SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------- ----------
Commission file number 0-14061
STEEL TECHNOLOGIES INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
KENTUCKY 61-0712014
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15415 Shelbyville Road, Louisville, KY 40245
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(502) 245-2110
----------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceeding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------- -------
There were 12,158,365 shares outstanding of the Registrant's
common stock as of April 30, 1995.
1 of 12
<PAGE>
STEEL TECHNOLOGIES INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1995 (Unaudited) and
September 30, 1994 (Audited) 3
Condensed Consolidated Statements
of Income Three months and six months
ended March 31, 1995 and 1994 (Unaudited) 4
Condensed Consolidated Statements of
Cash Flows Six months ended March 31,
1995 and 1994 (Unaudited) 5
Notes to Condensed Consolidated
Financial Statements (Unaudited) 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8-10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote
of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
2 of 12
<PAGE>
Part I. - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
STEEL TECHNOLOGIES INC.
Condensed Consolidated Balance Sheets
(Amounts in Thousands)
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
ASSETS (Unaudited) (Audited)
- --------------------------------------------------------------------------
<S> <C> <C>
Current assets:
- ---------------
Cash and cash equivalents $ 5,458 $ 1,008
Trade accounts receivable, net 38,964 34,496
Inventories (Note 2) 56,767 80,357
Deferred income taxes 1,350 1,450
Prepaid expenses and other assets 123 536
- --------------------------------------------------------------------------
Total current assets 102,662 117,847
- --------------------------------------------------------------------------
Property, plant and equipment, net 92,304 73,329
- --------------------------------------------------------------------------
Investments in corporate joint ventures 8,640 7,930
- --------------------------------------------------------------------------
Other assets 892 1,307
- --------------------------------------------------------------------------
$ 204,498 $ 200,413
==========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------
Current liabilities:
- --------------------
Accounts payable $ 31,607 $ 43,432
Accrued liabilities 3,924 3,094
Long-term debt due within one year 401 810
- --------------------------------------------------------------------------
Total current liabilities 35,932 47,336
- --------------------------------------------------------------------------
Long-term debt 72,444 60,805
- --------------------------------------------------------------------------
Deferred income taxes 4,924 4,634
- --------------------------------------------------------------------------
Shareholders' equity:
- ---------------------
Preferred stock - -
Common stock 18,632 18,625
Additional paid-in capital 4,909 4,909
Foreign currency translation
adjustment (Note 4) (647) -
Retained earnings (Note 3) 68,304 64,104
- --------------------------------------------------------------------------
91,198 87,638
- --------------------------------------------------------------------------
$ 204,498 $ 200,413
==========================================================================
</TABLE>
The accompanying notes are an integral part of the financial
statements.
3 of 12
<PAGE>
STEEL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income
(Amounts in Thousands, Except per Share Data, Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
1995 1994 1995 1994
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 71,496 $ 62,740 $ 135,741 $ 116,812
Cost of goods sold 61,810 54,357 118,233 101,315
- -------------------------------------------------------------------------
Gross profit 9,686 8,383 17,508 15,497
Selling, general and
administrative expenses 4,371 3,812 8,371 7,208
Equity in net income of
unconsolidated corporate
joint venture 387 351 710 654
- -------------------------------------------------------------------------
Operating income 5,702 4,922 9,847 8,943
Foreign currency exchange
loss (Note 4) 497 - 497 -
Interest expense 1,027 338 1,917 656
- -------------------------------------------------------------------------
Income before income
taxes 4,178 4,584 7,433 8,287
Provision for income
taxes 1,515 1,669 2,746 2,996
- -------------------------------------------------------------------------
Net income $ 2,663 $ 2,915 $ 4,687 $ 5,291
=========================================================================
Weighted average number of
common shares outstanding
(Note 5) 12,158 12,148 12,158 12,142
=========================================================================
Earnings per common share
(Note 5) $ 0.22 $ 0.24 $ 0.39 $ 0.44
=========================================================================
Cash dividends per common
share (Note 5) $ 0.00 $ 0.00 $ 0.04 $ 0.03
=========================================================================
</TABLE>
The accompanying notes are an integral part of the financial
statements.
4 of 12
<PAGE>
STEEL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands, Unaudited)
<TABLE>
<CAPTION>
Six months ended
March 31,
1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,687 $ 5,291
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 3,311 2,398
Foreign currency exchange loss 497 -
Deferred income taxes 390 300
Equity in net income of
unconsolidated corporate
joint venture (710) (654)
Increase (decrease) in cash
resulting from changes in:
Trade accounts receivable (4,468) (5,049)
Inventories 23,590 130
Accounts payable (11,825) 3,738
Accrued liabilities and taxes 830 (621)
Other 381 78
- ----------------------------------------------------------------------
Net cash provided by operating activities 16,683 5,611
- ----------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment (22,286) (10,659)
- ----------------------------------------------------------------------
Net cash used in investing activities (22,286) (10,659)
- ----------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 25,479 6,968
Principal payments on long-term
debt (14,249) (851)
Issuance of common stock under
incentive stock option plan 7 12
Cash dividends on common stock (487) (364)
- ----------------------------------------------------------------------
Net cash provided by financing activities 10,750 5,765
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Effect of exchange rate changes
on cash (697) -
- ----------------------------------------------------------------------
Net increase in cash and cash
equivalents 4,450 717
Cash and cash equivalents,
beginning of year 1,008 140
- ----------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 5,458 $ 857
======================================================================
Supplemental Cash Flow Disclosures:
- -----------------------------------
Cash payments for interest $ 1,736 $ 712
======================================================================
Cash payments for taxes $ 1,823 $ 3,275
======================================================================
</TABLE>
The accompanying notes are an integral part of the financial
statements.
5 of 12
<PAGE>
STEEL TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of March 31, 1995 and
the consolidated statements of income for the three and six-month
periods ended March 31, 1995 and 1994, and the condensed
consolidated statements of cash flows for the six-month periods
then ended have been prepared by the Company without audit. In
the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at March
31, 1995 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these condensed financial statements be read
in conjunction with the financial statements and notes thereto
included in the Company's annual report to shareholders for the
year ended September 30, 1994. The results of operations for the
six months ended March 31, 1995 are not necessarily indicative of
the operating results for the full year.
2. INVENTORIES
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
(Unaudited) (Audited)
-------------------------------
(Amounts in Thousands)
<S> <C> <C>
Inventories consist of:
- ------------------------------------------------------------------
Raw materials $ 47,240 $ 71,630
Finished goods and
work in process 9,527 8,727
- ------------------------------------------------------------------
$ 56,767 $ 80,357
- ------------------------------------------------------------------
</TABLE>
3. RETAINED EARNINGS
<TABLE>
<CAPTION>
Six months ended
March 31, 1995
--------------
(Amounts in Thousands)
<S> <C>
Retained earnings consists of:
- ------------------------------------------------------------
Balance, beginning of year $64,104
Net income 4,687
Cash dividends on common stock (487)
- ------------------------------------------------------------
Balance, end of period $68,304
- ------------------------------------------------------------
</TABLE>
6 of 12
<PAGE>
4. FOREIGN CURRENCY TRANSLATION
In accordance with Statement of Financial Accounting Standard No.
52, "Foreign Currency Translation", the assets and liabilities
denominated in foreign currency are translated into U.S. dollars
at the current rate of exchange existing at period end and
revenues and expenses are translated at the average monthly
exchange rates.
5. EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average
number of common shares outstanding during each period. Common
stock options are not included in earnings per share computations
since their effect is not significant.
7 of 12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
- ---------------------
Second quarter 1995 sales of $71,496,000 increased 14% from the
$62,740,000 posted a year ago and represented the highest sales
levels for any quarter in the Company's history. Sales for the
six months ended March 31, 1995 increased 16% to $135,741,000
from $116,812,000 in 1994. The Company continues to focus
significant resources on the automotive industry and to generate
a major portion of business from selling to industrial customers
manufacturing component parts for use in the automotive industry.
Automotive production schedules and economic conditions during
the quarter and six months ended March 31, 1995 continued to
improve over the prior year. These factors contributed to an
increase in market share as the Company benefited from increasing
its participation with existing customers and the addition of new
accounts. Tonnage shipped for the 1995 second quarter and six
months increased by 6% and 9% from 1994. Sales benefited from
increases in the average selling price for flat rolled steel
products of approximately 8% for the three and six months ended
March 31, 1995.
Cost of goods sold as a percentage of sales was 86.5% and 87.1%
in the second quarter and first half of fiscal 1995 compared to
86.7% in the same periods a year ago. The continuation of strong
demand of the past year in automotive and other steel consuming
markets created upward pressure on the prices paid for raw
materials from the primary mills. A lag existed between the
time raw material price increases impacted the Company and when
they were passed on to our customers. The Company managed to
pass through a majority of these raw material increases, however
this lag pressured the gross profit margin throughout fiscal 1994
and into the current fiscal year. Throughout the first half of
fiscal 1995, the Company has successfully increased the selling
prices for its flat rolled steel products while raw material
costs have remained relatively stable compared with the fourth
quarter of fiscal 1994. This has allowed the gross profit margin
to improve from the immediately preceeding quarter in each of the
first two quarters of 1995.
The Company continues to actively manage the level at which
selling, general and administrative costs are added to its cost
structure. This cost control over the last several years has
resulted in selling, general and administrative costs increasing
at a rate comparable to the growth in sales. As a result,
selling, general and administrative expenses remained at 6.1% and
6.2% of sales for the quarter and six months ended March 31, 1995
and 1994.
The Company's equity in unconsolidated corporate joint venture
increased to $387,000 and $710,000 for the quarter and six months
ended March 31, 1995 from $351,000 and $654,000 a year ago.
These increases are principally the result of the higher sales
levels achieved by the 50% owned corporate joint venture, Mi-Tech
Steel, Inc.
The Company recorded a charge of $497,000 in the second quarter
of fiscal 1995 to account for the impact of the Mexican peso
devaluation on intercompany borrowings by the Company's 80% owned
steel processing company located in Monterrey, Mexico.
Interest expense increased to $1,027,000 and $1,917,000 for the
quarter and six months ended March 31, 1995 from $338,000 and
$656,000 in 1994. These increases are the result of
significantly higher borrowings required to finance the capital
addition and working capital needs of the Company. Higher
interest rates have also contributed to the increase in interest
expense for the quarter and six months ended March 31, 1995.
Although the tax act of 1993 increased the maximum corporate tax
rate, the Company's effective income tax rate remained at 36% in
the second quarter of 1995 and 1994. The effective income tax
rate was 37% and 36% for the six months ended March 31, 1995 and
1994. The impact of the higher statutory rate was offset
somewhat by increased earnings of the Mi-Tech Steel joint
venture, which are not fully taxable to the Company.
8 of 12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Cont.)
Liquidity and Capital Resources
- -------------------------------
Over the last several years the Company has improved its
financial position as sales and operating profits have increased
significantly. Accounts receivable, inventories and other
working capital items have been increased to support the higher
sales levels. Additionally, the Company has maintained higher
levels of inventory over the past year in anticipation of rising
raw material costs. As raw material costs have stabilized in
the second quarter and the availability of raw materials has
improved, the Company has significantly reduced its inventory
levels during the March 1995 quarter. These working capital
items were financed with a combination of debt and cash from
operations.
The Company has continued to invest in new equipment and
facilities during the six months ended March 31, 1995. Capital
expenditures totaled $22,286,000 and were financed primarily with
proceeds from long-term debt. The Company has invested over
$13,300,000 on the new steel processing facility in Gallatin
County, Kentucky. This new facility, located adjacent to the new
Gallatin Steel mini mill, will have the capability to pickle,
level and slit flat rolled steel. Construction began in October
1994 and the facility is estimated to be operational in the
fourth quarter of fiscal 1995. This new $20 million operation
will comprise the majority of the planned $25 to $30 million 1995
capital budget.
The Company has also made significant progress on the expansion
of the Portage, Indiana, facility. This $6 million expansion
will significantly increase the production capacity of the
Portage, Indiana, facility which will enable the Company to
extend its coverage in the Chicago and Midwest markets. The
expansion includes the installation of new slitting lines as well
as an additional 75,000 square feet of production and storage
space.
While the effect of the Mexican peso devaluation has impacted the
short term operating performance of the 80% owned subsidiary, the
Company believes the Mexican market offers excellent long term
growth opportunities. The Monterrey facility is currently
undergoing a modest expansion. The addition includes the
installation of a new slitting line and rolling mill which will
increase the products and services offered to the Mexican
marketplace.
In April 1995, the Company completed the refinancing of $40
million of its bank line of credit through a private placement of
debt. The new 10 year note agreement is unsecured, bears a fixed
rate of interest and does not require any principal amortization
for 4 years. This refinancing reduced the availability of the
unsecured bank line of credit from a maximum of $80 million to
$40 million.
The Company believes that it currently has sufficient liquidity
and available capital resources to meet its existing needs. The
Company expects funds generated from operations and the
availability of $14 million under its unsecured bank line of
credit will be sufficient to satisfy the capital expenditure
plans for 1995. The working capital needs associated with the
anticipated sales growth in 1995 are being funded by the cash
flow generated as a result of the second quarter inventory
reductions. As fiscal 1995 progresses, the Company expects to
maintain these lower levels of inventory and to increase the
inventory turnover rates. Additionally, the Board of Directors
in March 1995 authorized the Company to repurchase up to 400,000
shares of its common stock from time to time in the open market.
As of April 30, 1995, no shares have been repurchased under this
authorization. The share repurchase would be funded with a
combination of cash from operations and available borrowing
capabilities.
At this time the Company has no known commitments or demands
which must be met beyond the next twelve months other than the
line of credit, which is expected to be renewed at the end of the
term. However, the Company may seek, from time to time,
additional funds to finance the opening of new plants,
significant improvements in its production and processing
equipment and purchases of equipment to expand its production and
processing capabilities. The form of such financing may vary
depending upon the prevailing market and related conditions, and
may include short or long-term borrowings or the issuance of debt
or equity securities.
At March 31, 1995, the Company had $72,444,000 in long-term debt
outstanding. Under its various debt agreements, the Company has
agreed to maintain specified levels of working capital and net
worth, maintain certain ratios and limit the addition of
substantial debt. The Company is in compliance with all of its
loan covenants, and none of these covenants would restrict the
Company from completing currently planned capital expenditures.
9 of 12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Cont.)
Liquidity and Capital Resources (Cont.)
- ---------------------------------------
Pursuant to a joint venture agreement, Steel Technologies has
guaranteed $6,250,000 of the bank financing required for the
working capital purposes of Mi-Tech Steel, Inc.
The Company maintains an investment, principally in preferred
stock of Processing Technology, Inc., a corporate joint venture.
The Company continues to evaluate the possible conversion of its
preferred stock investment into common stock of Processing
Technology, Inc. The Company's decision to convert its
investment to common stock will be based upon the joint venture
attaining certain financial criteria established by Steel
Technologies. Upon conversion, the Company would be obligated to
guarantee a proportionate share, currently approximating
$10,500,000, of the joint venture's loan and lease commitments.
Currently, the Company is a guarantor on a $2,000,000 Processing
Technology, Inc. bank line of credit.
The Company does not sponsor medical and life programs which
extend to pensioners and dependents. Therefore, the Company is
not subject to the provisions of Statement of Financial
Accounting Standards, No.106, "Employers' Accounting for
Postretirement Benefits Other than Pensions."
10 of 12
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
The annual meeting of shareholders was held on January 26, 1995.
The matters voted upon at the meeting were the election of three
directors for three year terms, the ratification of independent
auditors for the current fiscal year and the approval of the 1995
Stock Option Plan.
The number of votes cast for, against or withheld with respect to
each nominee for director elected at the meeting were as follows:
<TABLE>
<CAPTION>
Nominee Votes For Votes Against Votes Withheld
- ------- --------- ------------- --------------
<S> <C> <C> <C>
William E. Hellmann 10,680,001 0 157,234
Howard F. Bates, Jr. 10,682,931 0 154,304
Michael J. Carroll 10,683,080 0 154,155
</TABLE>
The number of votes cast for, against or abstained with respect
to the selection of Coopers and Lybrand as independent auditors
were as follows:
<TABLE>
<CAPTION>
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
<C> <C> <C>
10,808,832 6,148 22,255
</TABLE>
The number of votes cast for, against or abstained with respect
to the approval of the 1995 Stock Option Plan.
<TABLE>
<CAPTION>
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
<C> <C> <C>
10,210,864 503,676 70,752
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) The following exhibits are filed as a part of this report:
10.1 -- Note Agreement dated as of March 1, 1995, between the
Registrant and Principal Mutual Life Insurance Company,
Lincoln National Investment Management Company,
Jefferson-Pilot Life Insurance Company and Northern
Life Insurance Company.
10.2 -- Second Amendment to Loan Agreement dated as of April 6,
1995, between the Registrant and PNC Bank, Kentucky,
Inc., National City Bank, Kentucky, NBD Bank, N.A.
and Third National Bank, Nashville, Tennessee.
10.3 -- Steel Technologies Inc. 1995 Stock Option Plan
27 -- Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1995.
11 of 12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
STEEL TECHNOLOGIES INC.
-----------------------
(Registrant)
By Kenneth R. Bates
----------------
Kenneth R. Bates
Vice President Finance;
Chief Financial Officer
(Principal Financial and
Chief Accounting Officer)
Dated May 11, 1995
12 of 12
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------- ----------------------
10.1 -- Note Agreement dated as of March 1, 1995,
between the Registrant and Principal Mutual
Life Insurance Company, Lincoln National
Investment Management Company, Jefferson-Pilot
Life Insurance Company and Northern Life
Insurance Company.
10.2 -- Second Amendment to Loan Agreement dated as
of April 6, 1995, between the Registrant and
PNC Bank, Kentucky, Inc., National City Bank,
Kentucky, NBD Bank, N.A. and Third National
Bank, Nashville, Tennessee.
10.3 -- Steel Technologies Inc. 1995 Stock Option Plan
27 -- Financial Data Schedule
EXHIBIT 10.1
------------
=================================================================
STEEL TECHNOLOGIES INC.
NOTE AGREEMENT
Dated as of March 1, 1995
Re: $40,000,000 8.52% Senior Notes
Due March 1, 2005
=================================================================
<PAGE>
TABLE OF CONTENTS
(Not a part of the Agreement)
Section Heading Page
Parties...................................................... 1
Section 1. Description of Notes and Commitment........... 1
Section 1.1. Description of Notes....................... 1
Section 1.2. Commitment, Closing Date................... 1
Section 1.3. Guaranty of Notes.......................... 2
Section 1.4. Several Commitments........................ 2
Section 2. Prepayment of Notes........................... 2
Section 2.1. Required Prepayments....................... 2
Section 2.2. Optional Prepayment with Premium........... 3
Section 2.3. Notice of Optional Prepayments............. 3
Section 2.4. Application of Prepayments................. 3
Section 2.5. Direct Payment............................. 3
Section 3. Representations............................... 4
Section 3.1. Representations of the Company............. 4
Section 3.2. Representations of the Purchasers.......... 4
Section 4. Closing Conditions............................ 4
Section 4.1. Conditions................................. 4
Section 4.2. Waiver of Conditions....................... 5
Section 5. Company Covenants............................. 6
Section 5.1. Corporate Existence, Etc................... 6
Section 5.2. Insurance.................................. 6
Section 5.3. Taxes, Claims for Labor and Materials,
Compliance with Laws..................... 6
Section 5.4. Maintenance, Etc........................... 7
Section 5.5. Nature of Business......................... 7
Section 5.6. Current Ratio.............................. 7
Section 5.7. Consolidated Net Worth..................... 7
Section 5.8. Limitations on Indebtedness................ 7
Section 5.9. Limitation on Liens........................ 8
Section 5.10. Limitation on Sale and Leasebacks.......... 10
Section 5.11. Investments................................ 10
Section 5.12. Mergers, Etc............................... 12
Section 5.13. Sales of Assets............................ 12
-i-
<PAGE>
Section 5.14. Guaranties................................. 13
Section 5.15. Repurchase of Notes........................ 13
Section 5.16. Transactions with Affiliates............... 13
Section 5.17. Termination of Pension Plans............... 13
Section 5.18. Reports and Rights of Inspection........... 14
Section 5.19. Mexican Subsidiary Guaranty................ 16
Section 6. Events of Default and Remedies Therefor....... 17
Section 6.1. Events of Default.......................... 17
Section 6.2. Notice to Holders.......................... 18
Section 6.3. Acceleration of Maturities................. 18
Section 6.4. Rescission of Acceleration................. 19
Section 7. Amendments, Waivers and Consents.............. 19
Section 7.1. Consent Required........................... 19
Section 7.2. Solicitation of Holders.................... 19
Section 7.3. Effect of Amendment or Waiver.............. 20
Section 8. Interpretation of Agreement; Definitions...... 20
Section 8.1. Definitions................................ 20
Section 8.2. Accounting Principles...................... 27
Section 8.3. Directly or Indirectly..................... 27
Section 9. Miscellaneous................................. 27
Section 9.1. Registered Notes........................... 27
Section 9.2. Exchange of Notes.......................... 28
Section 9.3. Loss, Theft, Etc. of Notes................. 28
Section 9.4. Expenses, Stamp Tax Indemnity.............. 28
Section 9.5. Powers and Rights Not Waived;
Remedies Cumulative..................... 29
Section 9.6. Notices.................................... 29
Section 9.7. Successors and Assigns..................... 30
Section 9.8. Survival of Covenants and Representations.. 30
Section 9.9. Severability............................... 30
Section 9.10. Governing Law.............................. 30
Section 9.11. Captions................................... 30
Section 9.12. Additional Indebtedness.................... 30
Section 9.13. Confidential Information................... 30
Section 9.14. Execution of Financing Agreement........... 31
Signature Page............................................... 32
-ii-
<PAGE>
ATTACHMENTS TO NOTE AGREEMENT:
Schedule I - Names of Note Purchasers and Amounts of Commitments
Schedule II - Liens Securing Indebtedness (including Capitalized
Leases) as of March 1, 1995
Exhibit A - Form of 8.52% Senior Note due March 1, 2005
Exhibit B - Form of Guaranty Agreement
Exhibit C - Representations and Warranties of the Company
Exhibit D - Description of Special Counsel's Closing Opinion
Exhibit E - Description of Closing Opinion of Counsel to the
Company
-iii-
<PAGE>
STEEL TECHNOLOGIES INC.
15415 SHELBYVILLE ROAD
LOUISVILLE, KENTUCKY 40245
NOTE AGREEMENT
Re: $40,000,000 8.52% Senior Notes
Due March 1, 2005
Dated as of
March 1, 1995
To the Purchasers named on Schedule I
to this Agreement
The undersigned, STEEL TECHNOLOGIES INC., a Kentucky
corporation (the "Company"), agrees with the Purchasers named on
Schedule I to this Agreement (the "Purchasers") as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
SECTION 1.1. DESCRIPTION OF NOTES. The Company will
authorize the issue and sale of $40,000,000 aggregate principal
amount of its 8.52% Senior Notes (the "Notes") to be dated the
date of issue, to bear interest from such date at the rate of
8.52% per annum, payable semiannually on the first day of each
March and September in each year (commencing September 1, 1995)
and at maturity and to bear interest on overdue principal
(including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest at the rate
of 10.52% per annum after the date due, whether by acceleration
or otherwise, until paid, to be expressed to mature on March 1,
2005, and to be substantially in the form attached hereto as
Exhibit A. Interest on the Notes shall be computed on the basis
of a 360-day year of twelve 30-day months. The Notes are not
subject to prepayment or redemption at the option of the Company
prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set
forth in section 2 of this Agreement. The term "Notes" as used
herein shall include each Note delivered pursuant to this
Agreement.
SECTION 1.2. COMMITMENT, CLOSING DATE. Subject to the
terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, the Company
agrees to issue and sell to each Purchaser, and such Purchaser
agrees to purchase from the Company, Notes in the principal
amount set forth opposite such Purchaser's name on
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Steel Technologies Inc. Note Agreement
Schedule I hereto at a price of 100% of the principal amount
thereof on the Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of Chapman
and Cutler, 111 West Monroe Street, Chicago, Illinois 60603,
against payment therefor in Federal Reserve or other funds
current and immediately available at the principal office of PNC
Bank, Kentucky, Inc., Account #30-9521-4936, ABA #083-000-108,
FBO Steel Technologies Inc. in the amount of the purchase price
at 10:00 a.m. Chicago time, on March 31, 1995 or such later date
(not later than April 30, 1995) as shall mutually be agreed upon
by the Company and the Purchasers (the "Closing Date"). The
Notes delivered to each Purchaser on the Closing Date will be
delivered to such Purchaser in the form of a single registered
Note in the form attached hereto as Exhibit A for the full amount
of such Purchaser's purchase (unless different denominations are
specified by such Purchaser), registered in such Purchaser's name
or in the name of such Purchaser's nominee, all as such Purchaser
may specify at any time prior to the date fixed for delivery.
SECTION 1.3. GUARANTY OF NOTES. Pursuant to that certain
Guaranty Agreement dated as of March 1, 1995 from Wabash Steel
Corporation, an Indiana corporation, ("Wabash") to the Purchasers
(the "Guaranty Agreement"), Wabash will guarantee, so long as the
Indebtedness under the Loan Agreement remains outstanding and is
guaranteed by Wabash, the due and punctual payment of the
principal of and interest and Make-Whole Amount, if any, on the
Notes from time to time outstanding, as and when such payments
become due and payable subject to the limitations set forth in
the Guaranty Agreement. The Guaranty Agreement will be in the
form attached hereto as Exhibit B.
SECTION 1.4. SEVERAL COMMITMENTS. The obligations of the
Purchasers shall be several and not joint and no Purchaser shall
be liable or responsible for the acts or defaults of any other
Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
SECTION 2.1. REQUIRED PREPAYMENTS. The Company agrees that
on March 1 in each year, commencing March 1, 1999 and ending
March 1, 2004, both inclusive, it will prepay and apply and there
shall become due and payable on the principal indebtedness
evidenced by the Notes an amount equal to the lesser of (i)
$5,720,000 or (ii) the principal amount of the Notes then
outstanding. The entire remaining principal amount of the Notes
shall become due and payable on March 1, 2005. No premium shall
be payable in connection with any required prepayment made
pursuant to this section 2.1. For purposes of this section 2.1,
any prepayment of less than all of the outstanding Notes pursuant
to section 2.2 shall be deemed to be applied first, to the amount
of principal scheduled to remain unpaid on March 1, 2005, and
then to the remaining scheduled principal payments in inverse
chronological order.
In the event of any purchase or other acquisition by the
Company of less than all of the Notes pursuant to section 5.15 or
otherwise, the amount of the payment required at maturity and
each prepayment required to be made pursuant to this section 2.1
shall be reduced in the proportion that the principal amount of
such purchase or other acquisition bears to the
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Steel Technologies Inc. Note Agreement
unpaid principal amount of the Notes immediately prior to such
purchase or other acquisition (after giving effect to any
prepayment made pursuant to this section 2.1 on the date of such
purchase or other acquisition).
SECTION 2.2. OPTIONAL PREPAYMENT WITH PREMIUM. In addition
to the payments required by section 2.1, upon compliance with
section 2.3 the Company shall have the privilege, at any time and
from time to time, of prepaying the outstanding Notes, either in
whole or in part (but if in part then in a minimum principal
amount of $100,000) by payment of the principal amount of the
Notes, or portion thereof to be prepaid, and accrued interest
thereon to the date of such prepayment, together with a premium
equal to the Make-Whole Amount, determined as of five business
days prior to the date of such prepayment pursuant to this
section 2.2.
SECTION 2.3. NOTICE OF OPTIONAL PREPAYMENTS. The Company
will give notice of any prepayment of the Notes pursuant to
section 2.2 to each Holder thereof not less than 30 days nor more
than 60 days before the date fixed for such optional prepayment
specifying (i) such date, (ii) the principal amount of the
Holder's Notes to be prepaid on such date, (iii) that a premium
may be payable, (iv) the date when such premium will be
calculated, (v) the estimated premium, and (vi) the accrued
interest applicable to the prepayment. Such notice of prepayment
shall also certify all facts, if any, which are conditions
precedent to any such prepayment. Notice of prepayment having
been so given, the aggregate principal amount of the Notes
specified in such notice, together with accrued interest thereon
and the premium, if any, payable with respect thereto shall
become due and payable on the prepayment date specified in said
notice. Not later than two business days prior to the prepayment
date specified in such notice, the Company shall provide each
Holder written notice of the premium, if any, payable in
connection with such prepayment and, whether or not any premium
is payable, a reasonably detailed computation of the Make-Whole
Amount.
SECTION 2.4. APPLICATION OF PREPAYMENTS. All partial
prepayments shall be applied on all outstanding Notes ratably in
accordance with the unpaid principal amounts thereof.
SECTION 2.5. DIRECT PAYMENT. Notwithstanding anything to
the contrary contained in this Agreement or the Notes, in the
case of any Note owned by any Holder that is a Purchaser or any
other Institutional Holder which has given written notice to the
Company requesting that the provisions of this section 2.5 shall
apply, the Company will punctually pay when due the principal
thereof, interest thereon and premium, if any, due with respect
to said principal, without any presentment thereof, directly to
such Holder at its address set forth herein or such other address
as such Holder may from time to time designate in writing to the
Company or, if a bank account with a United States bank is so
designated for such Holder, the Company will make such payments
in immediately available funds to such bank account, marked for
attention as indicated, or in such other manner or to such other
account in any United States bank as such Holder may from time to
time direct in writing.
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Steel Technologies Inc. Note Agreement
SECTION 3. REPRESENTATIONS.
SECTION 3.1. REPRESENTATIONS OF THE COMPANY. The Company
represents and warrants that all representations and warranties
set forth in Exhibit C are true and correct as of the date hereof
and are incorporated herein by reference with the same force and
effect as though herein set forth in full.
SECTION 3.2. REPRESENTATIONS OF THE PURCHASERS. Each
Purchaser represents, and in entering into this Agreement the
Company understands, that such Purchaser is acquiring the Notes
for the purpose of investment and not with a view to the
distribution thereof, and that such Purchaser has no present
intention of selling, negotiating or otherwise disposing of the
Notes; it being understood, however, that the disposition of such
Purchaser's property shall at all times be and remain within its
control. Each Purchaser further represents that at least one of
the following statements is an accurate representation as to the
source of funds to be used by such Purchaser to pay the purchase
price of the Notes purchased by it hereunder:
(a) if such Purchaser is an insurance company, no part
of such funds constitutes assets allocated to any separate
account maintained by such Purchaser in which any employee
benefit plan (or its related trust) has any interest; or
(b) if such Purchaser is an insurance company, to the
extent that any part of such funds constitutes assets
allocated to any separate account maintained by such
Purchaser in which any employee benefit plan (or its related
trust) has any interest, (i) such separate account is a
"pooled separate account" within the meaning of Prohibited
Transaction Class Exemption 90-1, as amended, in which case
such Purchaser has disclosed to the Company the name of each
employee benefit plan whose assets in such separate account
exceed 10% of the total assets or are expected to exceed 10%
of the total assets of such account as of the date of such
purchase (and for the purposes of this paragraph (b), all
employee benefit plans maintained by the same employer or
employee organization are deemed to be a single plan), or
(ii) such separate account contains only the assets of a
specific employee benefit plan, complete and accurate
information as to the identity of which such Purchaser has
delivered to the Company; or
(c) if such Purchaser is other than an insurance
company, no part of such funds constitutes "plan assets".
As used in this section 3.2, the terms "employee benefit plan"
and "separate account" shall have the respective meanings
assigned to such terms in Section 3 of ERISA and the term "plan
assets" shall have the meaning specified in Department of Labor
Regulation Section 2510.3-101.
SECTION 4. CLOSING CONDITIONS.
SECTION 4.1. CONDITIONS. The obligation of each Purchaser
to purchase the Notes on the Closing Date shall be subject to the
performance by the Company of its agreements
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Steel Technologies Inc. Note Agreement
hereunder which by the terms hereof are to be performed at or
prior to the time of delivery of the Notes and to the following
further conditions precedent:
(a) CLOSING CERTIFICATES. Such Purchaser shall have
received certificates dated the Closing Date, signed by the
President or a Vice President of the Company and the
President or a Vice President of Wabash, the truth and
accuracy of which shall be a condition to such Purchaser's
obligation to purchase the Notes proposed to be sold to such
Purchaser and to the effect that (i) the representations and
warranties of the Company set forth in Exhibit C hereto
(with respect to the Company's Certificate) and the
representations and warranties of Wabash set forth in the
Guaranty Agreement (with respect to the Certificate of
Wabash) are each true and correct on and with respect to the
Closing Date, (ii) each of the Company and Wabash has
performed all of its obligations hereunder and under the
Guaranty Agreement, as the case may be, which are to be
performed on or prior to the Closing Date, (iii) no Default
or Event of Default has occurred and is continuing, (iv) the
execution of the Guaranty Agreement by Wabash will result in
a financial benefit to Wabash and (v) the Guaranty Agreement
has been executed by Wabash in good faith.
(b) GUARANTY AGREEMENT AND INTERCREDITOR AGREEMENT.
The Guaranty Agreement shall have been duly executed and
delivered by Wabash and the Intercreditor Agreement shall
have been duly executed and delivered by the parties
thereto.
(c) LEGAL OPINIONS. Such Purchaser shall have
received from Chapman and Cutler, who are acting as special
counsel to the Purchasers in this transaction, and from
Stites & Harbison, counsel for the Company, their respective
opinions dated the Closing Date, in form and substance
satisfactory to such Purchaser, and covering the matters set
forth in Exhibits D and E, respectively, hereto.
(d) CERTAIN TRANSACTIONAL COSTS. Without limiting the
provisions of section 9.4, concurrently with the issuance of
the Notes, the Company shall have paid the fees, expenses
and separately charged items of the Purchasers' special
counsel to date.
(e) RELATED TRANSACTIONS. The Company shall have
consummated the sale of the entire principal amount of the
Notes scheduled to be sold on the Closing Date pursuant to
this Agreement.
(f) SATISFACTORY PROCEEDINGS. All proceedings taken
in connection with the transactions contemplated by this
Agreement, and all documents necessary to the consummation
thereof, shall be satisfactory in form and substance to such
Purchaser and such Purchaser's special counsel, and such
Purchaser shall have received a copy (executed or certified
as may be appropriate) of all legal documents or proceedings
taken in connection with the consummation of said
transactions.
SECTION 4.2. WAIVER OF CONDITIONS. If on the Closing Date
the Company fails to tender to any Purchaser the Notes to be
issued to any Purchaser on such date or if the
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Steel Technologies Inc. Note Agreement
conditions specified in section 4.1 have not been fulfilled, such
Purchaser may thereupon elect to be relieved of all further
obligations under this Agreement. Without limiting the
foregoing, if the conditions specified in section 4.1 have not
been fulfilled, such Purchaser may waive compliance by the
Company with any such condition to such extent as such Purchaser
may in its sole discretion determine. Nothing in this section
4.2 shall operate to relieve the Company of any of its
obligations hereunder or to waive any Purchaser's rights against
the Company.
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as
any amount remains unpaid on any Note:
SECTION 5.1. CORPORATE EXISTENCE, ETC. The Company will
preserve and keep in full force and effect, and will cause each
Subsidiary to preserve and keep in full force and effect, its
corporate existence and all licenses and permits necessary to the
proper conduct of its business the absence of which might
materially and adversely affect the properties, business or
condition of the Company and its Subsidiaries, taken as a whole;
provided, however, that the foregoing shall not prevent any
transaction permitted by section 5.12.
SECTION 5.2. INSURANCE. The Company will maintain, and
will cause each Subsidiary to maintain, insurance coverage by
financially sound and reputable insurers accorded a rating by
A.M. Best Company, Inc. of A:XII or higher at the time of
issuance of any such policy; provided that (a) the Mexican
Subsidiary may maintain the type of insurance coverage in effect
on the Closing Date with Seguros Tepeyac, S.A. and (b) the
Company may maintain the type of insurance coverage in effect on
the Closing Date with (i) Liberty Mutual Insurance Company
("Liberty Mutual") so long as it shall be rated at least A-:XV
and (ii) Royal Indemnity Company (with respect to directors and
officers insurance). Liberty Mutual shall be accorded a similar
rating by another nationally recognized insurance rating agency
of similar standing acceptable to you if A.M. Best Company, Inc.
ceases to rate insurers. In the event that Liberty Mutual is
subsequently downgraded so as to no longer meet the requirements
set forth above, the Company, on the date of renewal of any such
policy (or, if such change in rating shall occur within 90 days
prior to such renewal date, within 90 days of the date of such
change in rating), will obtain such insurance policy from an
insurer rated at least A:XII by A.M. Best Company, Inc.. All
such insurance coverage shall be in such forms and amounts and
against such risks as are customary for corporations of
established reputation engaged in the same or a similar business
and owning and operating similar properties set forth above.
SECTION 5.3. TAXES, CLAIMS FOR LABOR AND MATERIALS,
COMPLIANCE WITH LAWS. The Company will promptly pay and
discharge, and will cause each Subsidiary promptly to pay and
discharge, all lawful taxes, assessments and governmental charges
or levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of the
property or business of the Company or such Subsidiary, all trade
accounts payable in accordance with usual and customary business
terms, and all claims for work, labor or materials, which if
unpaid might become a Lien upon any property of the Company or
such Subsidiary; provided, however, that the Company or such
Subsidiary shall not be required to
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Steel Technologies Inc. Note Agreement
pay any such tax, assessment, charge, levy, account payable or
claim if (i) the validity, applicability or amount thereof is
being contested in good faith by appropriate actions or
proceedings which will prevent the forfeiture or sale of any
property of the Company or such Subsidiary or any material
interference with the use thereof by the Company or such
Subsidiary, and (ii) the Company or such Subsidiary shall set
aside on its books, adequate reserves with respect thereto. The
Company will promptly comply and will cause each Subsidiary to
comply with all laws, ordinances or governmental rules and
regulations to which it is subject including, without limitation,
the Occupational Safety and Health Act of 1970, as amended, ERISA
and all laws, ordinances, governmental rules and regulations
relating to environmental protection in all applicable
jurisdictions, the violation of which could materially and
adversely affect the properties, business, prospects, profits or
condition of the Company and its Subsidiaries or would result in
any Lien not permitted under section 5.9.
SECTION 5.4. MAINTENANCE, ETC. The Company will maintain,
preserve and keep, and will cause each Subsidiary to maintain,
preserve and keep, its properties which are used or useful in the
conduct of its business (whether owned in fee or a leasehold
interest) in good repair and working order and from time to time
will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be
maintained, unless the failure to do so would not have a material
adverse effect on the properties, business or condition of the
Company and its Subsidiaries, taken as a whole.
SECTION 5.5. NATURE OF BUSINESS. Neither the Company nor
any Subsidiary will engage in any business if, as a result, the
general nature of the business, taken on a consolidated basis,
which would then be engaged in by the Company and its
Subsidiaries would be substantially changed from the general
nature of the business engaged in by the Company and its
Subsidiaries on the date of this Agreement.
SECTION 5.6. CURRENT RATIO. The Company will at all times
keep and maintain the ratio of Consolidated Current Assets to
Consolidated Current Liabilities at not less than 1.5 to 1.
SECTION 5.7. CONSOLIDATED NET WORTH. The Company will at
all times keep and maintain Consolidated Net Worth at an amount
not less than (i) for the fiscal quarter of the Company ending
March 31, 1995, $78,000,000, and (ii) for each fiscal quarter
thereafter, the sum of the Consolidated Net Worth required to be
maintained during the immediately preceding fiscal quarter of the
Company plus an amount equal to 50% of Consolidated Net Income
for such preceding fiscal quarter (but without deduction in the
case of a deficit in Consolidated Net Income).
SECTION 5.8. LIMITATIONS ON INDEBTEDNESS. (a) The Company
will not, and will not permit any Subsidiary to, create, assume
or incur or in any manner be or become liable in respect of any
Indebtedness, except:
(1) Indebtedness evidenced by the Notes;
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Steel Technologies Inc. Note Agreement
(2) Indebtedness of the Company and its Subsidiaries
outstanding as of the date of this Agreement and reflected
in Annex B to Exhibit C, less amounts required to be paid
from the proceeds of the Notes;
(3) additional Indebtedness of the Company and its
Subsidiaries, provided that at the time of incurrence
thereof and after giving effect thereto and to the
application of the proceeds thereof:
(i) Net Income Available for Fixed Charges for
the period of four consecutive fiscal quarters then
most recently ended shall have been at least 300% of
Pro Forma Fixed Charges for such period,
(ii) Consolidated Indebtedness shall not exceed
50% of Consolidated Total Capitalization as at the end
of the fiscal quarter of the Company then most recently
ended, and
(iii) in the case of the incurrence of any Priority
Debt, the aggregate amount of all Priority Debt shall
not exceed 5% of Consolidated Net Worth; and
(4) Indebtedness of a Subsidiary to the Company or to
a Wholly-owned Subsidiary.
(b) Any corporation which becomes a Subsidiary after the
date hereof shall for all purposes of this section 5.8 be deemed
to have created, assumed or incurred at the time it becomes a
Subsidiary all Indebtedness of such corporation existing
immediately after it becomes a Subsidiary.
(c) The renewal, extension or refunding of any Indebtedness
shall constitute the issuance of additional Indebtedness which
is, in turn, subject to the limitations of the applicable
provisions of this section 5.8.
SECTION 5.9. LIMITATION ON LIENS. The Company will not,
and will not permit any Subsidiary to, create or incur, or suffer
to be incurred or to exist, any Lien on its or their property or
assets, whether now owned or hereafter acquired, or upon any
income or profits therefrom, or transfer any property for the
purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or
acquire or agree to acquire, or permit any Subsidiary to acquire,
any property or assets upon conditional sales agreements or other
title retention devices, except:
(a) Liens for property taxes and assessments or
governmental charges or levies and Liens securing claims or
demands of mechanics and materialmen, provided payment
thereof is not at the time required by section 5.3, or Liens
for property taxes and assessments or governmental charges
not yet due and payable;
(b) Liens of or resulting from any judgment or award,
the time for the appeal or petition for rehearing of which
shall not have expired, or in respect of
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Steel Technologies Inc. Note Agreement
which the Company or a Subsidiary shall at any time in good
faith be prosecuting an appeal or proceeding for a review
and in respect of which a stay of execution pending such
appeal or proceeding for review shall have been secured;
(c) Liens incidental to the conduct of business or the
ownership of properties and assets (including Liens in
connection with worker's compensation, unemployment
insurance and other like laws, warehousemen's and attorneys'
liens and statutory landlords' liens) and Liens to secure
the performance of bids, tenders or trade contracts, or to
secure statutory obligations, surety or appeal bonds or
other Liens of like general nature incurred in the ordinary
course of business and not in connection with the borrowing
of money; provided in each case, the obligation secured is
not overdue or, if overdue, is being contested in good faith
by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for
rights-of-way, utilities and other similar purposes, or
zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the
activities of the Company and its Subsidiaries or which
customarily exist on properties of corporations engaged in
similar activities and similarly situated and which do not
in any event materially impair their use in the operation of
the business of the Company and its Subsidiaries;
(e) Liens securing Indebtedness of a Subsidiary to the
Company or to another Wholly-owned Subsidiary;
(f) Liens existing as of the Closing Date and
reflected in Schedule II hereto;
(g) extensions, renewals and replacements of Liens
described in the foregoing paragraph (f), provided that such
Liens shall not be extended to other property of the Company
or its Subsidiaries and the principal amount of Indebtedness
secured thereby shall not be increased over the principal
amount thereof outstanding immediately prior to such
extension, renewal or replacement;
(h) Liens incurred after the Closing Date given to
secure the payment of the purchase price incurred in
connection with the acquisition or construction of fixed
assets (e.g. machinery, equipment, land and buildings)
useful and intended to be used in carrying on the business
of the Company or a Subsidiary, including Liens existing on
such fixed assets at the time of acquisition thereof or at
the time of acquisition by the Company or a Subsidiary of
any business entity then owning such fixed assets, whether
or not such existing Liens were given to secure the payment
of the purchase price of the fixed assets to which they
attach so long as they were not incurred, extended or
renewed in contemplation of such acquisition or
construction, provided that (i) the Lien shall attach solely
to the fixed assets acquired, purchased or constructed, (ii)
the Lien (other than any Liens existing on such fixed assets
at the time of acquisition thereof or at the time of
acquisition by the Company or a Subsidiary of any business
entity owning such fixed assets) shall have been incurred
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Steel Technologies Inc. Note Agreement
within 6 months of the date of acquisition of or the
completion of the construction of such fixed assets, (iii)
at the time of incurrence of such Lien, the aggregate amount
remaining unpaid on all Indebtedness secured by Liens on
such fixed assets whether or not assumed by the Company or a
Subsidiary shall not exceed an amount equal to the lesser of
the total purchase price, fair market value or construction
cost at the time of the acquisition of such fixed assets (as
determined in good faith by the Board of Directors of the
Company), and (iv) all such Indebtedness shall have been
incurred within the applicable limitations provided in
section 5.8; and
(i) Liens on fixed assets created or incurred after
the Closing Date given to secure Indebtedness of the Company
or any Subsidiary in addition to the Liens permitted by the
preceding clauses (a) through (h) hereof, provided that no
such Lien shall be created to secure preexisting
Indebtedness, any extension, renewal or replacement of such
Indebtedness, or any Indebtedness (whether or not
preexisting Indebtedness) under any preexisting agreement or
under any extension, renewal or replacement of such an
agreement and provided, further, that all such Indebtedness
shall have been incurred within the limitations provided in
section 5.8(a)(3).
Notwithstanding the foregoing provisions of this section
5.9, in the event any property of the Company or its Subsidiaries
is subjected to a Lien in violation of paragraphs (a) through
(i), inclusive, of this section 5.9, but not in violation of any
other provision of this Agreement (a "Prohibited Lien") such
transaction will not constitute a Default or Event of Default
hereunder if, concurrently with and as a condition precedent to
the creation of such Prohibited Lien (i) the Company or such
Subsidiary makes or causes to be made provision whereby the
obligations of the Company under the Notes and this Agreement
will be secured equally and ratably with all other obligations
secured by such Prohibited Lien pursuant to security arrangements
satisfactory in form, scope and substance to the Holder or
Holders holding not less than 66-2/3% in unpaid principal amount
of the Notes, and (ii) the Company delivers or causes to be
delivered an opinion of counsel satisfactory to the Holder or
Holders holding not less than 66-2/3% in unpaid principal amount
of the Notes regarding the validity and priority of such security
interest and to the effect that the Notes are equally and ratably
secured.
SECTION 5.10. LIMITATION ON SALE AND LEASEBACKS. The
Company will not, and will not permit any Subsidiary to, enter
into any arrangement whereby the Company or any Subsidiary shall
sell or transfer any property owned by the Company or any
Subsidiary to any Person other than the Company or a Subsidiary
and thereupon the Company or any Subsidiary shall lease or intend
to lease, as lessee, the same property (herein referred to as a
"Sale and Leaseback Transaction"), unless, after giving effect
thereto, the aggregate amount of all Attributable Debt then
outstanding with respect to all such transactions, when added to
the aggregate amount of all other Priority Debt then outstanding
shall not exceed 5% of Consolidated Net Worth.
SECTION 5.11. INVESTMENTS. The Company will not, and will
not permit any Subsidiary to, make any Investments, other than:
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Steel Technologies Inc. Note Agreement
(a) Investments by the Company and its Subsidiaries in
and to Subsidiaries, including any Investment in a
corporation which, after giving effect to such Investment,
will become a Subsidiary;
(b) Investments in commercial paper maturing in 270
days or less from the date of issuance which, at the time of
acquisition by the Company or any Subsidiary, is rated A1+
by Standard & Poor's Corporation or P1+ by Moody's Investors
Service, Inc.;
(c) Investments in direct obligations of the United
States of America or any agency or instrumentality of the
United States of America, the payment or guarantee of which
constitutes a full faith and credit obligation of the United
States of America, in either case, maturing in twelve months
or less from the date of acquisition thereof;
(d) Investments in certificates of deposit maturing
within one year from the date of issuance thereof, issued by
a bank or trust company organized under the laws of the
United States or any state thereof, having capital, surplus
and undivided profits aggregating at least $100,000,000 and
whose long-term certificates of deposit are, at the time of
acquisition thereof by the Company or a Subsidiary, rated A-
or better by Standard & Poor's Corporation or A3 or better
by Moody's Investors Service, Inc.;
(e) loans or advances, not exceeding $1,000,000 in the
aggregate, in the usual and ordinary course of business to
officers, directors and employees for expenses (including
moving expenses related to a transfer) incidental to
carrying on the business of the Company or any Subsidiary;
(f) Guaranties by the Company of the Indebtedness of
Mi-Tech Steel, Inc., a Delaware corporation, and Processing
Technology, Inc., a Delaware corporation, and extensions and
renewals thereof, provided that the aggregate principal
amount so guaranteed shall not exceed $8,250,000 at any time
outstanding;
(g) Guaranties by Wabash and the Mexican Subsidiary of
(x) certain Indebtedness for borrowed money of the Company
under the Loan Agreement and (y) the Notes;
(h) receivables arising from the sale of goods and
services in the ordinary course of business of the Company
and its Subsidiaries; and
(i) other Investments of the Company and its
Subsidiaries (in addition to those permitted by the
foregoing provisions of this section 5.11) not to exceed 10%
of Consolidated Net Worth.
In valuing any Investments for the purpose of applying the
limitations set forth in this section 5.11, such Investments
shall be taken at the original cost thereof, without allowance
for any subsequent write-offs or appreciation or depreciation
therein, but less any amount repaid or recovered on account of
capital or principal.
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Steel Technologies Inc. Note Agreement
For purposes of this section 5.11, at any time when a
corporation becomes a Subsidiary, all Investments of such
corporation at such time shall be deemed to have been made by
such corporation, as a Subsidiary, at such time.
SECTION 5.12. MERGERS, ETC. The Company will not
consolidate with or be a party to a merger with any other
corporation, except that the Company may consolidate or merge
with any other corporation if (i) either (x) the Company shall be
the surviving or continuing corporation, or (y) the surviving or
continuing corporation, if not the Company, shall (A) be a
corporation incorporated and existing under the laws of any State
of the United States of America, (B) expressly and
unconditionally assume, by written agreement delivered to each
Holder and satisfactory in form and substance to the Holders
holding 66-2/3% in principal amount of the Notes, all of the
obligations of the Company under this Agreement and the Notes,
and (C) furnish to the Holders an opinion of independent counsel
reasonably satisfactory to such Holders to the effect that the
instrument of assumption has been duly authorized, executed and
delivered by the surviving corporation and constitutes the legal,
valid and binding contract and agreement of the surviving
corporation enforceable in accordance with its terms, (ii) at the
time of such consolidation or merger and after giving effect
thereto no Default or Event of Default shall have occurred and be
continuing, and (iii) after giving effect to such consolidation
or merger the surviving or continuing corporation would be
permitted to incur at least $1.00 of additional Indebtedness
under the provisions of section 5.8(a)(3).
SECTION 5.13. SALES OF ASSETS. The Company will not, and
will not permit any Subsidiary to, engage in any Asset
Disposition involving any substantial part of the assets of the
Company and its Subsidiaries, except that any Subsidiary may
sell, lease or otherwise dispose of all or any substantial part
of its assets to the Company or any Wholly-owned Subsidiary. As
used in this section 5.13:
(a) "Asset Disposition" shall mean and include (i) a
sale, lease or other disposition of assets (other than in
the ordinary course of business) by the Company or any
Subsidiary, (ii) the issuance or sale by any Subsidiary of
any shares of stock of any class (including as "stock" for
the purpose of this section 5.13, any warrants, rights or
options to purchase or otherwise acquire stock or other
Securities exchangeable for or convertible into stock) of
such Subsidiary to any Person other than the Company or a
Wholly-owned Subsidiary (except for the purpose of
qualifying directors, or except in satisfaction of the
validly pre-existing preemptive rights of minority
shareholders in connection with the simultaneous issuance of
stock to the Company and its Subsidiaries whereby the
Company and its Subsidiaries maintain their same
proportionate interest in such Subsidiary), and (iii) the
sale, transfer or other disposition by the Company of any
shares of stock of any Subsidiary (except to qualify
directors) and the sale, transfer or other disposition
(except to the Company or a Wholly-owned Subsidiary) by any
Subsidiary of any shares of stock of any other Subsidiary.
(b) An Asset Disposition shall be deemed to involve a
"substantial part" of the assets of the Company and its
Subsidiaries if the book value of the assets subject to such
Asset Disposition, when added to the book value of all other
assets subject to
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Steel Technologies Inc. Note Agreement
other Asset Dispositions during the same fiscal year exceeds
10% of Consolidated Assets, determined as of the end of the
immediately preceding fiscal year; provided, however, that
in any computation of "substantial part" there shall be
excluded any Asset Disposition, to the extent that the
proceeds thereof are applied within one year after the date
of such Asset Disposition to either (i) the voluntary
prepayment of the Notes or other Indebtedness of the Company
and its Subsidiaries, or (ii) the purchase of (or commitment
to purchase) other fixed or capital assets for use in the
business of the Company or any Subsidiary. Any prepayment
of the Notes pursuant to this paragraph (b) shall be made in
accordance with section 2.2 hereof.
SECTION 5.14. GUARANTIES. The Company will not, and will
not permit any Subsidiary to, become or be liable in respect of
any Guaranty except (i) Guaranties by the Company which are
limited in amount to a stated maximum dollar exposure or which
constitute Guaranties of obligations incurred by any Subsidiary
in compliance with the provisions of this Agreement and (ii)
Guaranties by the Subsidiaries expressly permitted by section
5.11(g) hereof.
SECTION 5.15. REPURCHASE OF NOTES. Neither the Company nor
any Subsidiary or Affiliate, directly or indirectly, may
repurchase or make any offer to repurchase any Notes unless an
offer has been made to repurchase Notes, pro rata, from all
Holders at the same time and upon the same terms. In case the
Company repurchases or otherwise acquires any Notes, such Notes
shall immediately thereafter be canceled and no Notes shall be
issued in substitution therefor. Without limiting the foregoing,
upon the repurchase or other acquisition of any Notes by the
Company, any Subsidiary or any Affiliate (or upon the agreement
of the Company, any Subsidiary or any Affiliate to purchase or
otherwise acquire any Notes), such Notes shall no longer be
outstanding for purposes of any section of this Agreement
relating to the taking by the Holders of any actions with respect
hereto, including, without limitation, section 6.3, section 6.4
and section 7.1.
SECTION 5.16. TRANSACTIONS WITH AFFILIATES. The Company
will not, and will not permit any Subsidiary to, enter into,
directly or indirectly, or be a party to any material transaction
or arrangement or material group of related transactions or
arrangements with any Affiliate (including, without limitation,
the purchase from, sale to, lease of or exchange of property
with, or the rendering of any service by or for, any Affiliate),
except in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Company
or such Subsidiary than would obtain in a comparable arm's-length
transaction with a Person other than an Affiliate.
SECTION 5.17. TERMINATION OF PENSION PLANS. The Company
will not and will not permit any Subsidiary to withdraw from any
Multiemployer Plan or permit any employee benefit plan maintained
by it to be terminated if such withdrawal or termination could
result in withdrawal liability (as described in Part 1 of
Subtitle E of Title IV of ERISA) or the imposition of a Lien on
any property of the Company or any Subsidiary pursuant to Section
4068 of ERISA.
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Steel Technologies Inc. Note Agreement
SECTION 5.18. REPORTS AND RIGHTS OF INSPECTION. The
Company will keep, and will cause each Subsidiary to keep, proper
books of record and account in which full and correct entries
will be made of all dealings or transactions of, or in relation
to, the business and affairs of the Company or such Subsidiary,
in accordance with GAAP consistently applied (except for changes
disclosed in the financial statements furnished to the Holders
pursuant to this section 5.18 and concurred in by the independent
public accountants referred to in section 5.18(b) hereof), and
will furnish to each Institutional Holder (in duplicate if so
specified below or otherwise requested):
(a) QUARTERLY STATEMENTS. As soon as available and in
any event within 45 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, copies
of:
(1) consolidated and consolidating balance sheets
of the Company and its Subsidiaries as of the close of
such quarterly fiscal period, setting forth in
comparative form the consolidated figures for the
fiscal year then most recently ended,
(2) consolidated and consolidating statements of
income of the Company and its Subsidiaries for such
quarterly fiscal period and for the portion of the
fiscal year ending with such quarterly fiscal period,
in each case setting forth in comparative form the
consolidated figures for the corresponding periods of
the preceding fiscal year, and
(3) consolidated and consolidating statements of
cash flows of the Company and its Subsidiaries for the
portion of the fiscal year ending with such quarterly
fiscal period, setting forth in comparative form the
consolidated figures for the corresponding period of
the preceding fiscal year,
all in reasonable detail and certified as complete and
correct by an authorized financial officer of the Company;
provided such quarterly financial statements shall be
without footnotes and shall be subject to normal year-end
adjustments;
(b) ANNUAL STATEMENTS. As soon as available and in
any event within 105 days after the close of each fiscal
year of the Company, copies of:
(1) consolidated and consolidating balance sheets
of the Company and its Subsidiaries as of the close of
such fiscal year, and
(2) consolidated and consolidating statements of
income and retained earnings and cash flows of the
Company and its Subsidiaries for such fiscal year,
in each case setting forth in comparative form the
consolidated figures for the preceding fiscal year, all in
reasonable detail and accompanied by a report thereon of a
firm of independent public accountants of recognized
national standing selected by
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Steel Technologies Inc. Note Agreement
the Company to the effect that the consolidated financial
statements present fairly, in all material respects, the
consolidated financial position of the Company and its
Subsidiaries as of the end of the fiscal year being reported
on and the consolidated results of the operations and cash
flows for said year in conformity with GAAP and that the
examination of such accountants in connection with such
financial statements has been conducted in accordance with
generally accepted auditing standards and included such
tests of the accounting records and such other auditing
procedures as said accountants deemed necessary in the
circumstances;
(c) AUDIT REPORTS. Promptly upon receipt thereof, one
copy of each interim or special audit made by independent
accountants of the books of the Company or any Subsidiary
and any management letter received from such accountants;
(d) SEC AND OTHER REPORTS. Promptly upon their
becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Company to
stockholders generally and of each regular or periodic
report, and any registration statement or prospectus filed
by the Company or any Subsidiary with any securities
exchange or the Securities and Exchange Commission or any
successor agency, and copies of any orders in any
proceedings to which the Company or any of its Subsidiaries
is a party, issued by any governmental agency, Federal or
state, having jurisdiction over the Company or any of its
Subsidiaries;
(e) ERISA REPORTS. Promptly upon the occurrence
thereof, written notice of (i) a Reportable Event with
respect to any Plan; (ii) the institution of any steps by
the Company, any ERISA Affiliate, the PBGC or any other
person to terminate any Plan; (iii) the institution of any
steps by the Company or any ERISA Affiliate to withdraw from
any Plan; (iv) a non-exempt "prohibited transaction" within
the meaning of Section 406 of ERISA in connection with any
Plan; (v) any material increase in the contingent liability
of the Company or any Subsidiary with respect to any
post-retirement welfare liability; or (vi) the taking of any
action by, or the threatening of the taking of any action
by, the Internal Revenue Service, the Department of Labor or
the PBGC with respect to any of the foregoing;
(f) OFFICER'S CERTIFICATES. Within the periods
provided in paragraphs (a) and (b) above, a certificate of
an authorized financial officer of the Company stating that
such officer has reviewed the provisions of this Agreement
and setting forth: (i) the information and computations (in
sufficient detail) required in order to establish whether
the Company was in compliance with the requirements of
section 5.6 through section 5.17 at the end of the period
covered by the financial statements then being furnished,
and (ii) whether there existed as of the date of such
financial statements and whether, to the best of such
officer's knowledge, there exists on the date of the
certificate or existed at any time during the period covered
by such financial statements any Default or Event of Default
and, if any such condition or event exists on the date of
the certificate, specifying the nature and period of
existence thereof and the action the Company is taking and
proposes to take with respect thereto;
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Steel Technologies Inc. Note Agreement
(g) ACCOUNTANT'S CERTIFICATES. Within the period
provided in paragraph (b) above, a certificate of the
accountants who render an opinion with respect to such
financial statements, stating that they have reviewed this
Agreement and stating further whether, in making their
audit, such accountants have become aware of any Default or
Event of Default under any of the terms or provisions of
this Agreement insofar as any such terms or provisions
pertain to or involve accounting matters or determinations,
and if any such condition or event then exists, specifying
the nature and period of existence thereof;
(h) REQUESTED INFORMATION. With reasonable
promptness, such other data and information as such
Institutional Holder may reasonably request, subject to the
terms of any confidentiality provisions in any joint venture
agreement to which the Company or any Subsidiary may be a
party.
Without limiting the foregoing, the Company will permit each
Institutional Holder (or such Persons as such Institutional
Holder may designate),
(A) to visit and inspect, under the Company's
guidance, any of the properties of the Company or any
Subsidiary, and
(B) upon the existence of a claimed Default, a Default
or an Event of Default to examine all of their books of
account, records, reports and other papers, to make copies
and extracts therefrom and to discuss their respective
affairs, finances and accounts with their respective
officers, employees, and independent public accountants (and
by this provision the Company authorizes said accountants to
discuss with any Institutional Holder the finances and
affairs of the Company and its Subsidiaries)
all at such reasonable times and as often as may be reasonably
requested. The Company shall not be required to pay or reimburse
any Holder for expenses which such Holder may incur in connection
with any such visitation or inspection, except that if such
visitation or inspection is made during any period when a Default
or an Event of Default shall have occurred and be continuing, the
Company agrees to reimburse such Holder for all such expenses
promptly upon demand.
SECTION 5.19. MEXICAN SUBSIDIARY GUARANTY. In the event
that the Indebtedness of the Company under the Loan Agreement is
guaranteed by the Mexican Subsidiary subsequent to the Closing
Date (and so long as such Indebtedness of the Company under the
Loan Agreement remains outstanding and is guaranteed by the
Mexican Subsidiary), the Company shall (concurrently with such
guaranty of the Indebtedness of the Company under the Loan
Agreement) cause the Mexican Subsidiary to execute and deliver a
Guaranty Agreement in the form attached as Exhibit B hereto,
together with a certificate dated the date of execution and
delivery of such Guaranty Agreement signed by the President or a
Vice President of the Mexican Subsidiary to the effect that such
Guaranty Agreement has been duly authorized, executed and
delivered by the Mexican Subsidiary and such Guaranty Agreement
constitutes the legal, valid and binding obligation, contract and
agreement of the Mexican Subsidiary enforceable in accordance
with its terms.
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Steel Technologies Inc. Note Agreement
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
SECTION 6.1. EVENTS OF DEFAULT. Any one or more of the
following shall constitute an "Event of Default" as such term is
used herein:
(a) Default shall occur in the payment of interest on
any Note when the same shall have become due and such
default shall continue for more than five business days; or
(b) Default shall occur in the making of any required
prepayment on any of the Notes as provided in section 2.1;
or
(c) Default shall occur in the making of any other
payment of the principal of any Note or premium, if any,
thereon at the expressed or any accelerated maturity date or
at any date fixed for prepayment; or
(d) Default shall be made in the payment when due
(whether by lapse of time, by declaration, by call for
redemption or otherwise) of the principal of or interest on
any Indebtedness (other than the Notes) of the Company or
any Subsidiary in an aggregate amount exceeding $5,000,000
and such default shall continue beyond the period of grace,
if any, allowed with respect thereto; or
(e) Default or the happening of any event shall occur
under any indenture, agreement or other instrument under
which any Indebtedness of the Company or any Subsidiary in
an aggregate amount exceeding $5,000,000 may be issued and
such default or event has resulted in the acceleration of
the maturity of any Indebtedness of the Company or any
Subsidiary outstanding thereunder; or
(f) Default shall occur in the observance or
performance of any covenant or agreement contained in
section 5.6 through section 5.17; or
(g) Default shall occur in the observance or
performance of any other provision of this Agreement which
is not remedied within 30 days after the earlier of (i) the
day on which the Company first obtains knowledge of such
default, or (ii) the day on which written notice thereof is
given to the Company by any Holder; or
(h) Any representation or warranty made by the Company
herein, or made by the Company in any statement or
certificate furnished by the Company in connection with the
consummation of the issuance and delivery of the Notes or
furnished by the Company pursuant hereto, is untrue in any
material respect as of the date of the issuance or making
thereof; or
(i) Final judgment or judgments for the payment of
money aggregating in excess of $1,000,000 is or are
outstanding against the Company or any Subsidiary or against
any property or assets of either and any one of such
judgments has remained unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of
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Steel Technologies Inc. Note Agreement
45 days from the date of its entry, or such shorter period
after which a judgment creditor is allowed under applicable
law and rules of court to levy against property of the
judgment debtor; or
(j) A custodian, liquidator, trustee or receiver is
appointed for the Company or any Subsidiary or for the major
part of the property of either and is not discharged within
30 days after such appointment; or
(k) The Company or any Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become
due or makes an assignment for the benefit of creditors, or
the Company or any Subsidiary applies for or consents to the
appointment of a custodian, liquidator, trustee or receiver
for the Company or such Subsidiary or for the major part of
the property of either; or
(l) Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for relief
under any bankruptcy or similar law or laws for the relief
of debtors, are instituted by or against the Company or any
Subsidiary and, if instituted against the Company or any
Subsidiary, are consented to or are not dismissed within 60
days after such institution.
SECTION 6.2. NOTICE TO HOLDERS. When any Event of Default
described in the foregoing section 6.1 has occurred, or if any
Holder or the holder of any other evidence of Indebtedness of the
Company gives any notice or takes any other action with respect
to a claimed default, the Company agrees to give notice (i)
within three business days of such event to all Holders and (ii)
to KEDFA within the permitted time period for such notice
pursuant to the provisions of the Financing Agreement.
SECTION 6.3. ACCELERATION OF MATURITIES. When any Event
of Default described in paragraph (a), (b) or (c) of section 6.1
has happened and is continuing in the payment of the Notes of any
Holder, such Holder may declare the entire principal and all
interest accrued on such Holder's Notes to be, and such Notes
shall thereupon become, forthwith due and payable, without any
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived. When any Event of Default
described in paragraphs (d) through (i), inclusive, of section
6.1 has happened and is continuing, any Holder or Holders holding
25% or more of the principal amount of Notes at the time
outstanding may, by notice to the Company, declare the entire
principal and all interest accrued on all Notes to be, and all
Notes shall thereupon become, forthwith due and payable, without
any presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived. When any Event of Default
described in paragraph (j), (k) or (l) of section 6.1 has
occurred, then all outstanding Notes shall immediately become due
and payable without presentment, demand or notice of any kind.
Upon the Notes becoming due and payable as a result of any Event
of Default as aforesaid, the Company will forthwith pay to the
Holders, the entire principal and interest accrued on the Notes
and, to the extent not prohibited by applicable law, an amount as
liquidated damages for the loss of the bargain evidenced hereby
(and not as a penalty) equal to the Make-Whole Amount, determined
as of the date on which the Notes shall so become due and
payable. No course of dealing on the part of the Holder
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Steel Technologies Inc. Note Agreement
or Holders nor any delay or failure on the part of any Holder to
exercise any right shall operate as a waiver of such right or
otherwise prejudice such Holder's rights, powers and remedies.
The Company further agrees, to the extent permitted by law, to
pay to the Holder or Holders all costs and expenses incurred by
them in the collection of any Notes upon any default hereunder or
thereon, including reasonable compensation to such Holder's or
Holders' attorneys for all services rendered in connection
therewith.
SECTION 6.4. RESCISSION OF ACCELERATION. The provisions
of section 6.3 are subject to the condition that if the principal
of and accrued interest on all or any outstanding Notes have been
declared immediately due and payable by reason of the occurrence
of any Event of Default described in paragraphs (a) through (i),
inclusive, of section 6.1, the Holders holding 66-2/3% in
aggregate principal amount of the Notes then outstanding may, by
written instrument filed with the Company, rescind and annul such
declaration and the consequences thereof, provided that at the
time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this
Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement
(except any principal, interest or premium on the Notes
which has become due and payable solely by reason of such
declaration under section 6.3) shall have been duly paid;
and
(c) each and every other Default and Event of Default
shall have been made good, cured or waived pursuant to
section 7.1;
and provided further, that no such rescission and annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
SECTION 7.1. CONSENT REQUIRED. Any term, covenant,
agreement or condition of this Agreement may, with the consent of
the Company, be amended or compliance therewith may be waived
(either generally or in a particular instance and either
retroactively or prospectively), if the Company shall have
obtained the consent in writing of the Holders holding at least
66-2/3% in aggregate principal amount of outstanding Notes;
provided, however, that without the written consent of all of the
Holders, no such amendment or waiver shall be effective (i) which
will change the time of payment (including any prepayment
required by section 2.1) of the principal of or the interest on
any Note or change the principal amount thereof or change the
rate of interest thereon, or (ii) which will change any of the
provisions with respect to optional prepayments, or (iii) which
will change the percentage of Holders required to consent to any
such amendment or waiver of any of the provisions of this section
7 or section 6.
SECTION 7.2. SOLICITATION OF HOLDERS. So long as there
are any Notes outstanding, the Company will not solicit, request
or negotiate for or with respect to any proposed waiver or
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Steel Technologies Inc. Note Agreement
amendment of any of the provisions of this Agreement or the Notes
unless each Holder (irrespective of the amount of Notes then
owned by it) shall be informed thereof by the Company and shall
be afforded the opportunity of considering the same and shall be
supplied by the Company with sufficient information to enable it
to make an informed decision with respect thereto. The Company
will not, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any Holder as consideration for or
as an inducement to entering into by any Holder of any waiver or
amendment of any of the terms and provisions of this Agreement or
the Notes unless such remuneration is concurrently offered, on
the same terms, ratably to all Holders.
SECTION 7.3. EFFECT OF AMENDMENT OR WAIVER. Any such
amendment or waiver shall apply equally to all of the Holders and
shall be binding upon them, upon each future Holder and upon the
Company, whether or not any Note shall have been marked to
indicate such amendment or waiver. No such amendment or waiver
shall extend to or affect any obligation not expressly amended or
waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
SECTION 8.1. DEFINITIONS. Unless the context otherwise
requires, the terms hereinafter set forth when used herein shall
have the following meanings and the following definitions shall
be equally applicable to both the singular and plural forms of
any of the terms herein defined:
"Affiliate" shall mean (i) Processing Technology, Inc. or
(ii) any Person (other than a Subsidiary) (A) which directly or
indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (B)
which beneficially owns or holds 10% or more of any class of the
Voting Stock of the Company or (C) 10% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 10%
or more of the equity interest) of which is beneficially owned or
held by the Company or a Subsidiary. The term "control" means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or
otherwise.
"Agreement" shall mean this Note Agreement.
"Attributable Debt" shall mean, in connection with any Sale
and Leaseback Transaction occurring subsequent to the date of
this Agreement, the present value, discounted according to GAAP
at the debt rate implicit in the related lease, of the obligation
of the lessee for rental payments during the remaining term of
such lease (including any period for which such lease has been
extended or may, at the option of the lessor, be extended).
"Capitalized Lease" shall mean any lease the obligation for
Rentals with respect to which is required to be capitalized on a
consolidated balance sheet of the lessee and its subsidiaries in
accordance with GAAP.
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Steel Technologies Inc. Note Agreement
"Capitalized Rentals" of any Person shall mean as of the
date of any determination thereof the amount at which the
aggregate Rentals due and to become due under all Capitalized
Leases under which such Person is a lessee would be reflected as
a liability on a consolidated balance sheet of such Person.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Company" shall mean Steel Technologies Inc., a Kentucky
corporation, and any Person who succeeds to all, or substantially
all, of the assets and business of Steel Technologies Inc.
"Consolidated Assets" shall mean as of the date of any
determination thereof the total amount of all assets of the
Company and its Subsidiaries determined on a consolidated basis
in accordance with general accepted accounting principles.
"Consolidated Current Assets" and "Consolidated Current
Liabilities" shall mean as of the date of any determination
thereof such assets and liabilities of the Company and its
Subsidiaries on a consolidated basis as shall be determined in
accordance with GAAP to constitute current assets and current
liabilities, respectively.
"Consolidated Indebtedness" shall mean all Indebtedness of
the Company and its Subsidiaries, determined on a consolidated
basis eliminating intercompany items.
"Consolidated Net Income" for any period shall mean the
gross revenues of the Company and its Subsidiaries for such
period less all expenses and other proper charges (including
taxes on income), determined on a consolidated basis after
eliminating earnings or losses attributable to outstanding
Minority Interests in accordance with GAAP, but excluding in any
event, any gains or losses on the sale or other disposition of
Investments or fixed or capital assets, and any taxes on such
excluded gains and any tax deductions or credits on account of
any such excluded losses (other than gains and losses arising in
the ordinary course of business).
"Consolidated Net Worth" shall mean at any date as of which
the amount thereof is to be determined, the amount of capital
stock accounts plus (or minus in the case of a deficit) the sum
of capital surplus, retained earnings, deferred compensation,
translation adjustment and other items which in accordance with
GAAP would be included in the shareholders' equity portion of a
consolidated balance sheet of the Company and its Subsidiaries.
"Consolidated Total Capitalization" shall mean as of the
date of any determination thereof Consolidated Net Worth plus
Consolidated Indebtedness.
"Default" shall mean any event or condition the occurrence
of which would, with the lapse of time or the giving of notice,
or both, constitute an Event of Default.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute of similar
import, together with the regulations
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Steel Technologies Inc. Note Agreement
thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer
to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or
business that is, along with the Company, a member of a
controlled group of corporations or a controlled group of trades
or businesses, as described in section 414(b) and 414(c),
respectively, of the Code or Section 4001 of ERISA.
"Event of Default" shall have the meaning set forth in
section 6.1.
"Financing Agreement" shall mean that certain Financing
Agreement to be entered into among the Company, KEDFA and the
Purchasers, as amended, modified or supplemented from time to
time.
"Fixed Charges" for any period shall mean on a consolidated
basis the sum of (i) all Rentals (other than Rentals on
Capitalized Leases) payable during such period by the Company and
its Subsidiaries, and (ii) all Interest Charges on all
Indebtedness (including the interest component of Rentals on
Capitalized Leases) of the Company and its Subsidiaries.
"GAAP" shall mean generally accepted accounting principles
at the time in the United States.
"Guaranties" by any Person shall mean all obligations (other
than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing, or in effect guaranteeing, any Indebtedness,
dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance
sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation,
(iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the
owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or
obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in
respect thereof. For the purposes of all computations made under
this Agreement, a Guaranty in respect of any Indebtedness for
borrowed money shall be deemed to be an Investment equal to the
principal amount of such Indebtedness for borrowed money which
has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be an
Investment equal to the maximum aggregate amount of such
obligation, liability or dividend.
"Holder" shall mean any Person which is, at the time of
reference, the registered Holder of any Note.
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Steel Technologies Inc. Note Agreement
"Indebtedness" of any Person shall mean (i) all Liabilities
of such Person for borrowed money, (ii) all Liabilities of such
Person which have been incurred in connection with the
acquisition of assets and which have a final maturity of one or
more than one year from the date of origin thereof (or which are
renewable or extendible at the option of the obligor for a period
or periods more than one year from the date of origin), including
all payments in respect thereof that are required to be made
within one year from the date of any determination of
Indebtedness, whether or not the obligation to make such payments
shall constitute a current liability of the obligor under GAAP,
and (iii) all Capitalized Rentals of such Person.
"Institutional Holder" shall mean any Holder which is a
Purchaser or an insurance company, bank, savings and loan
association, trust company, investment company, charitable
foundation, employee benefit plan (as defined in ERISA) or other
institutional investor or financial institution and, for purposes
of the direct payment provisions of this Agreement, shall include
any nominee of any such Holder.
"Intercreditor Agreement" shall mean that certain
Intercreditor Agreement dated as of March 1, 1995 among the
Purchasers, the Lenders party thereto, the Company and Wabash, as
the same may be amended, modified, waived or supplemented from
time to time.
"Interest Charges" for any period shall mean all interest
and all amortization of debt discount and expense on any
particular Indebtedness for which such calculations are being
made determined in accordance with GAAP. Computations of
Interest Charges on a pro forma basis for Indebtedness having a
variable interest rate shall be calculated at the rate in effect
on the date of any determination.
"Investments" shall mean all investments, in cash or by
delivery of property made, directly or indirectly in any Person,
whether by acquisition of shares of capital stock, indebtedness
or other obligations or Securities or by loan, advance, Guaranty,
extension of credit, capital contribution or otherwise; provided,
however, that "Investments" shall not mean or include routine
investments in property to be used or consumed in the ordinary
course of business.
"KEDFA" shall mean the Kentucky Economic Development Finance
Authority, a public body corporate and politic created under the
laws of the State of Kentucky, and any successor thereto.
"Liabilities" of any Person shall mean and include all
obligations of such Person which in accordance with GAAP shall be
classified upon a balance sheet of such Person as liabilities of
such Person, and in any event shall include all (i) obligations
of such Person for borrowed money or which has been incurred in
connection with the acquisition of property or assets, (ii)
obligations secured by any Lien upon property or assets owned by
such Person, even though such Person has not assumed or become
liable for the payment of such obligations, (iii) obligations
created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such
Person, notwithstanding the
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Steel Technologies Inc. Note Agreement
fact that the rights and remedies of the seller, lender or lessor
under such agreement in the event of default are limited to
repossession or sale of property and (iv) Capitalized Rentals.
"Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner
of the property, whether such interest is based on the common
law, statute or contract, and including but not limited to the
security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances (including, with respect
to stock, stockholder agreements, voting trust agreements,
buy-back agreements and all similar arrangements) affecting
property. For the purposes of this Agreement, the Company or a
Subsidiary shall be deemed to be the owner of any property which
it has acquired or holds subject to a conditional sale agreement,
Capitalized Lease or other arrangement pursuant to which title to
the property has been retained by or vested in some other Person
for security purposes and such retention or vesting shall
constitute a Lien.
"Loan Agreement" shall mean that certain Loan Agreement
dated as of October 15, 1994 among the Company, PNC Bank,
Kentucky, Inc., as agent (the "Agent") and the other banks named
on the signature pages thereof, as amended by the First Amendment
to Loan Agreement dated as of January 17, 1995 among the Company,
the Agent and the other banks named on the signature pages
thereof, as the same may be further amended, modified, waived or
supplemented from time to time, and any extension, renewal or
replacement thereof.
"Long-Term Lease" shall mean any lease of real or personal
property (other than a Capitalized Lease) having an original
term, including any period for which the lease may be renewed or
extended at the option of the lessor, of more than three years.
"Make-Whole Amount" shall mean in connection with any
prepayment or acceleration of the Notes the excess, if any, of
(i) the aggregate present value as of the date of such prepayment
of each dollar of principal being prepaid (taking into account
the application of such prepayment required by section 2.1) and
the amount of interest (exclusive of interest accrued to the date
of prepayment) that would have been payable in respect of such
dollar if such prepayment had not been made, determined by
discounting such amounts at the Reinvestment Rate from the
respective dates on which they would have been payable, over (ii)
100% of the principal amount of the outstanding Notes being
prepaid. If the Reinvestment Rate is equal to or higher than
8.52%, the Make-Whole Amount shall be zero. For purposes of any
determination of the Make-Whole Amount:
"Reinvestment Rate" shall mean .60%, plus the
arithmetic mean of the yields for the two columns under the
heading "Week Ending" published in the Statistical Release
under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the
Weighted Average Life to Maturity of the principal being
prepaid (taking into account the application of such
prepayment required by section 2.1). If no maturity exactly
corresponds to such Weighted Average
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Steel Technologies Inc. Note Agreement
Life to Maturity, yields for the published maturity next
longer than the Weighted Average Life to Maturity and for
the published maturity next shorter than the Weighted
Average Life to Maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate
shall be interpolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the
nearest month. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release
published prior to the date of determination of the
Make-Whole Amount shall be used. "Statistical Release"
shall mean the then most recently published statistical
release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve System and
which establishes yields on actively traded U.S. Government
Securities adjusted to constant maturities or, if such
statistical release is not published at the time of any
determination hereunder, then such other reasonably
comparable index which shall be designated by the Holders
holding 66-2/3% in aggregate principal amount of the
outstanding Notes.
"Weighted Average Life to Maturity" of the principal
amount of the Notes being prepaid shall mean, as of the time
of any determination thereof, the number of years obtained
by dividing the then Remaining Dollar-Years of such
principal by the aggregate amount of such principal. The
term "Remaining Dollar-Years" of such principal shall mean
the amount obtained by (i) multiplying (x) the remainder of
(1) the amount of principal that would have become due on
each scheduled payment date if such prepayment had not been
made, less (2) the amount of principal on the Notes
scheduled to become due on such date after giving effect to
such prepayment and the application thereof in accordance
with the provisions of section 2.1, by (y) the number of
years (calculated to the nearest one-twelfth) which will
elapse between the date of determination and such scheduled
payment date, and (ii) totalling the products obtained in
(i).
"Mexican Subsidiary" shall mean Transformadora y
Comercializadora de Metales S.A. de C.V., a corporation organized
and existing under the laws of Mexico and any Person who succeeds
to all, or substantially all, of the assets and business of
Transformadora y Comercializadora de Metales S.A. de C.V.
"Minority Interests" shall mean any shares of stock of any
class of a Subsidiary (other than directors' qualifying shares as
required by law) that are not owned by the Company and/or one or
more of its Subsidiaries. Minority Interests shall be valued by
valuing Minority Interests constituting preferred stock at the
voluntary or involuntary liquidating value of such preferred
stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and
surplus applicable thereto adjusted, if necessary, to reflect any
changes from the book value of such common stock required by the
foregoing method of valuing Minority Interests in preferred
stock.
"Multiemployer Plan" shall mean a multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA to which the Company
or any ERISA Affiliate is obligated or has within the previous
six years been obligated to make contributions on behalf of
participants who are or were employed by any such entity.
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Steel Technologies Inc. Note Agreement
"Net Income Available for Fixed Charges" for any period
shall mean the sum of (i) Consolidated Net Income during such
period plus (to the extent deducted in determining Consolidated
Net Income), (ii) all provisions for any Federal, state or other
income taxes made by the Company and its Subsidiaries during such
period and (iii) Fixed Charges of the Company and its
Subsidiaries during such period.
"PBGC" means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, partnership, corporation,
limited liability company, association, trust or unincorporated
organization, and a government or agency or political subdivision
thereof.
"Plan" means a "pension plan," as such term is defined in
ERISA, established or maintained by the Company or any ERISA
Affiliate or as to which the Company or any ERISA Affiliate
contributed or is a member or otherwise may have any liability.
"Priority Debt" shall mean (i) Indebtedness of the Company
secured by Liens permitted by section 5.9(i), (ii) Indebtedness
of any Subsidiary (other than any Indebtedness owed to the
Company or another Wholly-owned Subsidiary) and (iii)
Attributable Debt.
"Pro Forma Fixed Charges" for any period shall mean, as of
the date of any determination thereof, the maximum aggregate
amount of Fixed Charges which would have become payable by the
Company and its Subsidiaries in such period determined on a pro
forma basis giving effect as of the beginning of such period to
the incurrence of any Indebtedness (including Capitalized
Rentals) and the concurrent retirement of outstanding
Indebtedness or termination of any Capitalized Leases thereof.
"Purchasers" shall have the meaning set forth in the
paragraph preceding section 1.1.
"Rentals" shall mean and include as of the date of any
determination thereof all fixed payments (including as such all
payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by
the Company or a Subsidiary, as lessee or sublessee under a lease
of real or personal property, but shall be exclusive of any
amounts required to be paid by the Company or a Subsidiary
(whether or not designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage leases"
shall be computed solely on the basis of the minimum rents, if
any, required to be paid by the lessee regardless of sales volume
or gross revenues.
"Reportable Event" shall have the same meaning as in ERISA.
"Security" shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
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Steel Technologies Inc. Note Agreement
The term "subsidiary" shall mean as to any Person, (i) any
corporation, association or other business entity of which more
than 50% (by number of votes) of the Voting Stock (or in the case
of a Person which is not a corporation, more than 50% of the
equity interest) shall be beneficially owned by such Person or
one or more of its subsidiaries or such Person and one or more of
its subsidiaries, and (ii) any partnership or joint venture if
more than a 50% interest in the profits or capital thereof is
owned by such Person or one or more of its subsidiaries or such
Person and one or more of its subsidiaries (unless such
partnership can and does ordinarily take major business actions
without the prior approval of such Person or one or more of its
subsidiaries). The term "Subsidiary" shall mean a subsidiary of
the Company.
"Voting Stock" shall mean Securities of any class or
classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the directors (or
Persons performing similar functions).
"Wholly-owned" when used in connection with any Subsidiary
shall mean a Subsidiary of which all of the issued and
outstanding shares of stock (except shares required as directors'
qualifying shares) and all Indebtedness shall be owned by the
Company and/or one or more of its Wholly-owned Subsidiaries.
SECTION 8.2. ACCOUNTING PRINCIPLES. Where the character
or amount of any asset or liability or item of income or expense
is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of
this Agreement, the same shall be done in accordance with GAAP,
to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
SECTION 8.3. DIRECTLY OR INDIRECTLY. Where any provision
in this Agreement refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall
be applicable whether the action in question is taken directly or
indirectly by such Person.
SECTION 9. MISCELLANEOUS.
SECTION 9.1. REGISTERED NOTES. The Company shall cause to
be kept at its principal office a register for the registration
and transfer of the Notes (hereinafter called the "Note
Register"), and the Company will register or transfer or cause to
be registered or transferred as hereinafter provided any Note
issued pursuant to this Agreement.
At any time and from time to time any Holder of a Note which
has been duly registered as hereinabove provided may transfer
such Note upon surrender thereof at the principal office of the
Company duly endorsed or accompanied by a written instrument of
transfer duly executed by the Holder or its attorney duly
authorized in writing. Upon any transfer of Notes, the Company
shall provide prompt written notice of such transfer to KEDFA
pursuant to the provisions of the Financing Agreement.
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Steel Technologies Inc. Note Agreement
The Person in whose name any registered Note shall be
registered shall be deemed and treated as the owner and holder
thereof and a Holder for all purposes of this Agreement. Payment
of or on account of the principal, premium, if any, and interest
on any registered Note shall be made to or upon the written order
of such Holder.
SECTION 9.2. EXCHANGE OF NOTES. At any time and from time
to time, upon not less than ten days' notice to that effect given
by the Holder of any Note initially delivered or of any Note
substituted therefor pursuant to section 9.1, this section 9.2 or
section 9.3, and, upon surrender of such Note at its office, the
Company will deliver in exchange therefor, without expense to
such Holder, except as set forth below, a Note for the same
aggregate principal amount as the then unpaid principal amount of
the Note so surrendered, or Notes in the denomination of $100,000
or any amount in excess thereof as such Holder shall specify,
dated as of the date to which interest has been paid on the Note
so surrendered or, if such surrender is prior to the payment of
any interest thereon, then dated as of the date of issue,
registered in the name of such Person or Persons as may be
designated by such Holder, and otherwise of the same form and
tenor as the Notes so surrendered for exchange. The Company may
require the payment of a sum sufficient to cover any stamp tax or
governmental charge imposed upon such exchange or transfer.
SECTION 9.3. LOSS, THEFT, ETC. OF NOTES. Upon receipt of
evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Note, and in the case of any
such loss, theft or destruction upon delivery of a bond of
indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation
upon surrender and cancellation of the Note, the Company will
make and deliver without expense to the Holder thereof, a new
Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If an Institutional Holder is the owner of any
such lost, stolen or destroyed Note, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss,
theft or destruction and of its ownership of such Note at the
time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be
required as a condition to the execution and delivery of a new
Note other than the written agreement of such owner to indemnify
the Company.
SECTION 9.4. EXPENSES, STAMP TAX INDEMNITY. (a) Whether
or not the transactions herein contemplated shall be consummated,
the Company agrees to pay directly all of the Purchasers'
out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions
contemplated hereby, including but not limited to the reasonable
charges and disbursements of Chapman and Cutler, special counsel
to the Purchasers, duplicating and printing costs and charges for
shipping the Notes, adequately insured to each Purchaser's home
office or at such other place as such Purchaser may designate,
and all such expenses of the Holders relating to any amendment,
waivers or consents pursuant to the provisions hereof, including,
without limitation, any amendments, waivers, or consents
resulting from any work-out, renegotiation or restructuring
relating to the performance by the Company of its obligations
under this Agreement and the Notes. The Company also agrees that
it will pay and save each Purchaser harmless against any and all
liability with respect to stamp and other taxes, if any, which
may be payable or which may be determined to be payable in
connection with the execution and delivery of this
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Steel Technologies Inc. Note Agreement
Agreement or the Notes, whether or not any Notes are then
outstanding. The Company agrees to protect and indemnify each
Purchaser against any liability for any and all brokerage fees
and commissions payable or claimed to be payable to any Person in
connection with the transactions contemplated by this Agreement.
(b) The Company agrees, to the extent permitted by
applicable law, to pay and indemnify each Purchaser against any
costs and expenses, including reasonable attorneys' fees,
incurred by such Purchaser or any subsequent Holder in evaluating
(in connection with any controversy or potential controversy) and
enforcing any rights or remedies under this Agreement or the
Notes or in responding to any subpoena or other legal process
issued in connection with this Agreement or the transactions
contemplated hereby or by reason of such Purchaser's or any
subsequent Holder's having acquired any Note, including without
limitation, costs and expenses incurred in any bankruptcy case.
Without limiting the foregoing, to the extent permitted by
applicable law, the Company also will pay the reasonable fees,
expenses and disbursements of an investment bank or other firm
acting as financial adviser to the Holders following the
occurrence and during the continuance of a Default or an Event of
Default or in connection with any such amendment or waiver
proposed in connection with any potential Default or Event of
Default or any workout, restructuring or similar negotiations
relating to any other Holder. The Holders shall use their
reasonable best efforts to provide the Company with 5 business
days' prior written notice of the Holders' retention of a
financial adviser under this section 9.4(b). The obligations of
the Company under this section 9.4 shall survive the transfer of
any Note or portion thereof or interest therein by any Purchaser
or any subsequent Holder and the payment of any Note.
SECTION 9.5. POWERS AND RIGHTS NOT WAIVED; REMEDIES
CUMULATIVE. No delay or failure on the part of any Holder in the
exercise of any power or right shall operate as a waiver thereof;
nor shall any single or partial exercise of the same preclude any
other or further exercise thereof, or the exercise of any other
power or right, and the rights and remedies of each Holder are
cumulative to, and are not exclusive of, any rights or remedies
any such Holder would otherwise have.
SECTION 9.6. NOTICES. All communications provided for
hereunder shall be in writing and, if to a Holder, delivered or
mailed prepaid by registered or certified mail or overnight air
courier, or by facsimile communication, in each case addressed to
such Holder at its address appearing beneath its signature at the
foot of this Agreement or such other address as any Holder may
designate to the Company in writing, and if to the Company,
delivered or mailed by registered or certified mail or overnight
air courier, or by facsimile communication, to the Company at the
address beneath its signature at the foot of this Agreement or to
such other address as the Company may in writing designate to the
Holders; provided, however, that a notice to a Holder by
overnight air courier shall only be effective if delivered to
such Holder at a street address designated for such purpose in
accordance with this section 9.6, and a notice to such Holder by
facsimile communication shall only be effective if made by
confirmed transmission to such Holder at a telephone number
designated for such purpose in accordance with this section 9.6
and promptly followed by the delivery of such notice by
registered or certified mail or overnight air courier, as set
forth above.
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Steel Technologies Inc. Note Agreement
SECTION 9.7. SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon the Company and its successors and assigns and
shall inure to the benefit of each Purchaser and its successor
and assigns, including each successive Holder.
SECTION 9.8. SURVIVAL OF COVENANTS AND REPRESENTATIONS.
All covenants, representations and warranties made by the Company
herein and in any certificates delivered pursuant hereto, whether
or not in connection with the Closing Date, shall survive the
closing and the delivery of this Agreement and the Notes.
SECTION 9.9. SEVERABILITY. Should any part of this
Agreement for any reason be declared invalid or unenforceable,
such decision shall not affect the validity or enforceability of
any remaining portion, which remaining portion shall remain in
force and effect as if this Agreement had been executed with the
invalid or unenforceable portion thereof eliminated and it is
hereby declared the intention of the parties hereto that they
would have executed the remaining portion of this Agreement
without including therein any such part, parts or portion which
may, for any reason, be hereafter declared invalid or
unenforceable.
SECTION 9.10. GOVERNING LAW. This Agreement and the Notes
issued and sold hereunder shall be governed by and construed in
accordance with Illinois law.
SECTION 9.11. CAPTIONS. The descriptive headings of the
various Sections or parts of this Agreement are for convenience
only and shall not affect the meaning or construction of any of
the provisions hereof.
SECTION 9.12. ADDITIONAL INDEBTEDNESS. Subject to the
terms and provisions hereof (including, but not limited to,
section 5.8) the Company may, from time to time, issue and sell
additional senior promissory notes and may, in connection with
the documentation thereof, incorporate by reference various
provisions of this Agreement. Such incorporation by reference
shall not modify, dilute or otherwise affect the terms and
provisions hereof including, without limitation, the priority of
the Notes and the percentage of the Notes required to approve an
amendment or effectuate a waiver under the provisions of
section 7 or the percentages of the Notes required to accelerate
the Notes or rescind such an acceleration under the provisions of
section 6.
SECTION 9.13. CONFIDENTIAL INFORMATION. For the purposes
of this section 9.13, "Confidential Information" means
information delivered to you by or on behalf of the Company or
any Subsidiary in connection with the transactions contemplated
by or otherwise pursuant to this Agreement that is proprietary in
nature and that was clearly marked or labeled or otherwise
adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such
term does not include information that (a) was publicly known or
otherwise known to you prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by
you or any person acting on your behalf, (c) otherwise becomes
known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to
you under section 5.18 that are otherwise publicly available.
You will maintain the confidentiality of such Confidential
Information in accordance with procedures
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Steel Technologies Inc. Note Agreement
adopted by you in good faith to protect confidential information
of third parties delivered to you; provided that you may deliver
or disclose Confidential Information to (i) your directors,
officers, employees, agents, attorneys and affiliates (to the
extent such disclosure reasonably relates to the administration
of the investment represented by your Notes), (ii) your financial
advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in
accordance with the terms of this section 9.13, (iii) any other
holder of any Note, (iv) any institutional investor to which you
sell or offer to sell such Note or any part thereof or any
participation therein (v) any Person from which you offer to
purchase any security of the Company, (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the
National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that
requires access to information about your investment portfolio or
(viii) any other Person to which such delivery or disclosure may
be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response
to any subpoena or other legal process (including, without
limitation, any bankruptcy proceeding), (y) in connection with
any litigation to which you are a party or (z) if an Event of
Default has occurred and is continuing, to the extent you may
reasonably determine such delivery and disclosure to be necessary
or appropriate in the enforcement or for the protection of the
rights and remedies under your Notes and this Agreement. Each
Holder, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this
section 9.13 as though it were a party to this Agreement.
SECTION 9.14. EXECUTION OF FINANCING AGREEMENT; OBLIGATION
TO PROVIDE INFORMATION.
(a) The Purchasers will execute and deliver the Financing
Agreement upon terms and conditions satisfactory to such
Purchasers.
(b) Pursuant to the Financing Agreement, the Company will
be obligated to cause the Purchasers and any subsequent Holder of
a Note to provide certain written evidence to KEDFA. So long as
the Notes remain outstanding, the Purchasers hereby agree, and
each Holder, by its acceptance of a Note, will be deemed to have
agreed to provide to KEDFA, no later than 45 days after the end
of each fiscal year of the Company, a certificate (the
"Certificate") setting forth the amount of principal and interest
received from the Company during such fiscal year and any other
written evidence as the Company may determine is required by the
Financing Agreement, but only to the extent the Certificate and
such other written evidence shall be prepared by the Company and
provided to the Purchasers and such subsequent Holders of the
Notes. The Company shall provide the Purchasers and such
subsequent Holders of the Notes with sufficient notice (which
notice shall refer to this section 9.14) and instructions
regarding the transmission of the Certificate and such other
evidence to KEDFA.
(c) Notwithstanding any other provision of this section
9.14, the Company agrees that neither the Purchasers nor any
subsequent Holder of a Note shall have any liability for the
non-performance of any of their covenants, agreements, duties and
obligations set forth in this section 9.14.
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Steel Technologies Inc. Note Agreement
The execution hereof by the Purchasers shall constitute a
contract among the Company and the Purchasers for the uses and
purposes hereinabove set forth. This Agreement may be executed
in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement.
STEEL TECHNOLOGIES INC.
By Kenneth R. Bates
----------------------------------
Its CFO
STEEL TECHNOLOGIES INC.
15415 Shelbyville Road
Louisville, Kentucky 40245
Attention:
Telefacsimile:
Confirmation:
<PAGE>
Accepted as of March 1, 1995:
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By Sarah J. Pitts
-------------------------------------
Its Counsel
By Warren Shank
-------------------------------------
Its Counsel
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY(1)
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Department--Securities Division
Regarding Bond Number 1-B-60395 (with respect to the $11,000,000
Note)
Regarding Bond Number 16-B-60395 (with respect to the $4,000,000
Note)
Telefacsimile: (515) 248-2490
Confirmation: (515) 248-3495
Payments
All payments on or in respect of the Notes to be by bank wire
transfer of Federal or other immediately available funds
(identifying each payment as "Steel Technologies Inc., 8.52%
Senior Notes due 2005, PPN 858147 A* 2, Bond Number 1-B-60395
(with respect to the $11,000,000 Note) and Bond Number 16-B-60395
(with respect to the $4,000,000 Note), principal, premium or
interest") to:
Norwest Bank Iowa, N.A. (ABA #0730 0022 8)
7th and Walnut Streets
Des Moines, Iowa 50309
for credit to: Principal Mutual Life Insurance Company
Account Number 014752 (with respect to the $11,000,000 Note)
Separate Account Number 032395 (with respect to the
$4,000,000 Note)
- ---------------
1 To be evidenced by two Notes denominated as follows: (i)
$11,000,000 and (ii) $4,000,000.
Notices
All notices concerning payment on or in respect of the Notes, to:
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Department--Accounting & Treasury
Telefacsimile: (515) 247-5930
All notices and communications other than those in respect to
payments to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 42-012-7290
<PAGE>
Accepted as of March 1, 1995:
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
By Lincoln National Investment
Management Company, Its
Attorney-In-Fact
By Steven R. Brody
-------------------------------------
Its Senior Vice President
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
c/o Lincoln National Investment Management Company
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire
transfer of Federal or other immediately available funds
(identifying each payment as "Steel Technologies Inc., 8.52%
Senior Notes due 2005, PPN 858147 A* 2, principal or interest")
to:
Bankers Trust Company (ABA #021001033)
Private Placement Processing
New York, New York
Account Number 99-911-145
for the account of:
Account Name Custody Account Par Amount
Number
The Lincoln National Life Insurance 98194 $2,000,000
Company (IAL)
The Lincoln National Life Insurance 98208 $2,000,000
Company (GAI)
The Lincoln National Life Insurance 98149 $1,000,000
Company (REO)
The Lincoln National Life Insurance 98201 $1,000,000
Company (IOB)
The Lincoln National Life Insurance 98127 $1,000,000
Company (UIN)
The Lincoln National Life Insurance 98195 $500,000
Company (IAD)
Notices
All notices and communications, including notices with respect to
payments and written confirmation of each such payment, to be
addressed as first provided above with duplicate notices with
respect to payments and written confirmation of each such payment
to:
Bankers Trust Company
P. O. Box 998
Bowling Green Station
New York, New York 10274
Attention: Private Placement Unit
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 35-0472300
<PAGE>
Accepted as of March 1, 1995:
FIRST PENN-PACIFIC LIFE INSURANCE
COMPANY
By Lincoln National Investment
Management Company, Its
Attorney-In-Fact
By Steven R. Brody
-------------------------------------
Its Senior Vice President
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
c/o Lincoln National Investment Management Company
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire
transfer of Federal or other immediately available funds
(identifying each payment as "Steel Technologies Inc., 8.52%
Senior Notes due 2005, PPN 858147 A* 2, principal or interest")
to:
The Chase Manhattan Bank N.A. (ABA #021000021)
New York, New York
CHASE NYC/CTR/BNF
A/C 900-9-000200
Notices
All notices and communications, including notices with respect to
payments, and written confirmation of each such payment, to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: CUDD & CO
Taxpayer I.D. Number for First Penn-Pacific: 23-2044248
Taxpayer I.D. Number for CUDD & CO: 13-6022143
<PAGE>
Accepted as of March 1, 1995:
LINCOLN NATIONAL LIFE REINSURANCE
COMPANY
By Lincoln National Investment
Management Company, Its
Attorney-In-Fact
By Steven R. Brody
-------------------------------------
Its Senior Vice President
LINCOLN NATIONAL LIFE REINSURANCE COMPANY
c/o Lincoln National Investment Management Company
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire
transfer of Federal or other immediately available funds
(identifying each payment as "Steel Technologies Inc., 8.52%
Senior Notes due 2005, PPN 858147 A* 2, principal or interest")
to:
Bankers Trust Company (ABA #021001033)
Private Placement Processing
New York, New York
Account Number 99-911-145
for the account of: Lincoln National Life Reinsurance
Company
Custody Account Number 98165
Notices
All notices and communications, including notices with respect to
payments and written confirmation of each such payment, to be
addressed as first provided above with duplicate notices with
respect to payments and written confirmation of each such payment
to:
Bankers Trust Company
P. O. Box 998
Bowling Green Station
New York, New York 10274
Attention: Private Placement Unit
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 35-1679513<PAGE>
Accepted as of March 1, 1995:
LINCOLN NATIONAL INCOME FUND, INC.
By David A. Berry
-------------------------------------
Its Vice President
LINCOLN NATIONAL INCOME FUND, INC.
c/o Lincoln National Investment Management Company
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire
transfer of Federal or other immediately available funds
(identifying each payment as "Steel Technologies Inc., 8.52%
Senior Notes due 2005, PPN 858147 A* 2, principal or interest")
to:
Bankers Trust Company (ABA #021001033)
Private Placement Processing
New York, New York
Account Number 99-911-145
for the account of: Lincoln National Income Fund, Inc.
Custody Account Number 98245
Notices
All notices and communications, including notices with respect to
payments and written confirmation of each such payment, to be
addressed as first provided above with duplicate notices with
respect to payments and written confirmation of each such payment
to:
Bankers Trust Company
P. O. Box 998
Bowling Green Station
New York, New York 10274
Attention: Private Placement Unit
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 35-1273664
<PAGE>
Accepted as of March 1, 1995:
AMERICAN STATES LIFE INSURANCE
COMPANY
By Lincoln National Investment
Management Company, Its
Attorney-In-Fact
By Steven R. Brody
-------------------------------------
Its Senior Vice President
AMERICAN STATES LIFE INSURANCE COMPANY
c/o Lincoln National Investment Management Company
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire
transfer of Federal or other immediately available funds
(identifying each payment as "Steel Technologies Inc., 8.52%
Senior Notes due 2005, PPN 858147 A* 2, principal or interest")
to:
Bankers Trust Company (ABA #021001033)
Private Placement Processing
New York, New York
Account Number 99-911-145
for the account of: American States Life Insurance Company
Custody Account Number 97136
Notices
All notices of payment on or in respect of the Notes and written
confirmation of each such payment to be addressed:
American States Life Insurance Company
500 North Meridian Street
Indianapolis, Indiana 46204
Attention: Jodi Pitcock/Corporate Accounting
All notices and communications other than those in respect to
payments to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: SALKELD & CO
Taxpayer I.D. Number for American States Life Insurance Company:
35-1007048
Taxpayer I.D. Number for SALKELD & CO: 13-6065491
<PAGE>
Accepted as of March 1, 1995:
JEFFERSON-PILOT LIFE INSURANCE
COMPANY
By Robert E. Whalen
-------------------------------------
Its Second Vice President
JEFFERSON-PILOT LIFE INSURANCE COMPANY
100 North Greene Street
Greensboro, North Carolina 27401
Attention: Securities Administration 3630
Telefacsimile: (910) 691-3025
Payments
All payments on or in respect of the Notes to be by bank wire
transfer of Federal or other immediately available funds
(identifying each payment as "Steel Technologies Inc., 8.52%
Senior Notes due 2005, PPN 858147 A* 2, principal or interest")
to:
NationsBank of North Carolina (ABA #053 000 196)
Charlotte, North Carolina
(Greensboro office)
for credit to: Jefferson-Pilot Life Insurance Company
Account Number 020-000-014
Attention: Cash Management (910) 691-3133
Notices
All notices and communications, including notices with respect to
payments and written confirmation of each such payment (including
name and address of bank transmitting payment), to be addressed
as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 56-0359860
<PAGE>
Accepted as of March 1, 1995:
NORTHERN LIFE INSURANCE COMPANY
By Mark S. Jordahl
----------------------------------
Its Assistant Treasurer
NORTHERN LIFE INSURANCE COMPANY
c/o Washington Square Capital
100 Washington Square, Suite 800
Minneapolis, Minnesota 55401-2147
Attention: Securities Department
Telecopier Number: (612) 372-5368
Payments
All payments on or in respect of the Notes to be by bank wire
transfer of Federal or other immediately available funds
(identifying each payment as "Steel Technologies Inc., 8.52%
Senior Notes due 2005, PPN 858147 A* 2, principal, premium or
interest") to:
First National Bank N.A./Mpls. (ABA #091000022)
601 2nd Avenue South
Minneapolis, Minnesota 55402
Attention: Securities Accounting
for credit to: Northern Life Insurance Company
Account Number 1602-3237-6105
Notices
All notices and communications, including notices with respect to
payments and written confirmation of each such payment, to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-1295933
<PAGE>
Accepted as of March 1, 1995:
NORTHWESTERN NATIONAL LIFE INSURANCE
COMPANY
By Mark S. Jordahl
----------------------------------
Its Authorized Officer
NORTHWESTERN NATIONAL LIFE INSURANCE
COMPANY
c/o Washington Square Capital
100 Washington Square, Suite 800
Minneapolis, Minnesota 55401-2147
Attention: Securities Department
Telecopier Number: (612) 372-5368
Payments
All payments on or in respect of the Notes to be by bank wire
transfer of Federal or other immediately available funds
(identifying each payment as "Steel Technologies Inc., 8.52%
Senior Notes due 2005, PPN 858147 A* 2, principal, premium or
interest") to:
First National Bank N.A./Mpls. (ABA #091000022)
601 2nd Avenue South
Minneapolis, Minnesota 55402
Attention: Securities Accounting
for credit to: Northwestern National Life Insurance Company
Account Number 1102-4001-4461
Notices
All notices and communications, including notices with respect to
payments and written confirmation of each such payment, to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-0451140
EXHIBIT 10.2
------------
SECOND AMENDMENT TO LOAN AGREEMENT
----------------------------------
THIS SECOND AMENDMENT TO LOAN AGREEMENT (the "Second Amend-
ment"), is made and entered into as of the 6th day of April, 1995,
by and among (i) STEEL TECHNOLOGIES INC., a Kentucky corporation
with principal office and place of business in Louisville, Kentucky
(the "Borrower"), (ii)(a) PNC BANK, KENTUCKY, INC., a Kentucky
banking corporation with principal office and place of business in
Louisville, Kentucky ("PNC"), (b) NATIONAL CITY BANK, KENTUCKY, a
national banking association with principal office and place of
business in Louisville, Kentucky ("National City"), (c) NBD BANK,
a Michigan banking corporation with principal office and place of
business in Detroit, Michigan ("NBD"), and (d) THIRD NATIONAL BANK
IN NASHVILLE, a national banking association with principal office
and place of business in Nashville, Tennessee ("Third National")
(PNC, National City, NBD and Third National is each hereinafter
individually referred to as a "Bank," and all of the same are
hereinafter collectively referred to as the "Banks"), and (iii) PNC
BANK, KENTUCKY, INC., in its capacity as agent for the Banks (in
such capacity, the "Agent").
P R E L I M I N A R Y S T A T E M E N T S:
- - - - - - - - - - - - - - - - - - - - -
A. Pursuant to that certain Loan Agreement dated as of
October 15, 1994, among the Borrower, the Banks and the Agent (the
"Loan Agreement"), as amended pursuant to that certain First Amend-
ment to Loan Agreement dated as of January 17, 1995, among the
Borrower, the Banks and the Agent (the "First Amendment") (the term
"Loan Agreement", as defined herein, shall hereinafter include the
First Amendment), the Borrower has obtained from the Banks a re-
volving credit facility in the principal amount of Eighty Million
Dollars ($80,000,000.00) (the "Revolver"), for the purposes set
forth in Section 2.5 of the Loan Agreement.
B. Pursuant to that certain Note Agreement dated as of
March 1, 1995, between the Borrower and the institutional investors
(the "Note Purchasers") parties thereto (the "Note Agreement"), the
Borrower has issued and severally sold to the Note Purchasers the
Borrower's $40,000,000 8.52% Senior Notes due March 1, 2005 (the
"Senior Notes").
C. The proceeds realized by the Borrower from the issuance
and sale of the Senior Notes shall be used by the Borrower in part
to prepay Revolving Loans outstanding in the amount of Forty
Million Dollars ($40,000,000.00) pursuant to Section 2.4A(i) of the
Loan Agreement, and shall be used by the Borrower in full to effect
a permanent reduction in the Revolving Loan Commitments in the
amount of Forty Million Dollars ($40,000,000.00) pursuant to Sec-
tion 2.4C of the Loan Agreement.
D. The Borrower, the Banks and the Agent now desire to
execute and deliver this Second Amendment in connection with the
foregoing partial prepayment of the Revolving Loans outstanding and
<PAGE>
the foregoing partial permanent reduction in the Revolving Loan
Commitments.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth in the Loan Agreement and
herein, and for other good and valuable consideration, the mutual-
ity, receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Each capitalized term used herein, unless otherwise
expressly defined herein, shall have the meaning set forth in the
Loan Agreement.
2. Pursuant to Sections 2.4A(i) and 5.13 of the Loan Agree-
ment, the Borrower hereby prepays Revolving Loans outstanding in
the amount of Forty Million Dollars ($40,000,000.00), which the
Banks and the Agent hereby acknowledge. The Banks and the Agent
hereby waive any requirement of prior notice of such prepayment of
the Revolving Loans outstanding set forth in the Loan Agreement,
including the requirement of prior notice set forth in Section
2.4A(i) of the Loan Agreement.
3. Pursuant to Sections 2.4C and 5.13 of the Loan Agreement,
the Borrower hereby effects a permanent reduction in the Revolving
Loan Commitments in the amount of Forty Million Dollars
($40,000,000.00), which the Banks and the Agent hereby acknowledge.
The Banks and the Agent hereby waive any requirement of prior
notice of such permanent reduction in the Revolving Loan Commit-
ments set forth in the Loan Agreement, including the requirement of
prior notice set forth in Section 2.4C of the Loan Agreement.
4. The Banks and the Agent hereby acknowledge and agree that
all of the obligations of the Borrower set forth in Section 5.13 of
the Loan Agreement have been satisfied by virtue of the prepayment
of the Revolving Loans outstanding in the amount of Forty Million
Dollars ($40,000,000.00) and the permanent reduction in the Revolv-
ing Loan Commitments in the amount of Forty Million Dollars
($40,000,000.00), in each case effected by the Borrower contem-
poraneously herewith. Without in any way limiting the generality
of the foregoing, the Banks and the Agent hereby acknowledge and
agree that (a) the issuance and sale of the Senior Notes by the
Borrower constitutes both the incurrence of Indebtedness permitted
under Section 6.2 of the Loan Agreement and a private placement of
the Borrower's long-term debt in an amount equal to or greater than
Twenty Million Dollars ($20,000,000.00) within the meaning of Sec-
tion 5.13 of the Loan Agreement, (b) the Borrower shall not be
---
obligated under Section 9 of the First Amendment to effect a perma-
nent reduction in the Revolving Loan Commitments in the amount of
Ten Million Dollars ($10,000,000.00) on or before May 31, 1995, and
(c) the increase in each of the Base Rate, the Letter of Credit Fee
Percentage and the LIBOR Rate contemplated in Section 5.13 of the
Loan Agreement shall not be effective.
---
- 2 -
<PAGE>
5. The amount of each Bank's Revolving Loan Commitment
effective the date hereof is as follows:
<TABLE>
<CAPTION>
Revolving
Name of Bank Loan Commitment
------------ ---------------
<S> <C>
PNC Bank, Kentucky, Inc. $15,000,000
National City Bank, Kentucky $ 5,000,000
NBD Bank $10,000,000
Third National Bank in Nashville $10,000,000
</TABLE>
6. The term "Revolver", as defined in Section 1.78 of the
Loan Agreement, is hereby re-defined to mean the revolving credit
facility established by the Banks in favor of the Borrower in the
principal amount of Forty Million Dollars ($40,000,000.00) pursuant
to the Loan Agreement, pursuant to which the Borrower may obtain
Revolving Loans and Letters of Credit during the term of the Re-
volver upon the terms and conditions set forth in the Loan Agree-
ment. All references to the "aggregate principal balance of the
Revolving Loans outstanding" or similar phrases in the Loan Agree-
ment shall mean, as at the date of determination thereof, the sum
of (i) the entire aggregate outstanding principal balance of all
Revolving Loans made by the Banks pursuant to the Loan Agreement,
and (ii) the then existing Letter of Credit Usage.
7. The term "Revolving Notes", as defined in Section 1.82 of
the Loan Agreement, is hereby redefined to mean, collectively, (a)
that certain Amended and Restated Revolving Promissory Note dated
April 6, 1995, made by the Borrower, payable to the order of PNC,
and in the face principal amount of Fifteen Million Dollars
($15,000,000.00), together with all future amendments, modifica-
tions, extensions, renewals, restatements and replacements thereof,
(b) that certain Amended and Restated Revolving Promissory Note
dated April 6, 1995, made by the Borrower, payable to the order of
National City, and in the face principal amount of Five Million
Dollars ($5,000,000.00), together with all future amendments,
modifications, extensions, renewals, restatements and replacements
thereof, (c) that certain Amended and Restated Revolving Promissory
Note dated April 6, 1995, made by the Borrower, payable to the
order of NBD, and in the face principal amount of Ten Million
Dollars ($10,000,000.00), together with all future amendments,
modifications, extensions, renewals, restatements and replacements
thereof, (d) that certain Amended and Restated Revolving Promissory
Note dated April 6, 1995, made by the Borrower, payable to the
order of Third National, and in the face principal amount of Ten
Million Dollars ($10,000,000.00), together with all future amend-
ments, modifications, extensions, renewals, restatements and
replacements thereof, and (e) all future Revolving Promissory
Notes, if any, hereafter issued by the Borrower pursuant to the
Loan Agreement.
- 3 -
<PAGE>
8. The term "Wabash Guaranty Agreement", as defined in Sec-
tion 1.91 of the Loan Agreement, is hereby redefined to mean that
certain Guaranty Agreement dated as of March 1, 1995, executed and
delivered by Wabash Steel Corporation, in favor of the Agent for
the benefit of the Banks.
9. The Banks hereby acknowledge that, in conjunction with
the Borrower's issuance and sale of the Senior Notes, each of
Wabash Steel Corporation and the Mexican Subsidiary shall execute
and deliver a Guaranty Agreement in favor of the Note Purchasers
(the "Note Purchasers Guaranty Agreements"). The Banks hereby
consent to the execution and delivery of the Note Purchasers
Guaranty Agreements by Wabash Steel Corporation and the Mexican
Subsidiary, respectively, and the Banks hereby agree that the
execution and delivery of the Note Purchasers Guaranty Agreements
by Wabash Steel Corporation and the Mexican Subsidiary, respec-
tively, shall not cause a default under or a breach of any of the
provisions of the Loan Agreement or any other Loan Instrument,
subject to the conditions in each case that (a) the Note Purchasers
Guaranty Agreements shall be identical in all material respects to
the Wabash Guaranty Agreement and the Mexican Subsidiary Guaranty
Agreement, respectively, and (b) the Borrower shall not cause or
permit either Wabash Steel Corporation or the Mexican Subsidiary to
amend or modify the Note Purchasers Guaranty Agreement to which it
is a party in any respect without the prior consent of the Banks.
The Banks further hereby acknowledge and agree that the execution
and delivery of the Wabash Guaranty Agreement, the Mexican Subsid-
iary Guaranty Agreement and the Note Purchasers Guaranty Agreements
shall not constitute or be deemed to constitute the issuance of any
guaranties by the Borrower or the incurrence of any Contingent
Obligations by the Borrower within the parameters of Section
6.5(viii) of the Loan Agreement.
10. This Second Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same instrument.
11. Except to the extent expressly amended or modified
hereby, the Borrower hereby ratifies and reaffirms each of its
covenants, agreements, obligations, representations and warranties
set forth in the Loan Agreement.
12. This Second Amendment shall be effective as of the later
of (a) April 6, 1995, or (b) the date of delivery of the following
documents to the Banks and/or the Agent:
(i) This Second Amendment, duly executed by the Bor-
rower;
(ii) An Amended and Restated Revolving Promissory Note in
the face principal amount of Fifteen Million Dollars
($15,000,000.00) made payable to the order of PNC, duly executed by
the Borrower, in the form of Exhibit A attached hereto and made a
part hereof;
- 4 -
<PAGE>
(iii) An Amended and Restated Revolving Promissory Note in
the face principal amount of Five Million Dollars ($5,000,000.00)
made payable to the order of National City, duly executed by the
Borrower, in the form of Exhibit B attached hereto and made a part
hereof;
(iv) An Amended and Restated Revolving Promissory Note in
the face principal amount of Ten Million Dollars ($10,000,000.00)
made payable to the order of NBD, duly executed by the Borrower, in
the form of Exhibit C attached hereto and made a part hereof;
(v) An Amended and Restated Revolving Promissory Note in
the face principal amount of Ten Million Dollars ($10,000,000.00)
made payable to the order of Third National, duly executed by the
Borrower, in the form of Exhibit D attached hereto and made a part
hereof;
(vi) Certified Resolutions of the Board of Directors of
Wabash Steel Corporation, authorizing the Borrower's execution and
delivery of the Wabash Guaranty Agreement; and
(vii) A supplemental written opinion of counsel on behalf
of the Borrower and Wabash Steel Corporation, substantially in the
form of Exhibit E attached hereto and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Loan Agreement to be duly executed as of the day and
year first above written.
STEEL TECHNOLOGIES INC.
By: Kenneth R. Bates
--------------------------------
Its: Chief Financial Officer
-------------------------------
(the "Borrower")
- 5 -<PAGE>
PNC BANK, KENTUCKY, INC.
By: H. Joseph Brenner
--------------------------------
Title: Vice President
-----------------------------
Address: PNC Bank, Kentucky, Inc.
Citizens Plaza
500 West Jefferson Street
Louisville, KY 40202
Attn: H. Joseph Brenner
Vice President
Telephone: (502) 581-3991
Telecopy: (502) 581-3355
("PNC")
NATIONAL CITY BANK, KENTUCKY
By: Noel Rush
--------------------------------
Title: Vice President
-----------------------------
Address: 101 South Fifth Street
Louisville, KY 40202
Attn: Deroy Scott
Vice President
Telephone: (502) 581-7821
Telecopy: (502) 581-4424
("National City")
NBD BANK
By: Randall K. Stephens
--------------------------------
Title: Vice President
-----------------------------
Address: 611 Woodward Avenue
Detroit, MI 48226
Attn: Randall K. Stephens
Telephone: (313) 225-1314
Telecopy: (313) 225-3269
("NBD")
- 6 -<PAGE>
THIRD NATIONAL BANK IN NASHVILLE
By: Allen K. Oakley
--------------------------------
Title: Corporate Vice President
-----------------------------
Address: 201 Fourth Avenue North
Nashville, TN 37219
Attn: Allen K. Oakley
Telephone: (615) 748-5934
Telecopy: (615) 259-4119
("Third National")
(collectively, the "Banks")
PNC BANK, KENTUCKY, INC., in its
capacity as Agent
By: H. Joseph Brenner
--------------------------------
Title: Vice President
-----------------------------
(the "Agent")
- 7 -
EXHIBIT 10.3
------------
STEEL TECHNOLOGIES INC.
1995 STOCK OPTION PLAN
1. PURPOSE. The name of this plan is the Steel
Technologies Inc. 1995 Stock Option Plan (the "Plan"). The
purpose of the Plan is to further the best interests of Steel
Technologies Inc. (the "Company") by encouraging its key
employees and key employees of its Subsidiaries (as hereinafter
defined) and Related Entities (as hereinafter defined) to remain
as employees and by providing them with additional incentive for
unusual industry and efficiency by offering them an opportunity
to acquire a proprietary stake in the Company and its future
growth through compensation that is determined by reference to
the increase in value of the Company's stock.
2. DEFINITIONS.
As used in this Plan, the following terms shall have the
meanings set forth below:
(a) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.
(b) "Committee" shall mean the Compensation Committee of
the Board of Directors of the Company, or any other committee the
Board of Directors may subsequently appoint to administer the
Plan. The Committee shall be composed of not less than three
directors, each of whom is a Disinterested Person.
(c) "Disabled" or "Disability" shall have the meaning
assigned thereto in section 22(e)(3) of the Code.
(d) "Disinterested Person" shall mean any person who is
not, and has not within the prior one year been eligible for
selection as a person to whom stock may be allocated or to whom
stock options or stock appreciation rights may be granted
pursuant to this Plan or any other plan of the Company or any of
its affiliates entitling the participants therein to acquire
stock, stock options, or stock appreciation rights of the Company
or any of its affiliates. For purposes of this definition, the
terms contained herein shall have the same meaning as they have
in Rule 16b-3(d)(3) promulgated under the Securities Exchange Act
of 1934.
(e) "Eligible Employee" shall mean an employee of the
Company or any Subsidiary or Related Entity as described in
Section 5 hereof.
(f) "Fair Market Value" shall mean, as of any given date,
with respect to any stock options granted hereunder, the mean of
the high and low trading price of the stock on such date as
reported on the National Association of Securities Dealers
Automated Quotation System or, if the stock is admitted to trade
on a national securities exchange, on such exchange; provided,
however, that if any such quotation system or exchange is closed
on any day on which Fair Market Value is to be determined, Fair
Market Value shall be determined as of the first day immediately
preceding such day on which such exchange or quotation system was
open for trading.
(g) "Incentive Stock Option" shall mean any stock option
intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Code.
1
<PAGE>
(h) "Nonqualified Stock Option" means any stock option
granted under the Plan that is not designated as an Incentive
Stock Option.
(i) "Parent" shall have the meaning assigned thereto in
section 424 of the Code and the regulations promulgated
thereunder.
(j) "Participant" shall mean any Eligible Employee selected
by the Committee to receive a Stock Option under the Plan.
(k) "Related Entity" shall mean any corporation,
partnership, joint venture, or other entity, domestic or foreign,
other than a Subsidiary, in which the Company owns, directly or
indirectly, at least a 20% equity interest. A "Related Entity"
shall include any entity which becomes a Related Entity after the
date of adoption of this Plan.
(l) "Stock" shall mean the common stock, no par value, of
the Company.
(m) "Stock Option" shall mean any option to purchase shares
of Stock granted pursuant to Section 6 of the Plan.
(n) "Stock Ownership," whenever necessary to determine a
person's stock ownership in the Company, its Parent or any
Subsidiary, shall include stock actually owned and stock
indirectly owned by application of the rules of attribution
contained in section 424(d) of the Code.
(o) "Subsidiary" shall have the meaning assigned thereto in
section 424 of the Code and the regulations promulgated
thereunder. A "Subsidiary" shall include any entity which
becomes a Subsidiary after the date of adoption of this Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be
administered by the Committee.
The Company, by action of the Committee, and subject to
other provisions and limitations of this Plan, may from time to
time grant Stock Options to such Eligible Employees as the
Committee may in its sole discretion determine, for such number
of shares of the Company's Stock and on such terms and conditions
as the Committee may determine in its sole discretion.
The Committee may make, publish, amend, and rescind such
rules and practices as it may in its sole discretion deem
necessary or helpful to the administration of the Plan and the
issuance and exercise of Stock Options pursuant to the Plan.
All decisions made by the Committee pursuant to the
provisions of the Plan and as to the terms and conditions of any
Stock Option (and any agreements relating thereto) shall be final
and binding on all persons, including the Company and the
Participants.
4. OPTION SHARES. The aggregate maximum number of shares
of Stock reserved and available for issuance under this Plan
shall be four hundred thousand (400,000). However, the number of
shares that may be issued under this Plan may be increased by
action of the Board of Directors of the Company (the "Board") but
only when such increase is merely to prevent the enlargement or
dilution of rights that would occur were the adjustment not made,
such as in the case of a change in capitalization of the Company
by way of a stock dividend or stock split. Any shares of Stock
subject to an option
2
<PAGE>
granted under this Plan that terminates, is cancelled, or expires
unexercised for any reason may again be available for option
grants.
5. EMPLOYEES ELIGIBLE TO PARTICIPATE IN THE PLAN. All
salaried employees of the Company, its Parent, if any, its
Subsidiaries and its Related Entities shall be eligible to
receive Stock Options pursuant to this Plan. (Such employees
shall hereinafter be referred to as "Eligible Employees.") The
Participants under the Plan shall be selected, from time to time,
by the Committee, in its sole discretion, from among those
Eligible Employees.
6. STOCK OPTIONS.
(a) FORM. The Stock Options granted pursuant to this Plan
shall be in such form as the Committee may from time to time
approve. Each grant of a Stock Option pursuant to this Plan
shall be made in writing upon such terms and conditions as may be
determined by the Committee at the time of grant, subject to the
terms, conditions, and limitations set forth in this Plan. The
grant of an option shall be evidenced by written notice executed
by the Secretary of the Company.
(b) NATURE OF OPTIONS. The Committee shall have the
authority to grant any Participant either Incentive Stock Options
or Nonqualified Stock Options, or both. Whether an option is to
be an Incentive Stock Option or a Nonqualified Stock Option shall
be determined by the Committee in its sole discretion. Each
option that the Committee intends to constitute an Incentive
Stock Option shall be specifically designated as such and each
option that is not intended to constitute an Incentive Stock
Option shall specifically state "This option is not an incentive
stock option." If any option is issued without a specific
designation, it shall be deemed to constitute a Nonqualified
Stock Option. The Committee may, however, specifically provide
that a Stock Option shall constitute an Incentive Stock Option to
the extent of its exercise as to any particular number of shares
and a Nonqualified Stock Option to the extent of the remainder of
the shares, provided the Committee specifically provides that the
Stock Option shall be deemed an Incentive Stock Option to the
extent of the first shares exercised up to the number of shares
as to which the option is intended to constitute an Incentive
Stock Option, and that the option shall be considered a
Nonqualified Stock Option as to the remainder of the shares as to
which it is exercised.
(c) EXERCISE PRICE. The Stock Options granted pursuant to
this Plan shall provide a specified price at which the shares
subject to the option may be purchased (hereinafter called the
"Exercise Price"). If any Stock Option issued pursuant to this
Plan is designated as an Incentive Stock Option, the Exercise
Price for each share of Stock subject to the Incentive Stock
Option shall, except as hereinafter provided, be an amount at
least equal to the Fair Market Value of one share of Stock of the
Company as of the date of grant of the Incentive Stock Option.
Notwithstanding the above, in the event that on the date of grant
of the Incentive Stock Option, an Eligible Employee owns stock
(taking into account all classes of stock which are then
outstanding) in the Company which possesses more than 10% of the
total combined voting power of all classes of stock of the
Company or owns stock of a Parent or a Subsidiary of the Company
which possesses more than 10% of the total combined voting power
of all classes of stock of the Company's Parent or its
Subsidiary, the Exercise Price for each share of Stock subject to
the Incentive Stock Option (to the extent required by the Code at
the time of grant) shall be an amount equal to at least 110% of
the Fair Market Value of one share of Stock of the Company as
determined as of the date of grant of the Incentive Stock Option.
(For purposes of this paragraph, the rules of attribution
contained in section 424(d) of the Code (relating to the
attribution of Stock Ownership) shall be applied to determine
Stock Ownership.)
3
<PAGE>
(d) EXERCISE PERIOD. Each Stock Option by its terms shall
provide the period during which it is exercisable, provided,
however, no Stock Option shall be exercisable until the
expiration of at least one year from the date the Stock Option is
granted. Each Stock Option granted under this Plan shall provide
an expiration date which date shall be set by the Committee but
in no event shall the expiration date of any Stock Option that is
designated an Incentive Stock Option be a date later than ten
years from the date of grant of the Incentive Stock Option or, if
the grantee of the Incentive Stock Option, at the time of grant,
owns stock (taking into account all classes of stock then
outstanding) possessing more than 10% of the total combined
voting power of all classes of stock of the Company, its Parent,
or any Subsidiary, the expiration date of each such Incentive
Stock Option (to the extent required by the Code at the time of
grant) shall not be more than five years from the date of grant.
(For purposes of this paragraph, the rules of attribution
contained in section 424(d) of the Code (relating to the
attribution of Stock Ownership) shall be applied to determine
Stock Ownership.) Each Incentive Stock Option issued under this
Plan shall provide for expiration within three months after the
termination of the Eligible Employee's employment with the
Company due to retirement. Each Incentive Stock Option issued
pursuant to this Plan may provide that it shall be exercisable
within one year after termination of employment if the employee
is Disabled. Further, each Incentive Stock Option issued
pursuant to this Plan may provide that in the case of termination
of employment by reason of the employee's death, the Incentive
Stock Option may be exercised by the employee's estate or other
person who receives the option by bequest or the laws of descent
and distribution for a period of twelve months after the
employee's death. In no event shall the exercise period be
extended beyond the time which the employee would have been
required to exercise the Incentive Stock Option had he not become
disabled or died. The Committee shall, except as specifically
restricted herein, in its own discretion, determine the term of
Nonqualified Stock Options that are issued pursuant to this Plan
and the circumstances in which such Nonqualified Stock Options
shall be exercisable beyond the termination, disability or death
of the Eligible Employee; provided, that if the Nonqualified
Stock Option does not specifically state when it may be exercised
after the termination of the grantee's employment, death or
disability, the option shall be governed by the provisions stated
above for Incentive Stock Options. Except as otherwise provided
in this Section 6 or Section 14 of the Plan, or as determined by
the Committee in its sole discretion, if a Participant's
employment with the Company, any Subsidiary or any Related Entity
terminates (including termination for cause, voluntary
resignation or other termination under mutually agreeable
circumstances), all Stock Options held by the Participant will
terminate immediately upon the effective date and time of the
Participant's termination of employment.
(e) TRANSFERABILITY OF OPTIONS. Each Stock Option granted
under this Plan shall provide that such option shall be
exercisable during the grantee's lifetime only by the grantee and
that such option shall not be transferable by the grantee other
than by will or the laws of descent and distribution. Stock
Options granted pursuant to this Plan may, but need not, provide
for exercise by the Participant's estate or other person who
obtains the right to exercise the option by bequest or pursuant
to the laws of descent and distribution.
(f) METHOD OF EXERCISE. Stock Options may be exercised by
giving written notice of exercise delivered in person or by mail
at the Company's principal executive office, specifying the
number of shares of Stock with respect to which the option is
being exercised, accompanied by payment in full of the Exercise
Price. Each Stock Option shall provide that payment of the
Exercise Price may be made in cash or, if the owner of the Stock
Option and the Committee agree in advance, in a number of shares
of Stock of the Company having an aggregate Fair Market Value (as
of the date of exercise of the option) equal to the Exercise
Price. Each Stock Option shall provide that the Exercise Price
shall be payable
4
<PAGE>
upon or before the issuance of the Stock of the Company to be
received pursuant to the exercise of the Stock Option.
(g) STATEMENT AS TO WITHHOLDING OF FEDERAL INCOME OR OTHER
TAXES. Each option granted pursuant to this Plan shall contain a
statement to the effect that if the exercise of the option is an
event that would give rise to a federal income tax deduction to
the Company (or its Parent or any Subsidiary or Related Entity),
but only if the Company (or its Parent or a Subsidiary or Related
Entity) at the time of exercise or such other required time
withholds federal income or other taxes from the Eligible
Employee, then the Company shall have the right to withhold from
the Eligible Employee, from the sources and in the manner
required, such amounts as may be required to entitle the Company,
its Parent or a Subsidiary or Related Entity to the deduction.
(h) EXERCISE OF INCENTIVE STOCK OPTIONS. No stock option
that is designated an Incentive Stock Option shall be issued
pursuant to terms under which the right to exercise the Incentive
Stock Option is affected by the exercise of another stock option
or the right to exercise another stock option is affected by
exercise of the Incentive Stock Option.
(i) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. The Committee
shall not grant to any Eligible Employee any Incentive Stock
Options (or any further Incentive Stock Options) if the grant of
the Incentive Stock Option would cause the Employee to own
Incentive Stock Options which are first exercisable in any one
year as to more than $100,000 in Fair Market Value of Stock of
the Company, its Parent and its Subsidiaries as of the date of
grant of the Incentive Stock Option.
7. TERMINATION OF EMPLOYMENT. The employment of an
Eligible Employee by the Company shall not be deemed to have
terminated for purposes of this Plan if the Eligible Employee is
transferred to and becomes an employee of a Subsidiary or Parent
of the Company or an employee of a Related Entity. Further, the
Eligible Employee's employment by the Company shall not be
considered terminated if he becomes an employee of another
corporation (the "Other Company") which assumes the Stock Options
issued pursuant to this Plan or issues its own stock option in
substitution of an option issued under this Plan in a transaction
to which section 424(a) of the Code applies, provided he becomes
an employee of the Other Company, its Subsidiary or its Parent at
the time of the transaction. Absence on leave, whether paid or
unpaid, approved by the management of the Company shall not
constitute the termination of employment for any purpose of this
Plan, provided the leave does not exceed ninety (90) days. If
the period of leave of absence exceeds ninety (90) days, the
leave of absence shall be considered a termination of employment
unless the employee's right to return is guaranteed by statute or
contract. If the employee's right to return is not so
guaranteed, the employee shall be considered to have terminated
his employment, for purposes of this Plan, as of the end of the
ninetieth (90th) day of such absence.
8. REQUIREMENTS OF LAW. If any law, any regulation of the
Securities and Exchange Commission, or any regulation of any
other commission or agency having jurisdiction shall require the
Company or the exercising optionee to take any action with
respect to the shares of Stock to be acquired upon exercise of an
option, then the date upon which the Company shall deliver or
cause to be delivered the certificate or certificates for the
shares of Stock shall be postponed until full compliance has been
made with all such requirements of law or regulations. Further,
if the Company shall so require at or before the time of the
delivery of the shares with respect to which the exercise of an
option has been made, the exercising optionee shall deliver to
the Company his written statement that he intends to hold the
shares so acquired by him on exercise of the option for
investment only and not with a view to resale
5
<PAGE>
or other distribution thereof to the public. Further, in the
event the Company shall have determined that in compliance with
the Securities Act of 1933 or other applicable statute or
regulation, it is necessary to register any of the shares of
Stock with respect to which the exercise of an option has been
made, or qualify such shares for exemption from any requirements
of the Securities Act of 1933 or other applicable statutes or
regulations, then the Company shall take such action at its own
expense, but not until such action has been completed shall the
option shares be delivered to the exercising optionee Further,
in the event at the time of exercise of the option the shares of
Stock of the Company shall be listed on any stock exchange, then
if required to do so, the Company shall register the option
shares with respect to which exercise is so made in accordance
with the provisions of the Securities Act of 1933 or any other
applicable law or regulations, and the Company shall make prompt
application for the listing of option shares on such stock
exchange, again at the expense of the Company.
9. DILUTION OR OTHER AGREEMENT. In the event that
additional shares of Stock are issued pursuant to a stock split
or a stock dividend, the number of shares of Stock then covered
by each outstanding option granted hereunder shall be increased
proportionately with no increase in the total purchase price of
the shares then so covered, and the number of shares of Stock
reserved for the purpose of this Plan shall be increased by the
same proportion. In the event that the shares of Stock of the
Company from time to time issued and outstanding are reduced by a
combination of shares, the number of shares of Stock then covered
by each outstanding option granted hereunder shall be reduced
proportionately with no reduction in the total purchase price of
the shares then so covered, and the number of shares of Stock
reserved for the purposes of the Plan shall be reduced by the
same proportion. In the event that the Company should transfer
assets to another corporation and distribute the stock of such
other corporation without the surrender of stock of the Company,
and if such distribution is not taxable as a dividend and no gain
or loss is recognized by reason of Section 355 of the Code, or
some similar section, then the total purchase price of the shares
covered by each outstanding option shall be reduced by an amount
which bears the same ratio to the total purchase price then in
effect as the market value of the stock distributed in respect of
a share of Stock of the Company, immediately following the
distribution, bears to the aggregate of the fair market value at
such time of a share of the Stock of the Company and the stock
distributed in respect thereof. All such adjustments shall be
made by the Committee, whose determination upon the same shall be
final and binding upon the optionees. No fractional shares shall
be issued, and any fractional shares resulting from the
computations pursuant to this Section 11 shall be eliminated from
the respective option. No adjustment shall be made for cash
dividends or the issuance to stockholders of rights to subscribe
for additional stock or other securities.
10. AMENDMENT OR DISCONTINUANCE OF THE PLAN. The Committee
may amend, suspend, or discontinue this Plan at any time without
restriction; provided, however, that the Committee may not alter,
amend, or discontinue or revoke or otherwise impair any
outstanding option which has been granted pursuant to this Plan
and which remains unexercised (except as may be required to make
the adjustments referred to in Section 9 above or in the event
that there is secured the written consent of the holders of the
outstanding options proposed to be so altered or amended), or,
without shareholder approval, (i) increase the number of shares
which may be issued pursuant to the Plan (except as may be
necessary merely to prevent the enlargement or dilution of rights
which would occur were the change not made, such as in the case
of a stock dividend or stock split), (ii) extend the period or
periods during which options may be granted or exercised, (iii)
change the class of Eligible Employees as to whom options may be
granted or otherwise materially modify the requirements for
eligibility for participation in the Plan, (iv) change the
provision with respect to adjustments to be made upon changes in
capitalization, (v) change the method as to the selection of the
Committee (except as provided below), or (vi) materially increase
the benefits accruing to participants in the Plan. (Nothing in
this section, however, shall prevent
6
<PAGE>
the termination of an option which may be required, as
hereinabove provided by references made to termination of
employment of an optionee.) The Committee shall be entitled to
amend this Plan by the deletion of the prohibition against the
issuance of Incentive Stock Options that would cause an Eligible
Employee to own options that are first exercisable in any year as
to Stock having a fair market value of greater than $100,000, but
only provided the requirement that such a provision be included
in incentive stock option plans is deleted by amendment to
section 422 of the Code. The Board of Directors of the Company
may also terminate or suspend this Plan or vest the
administration of the Plan in persons other than the Committee
provided one member of any body that is vested with the power to
administer this plan shall be a member of the Board of Directors
of the Company and all members of such body shall be
"disinterested persons." In the event that the authority to
administer the Plan is vested in any body other than the
Committee, the references herein to the Committee shall be
considered to be references to that body.
11. COMPANY'S RIGHT TO TERMINATE EMPLOYEES NOT IMPAIRED.
Notwithstanding the provisions of this Plan or the provisions of
options granted pursuant to this Plan, the right of the Company
(or its Parent or any Subsidiary) to terminate any employee shall
not be in any manner affected or impaired by the adoption of this
Plan or by the grant of options pursuant to this Plan.
12. LIQUIDATION OF THE COMPANY. In the event of the
complete liquidation or dissolution of the Company, any options
granted pursuant to this Plan remaining unexercised shall be
deemed cancelled, without regard to or limitation by any other
provisions of this Plan.
13. SHAREHOLDER APPROVAL. This Plan shall be submitted to
a meeting of the shareholders of the Company, either at the
regular annual meeting thereof or at a special meeting called for
the purpose of the consideration of this Plan, and this Plan
shall not become effective unless its adoption is approved by the
shareholders of the Company within twelve (12) months of its
adoption by the Board of Directors of the Company. Upon approval
by the shareholders, this Plan shall take effect without further
action by the Company, provided such approval is obtained within
twelve (12) months of the adoption of this Plan by the Board.
14. CHANGE IN CONTROL. The following acceleration and
valuation provisions shall apply in the event of a Change in
Control notwithstanding other provisions of the Plan or any
provisions of any applicable agreement to the contrary:
(a) In the event of a Change in Control:
(i) any Stock Option awarded under the Plan not
previously exercisable in full shall become fully
exercisable; and
(ii) any Participant holding a Stock Option who is
terminated by the Company or any Subsidiary for any reason
within the two year period immediately following a Change in
Control shall be permitted to exercise any Stock Option
after such termination of employment at any time (x) within
the three month period commencing on the later of the date
of termination of his or her employment or the date on which
such Stock Option would first be exercisable in accordance
with the terms of the Plan had such termination not occurred
or (y) until the stated term of such Stock Option, whichever
period is shorter.
7
<PAGE>
(b) For purposes of the Plan, "Change in Control" shall
mean a Change in Control of the Company which shall be deemed to
have occurred if:
(i) any Person (as defined in this Section 15) is or
becomes the Beneficial Owner (as defined in this Section 15)
of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding
securities (unless (A) such Person is the Beneficial Owner
of 25% or more of such securities as of January 26, 1995 or
(B) the event causing the 25% threshold to be crossed is an
acquisition of securities directly from the Company);
(ii) during any period of two consecutive years
beginning after January 26, 1995, individuals who at the
beginning of such period constitute the Board and any new
director (other than a director designated by a person who
has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of this
Change in Control definition) whose election or nomination
for election was approved by a vote of at least two-thirds
of the directors then still in office who either were
directors at the beginning of the period or whose election
or nomination for election was previously so approved cease
for any reason to constitute a majority of the Board;
(iii) the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation
(other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the entity surviving such merger or consolidation), in
combination with voting securities of the Company or such
surviving entity held by a trustee or other fiduciary
pursuant to any employee benefit plan of the Company or such
surviving entity or of any Subsidiary of the Company or such
surviving entity, at least 75% of the combined voting power
of the securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation);
or
(iv) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
(c) For purposes of the definition of Change in Control,
"Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act as supplemented by Section 13(d)(3)
of the Exchange Act; provided, however, that Person shall not
include (i) the Company, any Subsidiary or any other Person
controlled by the Company, (ii) any trustee or other fiduciary
holding securities under any employee benefit plan of the Company
or of any Subsidiary, or (iii) a corporation owned, directly or
indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of securities of the
Company.
(d) For purposes of the definition of Change of Control, a
Person shall be deemed the "Beneficial Owner" of any securities
which such Person, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" (within the meaning
of Rule 13d-3 under the Exchange Act) of, including pursuant to
any agreement, arrangement or understanding (whether or not in
writing); provided, however, that: (i) a Person shall not be
deemed the Beneficial Owner of any security as a result of an
agreement, arrangement or understanding to vote such security (x)
arising solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant
to, and in accordance
8
<PAGE>
with, the Exchange Act and the applicable rules and regulations
thereunder or (y) made in connection with, or to otherwise
participate in, a proxy or consent solicitation made, or to be
made, pursuant to, and in accordance with, the applicable
provisions of the Exchange Act and the applicable rules and
regulations thereunder; in either case described in clause (x) or
clause (y) above, whether or not such agreement, arrangement or
understanding is also then reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or successor
report); and (ii) a Person engaged in business as an underwriter
of securities shall not be deemed to be the Beneficial Owner of
any securities acquired through such Person's participation in
good faith in a firm commitment underwriting until the expiration
of forty days after the date of such acquisition.
15. QUALIFICATION OF OPTIONS ISSUED UNDER THIS PLAN AS
INCENTIVE STOCK OPTIONS. It is the intention of the Company that
those options that are issued pursuant to this Plan that are
designated as Incentive Stock Options shall constitute "incentive
stock options" within the meaning of section 422 of the Code.
However, in the event that any option granted hereunder does not
constitute an "incentive stock option" within the meaning of
section 422 of the Code for any reason whatsoever, none of the
Company, its shareholders, directors, officers or employees,
shall be under any obligation to any person. If the
characterization of any option as an "incentive stock option"
within the meaning of section 422 of the Code is challenged by
the Internal Revenue Service, the Company may, but shall not be
required to, pay the reasonable legal and accounting expenses
incurred in an attempt to establish the characterization of the
options issued under this Plan as "incentive stock options"
within the meaning of section 422 of the Code. In all events,
however, the Company shall make available to any optionee such
factual information which is reasonably necessary to establish
the characterization of the options for federal income tax
purposes.
It is intended that any option granted under this Plan that
is not specifically designated as an "incentive stock option"
shall not constitute an incentive stock option.
16. EFFECTIVE DATE OF THE PLAN. The Plan shall be
effective on the date it is approved by the shareholders of the
Company.
17. TERM OF THE PLAN. Options may be issued pursuant to
this Plan from the date of its approval by the shareholders of
the Company until the earlier of (i) its termination by action of
the Board or (ii) ten years from the earlier of the date of
adoption of this Plan by the Board or its approval by the
shareholders of the Company.
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1995 AND CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED MARCH 31, 1995 AND
RELATED FOOTNOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000771790
<NAME> STEEL TECHNOLOGIES INC.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 5,458
<SECURITIES> 0
<RECEIVABLES> 39,909
<ALLOWANCES> (945)
<INVENTORY> 56,767
<CURRENT-ASSETS> 102,662
<PP&E> 118,652
<DEPRECIATION> (26,348)
<TOTAL-ASSETS> 204,497
<CURRENT-LIABILITIES> 35,931
<BONDS> 72,444
<COMMON> 18,632
0
0
<OTHER-SE> 72,566
<TOTAL-LIABILITY-AND-EQUITY> 204,497
<SALES> 135,741
<TOTAL-REVENUES> 135,741
<CGS> 118,233
<TOTAL-COSTS> 118,233
<OTHER-EXPENSES> 497
<LOSS-PROVISION> 60
<INTEREST-EXPENSE> 1,917
<INCOME-PRETAX> 7,433
<INCOME-TAX> 2,746
<INCOME-CONTINUING> 4,687
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,687
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
