<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
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)
July 19, 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.
<PAGE> 2
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
CUSIP No. 091250100
1. Name of Reporting Person: The United Company
IRS Identification No. 54-1120913
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: AF
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Virginia
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 0
8. Shared Voting Power: 1,819,400
9. Sole Dispositive Power: 0
10. Shared Dispositive Power: 1,819,400
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,819,400
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 6.1%
14. Type of Reporting Person: HC
<PAGE> 4
CUSIP No. 091250100
1. Name of Reporting Person: United Management Company LLC
IRS Identification No. 54-1884068
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: AF
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Delaware
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 0
8. Shared Voting Power: 1,949,200
9. Sole Dispositive Power: 0
10. Shared Dispositive Power: 1,949,200
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,949,200
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 6.6%
14. Type of Reporting Person: OO
<PAGE> 5
CUSIP No. 091250100
1. Name of Reporting Person: United Opportunities Fund, LLC
IRS Identification No. 54-1886995
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: OO
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Delaware
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 0
8. Shared Voting Power: 1,629,300
9. Sole Dispositive Power: 0
10. Shared Dispositive Power: 1,629,300
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,629,300
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 5.5%
14. Type of Reporting Person: OO
<PAGE> 6
CUSIP No. 091250100
1. Name of Reporting Person: The Summit Fund, LLC
IRS Identification No. 54-1897775
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: OO
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Delaware
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 0
8. Shared Voting Power: 190,100
9. Sole Dispositive Power: 0
10. Shared Dispositive Power: 190,100
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 190,100
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 0.6%
14. Type of Reporting Person: OO
<PAGE> 7
CUSIP No. 091250100
1. Name of Reporting Person: UC Investment Trust
IRS Identification No. 54-1901936
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: OO
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Ohio
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 0
8. Shared Voting Power: 90,800
9. Sole Dispositive Power: 0
10. Shared Dispositive Power: 90,800
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 90,800
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 0.3%
14. Type of Reporting Person: OO
<PAGE> 8
CUSIP No. 091250100
1. Name of Reporting Person: Nicholas D. Street
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: PF; AF
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: United States
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 10,000
8. Shared Voting Power: 1,953,200
9. Sole Dispositive Power: 10,000
10. Shared Dispositive Power: 1,953,200
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,963,200
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 6.6%
14. Type of Reporting Person: IN
<PAGE> 9
CUSIP No. 091250100
1. Name of Reporting Person: James W. McGlothlin
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: AF
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: United States
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 0
8. Shared Voting Power: 1,974,200
9. Sole Dispositive Power: 0
10. Shared Dispositive Power: 1,974,200
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,974,200
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 6.7%
14. Type of Reporting Person: IN
<PAGE> 10
CUSIP No. 091250100
1. Name of Reporting Person: Lois A. Clarke
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: PF; AF
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: United States
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 3,600
8. Shared Voting Power: 0
9. Sole Dispositive Power: 3,600
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 3,600
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11):
less than 0.1 %
14. Type of Reporting Person: IN
<PAGE> 11
CUSIP No. 091250100
1. Name of Reporting Person: James A. Todd, Jr.
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: PF; OO
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: United States
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 119,054
8. Shared Voting Power: 74,549
9. Sole Dispositive Power: 119,054
10. Shared Dispositive Power: 74,549
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 193,603
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 0.7%
14. Type of Reporting Person: IN
<PAGE> 12
CUSIP No. 091250100
1. Name of Reporting Person: Mark A. Todd
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: PF; OO
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: United States
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 12,529
8. Shared Voting Power: 94,220
9. Sole Dispositive Power: 12,529
10. Shared Dispositive Power: 94,220
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 106,749
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 0.4%
14. Type of Reporting Person: IN
<PAGE> 13
CUSIP No. 091250100
1. Name of Reporting Person: John D. Correnti
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: Not Applicable
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: United States
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 0
8. Shared Voting Power: 0
9. Sole Dispositive Power: 0
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 100,000 Note: Based on an Agreement in
Principle between The United Company and Correnti, The United
Company has agreed to grant Correnti an option on 100,000
Shares owned by The United Company.
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 0.3%
14. Type of Reporting Person: IN
<PAGE> 14
CUSIP No. 091250100
1. Name of Reporting Person: Paul Ekberg
2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: PF
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: United States
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 2,151
8. Shared Voting Power: 9,000
9. Sole Dispositive Power: 2,151
10. Shared Dispositive Power: 9,000
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 11,151
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11):
less than .01%
14. Type of Reporting Person: IN
<PAGE> 15
ITEM 1. SECURITY AND ISSUER
This statement relates to shares of Common Stock, par value $.01 per
share (the "Shares"), of Birmingham Steel Corporation (the "Issuer"). The
address of the principal executive offices of the Issuer is 1000 Urban Center
Parkway, Suite 300, Birmingham, Alabama 35242.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(c) and (f). The persons filing this statement are as follows:
<TABLE>
<CAPTION>
Principal Business/Residence
Name Address
---- -------
<S> <C> <C>
1. The United Company, 1005 Glenway Avenue
a Virginia corporation Bristol, Virginia 24203
2. United Management Company, LLC, 1005 Glenway Avenue
a Delaware limited liability company Bristol, Virginia 24203
3. United Opportunities Fund, LLC, 1005 Glenway Avenue
a Delaware limited liability company Bristol, Virginia 24203
4. The Summit Fund, LLC, 1005 Glenway Avenue
a Delaware limited liability company Bristol, Virginia 24203
5. UC Investment Trust, 1005 Glenway Avenue
an Ohio business trust Bristol, Virginia 24203
6. Nicholas D. Street, 1005 Glenway Avenue
a citizen of the United States Bristol, Virginia 24203
7. James W. McGlothlin, 1005 Glenway Avenue
a citizen of the United States Bristol, Virginia 24203
8. Lois A. Clarke, 1005 Glenway Avenue
a citizen of the United States Bristol, Virginia 24203
9. James A. Todd, Jr., 2005 Garden Place
a citizen of the United States Birmingham, Alabama 35223
10. Mark A. Todd, 1445 Ross Avenue, Suite 3200
a citizen of the United States Dallas, Texas 75202
11. John D. Correnti, 6833 Aronomink Drive
a citizen of the United States Charlotte, North Carolina 28210
12. Paul Ekberg, 3349 Hermitage Road
a citizen of the United States Birmingham, Alabama 35223
</TABLE>
<PAGE> 16
The above-named persons are sometimes collectively referred to herein
as the "Reporting Persons". The Reporting Persons may be deemed to be a "group"
within the meaning of Rule 13d-5 promulgated under the Securities and Exchange
Act of 1934, as amended (the "Act").
United Group
- ------------
Nicholas D. Street ("Street") and James W. McGlothlin ("McGlothlin")
directly or indirectly control the following entities (collectively, the "United
Group"):
1. The United Company
Street and McGlothlin wholly own The United Company ("United
Company") with each of them owning fifty percent (50%) of the outstanding common
stock of United Company.
United Company is primarily engaged in the business of
financial services and also invests in or has operations in oil and gas, real
estate and golf development, cogeneration, and industrial, mine, and
construction supply and distribution. Street is vice president, secretary, and a
director of United Company. McGlothlin is president, chief executive officer,
treasurer, and chairman of the board of directors of United Company. Lois A.
Clarke ("Clarke") is executive vice president and chief financial officer of
United Company. Wayne L. Bell ("Bell) is executive vice president and general
counsel and Ted G. Wood ("Wood") is president of operations.
2. United Management Company, LLC
Street and McGlothlin are the controlling owners of United
Management Company, LLC ("Management Company") with each of them owning a
forty-seven and one-half percent (47.5%) ownership interest in Management
Company. Management Company's principal business is investing in securities and
managing investments for third parties. Management Company is managed by a Board
of Managers consisting of Street, McGlothlin, Clarke, Bell, and Wood. Executive
officers of Management Company are as follows: (a) Clarke - president, (b)
Street - secretary and treasurer, (c) Jimmy D. Viers ("Viers") - executive vice
president, (d) Ronald E. Oliver ("Oliver") - executive vice president and
assistant treasurer, and (e) Steven Layfield ("Layfield") - vice president and
secretary.
Bell, Wood, Viers, Oliver, and Layfield are citizens of the United
States principally employed by Management Company and/or United Company in the
above stated capacities at the principal office addresses shown in Item 2 for
such entities. Bell, Wood, Viers, Oliver, and Layfield are not individual
Reporting Persons nor members of the Group (as defined in Item 4).
3. United Opportunities Fund, LLC and The Summit Fund, LLC
Street and McGlothlin indirectly control the United
Opportunities Fund, LLC ("UO Fund") and The Summit Fund, LLC ("Summit Fund") by
virtue of their direct control of United Company, the principal owner of the UO
Fund and Summit Fund, and by their direct control of Management Company, the
managing member of both UO Fund and Summit Fund. UO Fund and Summit Fund are
privately held investment funds. United Company owns approximately seventy-six
percent (76%) of UO Fund and ninety-nine percent (99%) of Summit Fund.
Management Company owns one percent (1%) of both UO Fund and Summit Fund in its
managing member capacity.
<PAGE> 17
4. UC Investment Trust
UC Investment Trust ("UCI Trust") operates the UC Investment
Fund, a publicly traded mutual fund ("UCI Fund"). Street and McGlothlin
indirectly control the investment decisions of UCI Fund and consequently, UCI
Trust, by virtue of their direct ownership control of Management Company, the
investment manager of UCI Fund. McGlothlin and Clarke serve on the Board of
Trustees of the UCI Trust. Other members of the Board of Trustees of the UCI
Trust, their residence or business address and their occupations are set forth
on Exhibit A hereto, which is incorporated herein by reference. McGlothlin and
Clarke also serve as Chairman and President of the UCI Trust, respectively.
Individual Reporting Persons
- ----------------------------
McGlothlin, Street, and Clarke are principally employed by United
Company and its affiliates in the capacities listed above.
James A. Todd, Jr., ("JA Todd") is not presently employed. JA Todd was
the chief executive officer and chairman of the board of directors of the Issuer
from 1991 until January 1996. He served as an employee and director of
the Issuer from January 1996 until August 1996 and as a consultant to the
chairman of the board from August 1996 until retiring in December of 1996. JA
Todd is currently receiving retirement benefits from the Issuer. JA Todd
received approximately $236,440 in retirement benefits in 1998 and for the
current calendar year has received approximately $122,599 through July 18, 1999.
Mark A. Todd ("MA Todd") is principally employed as a shareholder in
the law firm of Jenkens & Gilchrist, P.C.
John D. Correnti ("Correnti") is self employed as a consultant.
Correnti served in various capacities at Nucor Corporation from 1980 until June
1999, including most recently as president and chief executive officer.
Ekberg is not presently employed. Ekberg served in various capacities
at the Issuer from July 1991 to July 1996, including the positions of president,
chief operating officer, vice chairman of the board of directors, and director.
(d) and (e). Neither the Reporting Persons nor any executive officer,
director, or manager of the Reporting Persons has, during the past five years,
(a) been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), or (b) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or a finding of any violation with respect to such
laws.
<PAGE> 18
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Shares beneficially owned by the Reporting Persons were purchased
for an aggregate price of $14,601,504.
UO Fund and Summit Fund used approximately $11,075,173 and $2,201,085,
respectively, of funds available for investment to purchase their Shares. UCI
Trust used approximately $523,162 of funds available for investment in order to
purchase Shares held by the UCI Fund. Management Company used approximately
$257,398 of funds available for investment in discretionary investment accounts
of its clients in order to purchase Shares for such clients. Street, Clarke, JA
Todd, and Ekberg used approximately $70,403, $46,895, $295,632, and $60,000,
respectively, of personal funds to purchase the Shares they own directly. MA
Todd received 11,066 of the Shares he owns directly by gift from a trust
established by JA Todd and his wife, Mary Margaret Todd. MA Todd used
approximately $11,776 of personal funds to purchase the remaining 1,463 Shares
he owns directly.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of this filing is to report that on July 19, 1999 the
Reporting Persons acquired more than five percent beneficial ownership in the
Shares of the Issuer. The Reporting Persons constitute a group (the "Group") who
intend to vote their Shares and solicit proxies in support of a slate of
directors, nominated by the Group, for election at the 1999 annual stockholders
meeting of the Issuer in opposition to management's nominees.
Pursuant to an Agreement in Principle dated July 16, 1999, (the
"Agreement in Principle"), Correnti has been slated as one of the Group's
director nominees in addition to McGlothlin and JA Todd. McGlothlin, JA Todd,
and Correnti will serve as a nominating committee to select the Group's
remaining nominees for director. Correnti has also been slated by the Group to
be chairman of the board and chief executive officer. Other members of the Group
may serve as officers and/or consultants to the Issuer and report to Correnti.
The Group intends to request a list of shareholders from Issuer pursuant to
applicable state and federal laws in order to communicate with other
shareholders of the Issuer via a proxy solicitation.
JA Todd retired in August 1996 under the provisions of the Issuer's
Management Security Plan providing for annual retirement payments for twenty
years and a split dollar life insurance policy. Subsequent to JA Todd's
retirement, the Issuer amended and restated the Management Security Plan to
constitute the Issuer's Executive Retirement and Compensation Deferral Plan (as
amended and restated, the "Security Plan"). The Security Plan provides that upon
a change of control in Issuer (including, under certain circumstances, a
majority change in the board of directors), all vested benefits payable under
the Security Plan will be accelerated and distributed to participants in the
Security Plan.
The Group also anticipates purchasing additional Shares in the open
market or in private transactions. However, the Group intends not to purchase
more than ten percent (10%) of the total outstanding Shares in order to avoid
activating the poison pill take-over defense provision of the Issuer's by-laws.
The Group also plans to remove the poison pill provision from the Issuer's
by-laws.
Except as specified in this Item 4, the Group has no present plans or
proposals that relate to or that would result in any of the actions specified in
clauses (a) through (j) of Item 4 of Schedule 13D of the Act.
<PAGE> 19
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) and (b). As of the close of business on July 28, 1999, the
Reporting Persons beneficially owned in the aggregate 2,303,303 Shares,
constituting approximately 7.8% of the total outstanding Shares of the Issuer
(based upon the number of Shares reported to be outstanding in the Issuer's Form
10Q for the fiscal quarter ended March 31, 1999).
In aggregate, Street may be deemed the beneficial owner of 1,963,200
Shares, constituting approximately 6.6% of the total outstanding Shares.
In aggregate, McGlothlin may be deemed the beneficial owner of
1,974,200 Shares, constituting approximately 6.7% of the total outstanding
Shares.
The basis upon which beneficial ownership for Street and McGlothlin is
calculated is set forth as follows:
(1) Street and McGlothlin, by reason of their control of the United
Group, share with each other voting and disposition powers of the Shares owned
by the following members of the United Group and may be deemed beneficial owners
of such Shares:
<TABLE>
<CAPTION>
% of Total
Entity Number of Shares Shares Outstanding
------ ---------------- ------------------
<S> <C> <C>
UO Fund 1,629,300 5.5%
Summit Fund 190,100 0.6%
UCI Trust 90,800 0.3%
</TABLE>
Because of their record ownership, each of the United Group members
listed in the above table may be deemed to share beneficial ownership of the
Shares with Street and McGlothlin.
(2) Management Company is the beneficial owner of 39,000 Shares which
are held in certain individual discretionary investment accounts managed by
Management Company. Management Company has sole voting and disposition power
over the Shares held in these discretionary investment accounts. By virtue of
their control of Management Company, Street and McGlothlin share with each other
voting and disposition powers over these 39,000 Shares and may be deemed
beneficial owners of such Shares, which constitute 0.1% of the total Shares
outstanding.
(3) Street is the direct beneficial owner of 10,000 Shares. Street has
sole voting and disposition power for these 10,000 Shares. Street may be deemed
to beneficially own 2,000 Shares owned directly by his wife, Fay H. Street ("FH
Street"), and 2,000 Shares owned directly by his minor daughter, Lauren Street
("L. Street"). Such Shares together constitute less than one tenth of one
percent of the outstanding Shares. FH Street and L. Street are citizens of the
United States and are not presently employed. The residence address for both FH
Street and L. Street is 101 Lick Branch Road, Bristol, Tennessee 37620. FH
Street and L. Street are not members of the Group. McGlothlin may be deemed the
beneficial owner of 25,000 Shares owned directly by his wife, Frances
McGlothlin ("F. McGlothlin"), which constitute less than one tenth of one
percent of the total Shares outstanding. F. McGlothlin is a citizen of the
United States and employed as an executive assistant with United Company at its
principal office address. F. McGlothlin is not a member of the Group.
<PAGE> 20
Clarke is either the direct or indirect beneficial owner of 3,600
Shares, which constitute less than one tenth of one percent of the outstanding
Shares. Clarke has the sole power to vote and dispose of these Shares.
JA Todd may be deemed the beneficial owner of 193,603 Shares, which
constitute 0.7% of the outstanding Shares. JA Todd directly owns 119,054 Shares
and has sole voting and disposition power over these Shares. JA Todd may be
deemed to beneficially own and share voting and disposition power as to 74,549
Shares owned directly by his wife, Mary Margaret Todd ("MM Todd"). MM Todd is a
citizen of the United States and is not presently employed. MM Todd's address is
2005 Garden Place, Birmingham, Alabama 35223. MM Todd is not a member of the
Group.
MA Todd is the beneficial owner of 106,749 Shares, which constitutes
0.4% of the outstanding Shares. MA Todd has sole voting and disposition power as
to 12,529 Shares. As a trustee of certain trusts benefitting the Todd family
(the "Todd Trusts"), MA Todd shares voting and disposition power as to 93,475
Shares with Jennifer Todd Reed ("Reed"), the joint trustee of the Todd Trusts.
Reed is a United States citizen and not presently employed. Her residence
address is 3509 Canterbury Road, Birmingham, Alabama 35223. Reed beneficially
owns other Shares, but is not a member of the Group. MA Todd's beneficial
ownership also includes 745 Shares owned by his three minor children, Courtney
C. Todd, Hunter B. Todd, and Hayley A. Todd.
Correnti may be deemed the beneficial owner of 100,000 Shares. Under
the Agreement in Principle, United Company has agreed to grant Correnti an
option to purchase from United Company 100,000 of the Shares owned by United
Company at an exercise price of $4.88.
Ekberg may be deemed the beneficial owner of 11,151 Shares, which
constitutes less than one tenth of one percent of the total Shares outstanding.
Ekberg directly owns 2,151 Shares and has sole voting and disposition power over
these Shares. Ekberg may be deemed to beneficially own and share voting and
disposition power as to 9,000 Shares owned directly by his wife, Nancy Ekberg
("N. Ekberg"). N. Ekberg is a citizen of the United States and is not presently
employed. N. Ekberg's address is 3349 Hermitage Road, Birmingham, Alabama 35233.
N. Ekberg is not a member of the Group.
(c) The following table sets forth all transactions with respect to the
Issuer's Shares effected during the past sixty days by each of the Reporting
Persons. Each transaction set forth below reflects a purchase or sale effected
by means of open market transactions on the New York Stock Exchange.
<TABLE>
<CAPTION>
REPORTING TRADE DATE TYPE OF # OF SHARES PRICE PER
PERSON TRANSACTION SHARE ($)
<S> <C> <C> <C> <C>
UO Fund 06/07/99 Purchase 10,000 5.454
UO Fund 06/08/99 Purchase 48,500 5.748
</TABLE>
<PAGE> 21
<TABLE>
<S> <C> <C> <C> <C>
UO Fund 06/08/99 Purchase 10,000 5.695
Management Company (1) 06/09/99 Purchase 4,000 5.885
Management Company (1) 06/09/99 Purchase 3,500 5.863
Management Company (1) 06/10/99 Purchase 5,000 5.785
Management Company (1) 06/10/99 Purchase 5,000 5.785
UO Fund 06/10/99 Purchase 93,900 5.705
Management Company (1) 06/11/99 Purchase 5,000 5.571
UCI Trust 06/14/99 Purchase 55,000 5.818
UCI Trust 06/16/99 Purchase 35,800 5.523
UO Fund 07/19/99 Purchase 5,000 6.008
UO Fund 07/19/99 Purchase 25,000 6.050
UO Fund 07/19/99 Purchase 15,000 6.060
UO Fund 07/19/99 Purchase 17,000 5.935
UO Fund 07/19/99 Purchase 35,000 5.942
McGlothlin 07/19/99 Purchase 25,000 (2) 5.878
UO Fund 07/20/99 Purchase 15,000 5.966
UO Fund 07/20/99 Purchase 26,000 5.975
UO Fund 07/20/99 Sale 1,000 5.875
UO Fund 07/21/99 Purchase 66,500 6.318
UO Fund 07/21/99 Purchase 5,000 6.353
UO Fund 07/21/99 Purchase 10,000 6.353
UO Fund 07/21/99 Purchase 5,000 5.978
UO Fund 07/21/99 Purchase 5,000 6.040
UO Fund 07/21/99 Purchase 5,000 6.290
Ekberg 07/21/99 Purchase 10,000 (3) 6.187
UO Fund 07/22/99 Purchase 83,600 6.725
UO Fund 07/22/99 Purchase 14,000 6.540
UO Fund 07/22/99 Purchase 5,000 6.728
</TABLE>
<PAGE> 22
<TABLE>
<S> <C> <C> <C> <C>
UO Fund 07/23/99 Purchase 95,000 6.731
UO Fund 07/26/99 Purchase 99,000 6.773
Management Company (1) 07/26/99 Purchase 2,000 6.262
UO Fund 07/27/99 Purchase 167,500 6.962
UO Fund 07/28/99 Purchase 117,800 7.074
Management Company(1) 07/28/99 Purchase 6,000 6.989
</TABLE>
(1) Represents Shares purchased by Management Company on behalf of discretionary
account clients.
(2) Represents 25,000 Shares purchased by McGlothlin's wife, Frances McGlothlin.
McGlothlin may be deemed to beneficially own the 25,000 purchased by his wife.
(3) Includes 9,000 Shares purchased by Ekberg's wife, Nancy Ekberg. Ekberg may
be deemed to beneficially own the 9,000 Shares purchased by his wife.
(d) Management Company does not have any economic or pecuniary interest
in the Shares held in discretionary accounts on behalf of its clients. The
clients are the actual owners of the Shares and have the sole right to receive
and the sole power to direct the receipt of dividends from, or the proceeds from
the sale of Shares in such accounts. UCI Trust and Management Company have no
economic or pecuniary interest in the Shares held by the UCI Fund. The mutual
fund shareholders are the actual owners of the Shares and have the sole right to
receive and sole power to direct the receipt of dividends from, or the proceeds
from the sale of the Shares.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
As discussed in Item 5, United Company, pursuant to the Agreement in
Principle, has agreed to grant Correnti an option to purchase from United
Company 100,000 Shares owned by United Company at an exercise price of $4.88.
The powers of disposition and voting of Management Company with respect
to Shares owned beneficially by it on behalf of its discretionary account
clients are held pursuant to written Investment Management Agreements (the
"Discretionary Account Agreements") with such clients. Under the terms of the
Discretionary Account Agreements, Management Company is granted the sole power
to vote and actively trade securities held in the discretionary investment
accounts. The disposition power of Management Company, with respect to Shares
owned beneficially by it through its management of the UCI Fund, is held
pursuant to a written Advisory Agreement (the "UCI Advisory Agreement") between
Management Company and UCI Trust.
<PAGE> 23
Under the terms of the UCI Advisory Agreement, Management Company has the sole
power to trade securities held by the UCI Fund. The UCI Advisory Agreement was
originally executed by United Investment Corporation ("UI Corporation"). UI
Corporation was reorganized into Management Company in 1998 and Management
Company succeeded to the rights and obligations of UI Corporation under the UCI
Advisory Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A: Board of Trustees of UCI Trust
Exhibit B: Agreement in Principle
Exhibit C: Management Company's Standard Investment Management
Agreement with Discretionary Investment Account Clients
Exhibit D: Advisory Agreement between Management Company and UCI Trust
<PAGE> 24
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: July 29, 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
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
<PAGE> 25
/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
Exhibit A
UCI Board of Trustees
<TABLE>
<CAPTION>
Name Present Occupation Residence or Business
---- ------------------ ---------------------
Address
--------
<S> <C> <C>
Robert J. Bartel Professor 1350 King College Road
King College Bristol, Tennessee 37620
Aldo Albert Modena Retired 4 Windsor Circle Drive
Bluefield, VA 24605
Robert Henkel Spilman Retired P. O. Box 880
Bassett, VA 24055
Timothy Jackson Sullivan President, College of William Office of the President
and Mary, Williamsburg, VA College of William and Mary
Williamsburg, VA 23185
Charles W. Sydnor, Jr., Ph.D. President & CEO, Central Central Virginia Educational
Virginia Educational Telecommunications, Inc.
Telecommunications, Inc. 23 Sesame Street
Richmond, VA 23235
</TABLE>
<PAGE> 1
EXHIBIT B
CONFIDENTIAL
AGREEMENT IN PRINCIPLE
BETWEEN
JOHN D. CORRENTI AND THE UNITED COMPANY
REGARDING EMPLOYMENT BY BIRMINGHAM STEEL CORPORATION AND RELATED MATTERS
--------------------------------
This Agreement in Principle states the principal terms under which John D.
Correnti ("Executive") will agree (i) to be employed as a temporary consultant
by a shareholder group ("Shareholder Group"), or by The United Company as lead
shareholder of the Shareholder Group ("Lead Shareholder"), which intends to
undertake a proxy solicitation for the election of directors constituting at
least a majority of directors of Birmingham Steel Corporation (the "Company"),
and (ii) Executive will agree to serve as Chairman and Chief Executive Officer
of the Company if the proxy solicitation is successful. This Agreement in
Principle is not a complete statement of all relevant terms of the contemplated
agreements and is not binding on any party, except for the provision below
regarding confidentiality. Executive will not be bound to the consulting
agreement except upon the negotiation and execution of a complete and definitive
Consulting Agreement, which will be undertaken promptly. The parties
contemplate, however, that the Consulting Agreement will contain a form of
employment agreement that Executive will agree to accept if approved by the
directors of the Company after the successful proxy contest. The employment
agreement will be negotiated by Executive and the Shareholder Group, and
presented to the board of the Company for adoption after the next election of
directors of Company.
INTERIM CONSULTING
AGREEMENT Until the Company's annual shareholder meeting,
Executive (through International Steel Associates,
Inc., an Arkansas corporation) will be employed as a
consultant to Shareholder Group on the following
terms:
- Term: Maximum term through December
31, 1999, unless extended by
agreement, with earlier termination
on the first to occur of (i) notice
to Executive of abandonment of
proxy action referred to below or
(ii) the execution of an employment
agreement between Executive and
Company.
<PAGE> 2
- Rate: $ 50,000 per calendar month
(or portion thereof, paid by Lead
Shareholder monthly.
- Payment of monthly fee is
guaranteed, regardless of number of
consulting hours requested.
- Services on request.
- Reimbursement by Lead Shareholder
for out-of-pocket expenses (travel,
etc.).
- Non-exclusive; Executive may engage
in other consulting work but (i)
such other work must not interfere
with reasonable demands for
services under Consulting
Agreement, (ii) must not involve
any transaction, activity or group
competing with Shareholder Group
proxy action, and (iii) must not be
conducted for any company that
produces steel products in the
United States that are competitive
with products currently sold by
Company.
- Executive to be reimbursed for
legal fees related to negotiation
of Consulting and Employment
Agreements, federal and state
governmental filings, proxy action,
related consultation, etc.
- All fees and expense reimbursements
will be paid or guaranteed by Lead
Shareholder.
- Lead Shareholder will grant
Executive options to buy 100,000
shares of Company common stock
owned by Lead Shareholder. The
options will be exerciseable in
whole or in part from time to time,
at an exercise price equal to the
NYSE closing price for Company
common stock on the day before this
Agreement in Principle is signed by
both parties. The exercise term
will be agreed upon, but will
extend until the earlier to occur
of (i) six months after the annual
meeting of Company shareholders for
which the contemplated proxy
solicitation will be made or (ii)
June 30, 2000. Lead Shareholder
will finance the exercise (interest
free until the Company
shareholder's meeting, and at a
favorable rate thereafter, and for
a repayment term to be agreed). The
option agreement will be negotiated
and executed in connection with the
Consulting Agreement.
-2-
<PAGE> 3
CONSULTING AGREEMENT
TERMINATION - The Consulting Agreement may be
terminated by Lead Shareholder at
any time if the proposed proxy
action is announced but abandoned
prior to the Company's 1999
shareholder meeting.
- The Consulting Agreement will
terminate automatically if the
Shareholder Group's director
nominees numbering at least a
majority of the new Company board
are not elected at the next annual
meeting.
- Executive may terminate Consulting
Agreement, and be relieved of
further obligation, if the Company
Employment Agreement is not adopted
by the new Company board by
December 31, 1999.
CONSULTING AGREEMENT PROXY
MATTERS - Director: Executive will be
included in Shareholders' proposed
director slate.
- Composition of Director State:
Director slate will include
Executive, James Todd and James
McGlothlin (designees of the
Shareholder Group), and these three
individuals will serve as a
nominating committee for the
remainder of the nominees. All
other director nominees will be
selected from a list of candidates
developed by such nominating
committee, and 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, each of Executive
and Shareholder Group may declare
the Consulting Agreement
terminated, and all parties shall
have no further obligations or
liability under it, under this
Agreement in Principle or
otherwise.
- Lead Shareholder will indemnify
Executive from liability resulting
from proxy matters (other than from
information given by Executive for
inclusion in proxy statement).
Executive has the right to review
and consent to the form of proxy
statement and related materials, at
least to the extent they describe
Executive, Executive's proposed
Employment Agreement, and
-3-
<PAGE> 4
other matters reasonably related to
Executive's interest or potential liability.
- Executive's prior consent is necessary for
all public communications regarding
Executive's participation or regarding the
Consulting Agreement and Employment
Agreement. Except and until disclosed as
required by law, including the Executive's
and the Shareholder Group's good faith
determination of disclosure obligations
under federal and state securities laws and
other applicable laws, the terms of this
Agreement in Principle, the Consulting
Agreement and form of proposed Employment
Agreement will be held in confidence by
Shareholder Group and Executive, and neither
will make any public announcement about the
subject matter except by mutual consent.
EMPLOYMENT
AGREEMENT TERMS
POSITION - If proxy action is successful as
contemplated herein, Executive agrees to
become Chairman of the Board and Chief
Executive Officer of Company under terms of
Employment Agreement.
TERM - Five year term, subject to annual renewal
unless terminated by either party.
INDUCEMENT STOCK GRANT - 100,000 shares of Company common stock, with
full tax gross-up cash payment(s); subject
to forfeiture if Executive's employment
terminates before 3rd anniversary (except
termination without cause by Company,
termination by Executive for good reason, or
after change of control, or
death/disability, other equitable reasons to
be set forth in employment agreement).
Forfeiture restrictions lapse as to 1/3 of
total at each annual anniversary.
ANNUAL BASE COMPENSATION - $600,000 per year ($50,000/month)
- Subject to annual increase
consistent with senior executive
management increases
ANNUAL CASH BONUS - 1% of EBITDA
-4-
<PAGE> 5
- Extraordinary charges, goodwill
write-offs, other unusual
write-offs disregarded
INDUCEMENT PHANTOM STOCK
RIGHTS Phantom Stock Options for a total of 1
million shares, vesting over 5 years
(200,000 shares per year). Agreement would
allow Executive to receive a cash
compensation payment with respect to any
vested phantom shares at any time prior to
the expiration of the phantom option equal
to the number of phantom shares he desires
to exercise times the difference between the
strike price (closing price last trading day
before Agreement in Principle is confirmed;
adjusted for splits, etc.) and the market
price of the stock of the Company on the
date of the exercise (or value received by
common shareholders in any tender offer or
other transaction involving exchange or
conversion of common stock). Exercise would
be limited by Company's insider trading
restrictions (as applicable to directors and
executive officers generally) as if the
phantom shares were real shares and the
exercise were the exercise of real options
and the sale of the shares received upon
exercise. Shareholder Group director
designees will support Company Board's
approval of a final employment agreement by
which Executive receives actual stock
options in lieu of phantom options.
- The options would expire ten years after the
date of grant. All unvested options would
vest upon termination of employment other
than termination for cause. Vested options
will be exercisable at any time through 120
days after termination of employment.
PARTICIPATION IN SENIOR
MANAGEMENT PROGRAMS - Stock Accumulation Plan
- Executive Retirement and Compensation
Deferral Plan
- 401 (K)
- Life Insurance Plan
- Health, etc.
- Other Company Incentive and Fringe Benefit
Programs as adopted by Board for senior
management
-5-
<PAGE> 6
TERMINATION WITHOUT CAUSE
OR FOR GOOD REASON OR UPON
CHANGE OF CONTROL - Executive receives all compensation earned
to date, an incentive bonus based on last
fiscal year, pro rated, and all previously
deferred compensation
- Executive receives severance payment equal
to 3 times (i) currently effective annual
base compensation plus (ii) average of
aggregate of last 3 years incentive
compensation; parachute excise tax indemnity
- Insurance benefits continued for up to one
year
- Vesting of all unvested options is
accelerated; all are exercisable
- No forfeiture of restricted/forfeitable
stock or options
TERMINATION WITH CAUSE - Executive receives accrued and unpaid base
compensation for current year; no current
year incentive compensation is payable
- All exercisable options may be exercised;
forfeitable/unvested restricted stock or
unvested incentive options are forfeited
TERMINATION ON DEATH OR
DISABILITY - Accrued compensation paid (incentive pro
rated based on last year)
- All unvested options accelerate and may be
exercised
- No restricted stock is forfeited; forfeiture
restrictions lapse
RELOCATION EXPENSES - Moving expense reimbursement
- Brokers' fees (Arkansas residence
sale, Birmingham residence
purchase)
- Moving expenses (Charlotte to
Arkansas or Birmingham; and
Arkansas to Birmingham)
- Relocation expenses covered for any
time during term
-6-
<PAGE> 7
- Special Relocation Expenses
- Price protection on sale of Arkansas
residence if Executive relocates, based on
appraisals (appraisals to be paid by
Company); protection of up to 100% of cost
- Reimbursement of Birmingham city living
expenses for up to 2 years (apartment,
furniture, utilities, meals)
MISCELLANEOUS
COMPENSATION - Automobile Allowance in accordance with
Company policy
- Club Reimbursement
- Country Club initiation/equity and
monthly dues. Equity vests in
Executive after 3 years
- City Club initiation/equity and
monthly dues. Equity vests in
Executive after 3 years
- Reimbursement of reasonable business
expenses, in accordance with Company
policies
MISCELLANEOUS
- May continue other permitted
consulting agreements through
December 31, 1999 or, if earlier,
date of hire by Company
- May serve on boards of other
companies, with the approval of the
Company's Nominations Committee of
the board (not to be withheld
unreasonably); may participate in
trade organizations, speeches, etc.
- Maintenance of adequate D&O
insurance
- Indemnification provisions
acceptable to Executive
-7-
<PAGE> 8
The foregoing Agreement in Principle is confirmed, effective when signed by each
party, below.
/s/ John P. Correnti
- -----------------------
Executive
Date: 7/16/99
------------------
Lead Shareholder
The United Company
By: /s/ Wayne L. Bell
--------------------
Wayne L. Bell
Its: Executive Vice President and General Counsel
-----------------------------------------------
Date: 7-16-99
------------------
-8-
<PAGE> 1
EXHIBIT C
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT dated as of ________ 1999 between
________ (the "Client") and UNITED MANAGEMENT COMPANY, LLC, a Virginia
corporation ("UMC").
Recitals
A. WHEREAS, the Client has determined to engage the services of UMC to
manage certain of its assets.
B. WHEREAS, UMC is an investment adviser registered under the
Investment Advisers Act of 1940.
C. WHEREAS, UMC desires to manage the Client's assets subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, and upon the basis of the representations
and warranties contained herein, the parties hereto hereby agree as follows:
1. Appointment and Authority of Investment Manager.
(a) The Client hereby appoints UMC, as an investment manager of
approximately ________________________ and 00/100 Dollars ($______________ to be
deposited in Account Number ______________ at _______________.
(b) UMC, as an investment manager, shall have the power and duty to
manage, acquire and dispose of the Managed Assets with the objective of
maximizing the value thereof in a manner consistent with the investment
guidelines set forth on Exhibit A and subject to any investment restrictions, if
any, set forth on Exhibit A. In that regard, UMC shall have full discretion to
make all investment decisions concerning the timing, frequency and method of
execution of the purchase, sale, retention, exchange or conversion of the
<PAGE> 2
Managed Assets including what investments shall be bought, sold, retained or
exchanged and to direct without the consent or knowledge of the Client, the
execution of investment transactions including the timing, frequency and method
of execution thereof.
(c) Except as otherwise directed by the Client in writing, the
Client agrees to establish an account with any broker or dealer designated by
UMC to effect investment transactions in respect of the Managed Assets so long
as the use of such broker or dealer is consistent with UMC's duties under the
Investment Adviser's Act of 1940. UMC shall select such brokers or dealers in
its own discretion and shall not be responsible for any acts or omissions of any
such brokers or dealers provided UMC is not negligent in the selection of such
brokers or dealers. No commissions or fees shall be incurred which are
substantially greater than those chargeable by other brokers or dealers in the
community for like or comparable services, provided, however, the Client
authorizes UMC, consistent with the foregoing, to select brokers and dealers on
the basis of their having furnished statistical, research and other services to
UMC.
(d) Subject to the foregoing paragraph (c), UMC may utilize the
services of third party advisers and counsel as it deems prudent.
(e) Notwithstanding the discretion of UMC with respect to the
Managed Assets, UMC shall not at any time have any right to custody of any of
the Managed Assets.
(f) The Client acknowledges that UMC, from time to time, may be
acting as an investment manager for other institutional and individual clients
including affiliates of UMC and that investments and reinvestments of the
Managed Assets may differ from those made or recommended with respect to other
accounts and clients even though the investment objectives may be the same or
similar.
2. Fees and Expenses of Investment Manager.
(a) For services rendered, the Client agrees to pay UMC a
management fee of _____________ of one percent (____________%) per annum of the
net asset value
2
<PAGE> 3
of the Managed Assets or such other fee as the Client and UMC shall agree to in
writing from time to time. Net asset value shall be calculated based on the
closing market value of the Managed Assets (net of commissions) as of the last
business day of each month. All management fees due shall be paid to UMC within
thirty (30) days of the end of each calendar quarter. In the event this
Agreement is terminated prior to the end of any calendar quarter, the management
fee shall be prorated to take into account partial months.
(b) In computing the market value of any investment of the Managed
Assets for the purpose of this Agreement, each security listed on any national
securities exchange shall be valued at the last sale price on the valuation
date. Any unlisted stock regularly traded in the over-the-counter market, shall
be valued at the latest available bid price quotation.
(c) For purposes of determining UMC's management fee, there shall
be added to the value of the Managed Assets (i) interest accrued but not
collected on any interest bearing obligation and (ii) dividends declared but not
collected on stock which, if sold, would be sold ex-dividend.
(d) Except as otherwise expressly provided in this Agreement, UMC
shall be responsible for all of its costs and expenses in connection with its
performance of investment management services pursuant to this Agreement.
(e) UMC shall not be responsible for, and the Client shall cause to
be paid on its own behalf interest charges, taxes, fees and commissions of every
kind, and expenses pertaining to transactions involving the Managed Assets not
directly related to the performance by UMC of investment management services.
3. Representations and Warranties.
(a) UMC represents and warrants to the Client that:
(i) UMC is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Virginia, and has all
necessary power and authority to execute, deliver and perform its obligations
under this Agreement.
3
<PAGE> 4
(ii) UMC is a registered investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act").
(iii) This Agreement has been duly authorized, executed and
delivered by UMC and constitutes the valid and binding obligation of UMC.
(iv) Neither the execution and delivery of this Agreement by
UMC nor the performance of its obligations hereunder, will violate any provision
of law applicable to or affecting UMC, or conflict with, or constitute a default
under, any of the terms of its Articles of Incorporation or Bylaws or any
provision of any agreement or instrument to which it is a party or by which it
may be bound.
(v) UMC has furnished the Client with a written disclosure
statement as contemplated by Rule 204-3 promulgated under the Advisers Act.
(b) The Client represents and warrants to UMC that:
(i) This Agreement has been duly executed and delivered by the
Client and constitutes the valid and binding obligation of the Client.
(ii) Neither the execution and delivery of this Agreement by
the Client, nor the performance of its obligations hereunder, will violate any
provision of law applicable to or affecting the Client or conflict with, or
constitute a default under, any provision of any agreement or instrument to
which the Client is a party or by which the Client may be bound.
4. Covenants.
(a) UMC shall furnish to the Client, on a quarterly basis, written
reports relating to the transactions effected in connection with the Managed
Assets and the results of its investment decisions. It is understood, however,
that UMC in the maintenance of its records does not assume any responsibility
for the accuracy of information furnished by the Client.
(b) UMC shall not be liable for any mistake of judgement as a
result of its investment decisions or any loss or diminution of the Managed
Assets, except due to its
4
<PAGE> 5
own negligence, bad faith, fraud or willful misconduct. The federal securities
laws impose liabilities under certain circumstances on persons who act in good
faith, and therefore nothing herein shall in any way constitute a waiver or
limitation of any rights which the undersigned may have under any federal
securities laws.
(c) UMC shall not assign this Agreement without the express written
consent of the Client.
5. Termination of Agreement.
The Client and UMC shall each have the right, upon 30 days prior
written notice to the other, to terminate this Agreement.
6. Miscellaneous provisions.
(a) Nothing contained in this Agreement is intended to create third
party beneficiaries of or under this Agreement. Without limiting the generality
of the foregoing, no person other than the Client or UMC shall have any rights
or claims against the Client, UMC or any other person based upon or otherwise in
respect of this Agreement.
(b) This Agreement sets forth the entire understanding of the
parties hereto and supersedes all prior agreements, letters of intent,
covenants, arrangements, communications, representations and warranties, whether
oral or written, by either party.
(c) This Agreement may be amended only by a writing signed by each
of the parties hereto.
(d) The captions set forth in this Agreement are for convenience of
reference only and shall not be considered as part of this Agreement or as in
any way limiting or amplifying the terms and provisions hereof. In the event
that any provision of this Agreement is finally determined to be unlawful, such
provision shall be deemed to be severed from this Agreement, but every other
provision of this Agreement shall remain in full force and effect.
(e) Any notice or communication given pursuant hereto by either of
the parties shall be in writing and delivered by registered or certified mail,
postage prepaid, as
5
<PAGE> 6
follows:
If to the Client, to:
If to UMC, to:
Mrs. Lois A. Clarke
President and Managing Director
United Management Company, LLC
P. 0. Box 1280
Glenway Avenue
Bristol, VA 24203-1280
(f) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Virginia, except to the extent that they
are preempted by the laws of the United States.
(g) This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original and all of which shall constitute one
agreement.
IN WITNESS WHEREOF, the parties have executed this Investment
Management Agreement as of the date first above written.
--------------------------------
UNITED MANAGEMENT COMPANY, LLC
LOIS A. CLARKE
PRESIDENT AND MANAGING DIRECTOR
6
<PAGE> 7
EXHIBIT A
Statement of Investment Guidelines and Objectives:
The primary objective is long term capital appreciation.
Investment Restrictions:
Set forth restrictions, if any, on types of investments UMC may make. If none,
state none.
None.
7
<PAGE> 1
EXHIBIT D
ADVISORY AGREEMENT
UC Investment Trust (the "Trust") is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Act"), and subject to the rules and regulations promulgated thereunder. The
Trust currently offers one series of shares to investors, the UC Investment Fund
(the "Fund"). Each share of the Fund represents an undivided interest in the
assets, subject to the liabilities, of the Fund.
1. Appointment as Adviser. The Trust being duly authorized hereby
appoints and employs United Investment Corporation (the "Adviser") as
discretionary portfolio manager on the terms and conditions set forth herein of
the Fund.
2. Acceptance of Appointment; Standard of Performance. The Adviser
accepts the appointment as discretionary portfolio manager and agrees to use its
best professional judgement to make timely investment decisions for the Fund in
accordance with the provisions of this Agreement.
3. Portfolio Management Services of the Adviser. The Adviser is hereby
employed and authorized to select portfolio securities for investment by the
Trust on behalf of the Fund, to purchase and sell securities of the Fund, and,
upon making any purchase or sale decision, to place orders for the execution of
such portfolio transactions in accordance with paragraphs 5 and 6 hereof. In
providing portfolio management services to the Fund, the Adviser shall be
subject to such investment restrictions as are set forth in the Act and the
rules thereunder, the Internal
<PAGE> 2
Revenue Code of 1986, applicable state securities laws, the supervision and
control of the Trustees of the Trust, such specific instructions as the Trustees
may adopt and communicate to the Adviser and the investment objectives, policies
and restrictions of the Trust applicable to the Fund furnished pursuant to
paragraph 4. The Adviser is not authorized by the Trust to take any action,
including the purchase or sale of securities for the Fund, in contravention of
any restriction, limitation, objective, policy or instruction described in the
previous sentence. Within the framework of the investment objectives, policies
and restrictions of the Trust, the Adviser shall have the sole and exclusive
responsibility, subject to the oversight of the Trust, for portfolio management
and the making and execution of all investment decisions of the Fund. The
Adviser shall maintain on behalf of the Trust the records listed in Schedule A
hereto (as amended from time to time). The Adviser hereby acknowledges that all
such records are the property of the Trust, and in the event of a transfer of
portfolio management services to a person other than the Adviser, the Adviser
shall promptly, and at its own cost, take all steps necessary to segregate such
records and deliver them to the Trust. At the Trust's reasonable request, the
Adviser will consult with the Trust with respect to any decision made by it with
respect to the investments of the Fund.
4. Investment Objectives, Policies and Restrictions. The Trust will
provide the Adviser with the statement of investment
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<PAGE> 3
objectives, policies and restrictions applicable to the Fund as contained in the
Trust's registration statement under the Act and the Securities Act of 1933, and
any instructions adopted by the Trustees supplemental thereto. The Trust will
provide the Adviser with such further information concerning the investment
objectives, policies and restrictions applicable thereto as the Adviser may from
time to time reasonably request. The Trust retains the right, on written notice
to the Adviser from the Trust, to modify any such objectives, policies or
restrictions in any manner at any time.
5. Transaction Procedures. All transactions will be consummated by
payment to or delivery by Fifth Third Bank or any successor custodian (the
"Custodian"), or such depositories or agents as may be designated by the
Custodian in writing, as custodian for the Trust, of all cash and/or securities
due to or from the Fund, and the Adviser shall not have possession or custody
thereof. The Adviser shall advise the Custodian and confirm in writing to the
Trust and to Countrywide Fund Services, Inc. or any other designated agent of
the Trust, all investment orders for the Fund placed by it with brokers and
dealers. The Adviser shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated by
the Adviser.
6. Allocation of Brokerage. The Adviser shall have authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Adviser and to select the markets on or in which the
transactions will be executed.
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<PAGE> 4
In doing so, the Adviser will give primary consideration to securing
the best price and execution. Consistent with this policy, the Adviser may
consider the financial responsibility, research and investment information and
other services provided by brokers or dealers who may effect or be a party to
any such transaction or other transactions to which other clients of the Adviser
may be a party. It is understood that neither the Trust nor the Adviser has
adopted a formula for allocation of the Fund's investment transaction business.
It is also understood that it is desirable for the Trust that the Adviser have
access to supplemental investment and market research and security and economic
analyses provided by certain brokers who may execute brokerage transactions at a
higher commission to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the lowest commission. Therefore, the Adviser is
authorized to place orders for the purchase and sale of securities for the Fund
with such certain brokers, subject to review by the Trust's Trustees from time
to time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Adviser in connection with its services to other clients.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
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<PAGE> 5
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Trust and to such other clients.
For each fiscal quarter of the Trust, the Adviser shall prepare and
render reports to the Trust's Trustees of the total brokerage business placed
and the manner in which the allocation has been accomplished. Such reports shall
set forth at a minimum the information required to be maintained by Rule
3la-l(b)(9) under the Act.
7. Proxies. The Trust will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Fund may be invested
from time to time. At the request of the Trust, the Adviser shall provide the
Trust with its recommendations as to the voting of such proxies.
8. Reports to the Adviser. The Trust will provide the Adviser with
such periodic reports concerning the status of the Fund as the Adviser may
reasonably request.
9. Fees for Services. For all of the services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Adviser a
fee, computed and accrued daily and paid monthly, at the annual rate of 1.00% of
its average daily net assets.
10. Allocation of Charges and Expenses. The Adviser shall employ or
provide and compensate the executive, administrative,
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<PAGE> 6
secretarial and clerical personnel necessary to provide the services set forth
herein, and shall bear the expense thereof. The Adviser shall compensate all
Trustees, officers and employees of the Trust who are also employees of the
Adviser. The Adviser will pay all expenses incurred in connection with the sale
or distribution of the Fund's shares to the extent such expenses are not assumed
by the Fund under the Trust's Distribution Expense Plan.
The Fund will be responsible for the payment of all operating expenses
of the Fund, including fees and expenses incurred by the Fund in connection with
membership in investment company organizations, brokerage fees and commissions,
legal, auditing and accounting expenses, expenses of registering shares under
federal and state securities laws, insurance expenses, taxes or governmental
fees, fees and expenses of the custodian, the transfer, shareholder service and
dividend disbursing agent and the accounting and pricing agent of the Fund,
expenses including clerical expenses of the issue, sale, redemption or
repurchase of shares of the Fund, the fees and expenses of Trustees of the
Trust who are not interested persons of the Trust, the cost of preparing,
printing and distributing prospectuses, statements, reports and other documents
to shareholders, expenses of shareholders' meetings and proxy solicitations, and
such extraordinary or non-recurring expenses as may arise, including litigation
to which the Trust may be a party and indemnification of the Trust's officers
and Trustees
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<PAGE> 7
with respect thereto, or any other expense not specifically described above
incurred in the performance of the Trust's obligations. All other expenses not
expressly assumed by the Adviser herein incurred in connection with the
organization, registration of shares and operations of the Fund will be borne by
the Fund.
11. Other Investment Activities of the Adviser. The Trust acknowledges
that the Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"); provided, however, that performance by the Adviser of
such other services shall not impair or interfere with the Adviser's obligations
under this Agreement. Subject to the provisions of paragraph 2 hereof, the Trust
agrees that the Adviser or its affiliates may give advice or exercise investment
responsibility and take such other action with respect to other Affiliated
Accounts which may differ from the advice given or the timing or nature of
action taken with respect to the Fund, provided that the Adviser acts in good
faith, and provided further, that it is the Adviser's policy to allocate, within
its reasonable discretion, investment opportunities to the Fund over a period of
time on a fair and equitable basis relative to the Affiliated Accounts, taking
into account the investment objectives and policies of the Fund and
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<PAGE> 8
any specific investment restrictions applicable thereto. The Trust acknowledges
that one or more of the Affiliated Accounts may at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with positions in investments
in which the Fund may have an interest from time to time, whether in
transactions which involve the Fund or otherwise. The Adviser shall have no
obligation to acquire for the Fund a position in any investment which any
Affiliated Account may acquire, and the Trust shall have no first refusal,
co-investment or other rights in respect of any such investment, either for the
Fund or otherwise.
12. Certificate of Authority. The Trust and the Adviser shall furnish
to each other from time to time certified copies of the resolutions of their
Trustees or Board of Directors or executive committees, as the case may be,
evidencing the authority of officers and employees who are authorized to act on
behalf of the Trust, the Fund and/or the Adviser.
13. Limitation of Liability. The Adviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its reasonable judgment,
in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement, or in accordance with (or
in the absence of) specific directions or instructions from the Trust, provided,
however, that such acts or omissions shall not have resulted from the Adviser's
willful misfeasance, bad faith or negligence, a violation of the standard of
care established by and applicable to the Adviser in its actions under this
Agreement or breach of its duty or of its obligations hereunder.
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<PAGE> 9
Nothing in this paragraph 13 shall be construed in a manner inconsistent with
Sections 17(h) and (i) of the Act.
14. Confidentiality. Subject to the duty of the Adviser and the Trust
to comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of the Adviser and the
Trust in respect thereof.
15. Assignment. No assignment of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in the event of such
assignment. The Adviser shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Adviser.
16. Representation, Warranties and Agreements of the Trust. The Trust
represents, warrants and agrees that:
A. The Adviser has been duly appointed by the Trustees of the Trust
to provide investment advisory services to the Fund as contemplated hereby.
B. The Trust will deliver to the Adviser true and complete copies
of its then current prospectus and statement of additional information as
effective from time to time and such other documents or instruments governing
the investments of the Fund and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
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<PAGE> 10
C. The Trust is currently in compliance and shall at all times
comply with the requirements imposed upon the Trust by applicable law and
regulations.
17. Representations, Warranties and Agreements of the Adviser. The
Adviser represents, warrants and agrees that:
A. The Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940.
B. The Adviser will maintain, keep current and preserve on behalf
of the Trust, in the manner and for the time periods required or permitted by
the Act, the records identified in Schedule A. The Adviser agrees that such
records (unless otherwise indicated on Schedule A) are the property of the
Trust, and will be surrendered to the Trust promptly upon request.
C. The Adviser will complete such reports concerning purchases or
sales of securities on behalf of the Fund as the Trust may from time to time
require to ensure compliance with the Act, the Internal Revenue Code of 1986 and
applicable state securities laws.
D. The Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the Act and will provide the Trust with a
copy of the code of ethics and evidence of its adoption. Within forty-five (45)
days of the end of the last calendar quarter of each year while this Agreement
is in effect, an executive officer of the Adviser shall certify to the Trust
that the Adviser has complied with the requirements of Rule 17j-1 during the
previous year and that there has been no
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<PAGE> 11
violation of the Adviser's code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation. Upon the
written request of the Trust, the Adviser shall permit the Trust, its employees
or its agents to examine the reports required to be made to the Adviser by Rule
17j-l(c)(1).
E. The Adviser will, promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV, furnish a copy of such
amendment to the Trust.
F. Upon request of the Trust, the Adviser will provide assistance
to the Custodian in the collection of income due or payable to the Fund.
G. The Adviser will immediately notify the Trust of the occurrence
of any event which would disqualify the Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the Act or
otherwise.
18. Amendment. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Trustees and the
shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to approval
of amendments to this Agreement.
19. Effective Date; Term. This Agreement shall become effective on the
date of its execution and shall remain in force
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<PAGE> 12
for a period of two (2) years from such date, and from year to year thereafter
but only so long as such continuance is specifically approved at least annually
by the vote of a majority of the Trustees who are not interested persons of the
Trust or the Adviser, cast in person at a meeting called for the purpose of
voting on such approval, and by a vote of the Board of Trustees or of a majority
of the outstanding voting securities of the Fund. The aforesaid requirement that
this Agreement may be continued "annually" shall be construed in a manner
consistent with the Act and the rules and regulations thereunder.
20. Termination. This Agreement may be terminated by either party
hereto, without the payment of any penalty, immediately upon written notice to
the other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other, but
any such termination shall not affect the status, obligations or liabilities of
any party hereto to the other. This Agreement may be terminated by the Trust at
any time without the payment of any penalty in the event that it is established
by a court of competent jurisdiction that the Adviser or any officer or director
thereof has taken an action which results in a breach of the covenants of the
Adviser set forth in this Agreement.
21. Obligations of the Trust. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust. The execution and
delivery of this
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<PAGE> 13
Agreement have been authorized by the Trustees of the Trust and signed by an
officer of the Trust, acting as such, and neither such authorization by such
trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust.
22. Definitions. As used in paragraphs 15 and 19 of this Agreement, the
terms "assignment," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations hereunder.
23. Applicable Law. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Virginia.
24. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
the Agreement shall not be affected thereby.
25. Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year written below.
UC INVESTMENT TRUST
By: Lois A. Clarke
----------------------------
Title: President
-------------------------
Date: June 16 1998
--------------------,
UNITED INVESTMENT CORPORATION
By: Ronald E. Oliver
----------------------------
Title: Vice-President
-------------------------
Date: June 16 1998
--------------------,
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<PAGE> 15
SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
1. (Rule 3la-l(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases or sales, given by the Adviser on behalf of
the Fund for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification
or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the
Trust.
2. (Rule 3la-l(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of portfolio securities to named brokers or dealers was effected,
and the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or
dealers to:
(a) The Trust;
(b) The Adviser; and,
(c) Any person affiliated with the foregoing
persons.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made
available.
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<PAGE> 16
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 3la-l(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is
made by a committee or group, a record shall be kept of the names of
its members who participate in the authorization. There shall be
retained as part of this record any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of portfolio
securities and such other information as is appropriate to support the
authorization.*
4. (Rule 3la-l(f)) Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Adviser's transactions with respect to the Fund.
- ---------------------------
* Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms (including
their recommendation; i.e., buy, sell, hold) or any internal reports or
portfolio adviser reviews.
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