereby until payment in full of all Obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such Obligations as provided in Article 6 hereof, such Obligations (whether or not due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantee.
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Section 10.02 | Limitation on Guarantor Liability. |
Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the Obligations of such Guarantor will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the Obligations of such other Guarantor under this Article 10, result in the Obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance.
Section 10.03 | Execution and Delivery of Note Guarantee. |
To evidence its Note Guarantee set forth in Section 10.01 hereof, each Guarantor hereby agrees that a notation of such Note Guarantee substantially in the form attached as Exhibit E hereto will be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture will be executed on behalf of such Guarantor by one of its Officers.
Each Guarantor hereby agrees that its Note Guarantee set forth in Section 10.01 hereof will remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed, the Note Guarantee will be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the Guarantors.
Section 10.04 | Guarantors May Consolidate, etc., on Certain Terms. |
Except as otherwise provided in Section 10.05 hereof, no Guarantor may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than the Issuer or another Guarantor (or a Person that, upon such consolidation or merger, shall become a Guarantor), unless:
(1) immediately after giving effect to such transaction, no Default or Event of Default exists; and
(2) either:
(A) subject to Section 10.05 hereof, the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger unconditionally assumes all the Obligations of that Guarantor under its Note Guarantee, this Indenture (on the terms set forth herein or therein, pursuant to a supplemental indenture executed and delivered to the Trustee) and under the Registration Rights Agreement; or
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(B) the Net Available Cash, if any, of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation, Section 4.10 hereof.
In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee, if required, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person will succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Issuer and delivered to the Trustee. All the Note Guarantees so issued will in all respects have the same legal rank and benefit under this Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses 2(a) and (b) above, nothing contained in this Indenture or in any of the Notes will prevent any consolidation or merger of a Guarantor with or into the Issuer or another Guarantor, or will prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor.
Section 10.05 | Releases. |
A Note Guarantee of a Guarantor will be automatically and unconditionally released (and thereupon shall terminate and be discharged and be of no further force and effect):
(a) in connection with any sale or other disposition (including by merger, liquidation or otherwise) of (i) Capital Stock of the Guarantor after which such Guarantor is no longer a Subsidiary of the Parent, or (ii) of all or substantially all of the assets of such Guarantor, which sale or other disposition complies with the applicable provisions of this Indenture and all the Obligations (other than contingent Obligations) of such Guarantor in respect of all other Indebtedness of the Parent or the Guarantors terminate upon consummation of such transaction;
(b) if the Parent properly designates the Guarantor as an Unrestricted Subsidiary under this Indenture;
(c) solely in the case of a Note Guarantee created pursuant to Section 4.16 hereof upon the release or discharge of the Note Guarantee or Incurrence of Indebtedness that resulted in the creation of such Note Guarantee pursuant to that covenant, except a discharge or release by or as a result of payment under such Guarantee;
(d) upon Legal Defeasance or Covenant Defeasance in accordance with Article 8 hereof or satisfaction and discharge of this Indenture in accordance with Article 11 hereof;
(e) upon payment in full of the aggregate principal amount of all Notes then outstanding and all other obligations under this Indenture and the Notes then due and owing;
(f) pursuant to Article 9 hereof; or
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(g) in the case of any Guarantor which is also a guarantor under the ABL Facility and the Senior Secured Term Loan Facility, upon the release of such guarantee under such Credit Facilities (which release under such Credit Facilities may be conditioned upon the concurrent release of the Note Guarantee hereunder).
Upon any occurrence giving rise to a release of a Note Guarantee as specified in clauses (a) through (g) hereof, the Trustee will execute any documents reasonably requested by the Issuer, at the Issuers cost and expense, in order to evidence or effect such release, termination and discharge in respect of such Note Guarantee. None of the Issuer, any Guarantor or the Trustee will be required to make a notation on the Notes to reflect any Note Guarantee or any such release, termination or discharge.
Any Guarantor not released from its obligations under its Note Guarantee as provided in this Section 10.05 will remain liable for the full amount of principal of, premium on, if any, interest and Additional Interest, if any, on, the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 10.
ARTICLE 11
SATISFACTION AND DISCHARGE
Section 11.01 | Satisfaction and Discharge. |
This Indenture will be discharged and will cease to be of further effect as to all Notes issued hereunder, when:
(1) either:
(A) all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Issuer) have been delivered to the Trustee for cancellation; or
(B) all Notes that have not been delivered to the Trustee for cancellation have become due and payable (by reason of the mailing of a notice of redemption or otherwise) or will become due and payable at Stated Maturity within one year, and in each such case the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Additional Interest, if any, and accrued interest to the Stated Maturity or redemption date, as the case may be;
(2) in respect of clause 1(B) of this Section 11.01, no Default or Event of Default will have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and any similar deposit relating to other Indebtedness and, in each case, the granting of Liens to secure such borrowings) and such deposit will not result in a breach or violation of, or constitute a Default under, any material agreement or instrument to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound (other than with respect to the borrowing of funds to be applied concurrently to make the deposit required to effect such satisfaction and discharge and any similar concurrent deposit relating to other Indebtedness, and in each case the granting of Liens to secure such borrowings);
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(3) the Issuer or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture; and
(4) the Issuer has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at Stated Maturity or the redemption date, as the case may be.
In addition, the Issuer must deliver an Officers Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if money or Government Securities have been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section 11.01, the provisions of Sections 11.02 and 8.06 hereof will survive. In addition, nothing in this Section 11.01 will be deemed to discharge those provisions of Section 7.07 hereof, that, by their terms, survive the satisfaction and discharge of this Indenture.
Section 11.02 | Application of Trust Money. |
Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent), to the Persons entitled thereto, of the principal, premium, if any, interest and Additional Interest, if any, for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers and any Guarantors obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof; provided that if the Issuer has made any payment of principal of, premium on, if any, interest or Additional Interest, if any, on, any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.
ARTICLE 12
MISCELLANEOUS
Section 12.01 | Trust Indenture Act Controls. |
If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA §318(c), the imposed duties will control.
Section 12.02 | Notices. |
Any notice or communication by the Issuer, any Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or by first class mail (registered or certified, return receipt requested), facsimile transmission or overnight air courier guaranteeing next day delivery, to the others address:
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If to the Issuer and/or any Guarantor:
Tronox Finance LLC
One Stamford Plaza
263 Tresser Boulevard, Suite 1100
Stamford, CT 06901
Facsimile No.: (203) 705-3703
Attention: Michael J. Foster
With a copy to:
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
Facsimile No.: (212) 446-4900
Attention: Christian O. Nagler
If to the Trustee:
Wilmington Trust, National Association
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Facsimile No.: (612) 217-5651
Attention: Tronox Administrator
The Issuer, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar, or delivered electronically in accordance with the Applicable Procedures. Any notice or communication will also be so mailed to any Person described in TIA §313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
If the Issuer sends a notice or communication to Holders, it will send a copy to the Trustee and each Agent at the same time.
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Section 12.03 | Communication by Holders of Notes with Other Holders of Notes. |
Holders may communicate pursuant to TIA §312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Issuer, the Trustee, the Registrar and anyone else shall have the protection of TIA §312(c).
Section 12.04 | Certificate and Opinion as to Conditions Precedent. |
Upon any request or application by the Issuer or the Parent to the Trustee to take any action under this Indenture, the Issuer shall furnish to the Trustee:
(1) an Officers Certificate in form reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(2) an Opinion of Counsel in form reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
Section 12.05 | Statements Required in Certificate or Opinion. |
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA §314(a)(4)) must comply with the provisions of TIA §314(e) and must include:
(1) a statement that the Person making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and
(4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.
Section 12.06 | Rules by Trustee and Agents. |
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
Section 12.07 | No Personal Liability of Directors, Officers, Employees and Stockholders. |
No director, officer, employee, incorporator, stockholder, member, manager or partner of the Issuer or any Guarantor, as such, will have any liability for any obligations of the Issuer or the Guarantors under the Notes, this Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
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Section 12.08 | Governing Law. |
THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 12.09 | No Adverse Interpretation of Other Agreements. |
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 12.10 | Successors. |
All agreements of the Issuer in this Indenture and the Notes will bind its successors hereunder. All agreements of the Trustee in this Indenture will bind its successors. All agreements of each Guarantor in this Indenture will bind its successors hereunder, except as otherwise provided in Section 10.05 hereof.
Section 12.11 | Severability. |
In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.
Section 12.12 | Counterpart Originals. |
The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement.
Section 12.13 | Table of Contents, Headings, etc. |
The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.
Section 12.14 | Waiver of Jury Trial. |
EACH OF THE ISSUER, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.
TRONOX FINANCE LLC | ||
By: | /s/ Michael J Foster | |
Name: Michael J Foster | ||
Title: Manager |
Signature Page to Indenture
U.S. GUARANTORS: | ||
SOUTHWESTERN REFINING COMPANY, INC. | ||
TRIPLE S REFINING CORPORATION | ||
TRONOX HOLDINGS, INC. | ||
TRONOX INCORPORATED | ||
TRONOX LLC | ||
By: | /s/ Michael J Foster | |
Name: Michael J. Foster | ||
Title: Vice President |
TRONOX US HOLDINGS INC. | ||
By: | /s/ Michael J Foster | |
Name: Michael J. Foster | ||
Title: President |
Signature Page to Indenture
AUSTRALIAN GUARANTORS: | ||||
SIGNED, SEALED AND DELIVERED | ) | |||
by | ) | |||
Michael J. Foster | ) | |||
as attorney for | ) | |||
TRONOX AUSTRALIA HOLDINGS | ) | |||
PTY LIMITED | ) | |||
TRONOX AUSTRALIA PIGMENTS | ) | |||
HOLDINGS PTY LIMITED | ) | |||
TRONOX GLOBAL HOLDINGS PTY | ) | |||
LIMITED | ) | |||
TRONOX LIMITED | ) | |||
TRONOX PIGMENTS AUSTRALIA HOLDINGS PTY LIMITED |
) | |||
TRONOX PIGMENTS AUSTRALIA PTY LIMITED |
||||
TRONOX PIGMENTS WESTERN AUSTRALIA PTY LIMITED |
||||
TRONOX SANDS HOLDINGS PTY LIMITED |
||||
under power of attorney dated | ||||
in the presence of: | ||||
/s/ Catherine R. Liebelt | ||||
Signature of witness | ||||
Catherine R. Liebelt | /s/ Michael J Foster | |||
Name of witness (block letters) | By executing this agreement the attorney | |||
states that the attorney has received no notice | ||||
of revocation of the power of attorney |
Signature Page to Indenture
SIGNED, SEALED AND DELIVERED | ) | |||
by | ) | |||
Michael J. Foster | ) | |||
as attorney for | ) | |||
TRONOX WESTERN AUSTRALIA | ) | |||
PTY LTD under power of attorney dated | ) | |||
) | ||||
in the presence of: | ) | |||
) | ||||
/s/ Catherine R. Liebelt | ) | /s/ Michael J Foster | ||
Signature of witness | ) | By executing this agreement the attorney | ||
) | states that the attorney has received no notice | |||
Catherine R. Liebelt | ) | of revocation of the power of attorney | ||
Name of witness (block letters) | ||||
Signature Page to Indenture
SIGNED, SEALED AND DELIVERED | ) | |||
by | ) | |||
Michael J. Foster | ) | |||
as attorney for | ) | |||
TRONOX WORLDWIDE PTY | ) | |||
LIMITED (F/K/A TRONOX | ) | |||
WORLDWIDE LLC) | ) | |||
under power of attorney dated | ) | |||
) | ||||
in the presence of: | ) | |||
) | /s/ Michael J Foster | |||
) | By executing this agreement the attorney | |||
/s/ Catherine R. Liebelt | ) | states that the attorney has received no notice | ||
Signature of witness | ) | of revocation of the power of attorney | ||
Catherine R. Liebelt | ||||
Name of witness (block letters) |
Signature Page to Indenture
SIGNED, SEALED AND DELIVERED | ) | |||
by | ) | |||
Michael J. Foster | ) | |||
as attorney for | ) | |||
) | ||||
TRONOX HOLDINGS (AUSTRALIA) | ) | |||
PTY LIMITED | ) | |||
TRONOX INVESTMENTS | ) | |||
(AUSTRALIA) PTY LTD | ) | |||
TRONOX AUSTRALIA SANDS PTY LTD | ) | |||
TICOR RESOURCES PTY LTD | ) | |||
TICOR FINANCE (A.C.T.) PTY LTD | ) | |||
TIO2 CORPORATION PTY LTD | ) | |||
YALGOO MINERALS PTY. LTD. | ) | |||
TIFIC PTY. LTD. | ) | |||
SYNTHETIC RUTILE HOLDINGS PTY LTD | ) | |||
SENBAR HOLDINGS PTY LTD | ) | |||
PIGMENT HOLDINGS PTY LTD | ) | |||
TRONOX MINERAL SALES PTY LTD | ) | |||
TRONOX MANAGEMENT PTY LTD | ) | |||
under power of attorney dated | ) | |||
) | ||||
in the presence of: | ) | |||
) | ||||
/s/ Catherine R. Liebelt | ) | |||
Signature of witness | ) | /s/ Michael J Foster | ||
) | By executing this agreement the attorney | |||
Catherine R. Liebelt | ) | states that the attorney has received no notice | ||
Name of witness (block letters) |
) ) |
of revocation of the power of attorney |
Signature Page to Indenture
U.K. GUARANTORS: | ||
TRONOX INTERNATIONAL FINANCE LLP | ||
By: | /s/ Michael J Foster | |
Name: Michael J. Foster | ||
Title: Authorized Representative |
Signature Page to Indenture
BAHAMAS GUARANTORS: | ||
TRONOX PIGMENTS LTD | ||
By: | /s/ Michael J Foster | |
Name: Michael J. Foster | ||
Title: Vice President |
Signature Page to Indenture
WILMINGTON TRUST, NATIONAL ASSOCIATION, | ||
not in its individual capacity, but solely in its capacity as Trustee | ||
By: | /s/ Timothy P. Mowdy | |
Name: Timothy P. Mowdy | ||
Title: Administrative Vice President |
Signature Page to Indenture
[Face of Note]
CUSIP/CINS 897050 AA8
6.375% Senior Notes due 2020
No. | $ |
TRONOX FINANCE LLC
promises to pay to or registered assigns,
the principal sum of DOLLARS on August 15, 2020.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Dated:
TRONOX FINANCE LLC | ||
By: | ||
Name: | ||
Title: |
This is one of the Notes referred to in the within-mentioned Indenture: | ||
WILMINGTON TRUST, NATIONAL ASSOCIATION as Trustee | ||
By: | ||
Authorized Signatory |
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[Back of Note]
6.375% Senior Notes due 2020
[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]
Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
(1) INTEREST. Tronox Finance LLC, a Delaware corporation (the Issuer), promises to pay or cause to be paid interest on the principal amount of this Note at 6.375% per annum from , until maturity and shall pay the Additional Interest, if any, payable pursuant to the Registration Rights Agreement referred to below. The Issuer will pay interest and Additional Interest, if any, semi-annually in arrears on February 15 and August 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an Interest Payment Date). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that, if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be , . The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at a rate that is 1% higher than the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Additional Interest, if any (without regard to any applicable grace period), at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
(2) METHOD OF PAYMENT. The Issuer will pay interest on the Notes (except defaulted interest) and Additional Interest, if any, to the Persons who are registered Holders of Notes at the close of business on the February 1 or August 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, interest and Additional Interest, if any, at the office or agency of the Paying Agent and Registrar, or, at the option of the Issuer, payment of interest and Additional Interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of, premium on, if any, interest and Additional Interest, if any, on, all Global Notes and all other Notes the Holders of which will have provided wire transfer instructions to the Issuer or the Paying Agent. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided that Additional Interest may be paid through the issuance of additional Notes having an Accreted Value at the time of issuance equal to the amount of Additional Interest so paid.
(3) PAYING AGENT AND REGISTRAR. Initially, Wilmington Trust, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuer may change the Paying Agent or Registrar without prior notice to the Holders of the Notes. The Issuer or any of its Subsidiaries may act as Paying Agent or Registrar.
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(4) INDENTURE. The Issuer issued the Notes under an Indenture dated as of August 20, 2012 (the Indenture) among the Issuer, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are unsecured obligations of the Issuer limited to $900 million in aggregate principal amount, plus amounts, if any, issued to pay Additional Interest on outstanding Notes as set forth in Paragraph 2 hereof. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder.
(5) OPTIONAL REDEMPTION.
(a) At any time prior to August 15, 2015, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture, upon not less than 30 nor more than 60 days notice, at a redemption price equal to 106.375% of the principal amount of the Notes redeemed, plus accrued and unpaid interest and Additional Interest, if any, to the date of redemption (subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant Interest Payment Date) , in an amount not to exceed the net proceeds from an Equity Offering by the Issuer; provided that:
(i) at least 65% of the aggregate principal amount of Notes originally issued under the Indenture (excluding Notes held by the Issuer and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and
(ii) the redemption occurs within 45 days of the date of the closing of such Equity Offering.
(b) At any time prior to August 15, 2015, the Issuer may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Premium as of, and accrued and unpaid interest and Additional Interest, if any, to the applicable date of redemption, subject to the rights of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date.
(c) Except pursuant to the preceding paragraphs and Section 6 of this Note, the Notes will not be redeemable at the Issuers option prior to August 15, 2015.
(d) On or after August 15, 2015, the Issuer may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Additional Interest, if any, on the Notes redeemed, to the applicable date of redemption, if redeemed during the twelve-month period beginning on September 1 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant Interest Payment Date:
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Year |
Percentage | |||
2015 |
104.781 | % | ||
2016 |
103.188 | % | ||
2017 |
101.594 | % | ||
2018 and thereafter |
100.000 | % |
Unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.
(6) OPTIONAL TAX REDEMPTION. The Issuer may also redeem the Notes in accordance with Section 3.07(e) of the Indenture.
(7) MANDATORY REDEMPTION. The Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes.
(8) REPURCHASE AT THE OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, the Issuer will be required to make an offer (a Change of Control Offer) to each Holder to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holders Notes at a purchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest and Additional Interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant Interest Payment Date (the Change of Control Payment). Within 30 days following any Change of Control, the Issuer will mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture.
(b) If, as of the first day of any calendar month, the aggregate amount of Excess Proceeds totals at least $25 million, the Issuer must commence, not later than the fifteenth Business Day of such month, and consummate an Offer to Purchase, from the Holders and, at the Issuers option, all holders of Pari Passu Debt containing provisions similar to those set forth in the Indenture with respect to offers to purchase with the proceeds of sales of assets, the maximum principal amount of Notes and such Pari Passu Debt, if any, that may be purchased out of the Excess Proceeds. The offer price in any such Offer to Purchase shall be equal to or greater than the amount of Excess Proceeds and shall be calculated as follows: 100% of the principal amount (or accreted value, if applicable) of the Notes and such Pari Passu Debt, plus accrued and unpaid interest and Additional Interest, if any up to, but excluding, the date of purchase (subject to the rights of Holders of Notes on a relevant record date to receive interest on an Interest Payment Date that occurs prior to the purchase date) and will be payable in cash. To the extent that any Excess Proceeds remain after consummation of an Offer to Purchase pursuant to Section 4.10 of the Indenture, the Parent and the Restricted Subsidiaries may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture, and those Excess Proceeds shall no longer constitute Excess Proceeds. Holders of Notes that are the subject of an Offer to Purchase will receive an Offer to Purchase from the Issuer prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled Option of Holder to Elect Purchase attached to the Notes.
(9) NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a redemption date, the Issuer will send or cause to be sent, by first class mail or electronically in accordance with the Applicable Procedures, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more
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than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture pursuant to Articles 8 or 11 thereof. Notes and portions of Notes selected will be in amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder shall be redeemed or purchased.
(10) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuer need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Issuer need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the next succeeding Interest Payment Date.
(11) PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as the owner of it for all purposes. Only registered Holders have rights under the Indenture.
(12) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes or the Note Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class, and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class. Without the consent of any Holder of Notes, the Indenture, the Notes or the Note Guarantees may be amended or supplemented to cure any ambiguity, omission, mistake, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Issuers or a Guarantors obligations to Holders of the Notes and Note Guarantees by a successor to the Issuer or such Guarantor pursuant to the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not materially, in the good faith determination of the Board of Directors of the Parent, adversely affect the legal rights under the Indenture, the Note Guarantees or the Notes of any Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA, to comply with Section 4.16 of the Indenture, to evidence and provide for the acceptance of appointment by a successor Trustee, to provide for the issuance of Additional Notes in accordance with the Indenture, or to conform the text of the Indenture, the Notes, or the Note Guarantees to any provision of the Description of Notes section of the Issuers Offering Circular.
(13) DEFAULTS AND REMEDIES. Events of Default include: (i) default in the payment in respect of the principal of (or premium, if any, on) any Note when due and payable (whether at Stated Maturity or upon repurchase, acceleration, optional redemption or otherwise); (ii) default in the payment of any interest upon any Note when it becomes due and payable, and continuance of such default for a period of 30 days thereafter; (iii) failure by the Parent or any Restricted Subsidiary to comply with the provisions of Sections 4.10(c), 4.15 and 5.01 of the Indenture; (iv) default in the performance, or breach, of any covenant or agreement of the Parent or any Restricted Subsidiary in the Indenture (other than a covenant or agreement a default in whose performance or whose breach is specifically dealt with in clauses (1), (2) or (3) of Section 6.01 of
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the Indenture), and continuance of such default or breach for a period of 60 days after written notice thereof has been given to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in aggregate principal amount of the outstanding Notes, voting as a single class; (v) a default or defaults under any mortgage, bonds, debentures, notes or other evidences of Indebtedness (other than the Notes) by the Parent or any Restricted Subsidiary having, individually or in the aggregate, a principal or similar amount outstanding of at least $50 million, whether such Indebtedness now exists or shall hereafter be created, which default or defaults either (a) shall have resulted in the acceleration of the maturity of such Indebtedness prior to its express maturity or (b) shall constitute a failure to pay principal of, or interest or premium on, such Indebtedness when due and payable after the expiration of any applicable grace period with respect thereto; (vi) the entry against the Parent or any Restricted Subsidiary of a final judgment(s) for the payment of money in an aggregate amount in excess of $50 million (net of amounts covered by (a) insurance for which the insurer thereof has been notified of such claim and has not challenged such coverage or (b) valid third-party indemnifications for which the indemnifying party thereof has been notified of such claim and has not challenged such indemnification), by a court or courts of competent jurisdiction, which judgment(s) remain undischarged, unwaived, unstayed, unbonded or unsatisfied for a period of 60 consecutive days; (vii) The Issuer, the Parent or any of its Restricted Subsidiaries Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a custodian of it or for all or substantially all of its property, (d) makes a general assignment for the benefit of its creditors, or (e) generally is not paying its debts as they become due; (viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (a) is for relief against the Issuer, the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary in an involuntary case, (b) appoints a custodian of the Issuer, the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary, or (c) orders the liquidation of the Issuer, the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary, and the order or decree remains unstayed and in effect for 60 consecutive days; and (ix) except as permitted by the Indenture, any Note Guarantee ceases to be enforceable or ceases for any reason to be in full force and effect as against the Guarantors, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee. In the case of an Event of Default specified in clause (7) or (8) of Section 6.01 of the Indenture, with respect to the Issuer, any Restricted Subsidiary of the Issuer that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of all of the Holders of all the Notes, rescind an acceleration and its consequences hereunder, if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal of, premium on, if any, interest or Additional Interest, if any, on the Notes that has become due
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solely because of the acceleration) have been cured or waived. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. The Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may, on behalf of all the Holders of Notes, rescind an acceleration or waive an existing Default or Event of Default and its respective consequences under the Indenture except a continuing Default or Event of Default in the payment of principal of, premium on, if any, interest or Additional Interest, if any, on, the Notes (including in connection with an Offer to Purchase). The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuer is required, upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.
(14) TRUSTEE DEALINGS WITH ISSUER. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its Affiliates, as if it were not the Trustee.
(15) NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator, stockholder, member, manager or partner of the Issuer or any Guarantor, as such, will have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
(16) AUTHENTICATION. This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.
(17) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
(18) ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes will have all the rights set forth in the Registration Rights Agreement dated as of August 20, 2012, among the Issuer, the Guarantors and the other parties named on the signature pages thereof (the Registration Rights Agreement).
(19) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on the other identification numbers placed thereon.
(20) GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to:
Tronox Finance LLC
One Stamford Plaza
263 Tresser Boulevard, Suite 1100
Stamford, CT 06901
Attention: Michael J. Foster
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Assignment Form
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: | ||
(Insert assignees legal name) |
(Insert assignees soc. sec. or tax I.D. no.)
(Print or type assignees name, address and zip code)
and irrevocably appoint | ||
to transfer this Note on the books of the Issuer. The agent may substitute another to act for him. |
Date:
Your Signature: | ||
(Sign exactly as your name appears on the face of this Note) |
Signature Guarantee*: |
* | Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). |
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Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:
¨ Section 4.10 ¨ Section 4.15
If you want to elect to have only part of the Note purchased by the Issuer pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased:
$
Date: | ||
Your Signature: | ||
(Sign exactly as your name appears on the face of this Note) | ||
Tax Identification No.: |
Signature Guarantee*: |
* | Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). |
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Schedule of Exchanges of Interests in the Global Note*
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Date of Exchange |
Amount of decrease in Principal Amount of this Global Note |
Amount of increase in Principal Amount of this Global Note |
Principal
Amount of this Global Note following such decrease (or increase) |
Signature of authorized officer of Trustee or Custodian |
*This | schedule should be included only if the Note is issued in global form. |
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[Face of Regulation S Temporary Global Note]
CUSIP/CINS U8968X AA5
6.375% Senior Notes due 2020
No. | $ |
TRONOX FINANCE LLC
promises to pay to or registered assigns,
the principal sum of DOLLARS on August 15, 2020.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Dated:
TRONOX FINANCE LLC | ||
By: | ||
Name: | ||
Title: |
This is one of the Notes referred to in the within-mentioned Indenture: | ||
WILMINGTON TRUST, NATIONAL ASSOCIATION as Trustee | ||
By: | ||
Authorized Signatory |
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[Back of Regulation S Temporary Global Note]
6.375% Senior Notes due 2020
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE SECURITIES ACT) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 OF REGULATION D UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
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Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
(1) INTEREST. Tronox Finance LLC, a Delaware corporation (the Issuer), promises to pay or cause to be paid interest on the principal amount of this Note at 6.375% per annum from , until maturity and shall pay the Additional Interest, if any, payable pursuant to the Registration Rights Agreement referred to below. The Issuer will pay interest and Additional Interest, if any, semi-annually in arrears on February 15 and August 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an Interest Payment Date). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that, if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be , . The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at a rate that is 1% higher than the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Additional Interest, if any (without regard to any applicable grace period), at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or more Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to receive payments of interest hereon; until so exchanged in full, this Regulation S Temporary Global Note shall in all other respects be entitled to the same benefits as other Notes under the Indenture.
(2) METHOD OF PAYMENT. The Issuer will pay interest on the Notes (except defaulted interest) and Additional Interest, if any, to the Persons who are registered Holders of Notes at the close of business on the February 1 or August 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, interest and Additional Interest, if any, at the office or agency of the Paying Agent and Registrar, or, at the option of the Issuer, payment of interest and Additional Interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of, premium on, if any, interest and Additional Interest, if any, on, all Global Notes and all other Notes the Holders of which will have provided wire transfer instructions to the Issuer or the Paying Agent. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided that Additional Interest may be paid through the issuance of additional Notes having an Accreted Value at the time of issuance equal to the amount of Additional Interest so paid.
(3) PAYING AGENT AND REGISTRAR. Initially, Wilmington Trust, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuer may change the Paying Agent or Registrar without prior notice to the Holders of the Notes. The Issuer or any of its Subsidiaries may act as Paying Agent or Registrar.
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(4) INDENTURE. The Issuer issued the Notes under an Indenture dated as of August 20, 2012 (the Indenture) among the Issuer, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are unsecured obligations of the Issuer limited to $900 million in aggregate principal amount, plus amounts, if any, issued to pay Additional Interest on outstanding Notes as set forth in Paragraph 2 hereof. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder.
(5) OPTIONAL REDEMPTION.
(a) At any time prior to August 15, 2015, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture, upon not less than 30 nor more than 60 days notice, at a redemption price equal to 106.375% of the principal amount of the Notes redeemed, plus accrued and unpaid interest and Additional Interest, if any, to the date of redemption (subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant Interest Payment Date) , in an amount not to exceed the net proceeds from an Equity Offering by the Issuer; provided that:
(i) at least 65% of the aggregate principal amount of Notes originally issued under the Indenture (excluding Notes held by the Issuer and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and
(ii) the redemption occurs within 45 days of the date of the closing of such Equity Offering.
(b) At any time prior to August 15, 2015, the Issuer may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Premium as of, and accrued and unpaid interest and Additional Interest, if any, to the applicable date of redemption, subject to the rights of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date.
(c) Except pursuant to the preceding paragraphs and Section 6 of this Note, the Notes will not be redeemable at the Issuers option prior to August 15, 2015.
(d) On or after August 15, 2015, the Issuer may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Additional Interest, if any, on the Notes redeemed, to the applicable date of redemption, if redeemed during the twelve-month period beginning on September 1 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant Interest Payment Date:
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Year |
Percentage | |||
2015 |
104.781 | % | ||
2016 |
103.188 | % | ||
2017 |
101.594 | % | ||
2018 and thereafter |
100.000 | % |
Unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.
(6) OPTIONAL TAX REDEMPTION. The Issuer may also redeem the Notes in accordance with Section 3.07(e) of the Indenture.
(7) MANDATORY REDEMPTION. The Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes.
(8) REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, the Issuer will be required to make an offer (a Change of Control Offer) to each Holder to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holders Notes at a purchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest and Additional Interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant Interest Payment Date (the Change of Control Payment). Within 30 days following any Change of Control, the Issuer will mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture.
(b) If, as of the first day of any calendar month, the aggregate amount of Excess Proceeds totals at least $25 million, the Issuer must commence, not later than the fifteenth Business Day of such month, and consummate an Offer to Purchase, from the Holders and, at the Issuers option, all holders of Pari Passu Debt containing provisions similar to those set forth in the Indenture with respect to offers to purchase with the proceeds of sales of assets, the maximum principal amount of Notes and such Pari Passu Debt, if any, that may be purchased out of the Excess Proceeds. The offer price in any such Offer to Purchase shall be equal to or greater than the amount of Excess Proceeds and shall be calculated as follows: 100% of the principal amount (or accreted value, if applicable) of the Notes and such Pari Passu Debt, plus accrued and unpaid interest and Additional Interest, if any up to, but excluding, the date of purchase (subject to the rights of Holders of Notes on a relevant record date to receive interest on an Interest Payment Date that occurs prior to the purchase date) and will be payable in cash. To the extent that any Excess Proceeds remain after consummation of an Offer to Purchase pursuant to Section 4.10 of the Indenture, the Parent and the Restricted Subsidiaries may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture, and those Excess Proceeds shall no longer constitute Excess Proceeds. Holders of Notes that are the subject of an Offer to Purchase will receive an Offer to Purchase from the Issuer prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled Option of Holder to Elect Purchase attached to the Notes.
(9) NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a redemption date, the Issuer will send or cause to be sent, by first class mail or electronically, in
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accordance with the Applicable Procedures, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture pursuant to Articles 8 or 11 thereof. Notes and portions of Notes selected will be in amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder shall be redeemed or purchased.
(10) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuer need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Issuer need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the next succeeding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Global Notes only (i) on or after the termination of the 40-day distribution compliance period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Note for one or more Global Notes, the Trustee shall cancel this Regulation S Temporary Global Note.
(11) PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as the owner of it for all purposes. Only registered Holders have rights under the Indenture.
(12) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes or the Note Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class, and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class. Without the consent of any Holder of Notes, the Indenture, the Notes or the Note Guarantees may be amended or supplemented to cure any ambiguity, omission, mistake, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Issuers or a Guarantors obligations to Holders of the Notes and Note Guarantees by a successor to the Issuer or such Guarantor pursuant to the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not materially, in the good faith determination of the Board of Directors of the Parent, adversely affect the legal rights under the Indenture, the Note Guarantees or the Notes of any Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA, to comply with Section 4.16 of the Indenture, to evidence and provide for the acceptance of appointment by a successor Trustee, to provide for the issuance of Additional Notes in accordance with the Indenture, or to conform the text of the Indenture, the Notes, or the Note Guarantees to any provision of the Description of Notes section of the Issuers Offering Circular.
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(13) DEFAULTS AND REMEDIES. Events of Default include: (i) default in the payment in respect of the principal of (or premium, if any, on) any Note when due and payable (whether at Stated Maturity or upon repurchase, acceleration, optional redemption or otherwise); (ii) default in the payment of any interest upon any Note when it becomes due and payable, and continuance of such default for a period of 30 days thereafter; (iii) failure by the Parent or any Restricted Subsidiary to comply with the provisions of Sections 4.10(c), 4.15 and 5.01 of the Indenture; (iv) default in the performance, or breach, of any covenant or agreement of the Parent or any Restricted Subsidiary in the Indenture (other than a covenant or agreement a default in whose performance or whose breach is specifically dealt with in clauses (1), (2) or (3) of Section 6.01 of the Indenture), and continuance of such default or breach for a period of 60 days after written notice thereof has been given to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in aggregate principal amount of the outstanding Notes, voting as a single class; (v) a default or defaults under any mortgage, bonds, debentures, notes or other evidences of Indebtedness (other than the Notes) by the Parent or any Restricted Subsidiary having, individually or in the aggregate, a principal or similar amount outstanding of at least $50 million, whether such Indebtedness now exists or shall hereafter be created, which default or defaults either (a) shall have resulted in the acceleration of the maturity of such Indebtedness prior to its express maturity or (b) shall constitute a failure to pay principal of, or interest or premium on, such Indebtedness when due and payable after the expiration of any applicable grace period with respect thereto; (vi) the entry against the Parent or any Restricted Subsidiary of a final judgment(s) for the payment of money in an aggregate amount in excess of $50 million (net of amounts covered by (a) insurance for which the insurer thereof has been notified of such claim and has not challenged such coverage or (b) valid third-party indemnifications for which the indemnifying party thereof has been notified of such claim and has not challenged such indemnification), by a court or courts of competent jurisdiction, which judgment(s) remain undischarged, unwaived, unstayed, unbonded or unsatisfied for a period of 60 consecutive days; (vii) The Issuer, the Parent or any of its Restricted Subsidiaries Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a custodian of it or for all or substantially all of its property, (d) makes a general assignment for the benefit of its creditors, or (e) generally is not paying its debts as they become due; (viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (a) is for relief against the Issuer, the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary in an involuntary case, (b) appoints a custodian of the Issuer, the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary, or (c) orders the liquidation of the Issuer, the Parent or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would constitute a Significant Subsidiary, and the order or decree remains unstayed and in effect for 60 consecutive days; and (ix) except as permitted by the Indenture, any Note Guarantee ceases to be enforceable or ceases for any reason to be in full force and effect as against the Guarantors, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee. In the case of an Event of Default specified in clause (7) or (8) of Section 6.01 of the Indenture, with respect to the Issuer, any Restricted Subsidiary of the Issuer that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary, all
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outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of all of the Holders of all the Notes, rescind an acceleration and its consequences hereunder, if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal of, premium on, if any, interest or Additional Interest, if any, on the Notes that has become due solely because of the acceleration) have been cured or waived. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. The Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may, on behalf of all the Holders of Notes, rescind an acceleration or waive an existing Default or Event of Default and its respective consequences under the Indenture except a continuing Default or Event of Default in the payment of principal of, premium on, if any, interest or Additional Interest, if any, on, the Notes (including in connection with an Offer to Purchase). The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuer is required, upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.
(14) TRUSTEE DEALINGS WITH ISSUER. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its Affiliates, as if it were not the Trustee.
(15) NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator, stockholder, member, manager or partner of the Issuer or any Guarantor, as such, will have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
(16) AUTHENTICATION. This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.
(17) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
(18) ADDITIONAL RIGHTS OF HOLDERS. In addition to the rights provided to Holders of Notes under the Indenture, Holders of this Regulation S Temporary Global Note will have all the rights set forth in the Registration Rights Agreement dated as of August 20, 2012, among the Issuer, the Guarantors and the other parties named on the signature pages thereof (the Registration Rights Agreement).
(19) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers to be
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printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on the other identification numbers placed thereon.
(20) GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to:
Tronox Finance LLC
One Stamford Plaza
263 Tresser Boulevard, Suite 1100
Stamford, CT 06901
Attention: Michael J. Foster
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Assignment Form
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: | ||
(Insert assignees legal name) | ||
(Insert assignees soc. sec. or tax I.D. no.)
(Print or type assignees name, address and zip code)
and irrevocably appoint | ||
to transfer this Note on the books of the Issuer. The agent may substitute another to act for him. |
Date:
Your Signature: | ||
(Sign exactly as your name appears on the face of this Note) |
Signature Guarantee*: |
* | Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). |
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Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:
¨ Section 4.10 ¨ Section 4.15
If you want to elect to have only part of the Note purchased by the Issuer pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased:
$
Date:
Your Signature: | ||
(Sign exactly as your name appears on the face of this Note) | ||
Tax Identification No.: |
Signature Guarantee*: |
* | Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). |
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Schedule of Exchanges of Interests in the Regulation S Temporary Global Note
The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Global Note, or exchanges of a part of another other Restricted Global Note for an interest in this Regulation S Temporary Global Note, have been made:
Date of Exchange |
Amount of decrease in Principal Amount of this Global Note |
Amount of increase in Principal Amount of this Global Note |
Principal Amount of this Global Note following such decrease (or increase) |
Signature of authorized officer of Trustee or Custodian |
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EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Tronox Finance LLC
One Stamford Plaza
263 Tresser Boulevard, Suite 1100
Stamford, CT 06901
Attention: Michael J. Foster
Wilmington Trust, National Association
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: Tronox Administrator
Re: 6.375% Senior Notes due 2020
Reference is hereby made to the Indenture, dated as of August 20, 2020 (the Indenture), among Tronox Finance LLC, as issuer (the Issuer), the Guarantors party thereto and Wilmington Trust, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
, (the Transferor) owns and proposes to transfer the Notes or interest in such Notes specified in Annex A hereto, in the principal amount of $ in such Notes or interests (the Transfer), to (the Transferee), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. ¨ Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Restricted Definitive Note pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a qualified institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.
2. ¨ Check if Transferee will take delivery of a beneficial interest in the Regulation S Temporary Global Note, the Regulation S Permanent Global Note or a Restricted Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the
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requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and/or, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act [and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Permanent Global Note, the Regulation S Temporary Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.
3. ¨ Check and complete if Transferee will take delivery of a beneficial interest in the IAI Global Note or a Restricted Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
(a) ¨ such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
OR
(b) ¨ such Transfer is being effected to the Issuer or a subsidiary thereof;
OR
(c) ¨ such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;
OR
(d) ¨ such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Restricted Definitive Notes and in the Indenture and the Securities Act.
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4. ¨ Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) ¨ Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) ¨ Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) ¨ Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.
[Insert Name of Transferor] |
By: | ||
Name: | ||
Title: |
Dated:
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ANNEX A TO CERTIFICATE OF TRANSFER
1. | The Transferor owns and proposes to transfer the following: |
[CHECK ONE OF (A) OR (B)]
i) ¨ a beneficial interest in the:
(i) | ¨ 144A Global Note (CUSIP ), or |
(ii) | ¨ Regulation S Global Note (CUSIP ), or |
(iii) | ¨ IAI Global Note (CUSIP ); or |
(b) ¨ a Restricted Definitive Note.
2. | After the Transfer the Transferee will hold: |
[CHECK ONE]
(a) ¨ a beneficial interest in the:
(i) | ¨ 144A Global Note (CUSIP ), or |
(ii) | ¨ Regulation S Global Note (CUSIP ), or |
(iii) | ¨ IAI Global Note (CUSIP ); or |
(iv) | ¨ Unrestricted Global Note (CUSIP ); or |
(b) ¨ a Restricted Definitive Note; or
(c) ¨ an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
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EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Tronox Finance LLC
One Stamford Plaza
263 Tresser Boulevard, Suite 1100
Stamford, CT 06901
Attention: Michael J. Foster
Wilmington Trust, National Association
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: Tronox Administrator
Re: 6.375% Senior Notes due 2020
CUSIP U8968X AA5
Reference is hereby made to the Indenture, dated as of August 20, 2012 (the Indenture), among Tronox Finance LLC, as issuer (the Issuer), the Guarantors party thereto and Wilmington Trust, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
, (the Owner) owns and proposes to exchange the Notes or interest in such Note[s] specified herein, in the principal amount of $ in such Notes or interests (the Exchange). In connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note
(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owners beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owners own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the Securities Act), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(b) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owners beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owners own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
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(c) ¨ Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note. In connection with the Owners Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owners own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(d) ¨ Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In connection with the Owners Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owners own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes
(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owners beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owners own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
(b) ¨ Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owners Restricted Definitive Note for a beneficial interest in the [CHECK ONE] ¨ 144A Global Note, ¨ Regulation S Global Note, ¨ IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owners own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.
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This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.
[Insert Name of Transferor] |
By: | ||
Name: | ||
Title: |
Dated:
C-3
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Tronox Finance LLC
One Stamford Plaza
263 Tresser Boulevard, Suite 1100
Stamford, CT 06901
Attention: Michael J. Foster
Wilmington Trust, National Association
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: Tronox Administrator
Re: 6.375% Senior Notes due 2020
Reference is hereby made to the Indenture, dated as of August 20, 2012 (the Indenture), among Tronox Finance LLC, as issuer (the Issuer), the Guarantors party thereto and Wilmington Trust, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $ aggregate principal amount of:
(a) ¨ a beneficial interest in a Global Note, or
(b) ¨ a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the Securities Act).
2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Issuer or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a qualified institutional buyer (as defined therein), (C) to an institutional accredited investor (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Issuer a signed letter substantially in the form of this letter and an Opinion of Counsel in form reasonably acceptable to the Issuer to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.
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3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Issuer such certifications, legal opinions and other information as you and the Issuer may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional accredited investor (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional accredited investor) as to each of which we exercise sole investment discretion.
You and the Issuer are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.
[Insert Name of Accredited Investor] |
By: | ||
Name: | ||
Title: |
Dated:
D-2
EXHIBIT E
[FORM OF NOTATION OF GUARANTEE]
For value received, each Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture dated as of August 20, 2012 (the Indenture) among Tronox Finance LLC, (the Issuer), the Guarantors party thereto and Wilmington Trust, National Association, as trustee (the Trustee), (a) the due and punctual payment of the principal of, premium on, if any, interest and Additional Interest, if any, on, the Notes, whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal of, premium on, if any, interest and Additional Interest, if any, on, the Notes, if any, if lawful, and the due and punctual performance of all other obligations of the Issuer to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Note in accordance with the provisions of the Indenture.
Capitalized terms used but not defined herein have the meanings given to them in the Indenture.
[NAME OF GUARANTOR(S)] | ||
By: | ||
Name: | ||
Title: |
E-1
EXHIBIT F
[FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS]
SUPPLEMENTAL INDENTURE (this Supplemental Indenture), dated as of , among (the Guaranteeing Subsidiary), a subsidiary or affiliate of Tronox Limited (or its permitted successor), a public limited company organized under the laws of Western Australia, Australia (the Parent), Tronox Finance LLC, a Delaware limited liability company (the Issuer), the Parent, the other Guarantors (as defined in the Indenture referred to herein) and Wilmington Trust, National Association, as trustee under the Indenture referred to below (the Trustee).
W I T N E S S E T H
WHEREAS, the Issuer, the Parent and the Guarantors have heretofore executed and delivered to the Trustee an indenture (the Indenture), dated as of August 20, 2012 [, as subsequently amended on [ ] [ ], 20[ ]] providing for the issuance of 6.375% Senior Notes due 2020 (the Notes);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the Note Guarantee); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture, without the consent of Holders.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article 10 thereof.
3. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator, stockholder, partner or member of the Issuer, the Parent or any Guarantor, as such, will have any liability for any obligations of the Issuer, the Parent or the Guarantors under the Notes, the Indenture, this Supplemental Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
4. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
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6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuer.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.
Dated: ,
[GUARANTEEING SUBSIDIARY] | ||
By: | ||
Name: | ||
Title: |
By: | ||
Name: | ||
Title: |
By: | ||
Name: | ||
Title: |
TRONOX FINANCE LLC | ||
By: | ||
Name: | ||
Title: |
[EXISTING GUARANTORS] | ||
By: | ||
Name: | ||
Title: |
WILMINGTON TRUST, NATIONAL ASSOCIATION, | ||
as Trustee | ||
By: | ||
Name: | ||
Title: |
F-3
Exhibit 4.2
Execution Version
Tronox Finance LLC
$900,000,000 6.375% Senior Notes due 2020
unconditionally guaranteed as to the
payment of principal, premium,
if any, and interest by the Guarantors (as defined herein)
Exchange and Registration Rights Agreement
August 20, 2012
Goldman, Sachs & Co.,
Credit Suisse Securities (USA) LLC,
UBS Securities LLC
As representatives of the several Purchasers
named in Schedule I to the Purchase Agreement,
c/o Goldman, Sachs & Co.
200 West Street
New York, New York 10282-2198
Ladies and Gentlemen:
Tronox Finance LLC, a Delaware limited liability company (the Issuer) and an indirect wholly-owned subsidiary of Tronox Limited, an Australian holding company (the Parent Guarantor), proposes to issue and sell to the Purchasers (as defined herein) upon the terms set forth in the Purchase Agreement (as defined herein) $900,000,000 in aggregate principal amount of its 6.375% Senior Notes due 2020, which are unconditionally guaranteed by the Parent Guarantor and the subsidiaries of the Parent Guarantor named on Schedule I hereto (the Subsidiary Guarantors and together with the Parent Guarantor, the Guarantors). As an inducement to the Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Purchasers thereunder, the Issuer and the Guarantors agree with the Purchasers for the benefit of holders (as defined herein) from time to time of the Registrable Securities (as defined herein) as follows:
1. Certain Definitions. For purposes of this Exchange and Registration Rights Agreement (this Agreement), the following terms shall have the following respective meanings:
Base Interest shall mean the interest that would otherwise accrue on the Securities under the terms thereof and the Indenture, without giving effect to the provisions of this Agreement.
The term broker-dealer shall mean any broker or dealer registered with the Commission under the Exchange Act.
Business Day shall have the meaning set forth in Rule 13e-4(a)(3) promulgated by the Commission under the Exchange Act, as the same may be amended or succeeded from time to time.
Closing Date shall mean the date on which the Securities are initially issued.
Commission shall mean the United States Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose.
EDGAR System means the EDGAR filing system of the Commission and the rules and regulations pertaining thereto promulgated by the Commission in Regulation S-T under the Securities Act and the Exchange Act, in each case as the same may be amended or succeeded from time to time (and without regard to format).
Effective Time, in the case of (i) an Exchange Registration, shall mean the time and date as of which the Commission declares the Exchange Registration Statement effective or as of which the Exchange Registration Statement otherwise becomes effective and (ii) a Shelf Registration, shall mean the time and date as of which the Commission declares the Shelf Registration Statement effective or as of which the Shelf Registration Statement otherwise becomes effective.
Electing Holder shall mean any holder of Registrable Securities that has returned a completed and signed Notice and Questionnaire to the Issuer in accordance with Section 3(d)(ii) or Section 3(d)(iii) and the instructions set forth in the Notice and Questionnaire.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder, as the same may be amended or succeeded from time to time.
Exchange Offer shall have the meaning assigned thereto in Section 2(a).
Exchange Registration shall have the meaning assigned thereto in Section 3(c).
Exchange Registration Statement shall have the meaning assigned thereto in Section 2(a).
Exchange Securities shall have the meaning assigned thereto in Section 2(a).
Guarantor shall have the meaning assigned thereto in the Indenture.
The term holder shall mean each of the Purchasers and other persons who acquire Securities from time to time (including any successors or assigns), in each case for so long as such person owns any Securities.
Indenture shall mean the indenture, dated as of August 20, 2012 between the Issuer, the Guarantors and Wilmington Trust, National Association, as trustee, as the same may be amended from time to time.
Notice and Questionnaire means a Notice of Registration Statement and Selling Securityholder Questionnaire substantially in the form of Exhibit A hereto.
The term person shall mean a corporation, limited liability company, association, partnership, organization, business, individual, government or political subdivision thereof or governmental agency.
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Purchase Agreement shall mean the Purchase Agreement, dated as of August 15, 2012 between the Purchasers, the Issuer and the Guarantors relating to the Securities.
Purchasers shall mean the Purchasers named in Schedule I to the Purchase Agreement.
Registrable Securities shall mean the Securities; provided, however, that a Security shall cease to be a Registrable Security upon the earliest to occur of the following: (i) in the circumstances contemplated by Section 2(a), the Security has been exchanged for an Exchange Security in an Exchange Offer as contemplated in Section 2(a) (provided that any Exchange Security that, pursuant to the last two sentences of Section 2(a), is included in a prospectus for use in connection with resales by broker-dealers shall be deemed to be a Registrable Security with respect to Sections 5, 6 and 9 until resale of such Registrable Security has been effected within the Resale Period); (ii) in the circumstances contemplated by Section 2(b), a Shelf Registration Statement registering such Security under the Securities Act has been declared or becomes effective and such Security has been sold or otherwise transferred by the holder thereof pursuant to and in a manner contemplated by such effective Shelf Registration Statement; (iii) subject to Section 8(b), such Security is actually sold by the holder thereof pursuant to Rule 144 under circumstances in which any legend borne by such Security relating to restrictions on transferability thereof, under the Securities Act or otherwise, is removed by the Issuer or pursuant to the Indenture; or (iv) such Security shall cease to be outstanding.
Registration Default shall have the meaning assigned thereto in Section 2(c).
Registration Default Period shall have the meaning assigned thereto in Section 2(c).
Registration Expenses shall have the meaning assigned thereto in Section 4.
Resale Period shall have the meaning assigned thereto in Section 2(a).
Restricted Holder shall mean (i) a holder that is an affiliate of the Issuer within the meaning of Rule 405, (ii) a holder who acquires Exchange Securities outside the ordinary course of such holders business, (iii) a holder who has arrangements or understandings with any person to participate in the Exchange Offer for the purpose of distributing Exchange Securities and (iv) a holder that is a broker-dealer, but only with respect to Exchange Securities received by such broker-dealer pursuant to an Exchange Offer in exchange for Registrable Securities acquired by the broker-dealer directly from the Issuer.
Rule 144, Rule 405, Rule 415, Rule 424, Rule 430B and Rule 433 shall mean, in each case, such rule promulgated by the Commission under the Securities Act (or any successor provision), as the same may be amended or succeeded from time to time.
Securities shall mean, collectively, the $900,000,000 in aggregate principal amount of the Issuers 6.375% Senior Notes due 2020 to be issued and sold to the Purchasers, and securities issued in exchange therefor or in lieu thereof pursuant to the Indenture. Each Security is entitled to the benefit of the guarantee provided by the Guarantor in the Indenture (the Guarantee) and, unless the context otherwise requires, any reference herein to a Security, an Exchange Security or a Registrable Security shall include a reference to the related Guarantee.
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Securities Act shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission thereunder, as the same may be amended or succeeded from time to time.
Shelf Registration shall have the meaning assigned thereto in Section 2(b).
Shelf Registration Statement shall have the meaning assigned thereto in Section 2(b).
Special Interest shall have the meaning assigned thereto in Section 2(c).
Suspension Period shall have the meaning assigned thereto in Section 2(b).
Trust Indenture Act shall mean the Trust Indenture Act of 1939, as amended, and the rules and regulations promulgated by the Commission thereunder, as the same may be amended or succeeded from time to time.
Trustee shall mean Wilmington Trust, National Association, as trustee under the Indenture, together with any successors thereto in such capacity.
Unless the context otherwise requires, any reference herein to a Section or clause refers to a Section or clause, as the case may be, of this Agreement, and the words herein, hereof and hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Issuer and the Guarantors agree to file under the Securities Act, no later than 300 days after the Closing Date, a registration statement relating to an offer to exchange (such registration statement, the Exchange Registration Statement, and such offer, the Exchange Offer) any and all of the Securities for a like aggregate principal amount of debt securities issued by the Issuer and guaranteed by the Guarantors, which debt securities and guarantees are substantially identical to the Securities and the related Guarantees, respectively (and are entitled to the benefits of the Indenture), except that they have been registered pursuant to an effective registration statement under the Securities Act and do not contain provisions for Special Interest contemplated in Section 2(c) below (such new debt securities hereinafter called Exchange Securities). The Issuer and the Guarantors agree to use all commercially reasonable efforts to cause the Exchange Registration Statement to become effective under the Securities Actno later than 360 days after the Closing Date. The Exchange Offer will be registered under the Securities Act on the appropriate form and will comply with all applicable tender offer rules and regulations under the Exchange Act. Unless the Exchange Offer would not be permitted by applicable law or Commission policy, the Issuer further agrees to use all commercially reasonable efforts to (i) commence the Exchange Offer promptly (but no later than 10 Business Days) following the Effective Time of such Exchange Registration Statement and to complete the Exchange Offer no later than 390 days following the Closing Date, (ii) hold the Exchange Offer open for at least 20 Business Days in accordance with Regulation 14E promulgated by the Commission under the Exchange Act and (iii) exchange Exchange Securities for all Registrable Securities that have been properly tendered and not withdrawn promptly following the expiration of the Exchange Offer. The Exchange Offer will be deemed to have been completed only (i) if the debt securities and related guarantees received by holders other than Restricted Holders in the Exchange Offer for Registrable Securities are, upon receipt, transferable by each such holder without restriction under the Securities Act and the Exchange Act and without material restrictions
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under the blue sky or securities laws of a substantial majority of the States of the United States of America and (ii) upon the Issuer having exchanged, pursuant to the Exchange Offer, Exchange Securities for all Registrable Securities that have been properly tendered and not withdrawn before the expiration of the Exchange Offer, which shall be on a date that is at least 20 and not more than 40 Business Days following the commencement of the Exchange Offer. The Issuer and the Guarantors agree (x) to include in the Exchange Registration Statement a prospectus for use in any resales by any holder of Exchange Securities that is a broker-dealer and (y) to keep such Exchange Registration Statement effective for a period (the Resale Period) beginning when Exchange Securities are first issued in the Exchange Offer and ending upon the earlier of the expiration of the 180th day after the Exchange Offer has been completed or such time as such broker-dealers no longer own any Registrable Securities. With respect to such Exchange Registration Statement, such holders shall have the benefit of the rights of indemnification and contribution set forth in Subsections 6(a), (c), (d) and (e).
(b) If (i) on or prior to the time the Exchange Offer is completed existing law or Commission interpretations are changed such that the debt securities or the related guarantees received by holders other than Restricted Holders in the Exchange Offer for Registrable Securities are not or would not be, upon receipt, transferable by each such holder without restriction under the Securities Act, (ii) the Effective Time of the Exchange Registration Statement is not within 360 days following the Closing Date and the Exchange Offer has not been completed within 30 Business Days of such Effective Time and, in any event no later than 390 days after the Closing Date or (iii) any holder of Registrable Securities notifies the Issuer prior to the 20th Business Day following the completion of the Exchange Offer that: (A) it is prohibited by law or Commission policy from participating in the Exchange Offer, (B) it may not resell the Exchange Securities to the public without delivering a prospectus and the prospectus supplement contained in the Exchange Registration Statement is not appropriate or available for such resales or (C) it is a broker-dealer and owns Securities acquired directly from the Issuer or an affiliate of the Issuer, then the Issuer and the Guarantors shall, in lieu of (or, in the case of clause (iii), in addition to) conducting the Exchange Offer contemplated by Section 2(a), file under the Securities Act no later than 30 days after the time such obligation to file arises (but no earlier than 390 days after the Closing Date), a shelf registration statement providing for the registration of, and the sale on a continuous or delayed basis by the holders of, all of the Registrable Securities, pursuant to Rule 415 or any similar rule that may be adopted by the Commission (such filing, the Shelf Registration and such registration statement, the Shelf Registration Statement). The Issuer and the Guarantors agree to use all commercially reasonable efforts to cause the Shelf Registration Statement to become or be declared effective no later than 90 days after such Shelf Registration Statement filing obligation arises (but no earlier than 390 days after the Closing Date); provided, that if at any time the Issuer is or becomes a well-known seasoned issuer (as defined in Rule 405) and is eligible to file an automatic shelf registration statement (as defined in Rule 405), then the Issuer and the Guarantors shall file the Shelf Registration Statement in the form of an automatic shelf registration statement as provided in Rule 405. The Issuer and the Guarantors agree to use all commercially reasonable efforts to keep such Shelf Registration Statement continuously effective until the earlier of (i) one year after the Effective Time and (ii) such time as there are no longer any Registrable Securities outstanding. No holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement or to use the prospectus forming a part thereof for resales of Registrable Securities unless such holder is an Electing Holder. The Issuer and the Guarantors agree, after the Effective Time of the Shelf Registration Statement and promptly upon the request of any holder of Registrable Securities that is not then an Electing Holder, to use all commercially reasonable efforts to
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enable such holder to use the prospectus forming a part thereof for resales of Registrable Securities, including, without limitation, any action necessary to identify such holder as a selling securityholder in the Shelf Registration Statement (whether by post-effective amendment thereto or by filing a prospectus pursuant to Rules 430B and 424(b) under the Securities Act identifying such holder), provided, however, that nothing in this sentence shall (A) relieve any such holder of the obligation to return a completed and signed Notice and Questionnaire to the Issuer in accordance with Section 3(d)(iii) or (B) require the Issuer or the Guarantors to file more than one post-effective amendment to the Shelf Registration Statement in any 45-day period. Notwithstanding anything to the contrary in this Section 2(b), upon notice to the Electing Holders, the Issuer may suspend the use or the effectiveness of such Shelf Registration Statement, or extend the time period in which it is required to file the Shelf Registration Statement, for up to 45 consecutive days and up to 90 days in the aggregate, in each case in any 12-month period (a Suspension Period) if (i) such action is required by applicable law or (ii) the Chief Financial Officer and/or Chief Executive Officer of the Parent Guarantor determines that there is a valid business purpose for suspension of the Shelf Registration Statement; provided that the Issuer shall promptly notify the Electing Holders when the Shelf Registration Statement may once again be used or is effective.
(c) In the event that (i) the Exchange Offer has not been completed within 390 Days after the Closing Date or (ii) any Shelf Registration Statement required by Section 2(b) is filed and declared effective but shall thereafter either be withdrawn by the Issuer or shall become subject to an effective stop order issued pursuant to Section 8(d) of the Securities Act suspending the effectiveness of such registration statement (except as specifically permitted herein, including, with respect to any Shelf Registration Statement, during any applicable Suspension Period in accordance with the last sentence of Section 2(b) without being succeeded immediately by an additional registration statement filed and declared effective (each such event referred to in clauses (i) and (ii) a Registration Default and each period during which a Registration Default has occurred and is continuing, a Registration Default Period), then, as liquidated damages for such Registration Default, subject to the provisions of Section 9(b), special interest (Special Interest), in addition to the Base Interest, shall accrue on all Registrable Securities then outstanding at a per annum rate of 0.25% for the first 90 days of the Registration Default Period, at a per annum rate of 0.50% for the second 90 days of the Registration Default Period, at a per annum rate of 0.75% for the third 90 days of the Registration Default Period and at a per annum rate of 1.0% thereafter for the remaining portion of the Registration Default Period. Special Interest shall accrue and be payable only with respect to a single Registration Default at any given time, notwithstanding the fact that multiple Registration Defaults may exist at such time. The payment of such Special Interest will be the Holders sole remedy hereunder with respect to any Registration Defaults hereunder.
(d) The Issuer shall take, and shall cause the Guarantors to take, all actions necessary or advisable to be taken by it to ensure that the transactions contemplated herein are effected as so contemplated, including all actions necessary or desirable to register the Guarantees under any Exchange Registration Statement or Shelf Registration Statement, as applicable.
(e) Any reference herein to a registration statement or prospectus as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time; and any reference herein to any post-effective amendment to a registration statement or to any prospectus supplement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time.
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3. Registration Procedures.
If the Issuer and the Guarantors file a registration statement pursuant to Section 2(a) or Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Registration or any Shelf Registration, whichever may occur first, the Issuer shall qualify the Indenture under the Trust Indenture Act.
(b) In the event that such qualification would require the appointment of a new trustee under the Indenture, the Issuer shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Issuers and the Guarantors obligations with respect to the registration of Exchange Securities as contemplated by Section 2(a) (the Exchange Registration), if applicable, the Issuer and the Guarantors shall:
(i) prepare and file with the Commission, no later than 300 days after the Closing Date, an Exchange Registration Statement on any form which may be utilized by the Issuer and the Guarantors and which shall permit the Exchange Offer and resales of Exchange Securities by broker-dealers during the Resale Period to be effected as contemplated by Section 2(a), and use all commercially reasonable efforts to cause such Exchange Registration Statement to become effective no later than 360 days after the Closing Date and to complete the Exchange Offer no later than 390 days following the Closing Date;
(ii) as soon as practicable prepare and file with the Commission such amendments and supplements to such Exchange Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Exchange Registration Statement for the periods and purposes contemplated in Section 2(a) and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Exchange Registration Statement, and promptly provide each broker-dealer holding Exchange Securities with such number of copies of the prospectus included therein (as then amended or supplemented), in conformity in all material respects with the requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder, as such broker-dealer reasonably may request prior to the expiration of the Resale Period, for use in connection with resales of Exchange Securities;
(iii) promptly notify each broker-dealer that has requested or received copies of the prospectus included in such Exchange Registration Statement, and confirm such advice in writing, (A) when such Exchange Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Exchange Registration Statement or any post-effective amendment, when the same has become effective, (B) of any comments by the Commission and by the blue sky or securities commissioner or regulator of any state with respect thereto or any request by the Commission for amendments or supplements to such Exchange Registration Statement or prospectus or for additional information, (C) of the issuance by the
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Commission of any stop order suspending the effectiveness of such Exchange Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) if at any time the representations and warranties of the Issuer contemplated by Section 5 cease to be true and correct in all material respects, (E) of the receipt by the Issuer of any notification with respect to the suspension of the qualification of the Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (F) the occurrence of any event that causes the Issuer to become an ineligible issuer as defined in Rule 405, or (G) if at any time during the Resale Period when a prospectus is required to be delivered under the Securities Act, that such Exchange Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder or contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(iv) in the event that the Issuer and the Guarantors would be required, pursuant to Section 3(c)(iii)(G), to notify any broker-dealers holding Exchange Securities (except as otherwise permitted during any Suspension Period), promptly prepare and furnish to each such holder a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of such Exchange Securities during the Resale Period, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(v) use all commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Exchange Registration Statement or any post-effective amendment thereto at the earliest practicable date;
(vi) use all commercially reasonable efforts to (A) register or qualify the Exchange Securities under the securities laws or blue sky laws of such jurisdictions as are contemplated by Section 2(a) no later than the commencement of the Exchange Offer, to the extent required by such laws, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions until the expiration of the Resale Period, (C) take any and all other actions as may be reasonably necessary or advisable to enable each broker-dealer holding Exchange Securities to consummate the disposition thereof in such jurisdictions and (D) obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect the Exchange Registration, the Exchange Offer and the offering and sale of Exchange Securities by broker-dealers during the Resale Period; provided, however, that none of the Issuer or the Guarantors shall be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(c)(vi), (2) consent to general service of process in any such jurisdiction or become subject to taxation in any such jurisdiction or (3) make any changes to its certificate of incorporation or by-laws or other governing documents or any agreement between it and its stockholders;
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(vii) obtain a CUSIP number for all Exchange Securities, not later than the applicable Effective Time; and
(viii) comply with all applicable rules and regulations of the Commission, and make generally available to its securityholders no later than eighteen months after the Effective Time of such Exchange Registration Statement, an earning statement of the Issuer and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Issuer, Rule 158 thereunder).
(d) In connection with the Issuers and the Guarantors obligations with respect to the Shelf Registration, if applicable, the Issuer and the Guarantors shall:
(i) prepare and file with the Commission, within the time periods specified in Section 2(b), a Shelf Registration Statement on any form which may be utilized by the Issuer and which shall register all of the Registrable Securities for resale by the holders thereof in accordance with such method or methods of disposition as may be specified by the holders of Registrable Securities as, from time to time, may be Electing Holders and use all commercially reasonable efforts to cause such Shelf Registration Statement to become effective within the time periods specified in Section 2(b);
(ii) mail or distribute through DTC the Notice and Questionnaire to the holders of Registrable Securities (A) not less than 30 days prior to the anticipated Effective Time of the Shelf Registration Statement or (B) in the case of an automatic shelf registration statement (as defined in Rule 405), mail the Notice and Questionnaire to the holders of Registrable Securities not later than the Effective Time of such Shelf Registration Statement, and in any such case no holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement, and no holder shall be entitled to use the prospectus forming a part thereof for resales of Registrable Securities at any time, unless and until such holder has returned a completed and signed Notice and Questionnaire to the Issuer;
(iii) after the Effective Time of the Shelf Registration Statement, upon the request of any holder of Registrable Securities that is not then an Electing Holder, promptly send a Notice and Questionnaire to such holder; provided that the Issuer shall not be required (A) to take any action to name such holder as a selling securityholder in the Shelf Registration Statement or to enable such holder to use the prospectus forming a part thereof for resales of Registrable Securities until such holder has returned a completed and signed Notice and Questionnaire to the Issuer and (B) nothing in this clause (iii) shall require the Issuer or the Guarantors to file more than one post-effective amendment to the Shelf Registration Statement in any 45-day period;
(iv) as soon as practicable prepare and file with the Commission such amendments and supplements to such Shelf Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Shelf Registration Statement for the period specified in Section 2(b) and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Shelf Registration Statement, and furnish to the Electing Holders copies of any such supplement or amendment simultaneously with or prior to its being used or filed with the Commission to the extent such documents are not publicly available on the Commissions EDGAR System;
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(v) comply with the provisions of the Securities Act with respect to the disposition of all of the Registrable Securities covered by such Shelf Registration Statement in accordance with the intended methods of disposition by the Electing Holders provided for in such Shelf Registration Statement;
(vi) provide the Electing Holders and not more than one counsel for all the Electing Holders the opportunity to participate in the preparation of such Shelf Registration Statement, each prospectus included therein or filed with the Commission and each amendment or supplement thereto;
(vii) for a reasonable period prior to the filing of such Shelf Registration Statement, and throughout the period specified in Section 2(b), make available at reasonable times at the Issuers principal place of business or such other reasonable place for inspection by the persons referred to in Section 3(d)(vi) who shall certify to the Issuer that they have a current intention to sell the Registrable Securities pursuant to the Shelf Registration such financial and other information and books and records of the Issuer, and cause the officers, employees, counsel and independent certified public accountants of the Issuer to respond to such inquiries, as shall be reasonably necessary (and in the case of counsel, not violate an attorney-client privilege, in such counsels reasonable belief), in the judgment of the respective counsel referred to in Section 3(d)(vi), to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering on behalf of the Electing Holders shall be conducted by one counsel designated by the holders of at least a majority in aggregate principal amount of the Registrable Securities held by the Electing Holders at the time outstanding and provided further that each such party shall be required to maintain in confidence and not to disclose to any other person any information or records reasonably designated by the Issuer as being confidential, until such time as (A) such information becomes a matter of public record (whether by virtue of its inclusion in such Shelf Registration Statement or otherwise), or (B) such person shall be required so to disclose such information pursuant to a subpoena or order of any court or other governmental agency or body having jurisdiction over the matter (subject to the requirements of such order, and only after such person shall have given the Issuer prompt prior written notice of such requirement), or (C) such information is required to be set forth in such Shelf Registration Statement or the prospectus included therein or in an amendment to such Shelf Registration Statement or an amendment or supplement to such prospectus in order that such Shelf Registration Statement, prospectus, amendment or supplement, as the case may be, complies with applicable requirements of the federal securities laws and the rules and regulations of the Commission and does not contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(viii) promptly notify each of the Electing Holders and confirm such advice in writing, (A) when such Shelf Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Shelf Registration Statement or any post-effective amendment, when the same has become effective, (B) of any comments by the Commission and by the blue sky or securities commissioner or regulator of any state with respect thereto or any request by the Commission for amendments or supplements to such Shelf Registration Statement or prospectus or
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for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) if at any time the representations and warranties of the Issuer set forth in Section 5 cease to be true and correct in all material respects, (E) of the receipt by the Issuer of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (F) the occurrence of any event that causes the Issuer to become an ineligible issuer as defined in Rule 405, or (G) if at any time when a prospectus is required to be delivered under the Securities Act, that such Shelf Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act or contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(ix) use all commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Shelf Registration Statement or any post-effective amendment thereto at the earliest practicable date;
(x) if requested by any Electing Holder, promptly incorporate in a prospectus supplement or post-effective amendment such information as is required by the applicable rules and regulations of the Commission and as such Electing Holder specifies should be included therein relating to the terms of the sale of such Registrable Securities, including information with respect to the principal amount of Registrable Securities being sold by such Electing Holder, the name and description of such Electing Holder, the offering price of such Registrable Securities and any discount, commission or other compensation payable in respect thereof and with respect to any other terms of the offering of the Registrable Securities to be sold by such Electing Holder; and make all required filings of such prospectus supplement or post-effective amendment promptly after notification of the matters to be incorporated in such prospectus supplement or post-effective amendment;
(xi) furnish to each Electing Holder and the counsel referred to in Section 3(d)(vi) an executed copy (or a conformed copy) of such Shelf Registration Statement, each such amendment and supplement thereto (in each case including all exhibits thereto (in the case of an Electing Holder of Registrable Securities, upon request) and documents incorporated by reference therein) and such number of copies of such Shelf Registration Statement (excluding exhibits thereto and documents incorporated by reference therein unless specifically so requested by such Electing Holder) and of the prospectus included in such Shelf Registration Statement (including each preliminary prospectus and any summary prospectus), in conformity in all material respects with the applicable requirements of the Securities Act and the Trust Indenture Act to the extent such documents are not available through the Commissions EDGAR System, and such other documents, as such Electing Holder may reasonably request in order to facilitate the offering and disposition of the Registrable Securities owned by such Electing Holder and to permit such Electing Holder to satisfy the prospectus delivery requirements of the Securities Act; and subject to Section 3(e), the Issuer hereby consents to the use of such prospectus (including such preliminary and summary prospectus) and any amendment or supplement thereto by each such Electing Holder (subject to any
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applicable Suspension Period), in each case in the form most recently provided to such person by the Issuer, in connection with the offering and sale of the Registrable Securities covered by the prospectus (including such preliminary and summary prospectus) or any supplement or amendment thereto;
(xii) use all commercially reasonable efforts to (A) register or qualify the Registrable Securities to be included in such Shelf Registration Statement under such securities laws or blue sky laws of such jurisdictions as any Electing Holder shall reasonably request, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions during the period the Shelf Registration Statement is required to remain effective under Section 2(b) and for so long as may be necessary to enable any such Electing Holder to complete its distribution of Registrable Securities pursuant to such Shelf Registration Statement, (C) take any and all other actions as may be reasonably necessary or advisable to enable each such Electing Holder to consummate the disposition in such jurisdictions of such Registrable Securities and (D) obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect the Shelf Registration or the offering or sale in connection therewith or to enable the selling holder or holders to offer, or to consummate the disposition of, their Registrable Securities; provided, however, that none of the Issuer or the Guarantors shall be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(d)(xii), (2) consent to general service of process in any such jurisdiction or become subject to taxation in any such jurisdiction or (3) make any changes to its certificate of incorporation or by-laws or other governing documents or any agreement between it and its stockholders;
(xiii) unless any Registrable Securities shall be in book-entry only form, cooperate with the Electing Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates, if so required by any securities exchange upon which any Registrable Securities are listed, shall be printed, penned, lithographed, engraved or otherwise produced by any combination of such methods, on steel engraved borders, and which certificates shall not bear any restrictive legends;
(xiv) obtain a CUSIP number for all Securities that have been registered under the Securities Act, not later than the applicable Effective Time;
(xv) notify in writing each holder of Registrable Securities of any proposal by the Issuer to amend or waive any provision of this Agreement pursuant to Section 9(h) and of any amendment or waiver effected pursuant thereto, each of which notices shall contain the text of the amendment or waiver proposed or effected, as the case may be; and
(xvi) comply with all applicable rules and regulations of the Commission, and make generally available to its securityholders no later than eighteen months after the Effective Time of such Shelf Registration Statement an earning statement of the Issuer and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Issuer, Rule 158 thereunder).
(e) In the event that the Issuer would be required, pursuant to Section 3(d)(viii)(G), to notify the Electing Holders, the Issuer shall promptly prepare and furnish to each of the
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Electing Holders a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of Registrable Securities, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. Each Electing Holder agrees that upon receipt of any notice from the Issuer pursuant to Section 3(d)(viii)(G), such Electing Holder shall forthwith discontinue the disposition of Registrable Securities pursuant to the Shelf Registration Statement applicable to such Registrable Securities until such Electing Holder shall have received copies of such amended or supplemented prospectus, and if so directed by the Issuer, such Electing Holder shall deliver to the Issuer (at the Issuers expense) all copies, other than permanent file copies, of the prospectus covering such Registrable Securities in such Electing Holders possession at the time of receipt of such notice.
(f) In the event of a Shelf Registration, in addition to the information required to be provided by each Electing Holder in its Notice and Questionnaire, the Issuer may require such Electing Holder to furnish to the Issuer such additional information regarding such Electing Holder and such Electing Holders intended method of distribution of Registrable Securities as may be required in order to comply with the Securities Act. Each such Electing Holder agrees to notify the Issuer as promptly as practicable of any inaccuracy or change in information previously furnished by such Electing Holder to the Issuer or of the occurrence of any event in either case as a result of which any prospectus relating to such Shelf Registration contains or would contain an untrue statement of a material fact regarding such Electing Holder or such Electing Holders intended method of disposition of such Registrable Securities or omits to state any material fact regarding such Electing Holder or such Electing Holders intended method of disposition of such Registrable Securities required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly to furnish to the Issuer any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to such Electing Holder or the disposition of such Registrable Securities, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing.
(g) Until the expiration of the earlier of two years after the Closing Date and the date on which all Securities have ceased to be Registrable Securities, the Issuer will not, and will not permit any of its affiliates (as defined in Rule 144) to, resell any of the Securities that have been reacquired by any of them except pursuant to an effective registration statement, or a valid exemption from the registration requirements, under the Securities Act.
(h) As a condition to its participation in the Exchange Offer, each holder of Registrable Securities shall furnish, upon the request of the Issuer, a written representation to the Issuer (which may be contained in the letter of transmittal or agents message transmitted via The Depository Trust Companys Automated Tender Offer Procedures, in either case contemplated by the Exchange Registration Statement) to the effect that (A) it is not an affiliate of the Issuer, as defined in Rule 405 of the Securities Act, or if it is such an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (B) it is not engaged in and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Exchange Securities to be issued in the Exchange Offer, (C) it is acquiring the Exchange Securities in its ordinary course of business, (D) if it is a broker-dealer that
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holds Securities that were acquired for its own account as a result of market-making activities or other trading activities (other than Securities acquired directly from the Issuer or any of its affiliates), it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities received by it in the Exchange Offer, (E) if it is a broker-dealer, that it did not purchase the Securities to be exchanged in the Exchange Offer from the Issuer or any of its affiliates, and (F) it is not acting on behalf of any person who could not truthfully and completely make the representations contained in the foregoing subclauses (A) through (E).
4. Registration Expenses.
The Issuer agrees to bear and to pay or cause to be paid promptly all expenses incident to the Issuers performance of or compliance with this Agreement, including (a) all Commission and any FINRA registration, filing and review fees and expenses including reasonable fees and disbursements of counsel for the Eligible Holders in connection with such registration, filing and review, (b) all fees and expenses in connection with the qualification of the Registrable Securities and the Exchange Securities, as applicable, for offering and sale under the state securities and blue sky laws referred to in Section 3(d)(xii) and determination of their eligibility for investment under the laws of such jurisdictions as the Electing Holders may designate, including any reasonable fees and disbursements of counsel for the Electing Holders in connection with such qualification and determination, (c) all expenses relating to the preparation, printing, production, distribution and reproduction of each registration statement required to be filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the expenses of preparing the Securities or Exchange Securities, as applicable, for delivery and the expenses of printing or producing any selling agreements and blue sky or legal investment memoranda and all other documents in connection with the offering, sale or delivery of Securities or Exchange Securities, as applicable, to be disposed of (including certificates representing the Securities or Exchange Securities, as applicable), (d) messenger, telephone and delivery expenses relating to the offering, sale or delivery of Securities or Exchange Securities, as applicable, and the preparation of documents referred in clause (c) above, (e) fees and expenses of the Trustee under the Indenture, any agent of the Trustee and any counsel for the Trustee and of any collateral agent or custodian, (f) internal expenses (including all salaries and expenses of the Issuers officers and employees performing legal or accounting duties), (g) reasonable fees, disbursements and expenses of counsel and independent certified public accountants of the Issuer, (h) reasonable fees, disbursements and expenses of one counsel for the Electing Holders retained in connection with a Shelf Registration, as selected by the Electing Holders of at least a majority in aggregate principal amount of the Registrable Securities held by Electing Holders (which counsel shall be reasonably satisfactory to the Issuer), (i) any fees charged by securities rating services for rating the Registrable Securities or the Exchange Securities, as applicable, and (j) fees, expenses and disbursements of any other persons, including special experts, retained by the Issuer in connection with such registration (collectively, the Registration Expenses). To the extent that any Registration Expenses are incurred, assumed or paid by any holder of Registrable Securities, Securities or Exchange Securities, as applicable, the Issuer shall reimburse such person for the full amount of the Registration Expenses so incurred, assumed or paid promptly after receipt of a request therefor. Notwithstanding the foregoing, the holders of the Registrable Securities being registered shall pay all agency fees and commissions and underwriting discounts and commissions, if any, and transfer taxes, if any, attributable to the sale of such Registrable Securities and Exchange Securities, as applicable, and the fees and disbursements of any counsel or other advisors or experts retained by such holders (severally or jointly), other than the counsel and experts specifically referred to above.
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5. Representations and Warranties.
Each of the Issuer and the Guarantors, jointly and severally, represents and warrants to, and agrees with, each Purchaser and each of the holders from time to time of Registrable Securities that:
(a) Each registration statement covering Registrable Securities, Securities or Exchange Securities, as applicable, and each prospectus (including any preliminary or summary prospectus) contained therein or furnished pursuant to Section 3(c) or Section 3(d) and any further amendments or supplements to any such registration statement or prospectus, when it becomes effective or is filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act and the Trust Indenture Act and the rules and the regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and at all times subsequent to the Effective Time when a prospectus would be required to be delivered under the Securities Act, other than from (i) such time as a notice has been given to holders of Registrable Securities pursuant to Section 3(c)(iii)(G) or Section 3(d)(viii)(G) until (ii) such time as the Issuer furnishes an amended or supplemented prospectus pursuant to Section 3(c)(iv) or Section 3(e) or during any applicable Suspension Period, each such registration statement, and each prospectus (including any summary prospectus) contained therein or furnished pursuant to Section 3(c) or Section 3(d), as then amended or supplemented, will conform in all material respects to the requirements of the Securities Act and the Trust Indenture Act and the rules and the regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Issuer by a holder of Registrable Securities expressly for use therein.
(b) Any documents incorporated by reference in any prospectus referred to in Section 5(a), when they become or became effective or are or were filed with the Commission, as the case may be, will conform or conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and none of such documents will contain or contained an untrue statement of a material fact or will omit or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Issuer by a holder of Registrable Securities expressly for use therein.
(c) The compliance by the Issuer with all of the provisions of this Agreement and the consummation of the transactions herein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Issuer or any of its subsidiaries is a party or by which the Issuer or any of its subsidiaries is bound or to which any of the property or assets of the Issuer or any of its subsidiaries is subject, except as would not reasonably be expected to have a Material Adverse Effect (as defined in the Purchase Agreement), (ii) result in any violation of the provisions of the certificate of incorporation, as amended, or the by-laws or other governing documents, as applicable, of the Issuer or the Guarantors or (iii) result in any violation of
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any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Issuer or any of its subsidiaries or any of their respective properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the consummation by the Issuer and the Guarantors of the transactions contemplated by this Agreement, except (x) the registration under the Securities Act of the Registrable Securities and the Exchange Securities, as applicable, and qualification of the Indenture under the Trust Indenture Act, (y) such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or blue sky laws in connection with the offering and distribution of the Registrable Securities and the Exchange Securities, as applicable, and (z) such consents, approvals, authorizations, registrations or qualifications that have been obtained and are in full force and effect as of the date hereof.
(d) This Agreement has been duly authorized, executed and delivered by the Issuer and by the Guarantors.
6. Indemnification and Contribution.
(a) Indemnification by the Issuer and the Guarantors. The Issuer and the Guarantors, jointly and severally, will indemnify and hold harmless each of the holders of Registrable Securities included in an Exchange Registration Statement and each of the Electing Holders as holders of Registrable Securities included in a Shelf Registration Statement against any losses, claims, damages or liabilities, joint or several, to which such holder or such Electing Holder may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Exchange Registration Statement or any Shelf Registration Statement as the case may be, under which such Registrable Securities or Exchange Securities were registered under the Securities Act, or any preliminary, final or summary prospectus (including, without limitation, any issuer free writing prospectus as defined in Rule 433) contained therein or furnished by the Issuer to any such holder or any such Electing Holder, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each such holder and each such Electing Holder for any and all legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that neither the Issuer nor the Guarantors shall be liable to any such person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, or preliminary, final or summary prospectus (including, without limitation, any issuer free writing prospectus as defined in Rule 433), or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Issuer by such person expressly for use therein.
(b) Indemnification by the Electing Holders. The Issuer may require, as a condition to including any Registrable Securities in any Shelf Registration Statement filed pursuant to Section 2(b), that the Issuer shall have received an undertaking reasonably satisfactory to it from each Electing Holder of Registrable Securities included in such Shelf Registration Statement, severally and not jointly, to (i) indemnify and hold harmless the Issuer, the Guarantors and all other Electing Holders of Registrable Securities included in such Shelf Registration Statement, against any losses, claims, damages or liabilities to which the Issuer, the Guarantors or such other Electing Holders may become subject, under the
16
Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary, final or summary prospectus (including, without limitation, any issuer free writing prospectus as defined in Rule 433) contained therein or furnished by the Issuer to any Electing Holder, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Issuer by such Electing Holder expressly for use therein, and (ii) reimburse the Issuer and the Guarantors for any legal or other expenses reasonably incurred by the Issuer and the Guarantors in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that no such Electing Holder shall be required to undertake liability to any person under this Section 6(b) for any amounts in excess of the dollar amount of the proceeds to be received by such Electing Holder from the sale of such Electing Holders Registrable Securities pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party under subsection (a) or (b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 6, notify such indemnifying party in writing of the commencement of such action; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under the indemnification provisions of or contemplated by Section 6(a) or Section 6(b). In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of any indemnified party.
(d) Contribution. If for any reason the indemnification provisions contemplated by Section 6(a) or Section 6(b) are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection
17
with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 6(d) were determined by pro rata allocation (even if the holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 6(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6(d), no Electing Holder shall be required to contribute any amount in excess of the amount by which the dollar amount of the proceeds received by such holder from the sale of any Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) exceeds the amount of any damages which such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The holders obligations in this Section 6(d) to contribute shall be several in proportion to the principal amount of Registrable Securities registered by them and not joint.
(e) The obligations of the Issuer and the Guarantors under this Section 6 shall be in addition to any liability which the Issuer or the Guarantors may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each holder, each Electing Holder, and each person, if any, who controls any of the foregoing within the meaning of the Securities Act; and the obligations of the holders and the Electing Holders contemplated by this Section 6 shall be in addition to any liability which the respective holder or Electing Holder may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Issuer or any of the Guarantors (including any person who, with his consent, is named in any registration statement as about to become a director of the Issuer or the any of the Guarantors) and to each person, if any, who controls the Issuer within the meaning of the Securities Act, as well as to each officer and director of the other holders and to each person, if any, who controls such other holders within the meaning of the Securities Act.
7. Underwritten Offerings.
Each holder of Registrable Securities hereby agrees with the Issuer and each other such holder that no holder of Registrable Securities may participate in any underwritten offering hereunder unless (a) the Issuer gives its prior written consent to such underwritten offering, (b) the managing underwriter or underwriters thereof shall be designated by Electing Holders holding at least a majority in aggregate principal amount of the Registrable Securities to be included in such offering, provided that such designated managing underwriter or underwriters is or are reasonably acceptable to the Issuer, (c) each holder of Registrable Securities participating in such underwritten offering agrees to sell such holders Registrable Securities on the basis provided in any underwriting arrangements approved by the persons entitled selecting the managing underwriter or underwriters hereunder and (d) each holder of Registrable
18
Securities participating in such underwritten offering completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. The Issuer hereby agrees with each holder of Registrable Securities that, to the extent it consents to an underwritten offering hereunder, it will negotiate in good faith and execute all indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, including using all commercially reasonable efforts to procure customary legal opinions and auditor comfort letters.
8. Rule 144.
(a) Facilitation of Sales Pursuant to Rule 144. The Issuer covenants to the holders of Registrable Securities that to the extent it shall be required to do so under the Exchange Act, the Issuer shall timely file the reports required to be filed by it under the Exchange Act or the Securities Act (including the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144), and shall take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144. Upon the request of any holder of Registrable Securities in connection with that holders sale pursuant to Rule 144, the Issuer shall deliver to such holder a written statement as to whether it has complied with such requirements.
(b) Availability of Rule 144 Not Excuse for Obligations under Section 2. The fact that holders of Registrable Securities may become eligible to sell such Registrable Securities pursuant to Rule 144 shall not (1) cause such Securities to cease to be Registrable Securities or (2) excuse the Issuers and the Guarantors obligations set forth in Section 2 of this Agreement, including without limitation the obligations in respect of an Exchange Offer, Shelf Registration and Special Interest.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Issuer represents, warrants, covenants and agrees that it has not granted, and shall not grant, registration rights with respect to Registrable Securities, Exchange Securities or Securities, as applicable, or any other securities which would be inconsistent with the terms contained in this Agreement.
(b) Specific Performance. Except with respect to a Registration Default, the parties hereto acknowledge that there would be no adequate remedy at law if the Issuer fails to perform any of its obligations hereunder and that the Purchasers and the holders from time to time of the Registrable Securities may be irreparably harmed by any such failure, and accordingly agree that the Purchasers and such holders, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of the Issuer under this Agreement in accordance with the terms and conditions of this Agreement, in any court of the United States or any State thereof having jurisdiction. Time shall be of the essence in this Agreement.
(c) Notices. All notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, if delivered personally, by facsimile or by courier, or three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested) as follows: If to the Issuer, to it at Tronox Limited, One Stamford Plaza, 263 Tresser Boulevard, Suite 1100, Stamford, Connecticut 06901, Attention Michael Foster and facsimile
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no. (203) 705-3703, with a copy to Kirkland & Ellis LLP, 601 Lexington Avenue New York, NY 10022, facsimile no. 212-446-4900, Attention: Christian Nagler and if to a holder, to the address of such holder set forth in the security register or other records of the Issuer, or to such other address as the Issuer or any such holder may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto, the holders from time to time of the Registrable Securities and the respective successors and assigns of the foregoing. In the event that any transferee of any holder of Registrable Securities shall acquire Registrable Securities, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any further writing or action of any kind, be deemed a beneficiary hereof for all purposes and such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such transferee shall be entitled to receive the benefits of, and be conclusively deemed to have agreed to be bound by all of the applicable terms and provisions of this Agreement. If the Issuer shall so request, any such successor, assign or transferee shall agree in writing to acquire and hold the Registrable Securities subject to all of the applicable terms hereof.
(e) Survival. The respective indemnities, agreements, representations, warranties and each other provision set forth in this Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any holder of Registrable Securities, any director, officer or partner of such holder, or any controlling person of any of the foregoing, and shall survive delivery of and payment for the Registrable Securities pursuant to the Purchase Agreement and the transfer and registration of Registrable Securities by such holder and the consummation of an Exchange Offer.
(f) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to conflicts of law principles to the extent that the Law of another jurisdiction would be applied thereby.
(g) Headings. The descriptive headings of the several Sections and paragraphs of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement.
(h) Entire Agreement; Amendments. This Agreement and the other writings referred to herein (including the Indenture, the Purchase Agreement and the form of Securities) or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by the Issuer and the holders of at least a majority in aggregate principal amount of the Registrable Securities at the time outstanding. Each holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any amendment or waiver effected pursuant to this Section 9(h), whether or not any notice, writing or marking indicating such amendment or waiver appears on such Registrable Securities or is delivered to such holder.
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(i) Inspection. For so long as this Agreement shall be in effect, this Agreement and a complete list of the names and addresses of all the record holders of Registrable Securities shall be made available for inspection and copying on any Business Day by any holder of Registrable Securities for proper purposes only (which shall include any purpose related to the rights of the holders of Registrable Securities under the Securities, the Indenture and this Agreement) at the offices of the Issuer at the address thereof set forth in Section 9(c) and at the office of the Trustee under the Indenture.
(j) Counterparts. This Agreement may be executed by the parties in counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument.
(k) Severability. If any provision of this Agreement, or the application thereof in any circumstance, is held to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of such provision in every other respect and of the remaining provisions contained in this Agreement shall not be affected or impaired thereby.
(l) Agent for Service; Submission to Jurisdiction. The Issuer and the Guarantors agree that any suit or proceeding arising in respect of this agreement or our engagement will be tried exclusively in the U.S. District Court for the Southern District of New York or, if that court does not have subject matter jurisdiction, in any state court located in The City and County of New York and the Issuer and the Guarantors agree to submit to the jurisdiction of, and to venue in, such courts. The Issuer and the Guarantors irrevocably waive the defense of an inconvenient forum or objections to personal jurisdiction with respect to the maintenance of such legal suit, action or proceeding. To the extent permitted by law, the Issuer and the Guarantors hereby waive any objections to the enforcement by any competent court in their respective jurisdictions of organization of any judgment validly obtained in any such court in New York on the basis of any such legal suit, action or proceeding. Each of the Guarantors organized outside of the United States (the Foreign Guarantors) have appointed the Issuer (the Authorized Agent) as their authorized agent upon whom process may be served in any such legal suit, action or proceeding. Such appointment shall be irrevocable. The Authorized Agent has agreed to act as said agent for service of process and the Foreign Guarantors agree to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. The Foreign Guarantors further agree that service of process upon the Authorized Agent and written notice of said service to the Foreign Guarantors shall be deemed in every respect effective service of process upon the Foreign Guarantors in any such legal suit, action or proceeding. Nothing herein shall affect the right of any Purchaser or any person controlling any Purchaser to serve process in any other manner permitted by law. The provisions of this Section 9(l) are intended to be effective upon the execution of this Agreement without any further action by the Issuer or the Guarantors and the introduction of a true copy of this Agreement into evidence shall be conclusive and final evidence as to such matters.
(m) Waiver of Immunity. To the extent the Issuer or any of the Guarantors or any of their respective properties, assets or revenues may have or may hereafter become entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the competent jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution of judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any
21
competent jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement or any of the transactions contemplated hereby, the Issuer and the Guarantors hereby irrevocably and unconditionally waive, and agree not to plead or claim, any such immunity and consent to such relief and enforcement.
(n) Currency. Any payment on account of an amount that is payable to the Purchasers in a particular currency (the Required Currency) that is paid to or for the account of the Purchasers in lawful currency of any other jurisdiction (the Other Currency), whether as a result of any judgment or order or the enforcement thereof or the liquidation of the Issuer or any Guarantor or for any other reason shall constitute a discharge of the obligation of such obligor only to the extent of the amount of the Required Currency which the recipient could purchase in the New York or London foreign exchange markets with the amount of the Other Currency in accordance with normal banking procedures at the rate of exchange prevailing on the first day (other than a Saturday or Sunday) on which banks in New York or London are generally open for business following receipt of the payment first referred to above. If the amount of the Required Currency that could be so purchased (net of all premiums and costs of exchange payable in connection with the conversion) is less than the amount of the Required Currency originally due to the recipient, then the Issuer and the Guarantors shall jointly and severally indemnify and hold harmless the recipient from and against all loss or damage arising out of or as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations of the Issuer and the Guarantors, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any person owed such obligation from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due hereunder or any judgment or order.
If the foregoing is in accordance with your understanding, please sign and return to us one for the Issuer, each of the Guarantors and each of the Representatives plus one for each counsel counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Purchasers, this letter and such acceptance hereof shall constitute a binding agreement between each of the Purchasers, the Guarantors and the Issuer. It is understood that your acceptance of this letter on behalf of each of the Purchasers is pursuant to the authority set forth in a form of Agreement among Purchasers, the form of which shall be submitted to the Issuer for examination upon request, but without warranty on your part as to the authority of the signers thereof.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
Tronox Finance LLC | ||
By: | /s/ Michael J. Foster | |
Name: Michael J. Foster | ||
Title: Manager |
23
U.S. GUARANTORS: | ||
SOUTHWESTERN REFINING COMPANY, INC. TRIPLE S REFINING CORPORATION TRONOX HOLDINGS, INC. TRONOX INCORPORATED TRONOX LLC | ||
By: | /s/ Michael J. Foster | |
Name: | Michael J. Foster | |
Title: | Vice President | |
TRONOX US HOLDINGS INC. | ||
By: | /s/ Michael J. Foster | |
Name: | Michael J. Foster | |
Title: | President |
24
AUSTRALIAN GUARANTORS: | ||||||
SIGNED, SEALED AND DELIVERED by Michael J. Foster as attorney for TRONOX AUSTRALIA HOLDINGS PTY LIMITED TRONOX AUSTRALIA PIGMENTS HOLDINGS PTY LIMITED TRONOX GLOBAL HOLDINGS PTY LIMITED TRONOX LIMITED TRONOX PIGMENTS AUSTRALIA HOLDINGS PTY LIMITED TRONOX PIGMENTS AUSTRALIA PTY LIMITED TRONOX PIGMENTS WESTERN AUSTRALIA PTY LIMITED TRONOX SANDS HOLDINGS PTY LIMITED under power of attorney dated
16 August 2012
in the presence of:
/s/ Catherine R. Liebelt Signature of witness
Catherine R. Liebelt Name of witness (block letters)
|
) ) ) ) ) ) ) ) ) ) ) ) |
/s/ Michael J. Foster | ||||
By executing this agreement the attorney states that the attorney has received no notice of revocation of the power of attorney |
25
SIGNED, SEALED AND DELIVERED | ) | |||
by | ) | |||
Michael J. Foster | ) | |||
as attorney for | ) | |||
TRONOX WESTERN AUSTRALIA PTY LTD under power of attorney dated |
) ) |
|||
16 August 2012 | ) | |||
in the presence of: | ) | |||
) | ||||
) | ||||
/s/ Catherine R. Liebelt | ) | /s/ Michael J. Foster | ||
Signature of witness | ) | By executing this agreement the attorney states that the attorney has received no notice of revocation of the power of attorney | ||
) | ||||
Catherine R. Liebelt | ) | |||
Name of witness (block letters) |
26
SIGNED, SEALED AND DELIVERED | ) | |||
by | ) | |||
Michael J. Foster | ) | |||
as attorney for | ) | |||
TRONOX WORLDWIDE PTY | ) | |||
LIMITED (F/K/A TRONOX | ) | |||
WORLDWIDE LLC) | ) | |||
under power of attorney dated | ) | |||
16 August 2012 | ) | |||
in the presence of: | ) | |||
) | /s/ Michael J. Foster | |||
) | By executing this agreement the attorney states that the attorney has received no notice of revocation of the power of attorney | |||
/s/ Catherine R. Liebelt | ) | |||
Signature of witness | ) | |||
Catherine R. Liebelt | ||||
Name of witness (block letters) |
27
SIGNED, SEALED AND DELIVERED by Michael J. Foster as attorney for
TRONOX HOLDINGS (AUSTRALIA) PTY LIMITED TRONOX INVESTMENTS (AUSTRALIA) PTY LTD TRONOX AUSTRALIA SANDS PTY LTD TICOR RESOURCES PTY LTD TICOR FINANCE (A.C.T.) PTY LTD TIO2 CORPORATION PTY LTD YALGOO MINERALS PTY. LTD. TIFIC PTY. LTD. SYNTHETIC RUTILE HOLDINGS PTY LTD SENBAR HOLDINGS PTY LTD PIGMENT HOLDINGS PTY LTD TRONOX MINERAL SALES PTY LTD TRONOX MANAGEMENT PTY LTD under power of attorney dated
16 August 2012
in the presence of:
/s/ Catherine R. Liebelt Signature of witness
Catherine R. Liebelt Name of witness (block letters) |
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) |
/s/ Michael J. Foster By executing this agreement the attorney states that the attorney has received no notice of revocation of the power of attorney |
28
U.K. GUARANTORS: | ||
TRONOX INTERNATIONAL FINANCE LLP | ||
By: | /s/ Michael J. Foster | |
Name: | Michael J. Foster | |
Title: | Authorized Representative |
29
BAHAMAS GUARANTORS: | ||||
TRONOX PIGMENTS LTD | ||||
By: | /s/ Michael J. Foster | |||
Name: | Michael J. Foster | |||
Title: | Vice President |
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Accepted as of the date hereof:
Goldman, Sachs & Co. | ||
By: | /s/ Michael Hickey | |
Name: Michael Hickey | ||
Title: Vice President | ||
Credit Suisse Securities (USA) LLC | ||
By: | /s/ Spyros Svoronos | |
Name: Spyros Svoronos | ||
Title: Managing Director | ||
UBS Securities LLC | ||
By: | /s/ Aashish Dhahad | |
Name: Aashish Dhahad | ||
Title: Director | ||
By: | /s/ Ryan Velsch | |
Name: Ryan Velsch | ||
Title: Executive Director |
On behalf of themselves and each of the Purchasers
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Schedule I
Subsidiary Guarantors
1. | Tronox Incorporated |
2. | Triple S Refining Corporation |
3. | Southwestern Refining Company, Inc. |
4. | Tronox LLC |
5. | Tronox Holdings, Inc. |
6. | Tronox US Holdings Inc. |
7. | Tronox Pigments Ltd |
8. | Tronox Australia Pigments Holdings Pty Ltd |
9. | Tronox Pigments Australia Holdings Pty Ltd |
10. | Tronox Pigments Australia Pty Ltd |
11. | Tronox Pigments Western Australia Pty Ltd |
12. | Tronox Worldwide Pty Limited |
13. | Tronox Australia Holdings Pty Ltd |
14. | Tronox Global Holdings Pty Ltd |
15. | Tronox Sands Holdings Pty Ltd |
16. | Tronox Western Australia Pty Ltd |
17. | Tronox Management Pty Ltd |
18. | Tronox Investments (Australia) Pty Ltd |
19. | Tronox Holdings (Australia) Pty Ltd |
20. | Tronox Australia Sands Pty Ltd |
21. | Ticor Resources Pty Ltd |
22. | Ticor Finance (A.C.T.) Pty Ltd |
23. | TiO2 Corporation Pty Ltd |
24. | Tific Pty Ltd |
25. | Yalgoo Minerals Pty Ltd |
26. | Tronox Mineral Sales Pty Ltd |
27. | Senbar Holdings Pty Ltd |
28. | Synthetic Rutile Holdings Pty Ltd |
29. | Pigment Holdings Pty Ltd |
30. | Tronox International Finance LLP |
A-1
Exhibit A
Tronox Finance LLC
INSTRUCTION TO DTC PARTICIPANTS
(Date of Mailing)
URGENTIMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE] *
The Depository Trust Company (DTC) has identified you as a DTC Participant through which beneficial interests in the Tronox Finance LLC (the Issuer) 6.375% Senior Notes due 2020 (the Securities) are held.
The Issuer is in the process of registering the Securities under the Securities Act of 1933 for resale by the beneficial owners thereof. In order to have their Securities included in the registration statement, beneficial owners must complete and return the enclosed Notice of Registration Statement and Selling Securityholder Questionnaire.
It is important that beneficial owners of the Securities receive a copy of the enclosed materials as soon as possible as their rights to have the Securities included in the registration statement depend upon their returning the Notice and Questionnaire by [Deadline For Response]. Please forward a copy of the enclosed documents to each beneficial owner that holds interests in the Securities through you. If you require more copies of the enclosed materials or have any questions pertaining to this matter, please contact Tronox Finance LLC, at One Stamford Plaza, 263 Tresser Boulevard, Suite 1100, Stamford, Connecticut 06901.
* | Not less than 28 calendar days from date of mailing. |
A-1
Tronox Finance LLC
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Reference is hereby made to the Exchange and Registration Rights Agreement (the Exchange and Registration Rights Agreement) between Tronox Finance LLC (the Issuer) and the Purchasers named therein. Pursuant to the Exchange and Registration Rights Agreement, the Issuer has filed or will file with the United States Securities and Exchange Commission (the Commission) a registration statement on Form [ ] (the Shelf Registration Statement) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the Securities Act), of the Issuers 6.375% Senior Notes due 2020 (the Securities). A copy of the Exchange and Registration Rights Agreement has been filed as an exhibit to the Shelf Registration Statement and can be obtained from the Commissions website at www.sec.gov. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Exchange and Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined below) is entitled to have the Registrable Securities beneficially owned by it included in the Shelf Registration Statement. In order to have Registrable Securities included in the Shelf Registration Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire (Notice and Questionnaire) must be completed, executed and delivered to the Issuers counsel at the address set forth herein for receipt ON OR BEFORE [Deadline for Response]. Beneficial owners of Registrable Securities who do not properly complete, execute and return this Notice and Questionnaire by such date (i) will not be named as selling securityholders in the Shelf Registration Statement and (ii) may not use the Prospectus forming a part thereof for resales of Registrable Securities.
Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and related Prospectus.
The term Registrable Securities is defined in the Exchange and Registration Rights Agreement.
A-2
ELECTION
The undersigned holder (the Selling Securityholder) of Registrable Securities hereby elects to include in the Shelf Registration Statement the Registrable Securities beneficially owned by it and listed below in Item (3). The undersigned, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire and the Exchange and Registration Rights Agreement, including, without limitation, Section 6 of the Exchange and Registration Rights Agreement, as if the undersigned Selling Securityholder were an original party thereto.
Pursuant to the Exchange and Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Issuer, its officers who sign any Shelf Registration Statement, and each person, if any, who controls the Issuer within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act of 1934, as amended (the Exchange Act), against certain loses arising out of an untrue statement, or the alleged untrue statement, of a material fact in the Shelf Registration Statement or the related prospectus or the omission, or alleged omission, to state a material fact required to be stated in such Shelf Registration Statement or the related prospectus, but only to the extent such untrue statement or omission, or alleged untrue statement or omission, was made in reliance on and in conformity with the information provided in this Notice and Questionnaire.
Upon any sale of Registrable Securities pursuant to the Shelf Registration Statement, the Selling Securityholder will be required to deliver to the Issuer and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and as Exhibit B to the Exchange and Registration Rights Agreement.
The Selling Securityholder hereby provides the following information to the Issuer and represents and warrants that such information is accurate and complete:
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QUESTIONNAIRE
(1) (a) | Full legal name of Selling Securityholder: |
(b) | Full legal name of registered Holder (if not the same as in (a) above) of Registrable Securities listed in Item (3) below: |
(c) | Full legal name of DTC Participant (if applicable and if not the same as (b) above) through which Registrable Securities listed in Item (3) below are held: |
(2) | Address for notices to Selling Securityholder: |
Telephone: | ||||||
Fax: | ||||||
Contact Person: | ||||||
E-mail for Contact Person: |
(3) | Beneficial Ownership of Securities: |
Except as set forth below in this Item (3), the undersigned does not beneficially own any Securities.
(a) Principal amount of Registrable Securities beneficially owned: |
CUSIP No(s). of such Registrable Securities: |
(b) Principal amount of Securities other than Registrable Securities beneficially owned: |
CUSIP No(s). of such other Securities: |
(c) Principal amount of Registrable Securities that the undersigned wishes to be included in the Shelf Registration |
Statement: |
CUSIP No(s). of such Registrable Securities to be included in the Shelf Registration Statement: |
(4) | Beneficial Ownership of Other Securities of the Issuer: |
Except as set forth below in this Item (4), the undersigned Selling Securityholder is not the beneficial or registered owner of any other securities of the Issuer, other than the Securities listed above in Item (3).
State any exceptions here:
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(5) | Individuals who exercise dispositive powers with respect to the Securities: |
If the Selling Securityholder is not an entity that is required to file reports with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (a Reporting Company), then the Selling Securityholder must disclose the name of the natural person(s) who exercise sole or shared dispositive powers with respect to the Securities. Selling Securityholders should disclose the beneficial holders, not nominee holders or other such others of record. In addition, the Commission has provided guidance that Rule 13d-3 of the Securities Exchange Act of 1934 should be used by analogy when determining the person or persons sharing voting and/or dispositive powers with respect to the Securities.
(a) | Is the holder a Reporting Company? |
Yes | No |
If No, please answer Item (5)(b).
(b) | List below the individual or individuals who exercise dispositive powers with respect to the Securities: |
Please note that the names of the persons listed in (b) above will be included in the Shelf Registration Statement and related Prospectus.
(6) | Relationships with the Issuer: |
Except as set forth below, neither the Selling Securityholder nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Issuer (or its predecessors or affiliates) during the past three years.
State any exceptions here:
(7) | Plan of Distribution: |
Except as set forth below, the undersigned Selling Securityholder intends to distribute the Registrable Securities listed above in Item (3) only as follows (if at all): Such Registrable Securities may be sold from time to time directly by the undersigned Selling Securityholder. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions) (i) on any national securities exchange or quotation service on which the Registered Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market, or (iv) through the writing of options. In connection with sales of the
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Registrable Securities or otherwise, the Selling Securityholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities in the course of hedging the positions they assume. The Selling Securityholder may also sell Registrable Securities short and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities.
State any exceptions here:
Note: In no event may such method(s) of distribution take the form of an underwritten offering of Registrable Securities without the prior written agreement of the Issuer.
(8) | Broker-Dealers: |
The Commission requires that all Selling Securityholders that are registered broker-dealers or affiliates of registered broker-dealers be so identified in the Shelf Registration Statement. In addition, the Commission requires that all Selling Securityholders that are registered broker-dealers be named as underwriters in the Shelf Registration Statement and related Prospectus, even if they did not receive the Registrable Securities as compensation for underwriting activities.
(a) | State whether the undersigned Selling Securityholder is a registered broker-dealer: |
Yes No
(b) | If the answer to (a) is Yes, you must answer (i) and (ii) below, and (iii) below if applicable. Your answers to (i) and (ii) below, and (iii) below if applicable, will be included in the Shelf Registration Statement and related Prospectus. |
(i) | Were the Securities acquired as compensation for underwriting activities? |
Yes No
If you answered Yes, please provide a brief description of the transaction(s) in which the Securities were acquired as compensation:
(ii) | Were the Securities acquired for investment purposes? |
Yes No
(iii) | If you answered No to both (i) and (ii), please explain the Selling Securityholders reason for acquiring the Securities: |
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(c) | State whether the undersigned Selling Securityholder is an affiliate of a registered broker-dealer and, if so, list the name(s) of the broker-dealer affiliate(s): |
Yes No
(d) | If you answered Yes to question (c) above: |
(i) | Did the undersigned Selling Securityholder purchase Registrable Securities in the ordinary course of business? |
Yes No
If the answer is No to question (d)(i), provide a brief explanation of the circumstances in which the Selling Securityholder acquired the Registrable Securities:
(ii) | At the time of the purchase of the Registrable Securities, did the undersigned Selling Securityholder have any agreements, understandings or arrangements, directly or indirectly, with any person to dispose of or distribute the Registrable Securities? |
Yes No
If the answer is Yes to question (d)(ii), provide a brief explanation of such agreements, understandings or arrangements:
If the answer is No to Item (8)(d)(i) or Yes to Item (8)(d)(ii), you will be named as an underwriter in the Shelf Registration Statement and the related Prospectus.
(9) | Hedging and short sales: |
(a) | State whether the undersigned Selling Securityholder has or will enter into hedging transactions with respect to the Registrable Securities: |
Yes No
If Yes, provide below a complete description of the hedging transactions into which the undersigned Selling Securityholder has entered or will enter and the purpose of such hedging transactions, including the extent to which such hedging transactions remain in place:
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(b) | Set forth below is Interpretation A.65 of the Commissions July 1997 Manual of Publicly Available Interpretations regarding short selling: |
An issuer filed a Form S-3 registration statement for a secondary offering of common stock which is not yet effective. One of the selling shareholders wanted to do a short sale of common stock against the box and cover the short sale with registered shares after the effective date. The issuer was advised that the short sale could not be made before the registration statement becomes effective, because the shares underlying the short sale are deemed to be sold at the time such sale is made. There would, therefore, be a violation of Section 5 if the shares were effectively sold prior to the effective date.
By returning this Notice and Questionnaire, the undersigned Selling Securityholder will be deemed to be aware of the foregoing interpretation.
* * * * *
By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act, particularly Regulation M (or any successor rule or regulation).
The Selling Securityholder hereby acknowledges its obligations under the Exchange and Registration Rights Agreement to indemnify and hold harmless the Issuer and certain other persons as set forth in the Exchange and Registration Rights Agreement.
In the event that the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item (3) above after the date on which such information is provided to the Issuer, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Exchange and Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items (1) through (9) above and the inclusion of such information in the Shelf Registration Statement and related Prospectus. The Selling Securityholder understands that such information will be relied upon by the Issuer in connection with the preparation of the Shelf Registration Statement and related Prospectus.
In accordance with the Selling Securityholders obligation under Section 3(d) of the Exchange and Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the Selling Securityholder agrees to promptly notify the Issuer of any inaccuracies or changes in the information provided herein which may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains in effect and to provide such additional information that the Issuer may reasonably request regarding such Selling Securityholder and the intended method of distribution of Registrable Securities in order to comply with the Securities Act. Except as otherwise provided in the Exchange and Registration Rights Agreement, all notices hereunder and pursuant to the Exchange and Registration Rights Agreement shall be made in writing, by hand-delivery, first-class mail, or air courier guaranteeing overnight delivery as follows:
(i) | To the Issuer: |
Tronox Limited
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One Stamford Plaza,
263 Tresser Boulevard, Suite 1100,
Stamford, Connecticut 06901,
Attention: Michael Foster
(ii) | With a copy to: |
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
Attention: Christian Nagler
Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Issuers counsel, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Issuer and the Selling Securityholder (with respect to the Registrable Securities beneficially owned by such Selling Securityholder and listed in Item (3) above. This Notice and Questionnaire shall be governed in all respects by the laws of the State of New York.
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IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
Dated:
Selling Securityholder (Print/type full legal name of beneficial owner of Registrable Securities) | ||
By: | ||
Name: | ||
Title: |
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANYS COUNSEL AT:
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
Attention: Christian Nagler
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Exhibit B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
Wilmington Trust, National Association
Tronox Finance LLC
c/o Wilmington Trust, National Association
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: Trust Officer
Re: | Tronox Finance LLC (the Issuer) |
6.375% Senior Notes due 2020
Dear Sirs:
Please be advised that has transferred $ aggregate principal amount of the above-referenced Notes pursuant to an effective Registration Statement on Form [ ] (File No. 333- ) filed by the Issuer.
We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied and that the above-named beneficial owner of the Notes is named as a Selling Holder in the Prospectus dated [date] or in supplements thereto, and that the aggregate principal amount of the Notes transferred are the Notes listed in such Prospectus opposite such owners name.
Dated:
Very truly yours, | ||
(Name) | ||
By: | ||
(Authorized Signature) |
Exhibit 4.3
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF AUGUST 29, 2012
to
INDENTURE
dated as of August 20, 2012
among
TRONOX FINANCE LLC,
as Issuer
TRONOX LIMITED
as Parent
THE GUARANTORS NAMED THEREIN
as Guarantors
and
WILMINGTON TRUST, NATIONAL ASSOCIATION
as Trustee
THIS FIRST SUPPLEMENTAL INDENTURE (this Supplemental Indenture), dated as of August 29, 2012 Tronox Limited, a public limited company organized under the laws of Western Australia, Australia (the Parent), Tronox Finance LLC, a Delaware limited liability company (the Issuer), the Parent, the Guarantors (as defined in the Indenture referred to herein) and Wilmington Trust, National Association, as trustee under the Indenture referred to below (the Trustee).
W I T N E S S E T H
WHEREAS, the Issuer, the Parent and the Guarantors have heretofore executed and delivered to the Trustee an indenture (the Indenture), dated as of August 20, 2012 providing for the issuance of 6.375% Senior Notes due 2020 (the Notes);
WHEREAS, the Section 9.01(1) of the Indenture provides that the Indenture can be amended without the consent of Holders to cure any ambiguity, omission, mistake, defect or inconsistency; and
WHEREAS, pursuant to Sections 9.01 and 9.06 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture, without the consent of Holders.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, Parent, the Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2. AMENDMENT TO SECTION. The definition of Permitted Refinancing Indebtedness is hereby amended by the addition of the following prior to the period at the end of paragraph (5): or (b) the Issuer or a Guarantor.
3. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
4. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
2
5. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.
6. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Parent, Guarantors and the Issuer.
3
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.
TRONOX FINANCE LLC | ||
By: |
/s/ Michael J Foster | |
Name: Michael J Foster | ||
Title: Manager |
Signature Page to First Supplemental Indenture
U.S. GUARANTORS: | ||
SOUTHWESTERN REFINING COMPANY, INC. TRIPLE S REFINING CORPORATION TRONOX HOLDINGS, INC. TRONOX INCORPORATED TRONOX LLC | ||
By: |
/s/ Michael J. Foster | |
Name: |
Michael J. Foster | |
Title: |
Vice President | |
TRONOX US HOLDINGS INC. | ||
By: |
/s/ Michael J. Foster | |
Name: |
Michael J. Foster | |
Title: |
President |
Signature Page to Reserve Certificate
AUSTRALIAN GUARANTORS: | ||||
SIGNED, SEALED AND DELIVERED by Michael J. Foster as attorney for TRONOX AUSTRALIA HOLDINGS PTY LIMITED TRONOX AUSTRALIA PIGMENTS HOLDINGS PTY LIMITED TRONOX GLOBAL HOLDINGS PTY LIMITED TRONOX LIMITED TRONOX PIGMENTS AUSTRALIA HOLDINGS PTY LIMITED TRONOX PIGMENTS AUSTRALIA PTY LIMITED TRONOX PIGMENTS WESTERN AUSTRALIA PTY LIMITED TRONOX SANDS HOLDINGS PTY LIMITED under power of attorney dated
in the presence of: |
) ) ) ) ) ) ) ) ) ) ) ) |
|||
/s/ Catherine R. Liebelt |
||||
Signature of witness |
||||
Catherine R. Liebelt |
/s/ Michael J. Foster | |||
Name of witness (block letters) |
By executing this agreement the attorney states that the attorney has received no notice of revocation of the power of attorney |
Signature Page to First Supplemental Indenture
SIGNED, SEALED AND DELIVERED by Michael J. Foster as attorney for TRONOX WESTERN AUSTRALIA PTY LTD
in the presence of: |
) ) ) ) ) ) ) ) ) ) ) ) ) ) |
|||
/s/ Catherine R. Liebelt |
/s/ Michael J. Foster | |||
Signature of witness |
By executing this agreement the attorney states that the attorney has received no notice of revocation of the power of attorney | |||
Catherine R. Liebelt |
||||
Name of witness (block letters) |
Signature Page to First Supplemental Indenture
SIGNED, SEALED AND DELIVERED by Michael J. Foster as attorney for TRONOX WORLDWIDE PTY under power of attorney dated
in the presence of: |
) ) ) ) ) ) ) ) ) ) ) ) ) ) |
|||
/s/ Michael J. Foster | ||||
By executing this agreement the attorney states that the attorney has received no notice of revocation of the power of attorney | ||||
/s/ Catherine R. Liebelt |
||||
Signature of witness |
||||
Catherine R. Liebelt |
||||
Name of witness (block letters) |
Signature Page to First Supplemental Indenture
SIGNED, SEALED AND DELIVERED by Michael J. Foster as attorney for
TRONOX HOLDINGS (AUSTRALIA) TRONOX INVESTMENTS TRONOX AUSTRALIA SANDS PTY LTD TICOR RESOURCES PTY LTD TICOR FINANCE (A.C.T.) PTY LTD TIO2 CORPORATION PTY LTD YALGOO MINERALS PTY. LTD. TIFIC PTY. LTD. SYNTHETIC RUTILE HOLDINGS PTY SENBAR HOLDINGS PTY LTD PIGMENT HOLDINGS PTY LTD TRONOX MINERAL SALES PTY LTD TRONOX MANAGEMENT PTY LTD under power of attorney dated
in the presence of: |
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) |
|||
/s/ Catherine R. Liebelt |
/s/ Michael J. Foster | |||
Signature of witness |
By executing this agreement the attorney states that the attorney has received no | |||
Catherine R. Liebelt |
notice of revocation of the power of | |||
Name of witness (block letters) |
attorney |
Signature Page to First Supplemental Indenture
U.K. GUARANTORS: | ||
TRONOX INTERNATIONAL FINANCE LLP | ||
By: |
/s/ Michael J. Foster | |
Name: |
Michael J. Foster | |
Title: |
Authorized Representative |
Signature Page to First Supplemental Indenture
BAHAMAS GUARANTORS: | ||
TRONOX PIGMENTS LTD | ||
By: |
/s/ Michael J. Foster | |
Name: |
Michael J. Foster | |
Title: |
Vice President |
Signature Page to First Supplemental Indenture
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee | ||
By: |
/s/ Jane Y. Schweiger | |
Name: |
Jane Y. Schweiger | |
Title: |
Vice President |
Signature Page to First Supplemental Indenture
EXHIBIT 31.1
I, Thomas Casey, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 of Tronox Limited (the Registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4. The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5. The Registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting.
Date: November 14, 2012
/s/ Thomas Casey |
Thomas Casey |
Chief Executive Officer |
EXHIBIT 31.2
I, Daniel D. Greenwell, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 of Tronox Limited (the Registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4. The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5. The Registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting.
Date: November 14, 2012
/s/ Daniel D. Greenwell |
Daniel D. Greenwell |
Chief Financial Officer |
EXHIBIT 32.1
November 14, 2012
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Pursuant to 18 U.S.C. § 1350, the undersigned officer of Tronox Limited (the Registrant) hereby certifies that the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (the Report) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
/s/ Thomas Casey |
Thomas Casey |
Chief Executive Officer |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.
EXHIBIT 32.2
November 14, 2012
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Pursuant to 18 U.S.C. § 1350, the undersigned officer of Tronox Limited (the Registrant) hereby certifies that the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (the Report) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
/s/ Daniel D. Greenwell |
Daniel D. Greenwell |
Chief Financial Officer |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.
Intangible Assets (Tables)
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Sep. 30, 2012
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Gross Cost and Accumulated Amortization of Intangible Assets | The gross cost and accumulated amortization of intangible assets, by major intangible asset category, were as follows:
|
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Estimated Future Amortization Expense Related to Intangible Assets | Estimated future amortization expense related to intangible assets is as follows:
|
Shareholders' Equity (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
|
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Changes in Common Stock Shares Outstanding and Treasury Shares | The changes in ordinary shares and common stock outstanding and treasury shares for the nine months ended September 30, 2012 were as follows:
|
Accrued Liabilities - Accrued Liabilities (Detail) (Successor [Member], USD $)
In Millions, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
||||||
---|---|---|---|---|---|---|---|---|
Successor [Member]
|
||||||||
Unfavorable sales contracts | $ 68.6 | [1] | ||||||
Taxes other than income taxes | 39.8 | [2] | 5.2 | [2] | ||||
Employee-related costs and benefits | 45.9 | 26.3 | ||||||
Sales rebates | 11.0 | 8.2 | ||||||
Asset retirement obligations | 1.9 | 0.9 | ||||||
Interest | 7.5 | 1.3 | ||||||
Other | 2.4 | 3.8 | ||||||
Total | $ 177.1 | $ 45.7 | ||||||
|
Acquisition of Mineral Sands Business - Calculation of Total Purchase Price and Preliminary Allocation of Purchase Price to Assets Acquired and Liabilities Assumed from Exxaro (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified |
1 Months Ended | 6 Months Ended | 9 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2012
|
Sep. 30, 2012
|
Sep. 30, 2012
Initial Valuation [Member]
|
Sep. 30, 2012
Initial Valuation [Member]
Class B common stock [Member]
|
Sep. 30, 2012
Net Adjustments To Fair Value [Member]
|
Sep. 30, 2012
As Adjusted [Member]
|
Sep. 30, 2012
As Adjusted [Member]
Class B common stock [Member]
|
||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Number of Class B Shares(1) | 9,950,856 | [1] | 9,950,856 | [1] | |||||||||||||||
Fair value of Class B Shares on the Transaction Date | $ 137.70 | $ 137.70 | |||||||||||||||||
Fair value of equity issued | $ 1,370.1 | $ 1,370.1 | |||||||||||||||||
Noncontrolling interest | 291.1 | 291.1 | |||||||||||||||||
Total | 1,661.2 | 1,661.2 | |||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash | 114.8 | 114.8 | |||||||||||||||||
Accounts receivable | 199.0 | 199.0 | |||||||||||||||||
Inventories(2) | 613.9 | 621.7 | [2] | (7.8) | [2] | 613.9 | [2] | ||||||||||||
Prepaid and other assets | 24.1 | 24.1 | |||||||||||||||||
Total Current Assets | 959.6 | 951.8 | |||||||||||||||||
Property, plant and equipment, net, including mineral leaseholds of $1,366.0 | 2,319.2 | 2,319.2 | |||||||||||||||||
Deferred tax asset | 26.4 | 26.4 | |||||||||||||||||
Other long-term assets | 19.1 | 19.1 | |||||||||||||||||
Total Assets | 3,324.3 | (7.8) | 3,316.5 | ||||||||||||||||
Current Liabilities: | |||||||||||||||||||
Accounts payable | 36.4 | 36.4 | |||||||||||||||||
Accrued liabilities | 156.9 | 156.9 | |||||||||||||||||
Short-term debt | 76.0 | 76.0 | |||||||||||||||||
Current deferred tax liability | 28.3 | 28.3 | |||||||||||||||||
Income taxes payable | 2.1 | 2.1 | |||||||||||||||||
Other current liabilities | 8.5 | 8.5 | |||||||||||||||||
Total Current Liabilities | 308.2 | 308.2 | |||||||||||||||||
Long-term debt | 18.7 | 18.7 | |||||||||||||||||
Deferred tax liability | 211.5 | (3.0) | 208.5 | ||||||||||||||||
Pension and postretirement healthcare benefits | 5.4 | 5.4 | |||||||||||||||||
Asset retirement obligations | 57.1 | 57.1 | |||||||||||||||||
Other(3) | 1.1 | [3] | 10.7 | [3] | 11.8 | [3] | |||||||||||||
Total Liabilities | 602.0 | 7.7 | 609.7 | ||||||||||||||||
Net Assets (Liabilities) | 2,722.3 | (15.5) | 2,706.8 | ||||||||||||||||
Gain on bargain purchase | $ 202.3 | $ 1,061.1 | $ 1,061.1 | $ (15.5) | $ 1,045.6 | ||||||||||||||
|
Asset Retirement Obligations - Additional Information (Detail)
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Asset Retirement Obligation [Line Items] | |
Period for closure and annual monitoring costs | 2015 |
Pension and Other Postretirement Healthcare Benefits - Components of Net Periodic Pension and Postretirement Healthcare Cost (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 8 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | 1 Months Ended | ||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
Retirement Plans
Successor [Member]
|
Sep. 30, 2011
Retirement Plans
Successor [Member]
|
Sep. 30, 2011
Retirement Plans
Successor [Member]
|
Sep. 30, 2012
Retirement Plans
Successor [Member]
|
Jan. 31, 2011
Retirement Plans
Predecessor [Member]
|
Sep. 30, 2012
Postretirement Healthcare Plans
Successor [Member]
|
Sep. 30, 2011
Postretirement Healthcare Plans
Successor [Member]
|
Sep. 30, 2011
Postretirement Healthcare Plans
Successor [Member]
|
Sep. 30, 2012
Postretirement Healthcare Plans
Successor [Member]
|
Jan. 31, 2011
Postretirement Healthcare Plans
Predecessor [Member]
|
|
Net periodic cost: | ||||||||||
Service cost | $ 0.6 | $ 0.8 | $ 2.0 | $ 1.9 | $ 0.2 | $ 0.1 | $ 0.2 | $ 0.2 | ||
Interest cost | 5.4 | 6.0 | 15.7 | 16.3 | 1.9 | 0.1 | 0.1 | 0.3 | 0.3 | |
Expected return on plan assets | (5.0) | (5.6) | (14.8) | (15.2) | (2.0) | |||||
Net Amortization: | ||||||||||
Net amortization - Prior service cost (credit) | (1.1) | |||||||||
Net amortization - Actuarial (gain) loss | 0.1 | 0.1 | 0.5 | 0.1 | ||||||
Net periodic cost | $ 1.1 | $ 1.2 | $ 2.9 | $ 3.1 | $ 0.6 | $ 0.1 | $ 0.2 | $ 0.5 | $ 0.5 | $ (1.0) |
Income Taxes (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
|
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Provision for Income Tax | The following table presents the income tax provisions, along with income from continuing operations and the effective tax rates:
|
Subsequent Events
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Subsequent Events | 25. Subsequent Events On November 8, 2012, our Board of Directors declared a quarterly dividend of $0.25 per share to holders of our Class A Shares and Class B Shares, totaling approximately $28.3 million, payable on December 3, 2012 to shareholders of record at the close of business on November 23, 2012. |
Asset Retirement Obligations - Summary of Changes in Aros (Detail) (USD $)
In Millions, unless otherwise specified |
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Asset Retirement Obligation [Line Items] | |
Beginning Balance | $ 30.1 |
AROs acquired in the acquisition of the minerals sands business | 57.1 |
Additions | 5.8 |
Settlements/payments | (1.2) |
Accretion expense | 2.0 |
Other, including changes in estimates and remeasurement | 8.5 |
Ending Balance | 102.3 |
Current portion included in accrued liabilities | 1.9 |
Noncurrent portion | $ 100.4 |
Debt - Long-term debt (Detail) (USD $)
In Millions, unless otherwise specified |
9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2012
Successor [Member]
|
Dec. 31, 2011
Successor [Member]
|
Sep. 30, 2012
Secured Bonds Member
|
Sep. 30, 2012
Secured Bonds Member
Successor [Member]
|
Sep. 30, 2012
Term Facility
|
Sep. 30, 2012
Term Facility
Successor [Member]
|
Dec. 31, 2011
Term Facility
Successor [Member]
|
Sep. 30, 2012
Exit Financing Facility
|
Dec. 31, 2011
Exit Financing Facility
Successor [Member]
|
Sep. 30, 2012
Co-generation Unit Financing Arrangement
|
Sep. 30, 2012
Co-generation Unit Financing Arrangement
Successor [Member]
|
Dec. 31, 2011
Co-generation Unit Financing Arrangement
Successor [Member]
|
|||||||||
Lease financing | $ 15.6 | ||||||||||||||||||||
Co-generation Unit Financing Arrangement | 1,624.8 | 1,624.8 | 427.3 | 900.0 | 692.1 | [1] | 420.8 | [2] | 11.0 | 6.5 | |||||||||||
Less: Long-term debt due in one year | (11.0) | (5.9) | |||||||||||||||||||
Long-term debt | 1,607.7 | 421.4 | |||||||||||||||||||
Maturity Date | Aug. 15, 2020 | Feb. 08, 2018 | [1] | Oct. 21, 2015 | [2] | Feb. 01, 2016 | |||||||||||||||
Initial Principal Amount | $ 425.0 | $ 900.0 | $ 700.0 | [1] | $ 698.2 | $ 425.0 | [2] | $ 16.0 | |||||||||||||
|
Income Taxes - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
---|---|---|---|---|---|
Jun. 30, 2012
|
Sep. 30, 2012
|
Jun. 30, 2012
|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Schedule Of Income Taxes [Line Items] | |||||
Percentage of U.S. statutory rate | 35.00% | 35.00% | |||
Gain on bargain purchase | $ 202.3 | $ 1,061.1 | |||
Deferred income taxes as part of reorganization income | 11.8 | ||||
Tax deduction for the premium paid to the creditors | 1,129.7 | ||||
Federal tax benefit | 395.4 | ||||
State tax benefit | 51.0 | ||||
Provision for deferred income taxes | 0 | ||||
Undistributed earnings of certain foreign subsidiaries | 144.0 | ||||
Provision for deferred income taxes | $ 0 | $ 0 |
Segment Information - Segment Reporting Information (Detail) (USD $)
In Millions, unless otherwise specified |
1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | 1 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
|
Sep. 30, 2012
|
Jun. 30, 2012
|
Sep. 30, 2012
|
Sep. 30, 2012
Successor [Member]
|
Sep. 30, 2011
Successor [Member]
|
Sep. 30, 2011
Successor [Member]
|
Sep. 30, 2012
Successor [Member]
|
Sep. 30, 2011
Successor [Member]
|
Dec. 31, 2011
Successor [Member]
|
Jan. 31, 2011
Predecessor [Member]
|
Sep. 30, 2012
Minerals [Member]
Successor [Member]
|
Sep. 30, 2011
Minerals [Member]
Successor [Member]
|
Sep. 30, 2011
Minerals [Member]
Successor [Member]
|
Sep. 30, 2012
Minerals [Member]
Successor [Member]
|
Jan. 31, 2011
Minerals [Member]
Predecessor [Member]
|
Sep. 30, 2012
Pigment [Member]
Successor [Member]
|
Sep. 30, 2011
Pigment [Member]
Successor [Member]
|
Sep. 30, 2011
Pigment [Member]
Successor [Member]
|
Sep. 30, 2012
Pigment [Member]
Successor [Member]
|
Jan. 31, 2011
Pigment [Member]
Predecessor [Member]
|
Sep. 30, 2012
Corporate and Other
Successor [Member]
|
Sep. 30, 2011
Corporate and Other
Successor [Member]
|
Sep. 30, 2011
Corporate and Other
Successor [Member]
|
Sep. 30, 2012
Corporate and Other
Successor [Member]
|
Jan. 31, 2011
Corporate and Other
Predecessor [Member]
|
Sep. 30, 2012
Intersegment Elimination
Successor [Member]
|
Sep. 30, 2011
Intersegment Elimination
Successor [Member]
|
Sep. 30, 2011
Intersegment Elimination
Successor [Member]
|
Sep. 30, 2012
Intersegment Elimination
Successor [Member]
|
Jan. 31, 2011
Intersegment Elimination
Predecessor [Member]
|
|
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||
Net Sales | $ 216.1 | $ 255.6 | $ 487.3 | $ 465.4 | $ 1,160.8 | $ 1,349.8 | $ 1,160.8 | $ 107.6 | $ 271.7 | $ 44.0 | $ 107.9 | $ 443.6 | $ 7.6 | $ 279.8 | $ 399.4 | $ 1,002.2 | $ 990.1 | $ 88.5 | $ 38.6 | $ 37.5 | $ 93.3 | $ 96.6 | $ 14.5 | $ (102.8) | $ (15.5) | $ (42.6) | $ (180.5) | $ (3.0) | |||
Income (Loss) from operations | (24.5) | (21.2) | (38.1) | 99.2 | 201.8 | 95.4 | 201.8 | 19.9 | 19.4 | 13.3 | 24.3 | 110.4 | 1.9 | (13.2) | 111.6 | 219.4 | 137.4 | 20.3 | (25.6) | (25.7) | (41.3) | (129.7) | (1.4) | (18.7) | (0.6) | (22.7) | (0.9) | ||||
Interest and debt expense | (18.1) | (8.0) | (21.5) | (39.0) | (21.5) | (2.9) | |||||||||||||||||||||||||
Other income | 0.2 | (1.3) | (1.7) | (4.8) | (1.7) | 1.6 | |||||||||||||||||||||||||
Gain on bargain purchase | 202.3 | 1,061.1 | 1,045.6 | ||||||||||||||||||||||||||||
Reorganization income | 613.6 | ||||||||||||||||||||||||||||||
Income (Loss) from Continuing Operations before Income Taxes | (56.0) | 89.9 | 178.6 | 1,097.2 | 178.6 | 632.2 | |||||||||||||||||||||||||
Total Assets | 5,665.9 | 1,587.9 | 1,587.9 | 5,665.9 | 1,587.9 | 1,657.4 | 1,448.1 | 3,128.4 | 224.8 | 224.8 | 3,128.4 | 221.0 | 1,710.0 | 1,154.1 | 1,154.1 | 1,710.0 | 987.2 | 858.4 | 211.0 | 211.0 | 858.4 | 241.3 | (30.9) | (2.0) | (2.0) | (30.9) | (1.4) | ||||
Depreciation, Depletion and Amortization | 67.3 | 22.6 | 56.8 | 120.2 | 4.1 | 43.1 | 4.2 | 11.7 | 58.7 | 0.6 | 20.1 | 14.6 | 36.1 | 50.7 | 2.7 | 4.1 | 3.8 | 9.0 | 10.8 | 0.8 | |||||||||||
Capital Expenditures | $ 43.7 | $ 13.6 | $ 120.7 | $ 91.2 | $ 5.5 | $ 27.2 | $ 2.8 | $ 5.4 | $ 46.7 | $ 9.8 | $ 6.0 | $ 104.6 | $ 25.2 | $ 4.2 | $ 6.7 | $ 4.8 | $ 10.7 | $ 19.3 | $ 1.3 |
Debt - Leverage Ratio (Detail) (Term Facility)
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Term Facility
|
|
Debt Instrument [Line Items] | |
June 30, 2012 through December 31, 2015 | 3 |
March 31, 2016 and thereafter | 2.75 |
Noncontrolling Interest - Reconciliation of Beginning and Ending Balances of Non-Controlling Interest (Detail) (USD $)
In Millions, unless otherwise specified |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2012
|
||||
Noncontrolling Interest [Line Items] | ||||
Beginning Balance | ||||
Fair value of non controlling interest | 291.1 | [1] | ||
Earnings attributable to noncontrolling interest | (0.8) | |||
Effect of exchange rate changes | 13.1 | |||
Ending Balance | $ 303.4 | |||
|
Other Assets and Other Liabilities - Prepaid and Other Current Assets (Detail) (Successor [Member], USD $)
In Millions, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Successor [Member]
|
||
Prepaid expenses | $ 21.5 | $ 10.2 |
Cash collateralized letters of credit and surety bonds | 1.4 | 4.9 |
Other | 8.3 | 6.6 |
Total | $ 31.2 | $ 21.7 |
Other Income (Expense) - Other Income (Expense) (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 8 Months Ended | 9 Months Ended | 1 Months Ended | ||
---|---|---|---|---|---|---|
Sep. 30, 2012
Successor [Member]
|
Sep. 30, 2011
Successor [Member]
|
Sep. 30, 2011
Successor [Member]
|
Sep. 30, 2012
Successor [Member]
|
Sep. 30, 2011
Successor [Member]
|
Jan. 31, 2011
Predecessor [Member]
|
|
Net unrealized and realized foreign currency gain (loss) | $ (1.6) | $ (0.6) | $ (1.1) | $ (6.3) | $ 1.5 | |
Interest income | 0.5 | 0.2 | 0.4 | 0.9 | 0.1 | |
Other | 1.3 | (0.9) | (1.0) | 0.6 | ||
Total | $ 0.2 | $ (1.3) | $ (1.7) | $ (4.8) | $ (1.7) | $ 1.6 |
Deb - Interest Expense (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 8 Months Ended | 9 Months Ended | 1 Months Ended | ||
---|---|---|---|---|---|---|
Sep. 30, 2012
Successor [Member]
|
Sep. 30, 2011
Successor [Member]
|
Sep. 30, 2011
Successor [Member]
|
Sep. 30, 2012
Successor [Member]
|
Sep. 30, 2011
Successor [Member]
|
Jan. 31, 2011
Predecessor [Member]
|
|
Debt Instrument [Line Items] | ||||||
Interest expense | $ 16.3 | $ 8.0 | $ 21.1 | $ 31.1 | $ 2.6 | |
Amortization of deferred debt issuance costs | 1.2 | 0.3 | 0.6 | 7.5 | 0.3 | |
Other | 0.7 | 0.4 | 1.0 | |||
Capitalized interest | (0.1) | (0.3) | (0.6) | (0.6) | ||
Interest and debt expense | $ 18.1 | $ 8.0 | $ 21.5 | $ 39.0 | $ 21.5 | $ 2.9 |
Debt - Short-term debt (Detail)
In Millions, unless otherwise specified |
Sep. 30, 2012
Absa Revolver
USD ($)
|
Sep. 30, 2012
Absa Revolver
ZAR
|
Sep. 30, 2012
Successor [Member]
USD ($)
|
Dec. 31, 2011
Successor [Member]
USD ($)
|
Sep. 30, 2012
Successor [Member]
UBS Revolver
USD ($)
|
Dec. 31, 2011
Successor [Member]
UBS Revolver
USD ($)
|
Sep. 30, 2012
Successor [Member]
Absa Revolver
USD ($)
|
Dec. 31, 2011
Successor [Member]
Absa Revolver
USD ($)
|
Sep. 30, 2012
Successor [Member]
Wells Revolver
USD ($)
|
Dec. 31, 2011
Successor [Member]
Wells Revolver
USD ($)
|
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Short-term Debt [Line Items] | ||||||||||||||||||||||
Short-term Debt | $ 30.4 | 250.0 | $ 30.4 | [1] | [1] | $ 30.4 | [2] | [2] | [3] | [3] | ||||||||||||
|
Income Taxes
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
|
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Income Taxes | 17. Income Taxes The following table presents the income tax provisions, along with income from continuing operations and the effective tax rates:
The negative effective tax rate for the 2012 Successor nine months ended September 30, 2012, differs from the U.S. statutory rate of 35% primarily as a consequence of the Company re-domiciling in Australia. Because the Australian tax laws provide for a resetting of the tax basis of the business assets to market value, the Company recorded a tax benefit related to this market value basis adjustment. The overall tax benefit from this basis adjustment increase was partially offset by a valuation allowance established for the portion of the tax benefit which the Company believes will not be realized. Because this basis change did not pertain to an entity acquired in the Transaction, this net tax benefit was recorded through tax expense and did not impact the Company’s gain on bargain purchase. Additionally, the effective tax rate for the nine months ended September 30, 2012, was impacted by the release of a valuation allowance in the Netherlands, continuing valuation allowances in the United States, income in foreign jurisdictions taxed at rates lower than 35%, and the Company’s gain on the bargain purchase, which was recorded net of the financial tax impact and is not subject to income tax in any jurisdiction. The high effective tax rate for the three months ended September 30, 2012, differs from the U.S. statutory rate of 35% primarily because the Company incurred a book operating loss for the quarter while recording a tax benefit from the release of a valuation allowance in the Netherlands.
The effective tax rates for the 2011 Successor periods differ from the U.S. statutory rate of 35% primarily due to valuation allowances in the United States, income in foreign jurisdictions taxed at rates lower than 35% and statute lapses in a foreign jurisdiction which released significant liabilities related to uncertain tax positions. In the one month ended January 31, 2011, the effective tax rate for the Predecessor period differs from the U.S. statutory rate of 35% primarily due to fresh-start adjustments, which were recorded net of tax. Additionally, the Predecessor period effective tax rate was impacted by valuation allowances in multiple jurisdictions and income in foreign jurisdictions taxed at rates lower than 35%. The application of business combination accounting on June 15, 2012 resulted in the re-measurement of deferred income taxes associated with recording the assets and liabilities of acquired entities at fair value pursuant to ASC 805. As a result, deferred income taxes of $202.3 million were recorded at amounts determined in accordance with ASC 740 as part of the Company’s gain on bargain purchase. The application of fresh-start accounting on January 31, 2011, resulted in the re-measurement of deferred income tax liabilities associated with the revaluation of Tronox Incorporated’s assets and liabilities pursuant to ASC 852. As a result, deferred income taxes were recorded at amounts determined in accordance with ASC 740 of $11.8 million as part of reorganization income. Additionally, during 2011, Tronox Incorporated released valuation allowances against certain of its deferred tax assets in the Netherlands and Australia resulting from this re-measurement. For U.S. federal income tax purposes, typically the amount of cancellation of debt income (“CODI”) recognized, and accordingly the amount of tax attributes that may be reduced, depends in part on the fair market value of non-cash consideration given to creditors. On Tronox Incorporated’s date of emergence, the fair market value of non-cash consideration given was such that the creditors received consideration in excess of their claims. For this reason, Tronox Incorporated did not recognize any CODI and retained all of its U.S. tax attributes. In addition, Tronox Incorporated reflected a tax deduction for the premium paid to the creditors of $1,129.7 million. This deduction will increase the Company’s net operating losses (“NOL’s”) in the United States and in various states where the Company has filing requirements. The resulting federal tax benefit of $395.4 million and the estimated corresponding state tax benefit of $51.0 million, net of the deferred federal effect, have been fully offset by a valuation allowance in accordance with ASC 740, after considering all available positive and negative evidence. Because the financial offset for the consideration given to creditors was recorded through equity, neither the tax benefits nor the offsetting valuation allowance impacts were shown in the effective tax rate calculations. Instead, the excess tax benefit, which netted to zero with the valuation allowance, was reflected as an equity adjustment. The Company does not believe an ownership change occurred as a result of the Transaction. Upon the Company’s emergence from bankruptcy in the period ended January 31, 2011 the Company experienced an ownership change resulting in a limitation under IRC Sections 382 and 383 related to its U.S. NOL’s generated prior to emergence from bankruptcy. The Company does not expect that the application of these limitations will have any material affect upon its U.S. federal or state income tax liabilities. Earnings of certain foreign subsidiaries of Tronox Incorporated, which were undistributed to the U.S., totaled $144.0 million at December 31, 2011. Under the new Australian holding company, it is expected that undistributed earnings of certain subsidiaries will continue to increase. At September 30, 2012, no provision for deferred U.S. or Australian income taxes has been made for these earnings because they were considered to be indefinitely reinvested outside of the parent’s taxing jurisdictions. The distribution of these earnings in the form of dividends or otherwise may subject the Company to U.S. federal and state or foreign income taxes and, possibly, foreign withholding taxes. However, because of the complexities of taxation of foreign earnings, it is not practicable to estimate the amount of additional tax that might be payable on the eventual remittance of these earnings to their parent corporations. The Company continues to maintain a valuation allowance related to the net deferred tax assets in the United States. Future provisions for income taxes will include no tax benefits with respect to losses incurred and tax expense only to the extent of current alternative minimum tax and state tax payments until the valuation allowance in the United States is eliminated. ASC 740 requires that all available positive and negative evidence be weighted to determine whether a valuation allowance should be recorded. |
Cash Flows Statement Data (Tables)
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Sep. 30, 2012
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Other Noncash Items Included in Reconciliation of Net Income to Net Cash Flows from Operating Activities | Other noncash items included in the reconciliation of net income (loss) to net cash flows from operating activities include the following:
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Reorganization Items Included in Reconciliation of Net Income (Loss) to Net Cash Flows from Operating Activities | Reorganization items included in the reconciliation of net income (loss) to net cash flows from operating activities include the following:
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Other, Net, Included in Reconciliation of Net Income to Net Cash Flows from Operating Activities | Other, net, included in the reconciliation of net income to net cash flows from operating activities includes the following:
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Asset Retirement Obligations (Tables)
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Sep. 30, 2012
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Summary of Changes in AROs | A summary of the changes in the AROs during the nine months ended September 30, 2012 is as follows:
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Summary of AROs by Country | A summary of the AROs by site is included in the table below:
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Debt - Schedule of Company's Long-Term Debt (Detail) (USD $)
In Millions, unless otherwise specified |
Sep. 30, 2012
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Dec. 31, 2011
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Debt Instrument [Line Items] | |||||
Term Facility | $ 425.0 | ||||
Discount | (6.1) | ||||
Secured bonds, net | 1,624.8 | ||||
Successor [Member]
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Debt Instrument [Line Items] | |||||
Secured bonds, net | 1,624.8 | 427.3 | |||
Term Facility
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Debt Instrument [Line Items] | |||||
Term Facility | 700.0 | [1] | |||
Term Facility | Successor [Member]
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Debt Instrument [Line Items] | |||||
Term Facility | 698.2 | ||||
Discount | (6.1) | ||||
Secured bonds, net | $ 692.1 | [1] | |||
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Inventories (Tables)
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Sep. 30, 2012
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Inventories, Net of Allowance for Obsolete Inventories and Supplies |
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Segment Information (Tables)
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Sep. 30, 2012
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Segment Reporting Information |
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Segment Reporting Information of Revenue and Property, Plant and Equipment |
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Intangible Assets - Gross Cost and Accumulated Amortization of Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified |
Sep. 30, 2012
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Dec. 31, 2011
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Finite-Lived Intangible Assets [Line Items] | ||
Net Carrying Amount | $ 312.0 | |
Successor [Member]
|
||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Cost | 352.4 | 346.9 |
Less accumulated amortization | (40.4) | (21.8) |
Net Carrying Amount | 312.0 | 325.1 |
Successor [Member] | Customer Relationships
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Finite-Lived Intangible Assets [Line Items] | ||
Gross Cost | 293.9 | 293.9 |
Less accumulated amortization | (33.8) | (18.6) |
Net Carrying Amount | 260.1 | 275.3 |
Successor [Member] | TiO2 Technology
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Finite-Lived Intangible Assets [Line Items] | ||
Gross Cost | 31.9 | 31.9 |
Less accumulated amortization | (2.7) | (1.5) |
Net Carrying Amount | 29.2 | 30.4 |
Successor [Member] | Internal-Use Software
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Finite-Lived Intangible Assets [Line Items] | ||
Gross Cost | 17.4 | 11.8 |
Less accumulated amortization | (0.9) | |
Net Carrying Amount | 16.5 | 11.8 |
Successor [Member] | In-Process Research and Development
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Finite-Lived Intangible Assets [Line Items] | ||
Gross Cost | 5.0 | 5.0 |
Less accumulated amortization | (1.7) | (0.9) |
Net Carrying Amount | 3.3 | 4.1 |
Successor [Member] | Trade Names
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||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Cost | 3.6 | 3.6 |
Less accumulated amortization | (1.2) | (0.7) |
Net Carrying Amount | 2.4 | 2.9 |
Successor [Member] | Other
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||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Cost | 0.6 | 0.7 |
Less accumulated amortization | (0.1) | (0.1) |
Net Carrying Amount | $ 0.5 | $ 0.6 |
Subsequent Events - Additional Information (Detail) (Subsequent Event [Member], USD $)
In Millions, except Per Share data, unless otherwise specified |
1 Months Ended |
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Nov. 30, 2012
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Class of Stock [Line Items] | |
Common Stock Dividends Declared Amount | $ 28.3 |
Dividend declared, date of payment | Dec. 03, 2012 |
Dividend declared, record date for shareholders | Nov. 23, 2012 |
Class A common stock [Member]
|
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Class of Stock [Line Items] | |
Common Stock Dividends Per Share Declared | $ 0.25 |
Class B common stock [Member]
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Class of Stock [Line Items] | |
Common Stock Dividends Per Share Declared | $ 0.25 |
Accounts Receivable, Exclusive of Related Party Receivables and Net of Allowance for Doubtful Accounts (Detail) (Successor [Member], USD $)
In Millions, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total | $ 365.6 | $ 278.2 |
Allowance for doubtful accounts | (1.2) | (0.4) |
Net | 364.4 | 277.8 |
Trade Accounts Receivable [Member]
|
||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total | 346.0 | 268.7 |
Related Parties [Member]
|
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Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total | 0.3 | 6.9 |
Other [Member]
|
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Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total | $ 19.3 | $ 2.6 |
Earnings Per Share (Tables)
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Sep. 30, 2012
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Computation of Basic and Diluted Earnings per Share from Continuing Operations |
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The Company
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9 Months Ended |
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Sep. 30, 2012
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The Company | 1. The Company Tronox Limited, a public limited company registered under the laws of the State of Western Australia, Australia, and its subsidiaries (collectively referred to as “Tronox” or “the Company”) is a global leader in the production and marketing of titanium bearing mineral sands and titanium dioxide pigment (“TiO2”). The Company’s world-class, high performance TiO2 products are critical components of everyday applications such as coatings, plastics, paper and other applications. The Company’s mineral sands business consists primarily of two product streams—titanium feedstock and zircon. Titanium feedstock is used primarily to manufacture TiO2. Zircon, a hard, glossy mineral, is used for the manufacture of ceramics, refractories, TV glass and a range of other industrial and chemical products. Tronox has global operations in North America, Europe, South Africa and the Asia-Pacific region. The Company operates three TiO2 facilities at the following locations: Hamilton, Mississippi, Botlek, The Netherlands, and Kwinana, Western Australia, representing approximately 465,000 tonnes of annual TiO2 production capacity. Additionally, Tronox operates three separate mining operations: KwaZulu-Natal (“KZN”) Sands located in South Africa, Namakwa Sands located in South Africa and the Tiwest Joint Venture located in Western Australia, which have a combined annual production capacity of approximately 723,000 tonnes of titanium feedstock and approximately 265,000 tonnes of zircon. Tronox Limited was formed on September 21, 2011 for the purpose of the Transaction (see below). Prior to the completion of the Transaction, the Company was wholly-owned by Tronox Incorporated, and had no operating assets or operations. On September 25, 2011, Tronox Incorporated, a Delaware corporation formed on May 17, 2005, in preparation for the contribution and transfer by Kerr-McGee Corporation (“Kerr-McGee” or “KM”) of certain entities, including those comprising substantially all of its chemical business (“Tronox Incorporated”), entered into a definitive agreement (as amended, the “Transaction Agreement”) with Exxaro Resources Limited (“Exxaro”) and certain of its affiliated companies, to acquire 74% of its South African mineral sands operations, including its Namakwa and KZN Sands mines, separation facilities and slag furnaces, along with its 50% share of the Tiwest Joint Venture (together the “mineral sands business”) (the “Transaction”). On June 15, 2012, the date of the Transaction (the “Transaction Date”), the existing business of Tronox Incorporated was combined with the mineral sands business. Pursuant to a Registration Statement on Form S-4 (File No. 333-178835) declared effective by the Securities and Exchange Commission (the “SEC”) on May 4, 2012 (the “Registration Statement”), Tronox Limited registered Class A ordinary shares (“Class A Shares”) to be issued to stockholders of Tronox Incorporated in connection with the completion of the Transaction. On the Transaction Date, Tronox Limited issued 15,413,083 Class A Shares to stockholders in Tronox Incorporated. In addition, on the Transaction Date, Tronox Limited issued 9,950,856 Class B ordinary shares (“Class B Shares”) to Exxaro and one of its subsidiaries in consideration for the mineral sands business. As part of the Transaction, Exxaro and its subsidiaries retained a 26.0% ownership interest in each of Tronox KZN Sands Pty Ltd and Tronox Mineral Sands Pty Ltd in order to comply with the ownership requirements of the Black Economic Empowerment (“BEE”) legislation in South Africa. Immediately following the Transaction, Tronox Incorporated stockholders and Exxaro held approximately 60.8% and 39.2%, respectively, of the voting securities of Tronox Limited. Under the terms of the Transaction Agreement, Exxaro agreed that for a three-year period after the completion of the Transaction, it would not engage in any transaction or other action, that would result in its beneficial ownership of the voting stock of Tronox Limited exceeding 45.0% of the total issued shares of Tronox Limited. On June 26, 2012, the Board of Directors of Tronox Limited approved a 5-to-1 stock split for holders of its Class A Shares and Class B Shares at the close of business on July 20, 2012, by issuance of four additional shares for each share of the same class by way of bonus issue. All references to the number of shares and per share data in the Successor’s condensed consolidated financial statements and notes thereto have been adjusted to reflect the stock split, unless otherwise noted or as the context otherwise acquires. See Note 19 for additional information regarding the Company’s stock split. During the second and third quarters of 2012, the Company repurchased approximately 12.6 million Class A Shares, which was approximately 10% of the total voting securities. As a result of such buyback, Exxaro held approximately 43.5% of the voting securities of Tronox Limited. On October 4, 2012, Exxaro and J.P. Morgan Securities LLC (“JPMS”) entered into a Purchase Plan Agreement (the “JPMS Tronox Class A Trading Plan”) authorizing JPMS to purchase up to 1,400,000 Class A Shares (approximately 2.2% of Tronox Limited’s outstanding Class A Shares and approximately 1.2% of Tronox Limited’s voting securities) on Exxaro’s behalf beginning on October 5, 2012. The Company’s constitution provides that, subject to certain exceptions, when Exxaro acquires a Class A Share, it automatically converts to a Class B Share. As such, Exxaro generally will not hold Class A Shares. During October 2012, Exxaro purchased 1,400,000 Class A Shares in market purchases pursuant to the JPMS Tronox Class A Trading Plan. |
Inventories - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
Sep. 30, 2012
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Dec. 31, 2011
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fair value of inventory from the acquired mineral sands business | $ 613.9 | |
Successor [Member]
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Inventory on Consignment to Others | $ 33.1 | $ 12.0 |