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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)*
BIRMINGHAM STEEL CORPORATION
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
091250100
(CUSIP Number)
Gene T. Price, Esq.
Burr & Forman LLP
Suite 3100 SouthTrust Tower
420 North Twentieth Street
Birmingham, AL 35203
(205) 251-3000
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
September 10, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and
is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. [ ]
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See ss.
240.13d-7 for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
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The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 3
13D - AMENDMENT NO. 3
The undersigned hereby amend their Schedule 13D Statement dated July 29, 1999,
as amended by Amendment No. 1 dated August 16, 1999, as further amended by
Amendment No. 2 dated August 24, 1999 (the "Schedule 13D"), relating to the
common stock, par value $.01 per share, of Birmingham Steel Corporation as set
forth herein. Unless otherwise indicated, all defined terms used herein shall
have the meaning ascribed to them in the Schedule 13D.
ITEM 1. SECURITY AND ISSUER
No material change.
ITEM 2. IDENTITY AND BACKGROUND
No material change.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
No material change.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is hereby amended to add the following:
On September 10, 1999, John D. Correnti and International Steel
Associates, Inc., an Arkansas corporation solely owned by Mr. Correnti,
entered into a Consulting Agreement effective as of July 1, 1999 with
United Company, the lead shareholder of the Group, whereby
International Steel Associates, Inc. will perform certain consulting
services for the Group during the Group's proxy solicitation. A copy of
the Consulting Agreement is attached hereto as Exhibit G.
Contemporaneously with the execution of the Consulting Agreement,
United Company entered into a Stock Option Agreement effective as of
July 1, 1999 with Mr. Correnti whereby United Company granted Mr.
Correnti an option to purchase from affiliates of United Company
100,000 shares of the Company's common stock at an exercise price of
$4.88 (the "Option Agreement"). A copy of the Option Agreement is
attached here to as Exhibit H.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
No material change.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Pursuant to the Option Agreement, United Company has granted Mr.
Correnti an option to purchase from affiliates of United Company
100,000 shares of the Company's common stock at an exercise price of
$4.88. A copy of the Option Agreement is attached hereto as Exhibit H.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
ITEM 7 is hereby amended to add the following:
Exhibit G: Consulting Agreement by and among International Steel
Associates, Inc., John D. Correnti, and The United Company
Exhibit H: Stock Option Agreement by and between The United Company and
John D. Correnti
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 10, 1999
THE UNITED COMPANY
By: /s/ James W. McGlothlin
---------------------------------------------
James W. McGlothlin
President
UNITED MANAGEMENT COMPANY, LLC
By: /s/ Lois A. Clarke
---------------------------------------------
Lois A. Clarke
President and Managing Director
UNITED OPPORTUNITIES FUND, LLC
By: United Management Company, LLC
Its Managing Member
By: /s/ Lois A. Clarke
------------------------------------
Lois A. Clarke
President and Managing Director
THE SUMMIT FUND, LLC
By: United Management Company, LLC
Its Managing Member
By: /s/ Lois A. Clarke
------------------------------------
Lois A. Clarke
President and Managing
Director
UC INVESTMENT TRUST
By: /s/ Lois A. Clarke
--------------------------------------------
Lois A. Clarke
President
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/s/ Nicholas D. Street
--------------------------------------------
Nicholas D. Street
/s/ James W. McGlothlin
--------------------------------------------
James W. McGlothlin
/s/ Lois A. Clarke
--------------------------------------------
Lois A. Clarke
/s/ James A. Todd, Jr.
--------------------------------------------
James A. Todd, Jr.
/s/ Mark A. Todd
--------------------------------------------
Mark A. Todd
/s/ John D. Correnti
--------------------------------------------
John D. Correnti
/s/ Paul Ekberg
--------------------------------------------
Paul Ekberg
<PAGE> 1
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") entered into as of the 1st
day of July, 1999, by and among International Steel Associates, Inc., an
Arkansas corporation (the "Consultant"), John D. Correnti (the "Executive"), and
The United Company, a Virginia corporation (the "Company").
RECITALS
A. The Company is the lead shareholder of a shareholder group (the
"Shareholder Group") which intends to undertake a proxy solicitation (the "Proxy
Solicitation") for the election of directors constituting at least a majority of
directors of Birmingham Steel Corporation (the "Target").
B. The Executive is the sole shareholder of the Consultant.
C. The Company desires to engage the Consultant as a temporary
consultant, and the Consultant desires to serve as a temporary consultant for
the Company, to perform services for the Company's benefit during the Proxy
Solicitation, pursuant to the terms and provisions set forth below.
D. If the Proxy Solicitation is successful, the Executive will agree to
serve as Chairman and Chief Executive Officer of the Target pursuant to the
terms and provisions of the form employment agreement attached to this Agreement
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Consulting Services. Consultant will provide certain consulting
services for the benefit of the Company involving the business and professional
knowledge, experience, skills and efforts of the Consultant, as requested from
time to time by the Company. The Consultant shall appoint the Executive as its
representative responsible for performing such consulting services on behalf of
the Consultant. Furthermore, the Executive, as sole shareholder of the
Consultant, hereby agrees to cause the Company to perform such consulting
services for the benefit of the Company, and agrees to cause the Company to
appoint the Executive as the Consultant's representative in connection with the
services to be performed hereunder. Company acknowledges that by virtue of
Executive's employment by other entities involved in the production of steel
products, whether as employee or consultant, Executive has obtained certain
knowledge of information of third parties that Executive in good faith might
believe that he could not disclose, or use for the benefit of
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Company or Target, without breaching a duty to a third party ("Third Party
Information"). The Company acknowledges that it is not its intent to require
Executive or Consultant to disclose or use any such Third Party Information and
agrees that Executive shall have the sole discretion to determine whether
information constitutes Third Party Information.
2. Term. The term of this Agreement shall commence on the date hereof
and shall continue until December 31, 1999, unless extended by written
agreement, or unless terminated prior to such date pursuant to Section 4 below.
3. Compensation; Reimbursement.
(a) The Company shall pay the Consultant a consulting fee at a
rate of Fifty Thousand and No/100 Dollars ($50,000.00) per calender month (or
portion thereof), to be paid on a monthly basis. The monthly consulting fee
shall be paid to the Consultant regardless of the consulting hours requested by
the Company. In addition, the Company shall reimburse the Consultant for all
reasonable and appropriate out-of-pocket expenses incurred in carrying out its
duties for the Company.
(b) The Company shall reimburse the Consultant for reasonable
and appropriate legal fees related to negotiation of the Consulting Agreement,
and for negotiation of the Option Agreement and the Employment Agreement
referred to below. The Company shall also reimburse the Executive and the
Consultant for reasonable and appropriate legal fees related to federal and
state governmental filings, the Proxy Solicitation, defense of matters subject
to the Company's duty to indemnify under Section 5, and other related
consultation.
(c) The initial monthly fee shall be payable no later than two
(2) business days after execution of this Agreement. Subsequent monthly fees
shall be payable no later than the tenth (10th) day of each such month.
Reimbursements by Company for Consultant's expenses and attorneys' fees, as
provided in this Section 3, shall be payable not more than one a month within
fifteen (15) business days after Consultant provides a statement therefor, in
reasonable detail and accompanied by receipts or other reasonable evidence of
the incurrence of such expenses or fee payment obligations.
4. Termination. The Agreement may be terminated prior to the term set
forth in Section 2 above upon the occurrence of the events described below. Upon
such early termination, neither the Company, the Executive, nor the Consultant
shall have any further obligation to each other under this Agreement except with
respect to (i) the confidentiality provisions of Section 10 below, (ii) the
indemnity obligations of Section 5, (iii) any monthly fees earned but not yet
paid, including, if not already paid, the obligation to pay the monthly
consulting fee for the month in which termination occurs and (iv) the obligation
of the Company to reimburse Consultant for expenses and attorneys' fees as
provided in Section 3. Termination of this Agreement shall not affect the
validity and continuing effect of the Option Agreement referred to in Section 8.
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(a) The Company may terminate this Agreement at any time after
the Proxy Solicitation is announced, but prior to the 1999 annual shareholder
meeting of The Target, by providing written notice to the Consultant and the
Executive that the Shareholder Group has abandoned the Proxy Solicitation.
(b) This Agreement will terminate automatically if a majority
in number of the board of directors elected at the 1999 annual shareholder
meeting of The Target are not the directors nominated by the Nominating
Committee (as defined in Section 5 below) and slated in the Proxy Solicitation.
(c) The Executive and the Consultant may terminate this
Agreement by written notice to the Company if the Employment Agreement is not
adopted by the board of directors of The Target on or before December 31, 1999.
(d) This Agreement will automatically terminate upon execution
of the Employment Agreement attached hereto as Exhibit A by The Target and the
Executive.
(e) Either the Executive or the Company may terminate this
Agreement upon failure of the Nominating Committee to reach unanimous agreement
on the director slate, pursuant to Section 5(a) below, by providing written
notice of such failure and the party's intent to terminate this Agreement.
5. Proxy Matters.
(a) The Company, as lead shareholder of the Shareholder Group,
agrees to cause the Shareholder Group to include the Executive in the proposed
director slate with respect to the Proxy Solicitation, along with James A. Todd
and James W. McGlothlin (the designees of the Shareholder Group). These three
individuals will serve as a nominating committee (the "Nominating Committee"),
which will select the remaining nominees from a list of candidates developed by
the Nominating Committee. Each nominee must be approved by all members of the
Nominating Committee. Upon the failure of the Nominating Committee to reach
unanimous agreement on the director slate, either the Executive or the Company
may declare this Agreement terminated, and all parties shall have no further
obligations or liability under this Agreement (except with respect to Section 10
below).
(b) The Company shall indemnify the Consultant and the
Executive from any liability, damage, expenses, or loss incurred by the
Consultant and the Executive (to the extent such indemnification is not
duplicative) resulting or arising from the Proxy Solicitation, other than a
liability, damage, expenses, or loss resulting or arising from information
provided by the Consultant or the Executive for inclusion in the Proxy
Solicitation or related proxy statement. The Consultant and the Executive shall
indemnify the Company from any liability, damage, expenses or loss incurred by
the Company resulting or arising from the Proxy Solicitation to the extent that
such
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liability, damage or loss results or arises from information provided by the
Consultant or the Executive in writing specifically for inclusion in the Proxy
Solicitation or related proxy statement.
(c) The Executive shall have the right to review and consent
to the form of proxy statement and any other solicitation material or published
communication to the extent it describes the Consultant, the Executive ,the
Employment Agreement, and any other matter reasonably related to the
Consultant's or Executive's interests or potential liability. Company will keep
Consultant fully and promptly informed of the strategy for, progress of and
responses to the Proxy Solicitation, including the substance of all contacts
with shareholders, directors or employees of the Target.
(d) The Company shall obtain the Executive's prior consent
with respect to all public communications regarding the Consultant's and
Executive's participation with the Proxy Solicitation (including this Agreement,
the Option Agreement, and the Employment Agreement). Except and until disclosed
as required by law (including a good faith determination of disclosure
obligations under federal and state securities laws and other applicable laws by
the Consultant, the Executive and the Company), the terms of the "Agreement in
Principle" entered into by the Company and the Executive on July 16, 1999, this
Agreement, the Employment Agreement, and the Option Agreement will be held in
confidence by the Company, the Consultant, and the Executive, and no party will
make any public announcement about the subject matter, the Proxy Solicitation,
or any matter related thereto except by mutual consent.
6. Non-Exclusive. The Consultant and the Executive may engage in other
employment or consulting work, except such other work (a) must not interfere
with reasonable demands for services under this Agreement; (b) must not involve
any transaction, activity, or group competing with the Proxy Solicitation; and
(c) must not be conducted for any company that produces steel products in the
United States that are competitive with products currently sold by the Target.
7. Employment Agreement If the Proxy Solicitation is successful, the
Executive shall enter into an employment agreement with The Target in the form
attached hereto as Exhibit A (the "Employment Agreement"); provided, however,
such Employment Agreement is approved by the board of directors of The Target on
or before December 31, 1999. The Company warrants that the Shareholder Group
director designees identified above will vote in favor of adoption of the
Employment Agreement.
8. Option Agreement. This Agreement is contingent upon and subject to
the execution of that certain Option Agreement by and between the Company and
the Executive dated the date hereof (the "Option Agreement") granting to the
Executive an option to purchase 100,000 shares of common stock of the Target
owned by Company.
9. Not an Employee. Until such time as the Employment Agreement is
executed by the Target and the Executive, the parties hereto recognize that:
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(a) the Executive is not an employee of the Company or the
Target, and is, therefore, entitled to no employee benefits or other perquisites
of employment with the Company or the Target;
(b) the Consultant shall for all purposes be deemed an
independent contractor and shall be responsible for all taxes and for obtaining
any permits or licenses required in order for the Consultant to carry out its
obligations under this Agreement; and
(c) this Agreement does not authorize the Consultant or the
Executive to act as an agent or representative of the Company or the Target or
to represent itself as an agent or representative of the Company or the Target,
and neither the Consultant nor the Executive is authorized to enter into any
contract, make any representation, or do anything that will bind the Company in
any manner.
10. Confidential Information. In the course of providing the services
required hereunder, the Consultant and the Executive will have access to
confidential financial and business records, data specifications, supplier and
customer lists and other proprietary information owned by the Company or any
affiliate (collectively the "Companies") and used in the course of their
respective businesses, including, without limitation, information of a business
or technical nature imparted to or learned by the Consultant or the Executive in
the course of providing the consulting services pursuant hereto, irrespective of
whether the same have been formally stamped "confidential" (collectively
"Proprietary Information"); provided that Proprietary Information shall not
include any information that is or becomes in the public domain (unless such
disclosure is by Consultant or Executive in breach of this Agreement) or becomes
known to the Consultant or the Executive through a person not affiliated with
the Company. Except for disclosures required by law, the Consultant and the
Executive agree that during the term of this Agreement and for a period of two
years immediately following the expiration or termination of this Agreement,
neither the Consultant (including any director, officer, employee or agent of
Consultant) or the Executive (including any agent of the Executive) shall use,
divulge, furnish or make accessible to anyone (other than an authorized
representative of any of the Companies) any knowledge or information with
respect to Proprietary Information. All records, files, drawings, documents,
equipment and the like relating to the business of any of the Companies which
the Consultant or the Executive shall prepare, use or come into contact with
shall remain the sole property of the Companies. The Consultant and the
Executive further agree that upon the expiration or termination of this
Agreement it will return to the Companies all tangible property relating to the
Proprietary Information of which it has custody, including, but not limited to,
all business records, notebooks, documents, drawings, photographs and copies
thereof. The Consultant shall be responsible for requiring that all of its
directors, officers, employees and agents comply with the terms of this
Agreement, and the Executive shall be responsible for requiring that all of his
agents comply with the terms of this Agreement, and both shall be liable for any
failure of any such person to so comply. The provisions of this paragraph 10
shall survive the expiration or termination of this Agreement for the aforesaid
two year period.
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11. Notice. Any notice, report or demand required, permitted or desired
hereunder shall be in writing and delivered by certified mail-return receipt
requested, Federal Express (or similar courier), telegram, facsimile
transmission or receipted hand delivery at the following addresses (or such
other addresses designated by proper notice):
To the Company: 1005 Glenway Avenue
Post Office Box 1280
Bristol, Virginia 24203-1280
Attn: James W. McGlothlin
Fax No.: (540) 645-1404
To the Consultant/ Executive: 808 East Main Street
Blytheville, Arkansas 72316
Attn: John D. Correnti
Fax No.: (870) 762-6655
Any notice actually received shall be deemed to have been properly delivered.
12. Miscellaneous.
(a) Binding Effect and Benefit. All rights and obligations
under this Agreement shall inure to the benefit of and shall be binding upon the
parties hereto, the successors and permitted assigns of the Company and the
Consultant and the heirs, executors and personal representatives of the
Executive.
(b) Entire Agreement and Amendment. This Agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior or contemporaneous negotiations,
promises, covenants, agreements or representations of every nature whatsoever
with respect thereto. This Agreement may not be changed except by written
instrument duly executed by the parties hereto.
(c) Waiver. Waiver by any party of any breach of the terms and
conditions of this Agreement, or of any election available to that party
hereunder, shall not be deemed to be a waiver of any subsequent breach of any
term or condition of this Agreement or a waiver of a similar or dissimilar
provision or condition at the same time or at any prior or subsequent time, or
of the right of the applicable party to make any subsequent election under this
Agreement.
(d) Severability. If, for any reason, any provision or part
thereof, of this Agreement, is held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision, or any other part of such
provision, not held to be invalid or unenforceable, and each
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such other provision, or part thereof, shall to the full extent consistent with
law continue in full force and effect.
(e) Governing Law. The validity, performance and enforcement
of this Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Alabama.
(f) Headings. The headings and subheadings appearing in this
Agreement are solely for convenience in reference and shall have no effect upon
the meaning and construction of this Agreement.
(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(h) Assignment. The Consultant may not sell, assign, transfer
or delegate any right or obligation under this Agreement to any person or
entity. The Company may not sell, assign, transfer or delegate any right or
obligation under this Agreement to any person or entity.
*** SIGNATURES ON FOLLOWING PAGE***
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE "COMPANY"
THE UNITED COMPANY
By: /s/ Wayne L. Bell
-----------------------------------------
Its Executive Vice President
and General Counsel
THE "CONSULTANT"
INTERNATIONAL STEEL ASSOCIATES, INC.
By: /s/ John D. Correnti
-----------------------------------------
Its President
THE "EXECUTIVE"
/s/ John D. Correnti
--------------------------------------------
JOHN D. CORRENTI
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EXHIBIT A
FORM OF EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made by and between
Birmingham Steel Corporation, a Delaware corporation (the "Company"), and John
D. Correnti ("Executive") as of ___________, _____. This Agreement is offered by
the Company to induce Executive to accept employment. The Company and Executive,
each intending to be legally bound by the terms hereof, agree as provided below.
PROVISIONS
1. Employment Term
The Company hereby employs Executive and Executive hereby accepts
employment upon the terms and conditions of this Agreement, for an initial five
year term running from _______________, to and including ___________, 2004 (the
"Initial Term"). The Initial Term shall be extended automatically for successive
one year renewal terms (each, a "Renewal Term") unless either party notifies the
other in writing no later than 60 days before the expiration of the current term
that such party does not wish to extend the term of employment. The employment
term under this Agreement is referred to as the "Term."
2. Offices; Duties; Directorship; Other Activities
2.1. Offices and Duties. Executive shall serve during the course of his
employment as Chairman of the Board and Chief Executive Officer. Executive shall
have the duties and authority as are prescribed by the bylaws of the Company for
such officers on the date of this Agreement, such other duties and
responsibilities as customarily are assigned to the senior executive officer,
and such other duties and responsibilities as may be assigned to him by the
Company's Board of Directors (the "Board"), provided that such assignments by
the Board are customary and appropriate for the senior executive officer of the
Company. Executive shall be given such authority as is appropriate to carry out
his duties. The Company will not take any action to create an executive office
having greater authority over the daily management of the Company than that of
the Chief Executive Officer.
2.2. Service on Board. Executive agrees to serve as a director of the
Company during the Term and to serve on such committees of the Board as to which
he might be appointed. During the Term of this Agreement, Executive shall report
directly to the Board and committees of the Board.
2.3. Efforts and Other Activities. During the Term, except for periods
of vacation and sick leave, personal leave granted by the Board or leave to
which Executive is entitled under law, Executive shall devote reasonable
attention and time during normal business hours to the business and affairs of
the Company to the extent necessary to discharge his duties under this
Agreement.
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With the prior approval of the Board, Executive may serve as a director or
trustee of other corporations or businesses which do not compete with the
Company. Executive also may serve on civic, trade or charitable boards or
committees. Executive may invest in real estate for his own account or become a
passive partner or a passive stockholder in any corporation, partnership or
other venture not in direct competition with the Company. Executive may invest
in mutual funds or similar vehicles in which Executive does not direct the
investment of funds in particular securities. Executive may deliver lectures,
fulfill speaking engagements, or teach at educational institutions, and may
manage personal investments, provided that such activities do not materially
interfere with the performance of Executive's responsibilities for the Company.
2.4. Place of Business. Executive's services shall be performed
primarily at the Company's headquarters in Birmingham, Alabama.
3. Compensation and Benefits
3.1. Base Salary. The Company will pay to Executive a base salary at
the rate of $600,000 per year for each year of the Term, subject to increase as
provided herein ("Base Salary"). Base Salary will be earned monthly and will be
payable in periodic installments in accordance with the Company's customary
practices for executive officers. Amounts payable will be reduced by standard
withholding and other authorized deductions. The Company shall review
Executive's salary at least annually, and the Base Salary will be increased on a
basis consistent with increases in salary, if any, for the Company's other
senior executives. The Company may increase Executive's Base Salary in any year
of the Term but it may not reduce it from the amount applicable in the preceding
Term year.
3.2. Cash Bonus. (a) Executive shall receive during the Term an annual
cash bonus ("Bonus") equal to one percent (1%) of "Base Earnings" for each
fiscal year, or portion thereof, in the Term (including the fiscal years in
which the Term commences and in which it expires). Base Earnings shall be
determined from the Company's audited consolidated statement of operations (the
"Income Statement") for such fiscal year and shall be a sum equal to (i) the
Company's consolidated pre-tax income plus, (ii) the total of all interest
charges, (iii) the total of all depreciation and amortization charges, and (iv)
the total of all "Extraordinary Charges", all as shown on the Income Statement.
"Extraordinary Charges" means all reserves and charges or accruals on the Income
Statement arising from extraordinary items, goodwill write-offs and other
unusual items.
(b) The Bonus for each fiscal year (or portion thereof) in the
Term shall be paid in a single payment not later than 30 days after the issuance
of the Income Statement by the Company's auditors.
(c) The Bonus shall be in lieu of any other cash incentive
compensation program offered by the Company to its management employees, unless
otherwise provided by the Board or as specifically provided in this Agreement.
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3.3. Inducement Restricted Stock Grant. (a) To induce Executive to
accept employment by the Company, the Company hereby grants to Executive 100,000
shares of the Company's common stock, $0.01 par value per share (the "Grant
Shares").
(b) Stock certificates evidencing the Grant Shares shall be
retained by the Company pending release to Executive as provided herein. The
Company shall keep such certificates free from all claims and encumbrances other
than the Company's rights under this Agreement. In lieu of issuance of
certificates for Grant Shares that are subject to forfeiture, the Company may
make a "book entry" in the record of stockholders to evidence the ownership of
such shares.
(c) The Grant Shares shall be subject to forfeiture to the
Company if Executive's employment terminates prior to the third anniversary of
the date hereof. Subject to the earlier termination of forfeiture restrictions
as provided in Section 4, at each of the first and second anniversaries of the
date hereof, the forfeiture restrictions applicable to 33,333 Grant Shares shall
terminate and such shares shall be transferable and non-forfeitable. Subject to
the earlier termination of forfeiture restrictions as provided in Section 4, on
the third anniversary of the date hereof, Executive's interest in 33,334 Grant
Shares shall be transferable and non-forfeitable. Promptly upon such lapse of
restrictions the Company shall deliver, or cause its transfer agent to deliver,
a duly executed share certificate for such shares to Executive.
(d) Pending forfeiture, Executive will be deemed the record
holder of all Grant Shares, whether or not subject to forfeiture, and shall be
entitled to all voting rights, distributions and other rights of an owner of the
Grant Shares.
(e) During the Initial Term of this Agreement, except for
participation in the Company's 1995 Stock Accumulation Plan (the "Stock
Accumulation Plan"), Executive shall not be eligible to participate in the
Company's incentive restricted stock or other stock-based compensation plans
applicable to executive employees generally, unless otherwise provided by the
Board. After the Initial Term, Executive shall participate in any such plan
applicable to senior executives generally.
(f) Grant Shares that are subject to forfeiture under this
Section may not be transferred by Executive except by will or laws of descent
and distribution, and will not be subject in any manner to any other sale,
transfer, pledge or other encumbrance, lien or charge (other than to the
Company). Grant Shares not subject to forfeiture may be transferred by Executive
upon receipt by the Company of an opinion of counsel acceptable to the Company
that such shares may be transferred without registration under federal and state
securities laws. All certificates for Grant Shares may bear a legend to such
effect.
(g) The Company will indemnify and hold Executive harmless
from any income, employment or other tax liability incurred as a result of the
grant or vesting of the Grant Shares.
3.4. Inducement Grant of Options; Exercise Price. Subject to the terms
and conditions set forth herein, the Company hereby grants to Executive options
to purchase 1,000,000 shares of
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Common Stock at a price per share of $4.88 (the "Exercise Price"), which shall
be subject to the terms and conditions provided below (the "Options"). The
number of shares subject to the Options, the Exercise Price therefor and other
matters resulting from certain transactions shall be adjusted as provided in
Exhibit A hereto.
3.4.1. Exercise of Options.
(a) The Options shall be exercisable by the delivery to the
Company of a written notice in the form of Exhibit B stating the number of
shares to be purchased pursuant to the Options and accompanied by payment in
full in accordance with this Agreement, in an amount equal to the Exercise Price
per share multiplied by the number of shares to be purchased. The exercise shall
be effective upon hand delivery of the exercise notice to the Company or the
date of postmark of any exercise notice delivered by mail (the "Exercise Date")
provided such payment accompanies the notice of exercise; if not so accompanied,
then the Exercise Date shall be the later date on which payment of the Exercise
Price is made in accordance with this Agreement.
(b) Any exercise of Options by Executive must conform to
the Company's insider trading restrictions applicable to directors and officers
generally. Any exercise by Executive that may not be made due to such
restrictions may be made within the next available exercise period permitted by
such restrictions even if the right to exercise Options under this Agreement
otherwise has terminated.
(c) All Options will expire 10 years from the date hereof
(unless an earlier termination date is provided herein).
(d) Fractional share interests shall be disregarded, but
may be accumulated. No fewer than 5,000 Option shares may be purchased at any
one time (subject to appropriate adjustment in accordance with adjustments made
pursuant to Exhibit A), unless the number purchased is the total number at the
time remaining for purchase under the Options.
3.4.2. Permitted Consideration. The purchase price of any shares
purchased on exercise of a vested Option shall be paid in full at the time of
each purchase in one or a combination of the following methods: (i) in cash or
by electronic funds transfer; (ii) by check payable to the order of the Company;
or (iii) by delivery of shares owned by Executive or vested stock options
(whether Options or other stock options) held by Executive (in the case of
options, to be valued per option as the difference between the exercise price
thereof and the price per share of the stock to which such option pertains, as
such stock price is determined below). Any shares (or the value of shares used
for determining the value of the options) used to satisfy the Exercise Price of
an Option shall be valued (i) if the shares are traded on the New York Stock
Exchange, at the closing price as reported by such exchange for the trading day
immediately preceding the Exercise Date, (ii) if such shares are not traded on
the New York Stock Exchange, but are traded on another national exchange, at the
closing price as reported by such exchange for the trading day immediately
preceding the Exercise Date, (iii) if the shares are not traded on an exchange
but are reported on NASDAQ, then at the closing price as reported on NASDAQ for
the trading day immediately preceding the Exercise Date, or (iv) if the shares
are not traded on any of the foregoing, then at their fair market value on the
Exercise Date as mutually determined
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<PAGE> 13
by the Board of Directors and Executive (if unable to agree, then determined by
arbitration under Section 7. Any shares or options surrendered as payment of the
Exercise Price and shall have been owned by Executive or have been vested for at
least six months prior to the Exercise Date.
3.4.3. Vesting. Subject to the acceleration of vesting as provided
by this Agreement, a specified number of Executive's Options shall vest and
become exercisable on each anniversary of this Agreement if Executive is then
employed by the Company. The number of Executive's Options that shall vest and
become exercisable at the indicated dates are as follows:
<TABLE>
<CAPTION>
Date Number of Options Vesting
---- -------------------------
<S> <C>
, 2000 200,000
-----------
, 2001 200,000
----------
, 2002 200,000
----------
, 2003 200,000
----------
, 2004 200,000
----------
</TABLE>
Early termination of exercise rights and accelerated vesting of unexercised
Options shall be as provided in Section 4. The vesting schedule shall be
adjusted as appropriate if and as required pursuant to Exhibit A.
3.4.4. Share Certificates; Shareholder Rights. Upon proper
exercise of an Option and payment of the related Exercise Price, the Company
shall cause to be issued and delivered to Executive a certificate for the shares
issuable upon such exercise. Such certificate shall be deemed to have been
issued as of the Exercise Date. Executive shall be deemed to be the holder of
record of the shares issuable upon such exercise as of the Exercise Date and the
Company agrees to make such entries in its records of shareholders to reflect
such status.
3.4.5. Payment of Taxes. The Company shall pay all documentary
stamp taxes, if any, attributable to this Agreement or the issuance of any of
the shares or other securities upon the exercise of the Options.
3.4.6. Reservation of Shares. The Company will reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares, the full number of shares deliverable upon exercise of the
Options for the purpose of enabling it to satisfy any obligation to issue shares
upon exercise of the Options.
3.4.7. Representations of the Company; Registration of the Shares.
The Company covenants and represents that all shares which may be issued upon
the exercise of the options will, upon issuance, be fully paid and nonassessable
and free from all taxes (other than withholding taxes on income and wages),
liens, charges and security interests with respect to the issue thereof. The
Company will in good faith, and as expeditiously as possible, take all action
which may be necessary to obtain and keep effective any and all registrations,
permits, consents and approvals of governmental agencies and authorities, and
will make any and all necessary filings under Federal and State securities laws,
or of exchanges or similar markets on which the class of option shares are
listed, necessary in connection with the issuance of the options, the
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<PAGE> 14
exercise of the options, and the issuance, sale, transfer and delivery of shares
upon exercise of the options by Executive.
3.4.8. Non-transferability. Except as provided in Section 4, the
Options are exercisable only by Executive. Prior to vesting, the options are
non-transferable and shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge (other
than to the Company), except by operation of law or by will or laws of descent
and distribution.
3.4.9. Company Incentive Option Plans. Unless otherwise provided
by the Board, during the Initial Term of the Agreement Executive shall not be
eligible to participate in the Company's incentive stock option plans applicable
to executive employees generally. After the Initial Term, Executive shall
participate in any such plan applicable to senior executives generally.
3.4.10. Option Share Exercise Record. Executive and the Company
shall keep a record of exercise of all Options (the "Option Share Exercise
Record").
3.5. Stock Accumulation Plan. During the Term, Executive shall
participate in the Company's Stock Accumulation Plan. In lieu of any
contribution required under such plan, and notwithstanding the terms of the
plan, Executive will defer or contribute annually from 5% to 20% of his annual
Base Salary or Bonus (such amount and sources as Executive may elect), to the
Stock Accumulation Plan. Executive's obligations under this section will be
reduced, or eliminated, for each applicable deferral period by the aggregate
Exercise Price of Options exercised by Executive during such period, but
Executive retains the right to make such deferral or contribution under the
Stock Accumulation Plan notwithstanding his exercise of Options.
3.6. Executive Retirement and Compensation Deferral Plan. During the
Term, Executive shall participate in the Company's Executive Retirement and
Compensation Deferral Plan as a "Group 1 Participant".
3.7. Other Savings and Retirement Plans. Except as specifically
provided herein, Executive shall be entitled to participate in all savings and
retirement plans, practices, policies and programs applicable generally to other
executives of the Company.
3.8. Welfare Benefit Plans. Executive shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company (including medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other executives of the Company.
3.9. Severance Plan. Executive shall be entitled to the benefits of the
Company's Executive Severance Plan, but without duplication of any such
payments.
3.10. Expenses. (a) For the first two years of the Term of this
Agreement, Executive shall be reimbursed for (or at Executive's request, where
feasible, the Company shall pay directly) the following special expenses:
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<PAGE> 15
(i) the costs of an apartment in Birmingham, Alabama,
furnishings, parking, utilities and related costs; and
(ii) weekly commuting expenses from Executive's residences in
Charlotte, North Carolina and Blytheville, Arkansas to and from Birmingham (if
Executive uses any aircraft owned or leased by him, the reimbursement rate shall
be as agreed by Executive and Company from time to time).
(b) Reimbursement of Executive's living expenses under subsection
(a) shall be made promptly by the Company upon receipt of request by Executive.
Executive's request may be made not more than once per month, and must be
accompanied by reasonable documentation evidencing such expenses.
(c) Executive is encouraged to incur reasonable expenses for
promoting the Company's business. Such promotional expenses include travel,
entertainment (including memberships in social and athletic clubs), and
community service expenses. Executive is encouraged to attend seminars, trade
and professional meetings and conventions, and educational courses that are
reasonably related to Executive's employment with the Company. The cost of
travel, tuition or registration, food, and lodging for attending those
activities, and other charges of a type for which executive managers of the
Company typically are reimbursed, shall be paid by the Company. Other costs
shall be paid by Executive, unless the Company authorizes those costs. Executive
also will be entitled to reimbursement for reasonable employment expenses
incurred by him during the Term in accordance with the policies, practices and
procedures then as in effect generally with respect to other senior executives
of the Company. When Executive attends trade, Company or promotional events at
which spouses customarily attend, the Company also shall reimburse Executive for
expenses arising from the attendance of Executive's spouse.
3.11. Relocation Expenses.
(a) The Company shall reimburse the Executive for (i) the amount
of brokers' commissions paid in connection with the sale during the Term of
Executive's residence in either Charlotte, North Carolina or Blytheville,
Arkansas, (ii) broker's commissions payable in connection with Executive's
purchase during the Term of a residence in or near Birmingham, Alabama, (iii)
moving expenses (including storage) for Executive's goods from Charlotte, North
Carolina to either Blytheville, Arkansas or Birmingham, Alabama, and moving
expenses (including storage and reasonable travel expenses for Executive and his
family) from Blytheville, Arkansas or Charlotte, North Carolina to Birmingham,
Alabama. Such reimbursement shall be made with respect to any relocation made
during the Term.
(b) If Executive relocates to Birmingham, Alabama and sells his
current residence in Blytheville, Arkansas during the Term, the Company also
shall pay to the Executive the amount of any difference between (i) the fair
market value (or, if higher, the "Adjusted Cost") of Executive's current
residence in Blytheville, Arkansas and (ii) the price paid by the buyer of the
residence. For the purposes of this Section, fair market value shall be as
determined by the average of three appraisals made by qualified appraisers (the
cost of which shall be paid by the Company), and the "Adjusted Cost" shall be
the purchase price paid by Executive (or cost of
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<PAGE> 16
construction pursuant to a construction contract) plus the amount of all
improvements made by Executive and evidenced by reasonably satisfactory
documentation. In no event shall the Company's obligation under this Section
3.11(b) exceed the Adjusted Cost.
3.12. Fringe Benefits. Executive shall be entitled to fringe
benefits in accordance with the plans, practices, programs and policies as in
effect generally with respect to other executives of the Company.
3.13. Vacations and Leave.
(a) During the Term, at such reasonable times as the Board
shall permit, Executive shall be entitled, without loss of pay, to be absent
from the performance of his duties under this Agreement. In addition, Executive
shall be entitled to annual vacation in accordance with policies established by
the Board for executive officers.
(b) Executive shall be entitled to sick leave (without loss
of pay) in accordance with the Company's policies in effect from time to time,
and other personal and family leave as provided by law.
3.14. Effect of Termination on Restricted Stock Options and
Benefits. The obligations of the Company with respect to Grant Shares, Options,
other restricted stock or stock options granted to Executive under Company plans
or other agreements, and other employee benefits, shall be as provided in
Section 4.
3.15. Conflict. In the event of any conflict between this
Agreement and the terms of any benefit, severance, deferred compensation,
incentive or similar plan or agreement in which Executive is or becomes a
participant during the Term, the result most favorable to the Executive shall
apply unless Executive makes a specific written election otherwise, but
Executive shall not be entitled to duplicative payments or benefits.
4. Termination
4.1. Change of Control Defined. (a) For the purposes of this
Section, the following terms are used as defined below:
(i) "Exchange Act" means the Securities Exchange Act of
1934, as amended;
(ii) "Voting Securities" means any voting securities of the
Company;
(iii) "Person" is used as such term is used for purposes of
Section 13(d) or 14(d) of the Exchange Act;
(iv) "Beneficial Ownership" is used as such term is used
within the meaning of Rule 13d-3 promulgated under the Exchange Act;
(v) "Election Contest" is used as described in Rule 14a-11
promulgated under the Exchange Act, including any agreement intended to avoid or
settle any Election Contest;
8
<PAGE> 17
(vi) "Proxy Contest" means an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board, including any agreement intended to avoid or settle any Proxy Contest;
(vii) "Incumbent Board" means the individuals who as of the
date of this Agreement are members of the Board;
(viii) "Subsidiary" means any corporation or other entity with
respect to which the Company has the direct or indirect right to vote shares
representing 50% or more of the votes eligible to be cast in the election of
directors or managers of each such entity;
(ix) "Non-Control Acquisition" means an acquisition by (A)
an employee benefit plan (or a trust forming a part thereof) maintained by (1)
the Company or (2) any corporation or other Person of which a majority of its
voting power or its voting equity securities or equity interest is owned,
directly or indirectly, by the Company (for purposes of this definition, a
"Subsidiary") (B) the Company or its Subsidiaries, or (C) any Person in
connection with a "Non-Control Transaction";
(x) "Non-Control Transaction" means a merger, consolidation
or reorganization of the Company where:
(A) the stockholders of the Company immediately before
such merger, consolidation or reorganization, own directly or indirectly
immediately following such merger, consolidation or reorganization, at least
seventy percent (70%) of the combined voting power of all outstanding Voting
Securities of the corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement providing for such
merger, consolidation or reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving Corporation, or a corporation
beneficially directly or indirectly owning a majority of the voting securities
of the Surviving Corporation, and
(C) no Person other than (1) the Company or any of its
Subsidiaries, (2) any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the Surviving Corporation, or any of its
subsidiaries, or (3) any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of fifteen percent
(15%) or more of the then outstanding Voting Securities, has Beneficial
Ownership of fifteen percent (15%) or more of the combined voting power of the
Surviving Corporation's then outstanding voting securities.
(b) A "Change in Control" shall mean the occurrence during the
Term of any one of the following events:
(i) An acquisition (other than directly from the Company) of
Voting
9
<PAGE> 18
Securities by any Person, immediately after which such Person has
Beneficial Ownership of more than fifteen percent (15%) of the combined
voting power of the Company's then outstanding Voting Securities, but in
determining whether a Change in Control has occurred, Voting Securities
which are acquired in a Non-Control Acquisition under Section
4.1(a)(ix)(A) or (B) shall not constitute an acquisition which would cause
a Change in Control;
(ii) The individuals who, as of the date of this Agreement
are members of the Incumbent Board, cease for any reason to constitute at
least two-thirds of the members of the Board; but if the election, or
nomination for election by the Company's common stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Plan, be considered
as a member of the Incumbent Board, but no individual shall be considered
a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened Election Contest or
Proxy Contest;
(iii) Approval by stockholders of the Company of a merger,
consolidation or reorganization involving the Company, unless such merger,
consolidation or reorganization is a Non-Control Transaction;
(iv) A complete liquidation or dissolution of the Company; or
(v) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).
(c) Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then outstanding
Voting Securities as a result of the acquisition of Voting Securities by the
Company which, by reducing the number of Voting Securities then outstanding,
increases the proportional number of shares Beneficially Owned by the Subject
Persons, provided that if a Change in Control would occur (but for the operation
of this sentence) as a result of the acquisition of Voting Securities by the
Company, and after such share acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional Voting Securities which increases
the percentage of the then outstanding Voting Securities Beneficially Owned by
the Subject Person, then a Change in Control shall occur.
4.2. Termination for Cause. The Company may terminate Executive's
employment for Cause. For purposes of this Agreement, a termination of
employment is for "Cause" if Executive (i) has been convicted of a felony, (ii)
intentionally engaged in conduct that is demonstrably and materially injurious
to the Company, monetarily or otherwise, or (iii) has refused to attempt to
perform his employment duties under this Agreement (other than due to temporary
physical or mental incapacity not constituting Permanent Disability) and
Executive has not undertaken his employment duties within 5 business days after
demand has been made by the Company (but Executive's temporary performance of
duties followed by resumption of refusal to perform occurring within 12 months
from such demand will not require another demand by the Company). However, no
termination of Executive's employment shall be for Cause as set forth in clause
(ii)
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<PAGE> 19
or (iii) above until (A) there shall have been delivered to Executive a copy of
a written notice setting forth that Executive was guilty of the conduct set
forth in clause (ii) or (iii) and specifying the particulars thereof in detail,
and (B) Executive shall have been provided an opportunity to be heard by the
Board (with the assistance of Executive's counsel if Executive so desires). If
within 5 business days of such hearing the Board does not confirm in writing its
determination of Cause and the termination of employment of Executive, then the
initial notice shall be deemed null and void (subject, however, to Executive's
right to treat the initial notice as effective, notwithstanding the Board's
failure to confirm termination for Cause, as set forth below). No act, or
failure to act, on Executive's part, shall be considered "intentional" unless he
has acted, or failed to act, with an absence of good faith and without a
reasonable belief that his action or failure to act was in the best interest of
the Company. Any action, or failure to act, by Executive in furtherance of a
Company objective that the Board (or committee of the Board) approved or of
which the Board (or committee of the Board) was aware shall not constitute
Cause. Notwithstanding anything contained in this Agreement to the contrary, no
failure to perform by Executive after a notice of termination is given by
Executive shall constitute Cause for purposes of this Agreement. If the Company
asserts grounds for termination for Cause but withdraws the assertion (or fails
to make the confirmation of termination for Cause after hearing, as described
above), Executive shall have the option of accepting termination at any time
within 30 days of such withdrawal (or within 30 days after the expiration of 5
days after such hearing, as applicable), in which case the termination shall be
deemed as having been made by the Company without Cause. A plea of nolo
contendere or its equivalent, shall not, of itself, constitute Cause or create a
presumption that the Executive's conduct constitutes Cause. Any determination of
Cause by the Board will not be binding on the Executive and, if challenged in an
action for breach or for injunctive relief, the Company shall retain the burden
of proof.
4.3. Death or Permanent Disability. Executive's employment shall
terminate automatically upon Executive's death. If Executive suffers a Permanent
Disability (as defined below) which results in an absence from full-time
performance of his duties for a period of 180 consecutive days or if longer,
such period as is required before Executive is entitled to disability payments
under the Company's disability insurance policy covering Executive, the Company
shall be entitled to terminate his employment. For purposes of this Agreement,
"Permanent Disability" shall mean a physical or mental impairment which
substantially limits a major life activity of Executive and which renders
Executive unable to perform the essential functions of his position. Executive
shall be entitled to the compensation and benefits provided for under this
Agreement for any period during the Term and prior to the establishment of the
Executive's Permanent Disability during which the Executive is unable to work
due to a physical or mental infirmity. Notwithstanding anything contained in
this Agreement to the contrary, until the termination date specified in a notice
of termination relating to Executive's Permanent Disability, Executive shall be
entitled to return to his position with the Company as set forth in this
Agreement, in which event no Permanent Disability of Executive will be deemed to
have occurred.
4.4. Resignation for Good Reason. Executive may resign for "Good
Reason." For purposes of this Agreement, "Good Reason" means the resignation of
Executive after (i) the Company fails to nominate Executive for election as a
director of the Company for re-election upon termination of Executive's initial
term or any successive term as director, or if nominated the shareholders of the
Company do not elect Executive for such term, (ii) Executive is removed
11
<PAGE> 20
from or not named to serve on the Executive Committee of the Board, except where
Executive is also removed as a director for Cause (iii) Executive is removed as
a director by the Board or shareholders for reasons other than would constitute
Cause, or (iv) the Company, without the consent of Executive, materially
breaches this Agreement, Executive notifies the Company in writing of the nature
of such material breach and the Company does not correct such material breach
within 30 calendar days after its receipt of such notice. The Company agrees
that a material breach for purposes of this provision shall include (i) a change
in Executive's titles or offices without his consent, (ii) the assignment of
Executive of duties that are materially inconsistent with Executive's position
or the withdrawal of duties, responsibilities or authority previously granted to
Executive, (iii) a change in Executive's principal work location by more than 25
miles from Birmingham, Alabama without his consent (or more than 25 miles from
any other principal location previously agreed to by Executive), (iv) failure by
the Company to increase Executive's Base Salary in accordance with Section 3.1,
or (v) at any time following a Change of Control, the Company fails to maintain
any benefit or compensation plans in which the Executive was participating (or
fails to provide equivalent plans) or reduces the Executive's benefits under any
such plan as in effect immediately prior to the Change of Control, or fails to
provide Executive with fringe benefits or the same number of vacation days to
which he was entitled immediately prior to the Change of Control. Executive's
right to terminate his employment pursuant to this Section shall not be affected
by his incapacity due to physical or mental illness.
4.5. Obligations of the Company Upon Termination.
4.5.1. Termination for Cause or Resignation Without Good Reason.
If Executive is terminated for Cause or if Executive resigns from the Company
prior to a Change of Control without Good Reason or resigns after one year from
a Change in Control without Good Reason, this Agreement shall terminate without
further obligation to Executive other than for the timely payment of: (i)
Executive's annual Base Salary through the date of termination to the extent not
theretofore paid, any vested Grant Shares, and any unpaid Bonus to which
Executive is entitled, on or prior to the date of termination, (ii) any
compensation previously deferred by Executive (together with any accrued
interest or earnings thereon) and accrued vacation pay, and reimbursable
expenses incurred under Sections 3.10 and 3.11, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (i) and (ii) shall
be hereinafter referred to as the "Accrued Obligations"), which shall be paid to
Executive within 30 days of the termination date. Executive's rights upon
termination as described in this section under savings, retirement or similar
plans in which Executive is a participant shall be governed by the terms of such
plans.
4.5.2. Termination for Death or Permanent Disability. If
Executive's employment is terminated by the Company because of Executive's death
or Permanent Disability, this Agreement shall terminate without further
obligation to Executive other than for the timely payment to Executive or his
estate or beneficiary, as applicable, of (i) the Accrued Obligations, (ii) the
payment of a Bonus for the current fiscal year equal to the Bonus paid with
respect to the prior fiscal year, prorated for the current fiscal year based on
the date of termination, and (iii) payment to Executive of any amounts due
pursuant to the terms of any applicable savings and retirement plans and welfare
benefit plans.
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<PAGE> 21
4.5.3. Termination by the Company for Other than Cause, Death or
Disability; Resignation By Executive for Good Reason or Within One Year After a
Change of Control. If the Company terminates Executive's employment for other
than Cause, death or Permanent Disability, or if Executive resigns for Good
Reason or resigns within one year after a Change of Control without Good Reason,
this Agreement shall terminate with the following obligations owed by the
Company to Executive: (i) the timely payment of Accrued Obligations, and (ii)
the payment of a Bonus for the current fiscal year equal to the Bonus paid with
respect to the prior fiscal year, prorated for the current fiscal year based on
the date of termination, and (iii) a "Severance Payment" as provided herein. The
Severance Payment shall be a lump sum cash payment equal to the largest of the
following amounts: (i) a sum equal to (A) $3,000,000 less all Base Salary paid
or payable through the date of termination, plus (B) the "Bonus Component" (as
defined an computed as set forth below), (ii) the severance payment due to the
Executive under the Company's Severance Plan, and (iii) an amount equal to (A)
three times the Executive's current Base Salary plus (B) the Bonus Component.
For the purposes of this Section, the Bonus Component shall be calculated as
follows:
(i) if Executive's employment terminates on or after January 1,
2003, the Bonus Component shall be an amount equal to three times the
average of the Bonus payments payable for the past three fiscal years;
(ii) if Executive's employment terminates after December 31, 2000
and prior to January 1, 2003, the Bonus Component shall be an amount
equal to three times the Bonus payment payable with respect to the
fiscal year preceding the year in which employment terminates; and
(iii) if Executive's employment terminates on or before December
31, 2000, the Bonus Component shall be an amount equal to three times
what the Bonus Payment would have been if Executive had been employed
by the Company throughout 2000 and a Bonus Payment (calculated in
accordance with Section 3.2) had been payable with respect to that
year.
4.5.4. Continuation of Benefits. If Executive's employment is
terminated (i) by the Company without Cause, (ii) by the Executive for Good
Reason, or (iii) at anytime within one year after a Change of Control except for
Cause, Executive shall continue to participate in the Company's pension and
welfare benefit plans, until the first anniversary of the termination of
Executive's employment (the "Benefit Extension Period"); if Executive is not
eligible to participate in any such plan, the Company shall provide him with a
substantially equivalent benefit. To the extent a benefit cannot be provided
under the terms of the applicable plan, policy or program, the Company shall
provide a comparable benefit under another plan or make a cash payment of
equivalent value. Executive's rights under such benefit plans during the Benefit
Extension Period will be on the same terms as if Executive's employment had
continued through the Benefit Extension Period, except that Executive shall
cease to accrue all service for purposes of determining his entitlement to, and
the amount of, his pension benefits upon the Executive's
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<PAGE> 22
commencement of receipt of benefits under any of the Company's pension plans and
Executive's rights under welfare benefit plans during the Benefit Extension
Period shall cease on any earlier date on which Executive becomes eligible for
comparable welfare benefits from a subsequent employer. Other than as provided
in this Section, Executive's vested right to benefits under the benefit plans
and the amount of such benefits shall be determined based on Executive's age and
service as though he had remained employed under this Agreement through the
Benefit Extension Period. If under any other agreement or plan Executive is
entitled to more favorable benefits, or a longer benefit continuation period,
than provided hereby, the terms of such agreement or plan shall apply
4.5.5. Tax Reimbursement. (a) If any payment or benefit (within
the meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as
amended (the "Code")), to the Executive or for his benefit paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment with the Company
or a Change of Control (a "Payment" or "Payments"), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are collectively referred to as
the "Excise Tax"), then the Executive will be entitled to receive an additional
payment (a "Gross-Up Payment"). The amount of the Gross Payment will be such
that after payment by the Executive of all taxes (including any interest or
penalties, other than interest and penalties imposed by reason of the
Executive's failure to file timely a tax return or pay taxes shown due on his
return, imposed with respect to such taxes and the Excise Tax), including any
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) An initial determination as to whether a Gross-Up Payment
is required pursuant to this Agreement and the amount of such Gross-Up Payment
shall be made by an accounting firm selected by the Company and reasonably
acceptable to the Executive, which is designated as one of the five largest
accounting firms in the United States (the "Accounting Firm"). The Accounting
Firm shall provide its determination (the "Determination"), together with
detailed supporting calculations and documentation, to the Company and the
Executive within five days of the termination date if applicable, or such other
time as requested by the Company or by the Executive (provided the Executive
reasonably believes that any of the Payments may be subject to the Excise Tax)
and if the Accounting Firm determines that no Excise Tax is payable by the
Executive with respect to a Payment or Payments, it shall furnish the Executive
with an opinion reasonably acceptable to the Executive that no Excise Tax will
be imposed with respect to any such Payment or Payments. Within ten days of the
delivery of the Determination to the Executive, the Executive shall have the
right to dispute the Determination (the "Dispute"). The Gross-Up Payment, if
any, as determined pursuant to this Section 4.5.5 shall be paid by the Company
to the Executive within five days of the receipt of the Determination. The
existence of the Dispute shall not in any way affect the Executive's right to
receive the Gross-Up Payment in accordance with the Determination. Upon the
final resolution of a Dispute, the Company shall promptly pay to the Executive
any additional amount required by such resolution. If there is no Dispute, the
Determination shall be binding, final and conclusive upon the Company and the
Executive subject to the application of subsection (c), below.
14
<PAGE> 23
(c) Notwithstanding anything contained in this Agreement to the
contrary, if according to the Determination an Excise Tax will be imposed on any
Payment or Payments, the Company shall pay to the applicable government taxing
authorities as Excise Tax withholding, the amount of the Excise Tax that the
Company has actually withheld from the Payment or Payments.
4.5.6. Options and Restricted Stock Rights Upon Termination.
(a) If Executive's employment terminates under the provisions of
Section 4.5.1, any of Executive's Options that are vested on or prior to the
date of termination shall not be forfeited. If Executive is terminated for
Cause, such vested Options may be exercised by Executive or by Executive's legal
representative or representatives or the persons who become entitled to such
property under Executive's will or under the laws of descent and distribution
(referred to herein as "Executive's Successors") at any time within the earlier
of the date on which such Options otherwise expire and one year from the date of
termination of employment, and if Executive resigns prior to a Change of Control
or within one year after a Change of Control without Good Reason, such vested
Options may be exercised by Executive or Executive's Successors at any time
within the earlier of the date on which such Options otherwise expire and two
years from the date of termination. Any unvested Grant Shares or Options shall
be forfeited.
(b) If Executive's employment terminates under the provisions of
Section 4.5.2, all unvested Options shall vest immediately upon the date of
termination and all of the Executive's unexercised Options may be exercised by
Executive or Executive's Successors at any time within one year of termination.
All Grant Shares subject to forfeiture at the date of termination under Section
4.5.2 shall no longer be subject to forfeiture and shall be released to
Executive or Executive's estate.
(c) If Executive's employment terminates under the provisions of
Section 4.5.3, all unvested Options shall vest immediately upon the date of
termination and all of Executive's unexercised Options may be exercised by
Executive or Executive's Successors at any time within five years from the date
of termination. All Grant Shares subject to forfeiture at the date of
termination shall no longer be subject to forfeiture and shall be released to
Executive.
(d) The vesting and forfeiture, upon termination of Executive's
employment, of any restricted stock or options owned by Executive under any
Company plan or agreement, and the Executive's rights under any other employee
benefit plan or agreement, other than those under Sections 3.3 or 3.4 of this
Agreement, shall be governed by the provisions of such plan or other agreement.
5. Non-Competition; Confidentiality
5.1. Non-Competition; Non-Solicitation of Customers. At no time during
the Term of Executive's employment by the Company or, if Executive is terminated
under Section 4.5.3 and the Severance Payment is paid, for a period of 12 months
after termination of employment will Executive, directly or indirectly, alone or
as an employee, independent contractor or consultant of any type, partner,
officer, director, creditor, owner, substantial (i.e., 5.0% or greater)
stockholder
15
<PAGE> 24
or holder of any option or right to become a substantial stockholder in or owner
of an entity or organization, (i) engage in any business that competes with that
of the Company or any subsidiary of the Company, or (ii) solicit or attempt to
divert the business of any person or entity that had been a customer of the
Company during the two years prior to termination of Executive's employment
under this Agreement. For the purpose of this Section 5.1, (i) a business is
deemed to "compete" with the Company if such company or other entity has more
than 25% of its sales in products that compete with products then being sold by
the Company or any subsidiary, or that will compete with products that are then
in development by the Company or any subsidiary (as evidenced by the business
records of the Company or any subsidiary) for its most recent fiscal year then
concluded, and (ii) to "solicit the business" of a customer or former customer
of the Company means to attempt to sell or otherwise provide products to such
customer that are competitive with products provided by the Company (or
competitive with products that are in development by the Company, as described
above, at the time of termination of Executive's employment). If Executive
remains employed by the Company for the Base Term, this non-competition
agreement shall not be in effect as to the Executive following termination of
employment.
5.2. Confidentiality. Except as may be required by Executive's
employment by the Company, Executive will not, during his employment and for two
years thereafter, intentionally divulge, disclose or communicate to any person,
corporation or other entity any material and confidential information concerning
the products, services or business of the Company, its subsidiaries, or
affiliates. Subject to the foregoing, the information not to be disclosed
includes policies, prices, expenses, other financial information, contractual
relationships, past or contemplated actions, personnel matters, marketing or
sales data and written or oral communications or understandings of any sort of
the Company or any customer with which the Company does business. This
nondisclosure agreement shall not apply to (i) information that is generally
available to the public, unless made public by Executive in breach of this
Agreement or (ii) disclosure by Executive pursuant to legal requirement or
process (in which case Executive will give prior notice to the Company, to the
extent practicable, so that the Company may try to protect its interests).
5.3. Non-Solicitation of Employees. Executive agrees that during his
employment by the Company and for one year following the termination, for any
reason, of such employment, he will not, either directly or indirectly, on his
own behalf or in the service of or on behalf of others, solicit, divert or hire
away, or attempt to solicit, divert or hire away any person employed by the
Company, whether or not such employee is a full-time employee or a temporary
employee of the Company and whether or not such employment is pursuant to a
written agreement and whether or not such employment is for a determined period
or is at will.
6. Indemnification
(a) In addition to any indemnification required by law, under the
Certificate of Incorporation or bylaws of the Company, under a resolution of the
Board, under Company policy or under any other agreement between the Company and
Executive, the Company shall indemnify and hold Executive harmless, to the
fullest extent allowed by law, against:
16
<PAGE> 25
(i) expenses, including attorneys' fees, incurred by him in
connection with any threatened, pending or completed action, suit or proceeding
(including appeals), whether or not brought by or on behalf of the Company or by
a third party, and whether civil, criminal, administrative, investigative or
arbitrative (a "Proceeding"), seeking to hold him liable by reason of the fact
that he is or was acting as an agent, officer or other employee of the Company
or as a director of the Company, or he is or was acting in connection with the
business of the Company, or he is or was acting at the request of the Company as
a director, officer, partner, trustee, employee or agent for any other
corporation, partnership, limited liability company, joint venture, trust or
other enterprise, or as a trustee or administrator under an employee benefit
plan, and
(ii) payments for which he is liable or under made by him in
satisfaction of any judgment, money decree, fine, tax, penalty or settlement for
which he may have become liable with respect to such capacity in any such
Proceeding.
Such amounts due from the Company shall include interest from the date of
payment by Executive (if paid by Executive) at the "prime rate" as most recently
reported in The Wall Street Journal (or a comparable rate if publication of the
prime rate is discontinued) (the "Prime Rate") on the date of such payment by
Executive (or, if not published on such date, the nearest date on which such
rate is published). Notwithstanding the above, Executive shall be entitled to
indemnification rights equal to any more favorable rights granted to any
director or officer of the Company.
(b) The Company shall have the burden of proving that the Company is
not required to indemnify Executive under this Agreement.
(c) At the request of Executive, the Company shall, at the option of
Executive, pay or advance to Executive the expenses incurred by him, including
attorneys' fees in defending a Proceeding for which indemnification is claimed
in advance of final disposition, upon receipt of (i) evidence of Executive's
obligation and (ii) if then required under the general Corporation Law of the
State of Delaware, an undertaking by or on behalf of the Executive to repay such
amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Company against such expenses. The undertaking need not be
secured and shall be sufficient without reference to the financial ability of
the Executive to make repayment.
(d) Executive also shall be entitled to recovery of expenses, including
attorneys' fees, incurred in connection with enforcement of indemnification
rights under this Agreement, plus interest from the date of payment at the Prime
Rate as most recently reported in The Wall Street Journal (or a comparable rate
if publication of the prime rate is discontinued) on the date of such payment by
Executive (or, if not published on such date, the nearest date on which such
rate is published).
(e) Within ten days after receipt of a claim for indemnification under
this Agreement, accompanied by evidence of the liability or expense, the Company
shall pay the indemnification claim or cause it to be paid unless the Company
claims that the indemnification claim is not covered by this Agreement. If the
Company believes that the indemnification claim is not covered it shall so
advise the Executive in writing within the ten day period.
17
<PAGE> 26
(f) Executive shall give notice to the Company promptly and in any
event no later than ten days after Executive is served with written notice of
any claim against Executive that may give rise to a claim for indemnification
under this Agreement. A copy of any documents which have been served upon
Executive shall accompany such notice or, where this is not feasible, shall be
delivered to the Company as soon as reasonably practicable thereafter.
(g) Subject to any rights of or duties to any insurer, reinsurer or
other third party having liability for any claim made or brought against
Executive, the Company shall have the right, at its option, to assume, at its
own expense, the control of the defense thereof, including the employment of
legal counsel reasonably satisfactory to Executive. If the Company exercises the
foregoing right, the Executive shall cooperate with the Company and make
available to it all information under the control of the Executive that is
relevant to the claim. If the Company decides not to exercise the foregoing
right, the Executive, at the request of the Company, shall keep the Company
reasonably apprised of the progress of the defense of the claim.
(h) Nothing herein shall preclude Executive, at his sole discretion and
expense, from employing legal counsel of his choosing to participate in the
defense of any claim made or brought against him in addition to legal counsel
employed by the Company.
(i) If the Company elects to assume control of the defense of any
claim, the Company shall not settle or compromise the claim for or on behalf of
Executive without his written consent. However, if the Company receives an offer
of settlement or compromise from the other party or parties to the claim in a
particular amount or obtains a commitment from such party or parties to accept a
compromise or settlement in such amount if offered, and if such settlement or
compromise requires only the payment of such amount, the granting of an
appropriate release of Executive or similar accommodation, and no other relief,
and the Executive refuses to consent thereto and elects to continue to defend
the claim, then the extent of the indemnity to which Executive shall be entitled
hereunder shall be limited to such amount and the legal fees and expenses that
Executive would have been entitled to receive from the Company if such
compromise or settlement has been accepted.
7. Arbitration
Any controversy or claim arising out of or relating to this Agreement,
its enforcement or interpretation, or because of an alleged breach, default or
misrepresentation in connection with any of its provisions, or any failure to
reach agreement on the value of the Company's stock as contemplated by Section
3.4.2, shall be submitted to arbitration to be held in Birmingham, Alabama, in
accordance with the American Arbitration Association's National Rules for the
Resolution of Employment Disputes. All expenses of arbitration, including the
arbitrator's fees and expenses, shall be paid entirely by the Company.
8. Successors
8.1. This Agreement is personal to Executive and shall not, without the
prior written consent of the Company be assignable by Executive.
18
<PAGE> 27
8.2. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns and any such successor or assignee
shall be deemed substituted for the Company under the terms of this Agreement
for all purposes. As used herein, "successor" and "assignee" shall include any
person, firm, corporation or other entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise.
9. Waiver
No waiver of any breach of any term or provision of this Agreement
shall be construed to be, nor shall be, a waiver of any other breach of this
Agreement. No waiver shall be binding unless in writing and signed by the party
waiving the breach.
10. Modification
This Agreement may not be amended or modified other than by written
agreement executed by Executive and the Company, with the approval of the Board
of Directors.
11. Savings Clause
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
12. Complete Agreement
This Agreement constitutes and contains the entire agreement and final
understanding concerning Executive's employment with the Company and the other
subject matters addressed herein between the parties. It is intended by the
parties as a complete and exclusive statement of the terms of their agreement.
It supersedes and replaces all prior negotiations and all agreements proposed or
otherwise, whether written or oral, concerning the subject matter hereof. Any
representation, promise or agreement not specifically included in this Agreement
shall not be binding upon or enforceable against either party. This is a fully
integrated agreement.
13. Governing Law
This Agreement shall be deemed to have been executed and delivered
within the State of Delaware, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with, and governed by,
the laws of the State of Delaware without regard to principles of conflict of
laws.
14. Construction
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the
19
<PAGE> 28
provisions hereof and shall have no force or effect. The term "including" is
illustrative and not exclusive.
15. Communications
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if deliverable or if
mailed by registered or certified mail, postage prepaid, addressed to Executive
at the address given by Executive to the Company for payroll and tax reporting
purposes, and addressed to the Company at: Birmingham Steel Corporation,1000
Urban Center Drive, Suite 300, Birmingham, Alabama 35242-2516, ATTN: Corporate
Secretary
Either party may change the address at which notice shall be given by written
notice in the above manner.
16. Legal Fees and Expenses
The Company shall pay all legal fees and expenses, if any, incurred by
Executive in obtaining, enforcing, or defending any right or benefit provided by
this Agreement, if successful in whole or in part (including any settlement),
and the reasonable legal fees incurred by Executive in connection with the
formation of this Agreement.
17. Execution
This Agreement is being executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Photographic copies of such signed counterparts may
be used in lieu of the originals for any purpose.
18. Survival
The provisions of Sections 3.3(g), 3.4 (as modified by Section 4.5.6),
3.14, 3.15, 4.5, and 5-18 of this Agreement shall survive termination of
Executive's employment or termination of other obligations under this Agreement.
20
<PAGE> 29
IN WITNESS THEREOF, the parties hereto have executed this Agreement as
of the date first above written.
-------------------------------------
John D. Correnti
BIRMINGHAM STEEL CORPORATION
ATTEST By:
-----------------------------------
By: Its:
---------------------------- ----------------------------------
Secretary
-------------------
[Corporate Seal]
21
<PAGE> 30
Exhibit A to Employment Agreement
Between Birmingham Steel Corporation and John D. Correnti
STOCK OPTION ADJUSTMENTS
A. Generally. The Exercise Price and the number of shares of purchasable upon
the exercise of an Option are subject to adjustment from time to time as
provided in this Exhibit A as follows:
(1) If there shall occur any extraordinary dividend or other
extraordinary distribution in respect of the shares (whether in the form of
cash, shares, other securities, or other property), or any recapitalization,
stock split (including a stock split in the form of a stock dividend), reverse
stock split, reorganization, merger, combination, consolidation, split-up,
spin-off, combination, repurchase, or exchange of shares or other securities of
the Company, or there shall occur any other fundamental change or event in
respect of the shares or a sale of substantially all the assets of the Company
as an entirety, then the Company shall:
(a) equitably and proportionately adjust (i) the number and type of
shares subject to the then outstanding Options, and (ii) the Exercise Price of
the Options; or
(b) in the case of an extraordinary dividend or other distribution,
split-up, or spin-off, make an appropriate, equitable provision for a
distribution upon exercise of the Options of equivalent value (in property,
securities or cash) to the distribution to shareholders; or
(c) in the case of a merger, combination or other reorganization
that the Company does not survive, or in a sale of assets, provide for the
substitution or exchange of the Options (or the shares deliverable on exercise
of the Options) for a right to acquire the consideration payable to holders of
other shares of the Company upon or in respect of such event.
However, in each case described in clauses (a) through (c), above, no such
adjustment shall fail to provide, upon a merger or other reorganization or
similar event of the type described above that the Company does not legally
survive, for a conversion of the Options into a right to acquire consideration
at least as favorable to Executive as that distributed or payable upon or in
respect of such event in respect of the number of shares as to which the Options
is or thereafter may be exercised, with appropriate, proportionate and equitable
adjustments to the Exercise Price and any other affected features.
If, in the case of any such event, the stock or other securities or property
receivable thereupon by shareholders of the Company includes shares of stock or
other securities or property of or from an entity other than a successor legally
bound hereby, such other entity shall execute and deliver for the benefit of
Executive an agreement to be bound hereby, together with such additional
provisions to protect the interests of Executive as the Company shall reasonably
consider necessary by reason of the foregoing or as the Company may otherwise
provide.
(2) If Options are not exercised prior to a dissolution of the Company,
express provision shall be made in the plan of dissolution or otherwise for the
substitution or other settlement of such Options for the payment of the fair
value thereof, or upon exercise, for the payment of value equivalent
A-1
<PAGE> 31
to that paid in the dissolution to the holders of a like number of shares as
then are subject to the Options.
(3) Except as provided herein, adjustments under Section A(1) or (2) of
this Exhibit A shall become effective immediately after the record date for the
determination of shareholders entitled to receive the applicable rights
contemplated thereby.
(4) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% of the Exercise
Price per share, but any adjustments that by reason of this subsection (4) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section A of Exhibit A shall
be made to the nearer cent or to the nearer one-hundredth of a share, as the
case may be. The Company shall not be required to issue any fractional share,
but any fractional share interest shall be paid in cash equal to the fair market
value of the applicable percentage of a share in lieu thereof or, at the
Company's election, paid in a fractional or whole share.
(5) The provisions of Section A(1) and (2) of this Exhibit A shall bind
Executive to the adjustments or substitutions made by the Company in good faith
in accordance with the terms hereof. These provisions also shall apply to any
successive recapitalization, reorganization or other change.
B. Notices to Executive.
(1) Adjustments. Upon any adjustment of the Exercise Price or the
number of shares Executive shall be entitled to purchase upon exercise of the
Options pursuant to Section A of this Exhibit A, the Company within 20 days
thereafter shall (a) mail to Executive (at the address last appearing on the
Company's records for such purposes) a certificate of a firm of independent
public accountants of recognized standing selected by the Board of Directors of
the Company (who may be the regular auditors of the Company) setting forth the
Exercise Price after such adjustment and the adjusted number of shares (or
fraction thereof) purchasable upon exercise of the Options and setting forth in
reasonable detail the method of calculation and the facts upon which the
calculation is based.
(2) Distributions; Certain Major Events. If:
(a) the Company shall declare a dividend (or any other
distribution) payable to the holders of shares otherwise than in cash; or
(b) the Company shall authorize the granting to the holders of
shares of rights to subscribe for or purchase any shares of any class or of any
other rights; or
(c) the Company shall authorize any reclassification or change of
the shares (other than a subdivision or combination of its outstanding shares),
or any reclassification, consolidation, merger or other reorganization to which
the Company is a party and for which approval of any
A-2
<PAGE> 32
shareholders of the Company is required, or the sale or conveyance of all or
substantially all the property or business of the Company; or
(d) there shall be proposed any voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then the Company shall cause to be mailed to Executive, (at the address last
appearing on the Company's records for such purposes), at least 20 days prior to
the applicable record date or effective date hereinafter specified, by first
class mail, postage prepaid, a written notice stating (i) the date as of which
the holders of record of shares to be entitled to receive any such rights,
warrants or distribution are to be determined, or (ii) the date on which any
such consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it is
expected that holders of record of shares shall be entitled to exchange their
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, reorganization, conveyance, transfer,
dissolution, liquidation or winding up. If any action referred to in this
subsection B(2) requires the approval of holders of shares, the Company shall
cause notice of the proposed action and the record date for the determination of
holders of shares entitled to vote on such matter to be mailed to Executive (at
such address), at least 20 days prior to such record date, by first class mail,
postage prepaid. The failure to give any notice required by this subsection B(2)
or any defect therein shall not affect the legality of any such
reclassification, consolidation, merger, reorganization, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any action, but the
failure to give any notice will extend the period during which the Options may
be exercised by a like number of days and during which the holder is entitled to
receive securities or other property, as the case may be, upon exercise of the
Options.
A-3
<PAGE> 33
Exhibit B to Employment Agreement
Between Birmingham Steel Corporation and John D. Correnti
FORM OF EXERCISE OF OPTION
(To be executed upon each exercise of Option)
The undersigned hereby irrevocably elects to exercise the right, evidenced by
the Employment Agreement dated as of _____, ______ (the "Agreement"), to
purchase _______ shares (the "shares") of common stock of Birmingham Steel
Corporation and herewith tenders payment in full for such shares as follows:
[check applicable box(es)]
[ ] by certified or official bank check payable to the order of
Birmingham Steel Corporation in the amount of $_______________
[ ] by electronic funds transfer in the amount of $_______________
[ ] by delivery of ____________ shares with a value of $____________
per share, or $____________ in the aggregate, or options for ________ shares
having a value (as determined in accordance with such Agreement) of $__________
in accordance with the terms of the Agreement.
Executive requests that a certificate for such shares be registered to Executive
and delivered to:
- --------------------------------------------------------------------------------
If the number of shares for which exercise is made hereby is less than all of
the shares purchasable under the Agreement, Executive represents that he has
made (and authorizes the Company to likewise make) notation of the partial
exercise and the date hereof on the Option Share Exercise Record as provided by
the Agreement.
Dated:
-------------------------------
- -------------------------------------
John D. Correnti
- -------------------------------------
Insert Taxpayer I.D. No. of Executive
B-1
<PAGE> 34
ACCEPTED BY:
BIRMINGHAM STEEL CORPORATION Dated:
---------------------
By:
---------------------------
Name:
------------------------
Title:
------------------------
B-2
<PAGE> 35
Notational Record of Exercise:
<TABLE>
<CAPTION>
======================================================================================================================
Date Number of Shares Amount Received
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
======================================================================================================================
</TABLE>
B-3
<PAGE> 1
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement"), entered into as of the
1st day of July, 1999, by and between The United Company, a Virginia corporation
(the "Company"), and John D. Correnti, an individual (the "Optionee").
RECITALS
A. The Company is the lead shareholder of a shareholder group
which intends to undertake a proxy solicitation (the "Proposed Solicitation")
for the election of directors constituting at least a majority of directors of
Birmingham Steel Corporation (the "Target").
B. The Company desires to engage the Optionee, through
Optionee's affiliated company, as a temporary consultant to perform services for
the Company's benefit during the Proxy Solicitation, pursuant to the terms and
provisions of that certain Consulting Agreement dated the date hereof (the
"Consulting Agreement").
C. In order to induce the Optionee to enter into the
Consulting Agreement pursuant to the terms and condition set forth therein, the
Company desires to grant the Optionee an option to purchase the number shares of
common stock of Target owned by the Company set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Grant of Option. Subject to the terms and conditions hereinafter set
forth, the Company hereby grants to the Optionee an option to purchase one
hundred thousand (100,000) shares of common stock in Target (subject to
adjustment as provided in Section 4, below) at a price of $4.88 per share (as
adjusted pursuant to Section 4, below, the "Option Price"). Such option is
hereinafter referred to as the "Option" and the shares of Stock purchasable upon
exercise of the Option are hereinafter sometimes referred to as the "Option
Shares." Subject to such further limitations as are provided herein, the Option
shall vest with respect to all Option Shares immediately.
2. Termination of Option. The Option and all rights hereunder with
respect thereto, to the extent such rights shall not have been exercised (or
notice of such exercise given pursuant to Section 3(a) below), shall terminate
and become null and void after the earlier to occur of:
(a) Six (6) months after the 1999 annual shareholder meeting
of Target, at which time the contemplated Proxy Solicitation will be made; or
(b) June 30, 2000.
<PAGE> 2
3. Exercise of Option.
(a) The Optionee may exercise the Option, from time to time,
with respect to all or any part of the number of Option Shares then exercisable
hereunder by giving the Company written notice of intent to exercise. The notice
of exercise shall specify the number of Option Shares as to which the Option is
to be exercised, the manner of payment (in accordance with Section 3(b) below),
and the date of exercise thereof, which date shall be at least five (5) days
after the giving of such notice, unless an earlier time shall have been mutually
agreed upon in writing.
(b) Full payment by the Optionee of the Option Price for the
Option Shares (the "Exercise Price") purchased shall be made on or before the
exercise date specified in the notice of exercise in cash or its equivalent, or
alternatively, the Optionee may elect to finance the Exercise Price by granting
the Company a promissory note (the "Promissory Note") for the amount of the
Exercise Price under commercially reasonable terms, provided that such
Promissory Note must include the following terms:
(i) The Promissory Note shall be interest free if the
notice of exercise (as described in Section 3(a) above) is delivered to the
Company prior to the date of the 1999 annual shareholder meeting of Target, and
after such date, the interest rate shall be the prime rate as reported from
time-to-time in the "Money Rates" section of the Wall Street Journal.
(ii) The principal and interest due under the
Promissory Note shall be payable in full no later than three (3) years after the
date of exercise.
(iii) The Company shall retain a security interest in
the Option Shares, and both parties shall take all actions necessary in order to
perfect such security interest. The parties will select an attorney or other
third party to hold certificates for the pledged shares as escrow agent ("Escrow
Agent") for Company and Optionee, and shall execute a pledge agreement creating
a security interest in such shares in favor of Company, to secure payment of the
related Promissory Note.
(c) The exercise date shall be the later of the date specified
in the Optionee's notice, or the date the Company receives payment of the
Exercise Price, for the Option Shares to be purchased upon exercise of the
Option.
Issuance of a Promissory Note shall be deemed receipt of the Exercise Price for
the purposes of this Agreement.
(d) Upon exercise of the Option and payment of the Exercise
Price, the Company shall cause to be delivered to the Optionee, stock
certificates or other appropriate transfer documents for an appropriate number
of shares based upon the number of shares purchased under the Option. If a
Promissory Note is granted with respect to the Exercise Price the Company will
deliver certificates for the Option Shares purchased by such exercise to the
Escrow Agent pending payment of the related Promissory Note. At the end of each
calendar quarter, the Escrow Agent will be instructed to release to the Optionee
certificates for the number of Option Shares determined by multiplying the total
number
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of Option Shares held at that time in escrow by the fractions determined by
dividing the total amount of all principal payments made by Optionee on the
Promissory Note during such quarter by the total outstanding balance of the
Promissory Note at the beginning of such quarter.
(e) All Option Shares deliverable by the Company under this
Agreement will be delivered to Optionee free of all liens, claims, encumbrances
(other than the Company's retained security interest as provided herein) and
restrictions on transfer. Such Option Shares shall have been acquired from
Target pursuant to a registration statement filed by Target with the United
States Securities and Exchange Commission or shall have been purchased by the
Company in the public market.
(f) Upon a valid exercise of all or a portion of the Option,
Optionee will be deemed the beneficial owner of the Option Shares for which the
Option has been exercised pending change of record ownership and will be
entitled to all voting rights, distributions and other rights of an owner of
such Option Shares. The Company will take such actions as are necessary to grant
such rights (such as appointing Optionee its proxy to vote such Option Shares,
and remitting promptly all distributions received with respect to such shares).
If any shares were transferred pursuant to exercise of an Option for which the
exercise was paid by a Promissory Note, upon default by Optionee of its
obligations under any such note, any distributions (or amounts received pursuant
to a merger or other transaction involving any conversion or exchange of such
shares) that are received by the Company with respect to the Option Shares shall
be retained by the Company to the extent necessary to pay all amounts due under
such note.
4. Adjustments to Option Shares and Exercise Price. In the event of a
stock dividend, stock split, combination or consolidation of shares, merger,
spinoff, exchange or other change in the capitalization of the Target,
appropriate adjustments will be made in the number or kind of shares, securities
or other property or rights for which the Option may be exercised, and the
Exercise Price per Option Share, as equitably required to reflect such
transaction.
5. Death of Optionee. If Optionee dies while any part of the Option is
unexercised, the Optionee's legal representative or representatives or the
persons entitled to the Option under Optionee's will or under laws of intestacy
shall have the right to exercise the Option during the remaining term.
6. Shareholder Rights. Upon an exercise of the Option and receipt by
the Company of the Exercise Price for the related Option Shares, pending
Target's recognition of Optionee as record holder thereof, Optionee shall be
entitled to all rights of ownership of such related Option Shares, including
rights to dividends or other distributions by Target with respect to such shares
declared after the exercise date. The Company shall remit all such distributions
to Optionee and take such other actions as might be required to give effect to
this provision. Until exercise and receipt of the Exercise Price for the Option
Shares, the Company shall retain all rights of ownership of the Option Shares
(but shall not transfer or encumber the Option Shares, or take any other action
inconsistent with this Agreement).
7. Consulting Agreement. This Agreement is effective contingent upon
the execution of that certain Consulting Agreement dated the date hereof.
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8. Notice. Any notice, report or demand required, permitted or desired
hereunder shall be in writing and delivered by certified mail-return receipt
requested, Federal Express (or similar courier), telegram or receipted hand
delivery at the following addresses (or such other addresses designated by
proper notice):
To the Company: 1005 Glenway Avenue
Post Office Box 1280
Bristol, Virginia 24203-1280
Attn: James W. McGlothlin
Fax No.: (540) 645-1404
To the Optionee: 808 East Main Street
Blytheville, Arkansas 72316
Attn: John D. Correnti
Fax No.: (870) 762-6655
Any notice actually received shall be deemed to have been properly delivered.
9. Miscellaneous.
(a) Binding Effect and Benefit. All rights and obligations
under this Agreement shall inure to the benefit of and shall be binding upon the
parties hereto, the successors and permitted assigns of the Company and the
heirs, executors and personal representatives of the Optionee.
(b) Entire Agreement and Amendment. This Agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior or contemporaneous negotiations,
promises, covenants, agreements or representations of every nature whatsoever
with respect thereto. This Agreement may not be changed except by written
instrument duly executed by the parties hereto.
(c) Waiver. Waiver by any party of any breach of the terms and
conditions of this Agreement, or of any election available to that party
hereunder, shall not be deemed to be a waiver of any subsequent breach of any
term or condition of this Agreement or a waiver of a similar or dissimilar
provision or condition at the same time or at any prior or subsequent time, or
of the right of the applicable party to make any subsequent election under this
Agreement.
(d) Severability. If, for any reason, any provision or part
thereof, of this Agreement, is held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision, or any other part of such
provision, not held to be invalid or unenforceable, and each such other
provision, or part thereof, shall to the full extent consistent with law
continue in full force and effect.
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(e) Governing Law. The validity, performance and enforcement
of this Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Alabama.
(f) Headings. The headings and subheadings appearing in this
Agreement are solely for convenience in reference and shall have no effect upon
the meaning and construction of this Agreement.
(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(h) Assignment. The Optionee may not sell, assign, transfer or
delegate any right or obligation under this Agreement to any person or entity,
except for transfer by will or intestacy.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE "COMPANY"
THE UNITED COMPANY
By: /s/ Wayne L. Bell
--------------------------------------
Its Executive Vice President
and General Counsel
THE "OPTIONEE"
/s/ John D. Correnti
-----------------------------------------
JOHN D. CORRENTI
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