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, 1997
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 11,986,345 shares outstanding of the Registrant's common
stock as of April 30, 1997.
1 of 13
<PAGE>
STEEL TECHNOLOGIES INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1997 (Unaudited) and
September 30, 1996 (Audited) 3
Condensed Consolidated Statements
of Income Three months and six months
ended March 31, 1997 and 1996 (Unaudited) 4
Condensed Consolidated Statements of
Cash Flows Six months ended March 31,
1997 and 1996 (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 8-12
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote
of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
2 of 13
Part I. - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
STEEL TECHNOLOGIES INC.
Condensed Consolidated Balance Sheets
(Amounts in Thousands)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
ASSETS (Unaudited) (Audited)
- --------------------------------------------------------------------------
<S> <C> <C>
Current assets:
- ---------------
Cash and cash equivalents $ 6,411 $ 4,218
Trade accounts receivable, net 45,391 39,732
Inventories 75,668 59,374
Deferred income taxes 1,702 1,631
Prepaid expenses and other assets 1,479 369
- --------------------------------------------------------------------------
Total current assets 130,651 105,324
- --------------------------------------------------------------------------
Property, plant and equipment, net 99,581 100,017
- --------------------------------------------------------------------------
Investments in corporate joint ventures 11,719 11,016
- --------------------------------------------------------------------------
Other assets 805 784
- --------------------------------------------------------------------------
$ 242,756 $ 217,141
==========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------
Current liabilities:
- --------------------
Accounts payable $ 40,495 $ 34,528
Accrued liabilities 5,058 4,843
Accrued income taxes - 303
Long-term debt due within one year 7,385 385
- --------------------------------------------------------------------------
Total current liabilities 52,938 40,059
- --------------------------------------------------------------------------
Long-term debt 75,525 67,260
- --------------------------------------------------------------------------
Deferred income taxes 9,407 8,461
- --------------------------------------------------------------------------
Shareholders' equity:
- ---------------------
Preferred stock - -
Common stock 16,749 16,662
Additional paid-in capital 4,909 4,909
Retained earnings 84,763 81,161
Foreign currency translation
adjustment (1,535) (1,371)
- --------------------------------------------------------------------------
104,886 101,361
- --------------------------------------------------------------------------
$ 242,756 $ 217,141
==========================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3 of 13
<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,
1997 1996 1997 1996
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 79,799 $ 76,630 $ 157,829 $ 142,338
Cost of goods sold 71,528 65,604 140,154 122,846
- -------------------------------------------------------------------------
Gross profit 8,271 11,026 17,675 19,492
Selling, general and
administrative expenses 4,645 4,898 9,278 9,252
Equity in net income of
unconsolidated corporate
joint venture 350 388 703 732
- -------------------------------------------------------------------------
Operating income 3,976 6,516 9,100 10,972
Interest expense 1,284 1,272 2,499 2,462
- -------------------------------------------------------------------------
Income before income
taxes 2,692 5,244 6,601 8,510
Provision for income
taxes 956 1,878 2,401 3,033
- -------------------------------------------------------------------------
Net income $ 1,736 $ 3,366 $ 4,200 $ 5,477
=========================================================================
Weighted average number of
common shares outstanding 11,963 11,958 11,958 11,999
=========================================================================
Earnings per common share $ 0.15 $ 0.28 $ 0.35 $ 0.46
=========================================================================
Cash dividends per common
share $ 0.00 $ 0.00 $ 0.05 $ 0.04
=========================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4 of 13
STEEL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands, Unaudited)
<TABLE>
<CAPTION>
Six months ended
March 31,
1997 1996
- ---------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,200 $ 5,477
Adjustments to reconcile net income
to net cash (used in) operating
activities:
Depreciation and amortization 4,948 4,617
Deferred income taxes 875 825
Equity in net income of
unconsolidated corporate
joint venture (703) (732)
Loss (gain) on sales of assets 7 (477)
Increase (decrease) in cash
resulting from changes in:
Trade accounts receivable (5,751) (11,909)
Inventories (16,337) (14,624)
Accounts payable 5,995 11,573
Accrued liabilities 21 2,978
Other (1,190) 983
- ----------------------------------------------------------------------
Net cash (used in)
operating activities (7,935) (1,289)
- ----------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment (4,621) (3,784)
Proceeds from sale of assets 2 737
- ----------------------------------------------------------------------
Net cash used in investing activities (4,619) (3,047)
- ----------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 15,514 6,014
Principal payments on long-term
debt (249) (249)
Repurchase of common stock - (1,570)
Cash dividends on common stock (598) (480)
Net issuance of common stock under
incentive stock option plan 87 -
- ----------------------------------------------------------------------
Net cash provided by financing activities 14,754 3,715
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Effect of exchange rate changes on cash (7) (55)
- ----------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 2,193 (676)
Cash and cash equivalents,
beginning of year 4,218 2,698
- ----------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 6,411 $ 2,022
======================================================================
Supplemental Cash Flow Disclosures:
- -----------------------------------
Cash payments for interest $ 2,546 $ 2,455
======================================================================
Cash payments for taxes $ 2,169 $ 1,108
======================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5 of 13
<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, 1997 and the
condensed consolidated statements of income for the three and six-month
periods ended March 31, 1997 and 1996, 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, 1997 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, 1996. The results of
operations for the six months ended March 31, 1997 are not necessarily
indicative of the operating results for the full year.
2. INVENTORIES
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
(Unaudited) (Audited)
-------------------------------
(Amounts in Thousands)
<S> <C> <C>
Inventories consist of:
- ------------------------------------------------------------------
Raw materials $ 67,103 $ 49,617
Finished goods and
work in process 8,565 9,757
- ------------------------------------------------------------------
$ 75,668 $ 59,374
- ------------------------------------------------------------------
</TABLE>
3. RETAINED EARNINGS
<TABLE>
<CAPTION>
Six months ended
March 31, 1997
--------------
(Amounts in Thousands)
<S> <C>
Retained earnings consists of:
- ------------------------------------------------------------
Balance, beginning of year $ 81,161
Net income 4,200
Cash dividends on common stock (598)
- ------------------------------------------------------------
Balance, end of period $ 84,763
- ------------------------------------------------------------
</TABLE>
6 of 13
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 have previously been translated into U.S. dollars at the
current rate of exchange existing at period end and revenues and expenses
were translated at the average monthly exchange rates. The cumulative
inflation rate in Mexico over the three year period ended December 31, 1996
was approximately 100%, resulting in the Mexican economy being considered
hyper-inflationary. The impact to the Company's consolidated financial
statements from accounting for the Company's investment in a hyper-
inflationary economy is not expected to be material.
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.
6. SUBSEQUENT EVENT
On April 1, 1997, the company completed the purchase of 100% of the common
stock of Atlantic Coil Processing, Inc. (ACP) for approximately $19.6 million
in cash, notes payable and assumption of other liabilities. The Company
financed the transaction with a combination of bank borrowings, issuance of
a note payable to the former ACP shareholders and the assumption of ACP
trade payables and other liabilities. The transaction was accounted for
by the purchase method of accounting. The results of operations for ACP will
be included in the consolidated financial statements of the Company from the
date of acquisition.
7 of 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
When used in the following discussion, the word "expects" and other similar
expressions are intended to identify forward-looking statements, which are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those projected. Specific risks and uncertainties include,
but are not limited to, general business and economic conditions; cyclicality
of demand in the steel industry, specifically in the automotive market;
work stoppages or other business interruptions affecting automotive
manufacturers; competitive factors such as pricing and availability of
steel; reliance on key customers; and potential equipment malfunctions.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes
no obligation to republish revised forward-looking statements to reflect the
occurrence of unanticipated events or circumstances after the date hereof.
Results of Operations
- ---------------------
The Company posted record second quarter 1997 sales of $79,799,000, the
highest for any quarter in the Company's history, an increase of 4% from
the $76,630,000 a year ago. Sales for the six months ended March 31, 1997
increased 11% to $157,829,000 from $142,338,000 in 1996. 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. Demand in
the automotive and other steel consuming markets during the quarter and
six months ended March 31, 1997 was up slightly from the levels of the prior
year. The Company continues to increase its market share and to be successful
in developing a substantial amount of new business with both existing and new
customers. As a result, tons shipped in the second quarter and six months of
fiscal 1997 increased 9% and 18%, respectively. Average selling prices
declined 3% and 5% during these same periods. The sales outlook for 1997
continues to improve as demand in the automotive and other steel consuming
markets is expected to increase from the prior year levels. The capital
investments completed in recent years have added new capacity and increased
the products and services offered by the Company. The additional product
offerings are allowing the Company to pursue significant new business
opportunities and to further enhance its market share. The acquisition of
Atlantic Coil Processing in April 1997 adds new capacity, geographic diversity
and cut-to-length capabilities, which will further enhance the Company's
position in the marketplace.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Cont.)
Results of Operations (Cont).
- -----------------------------
Cost of goods sold a percentage of sales was 89.6% and 88.8% in the second
quarter and first half of fiscal 1997 compared to 85.6% and 86.4% in the same
periods of 1996. As a result, the gross profit margin decreased to 10.4%
and 11.2% in 1997 from 14.4% and 13.6% a year earlier. The gross profit
margin in the second quarter and first half of 1997 declined as a result of
increases in the purchase price of raw material from the primary steel mills.
These purchase price increases were not fully offset with selling price
increases to our customers. A number of steel mills experienced temporary
production problems and work stoppages which have negatively impacted the
available supply of raw materials. Additionally, the Company expects the
raw material supply, especially in hot rolled steel, to improve as new
steelmaking capacity and increased imports enter the market. This additional
raw material supply is expected to alleviate the upward pressure on the price
of flat rolled steel. However, should raw material price increases persist,
margins will be negatively impacted until corresponding selling price
increases are passed along to customers. The gross margin is expected to be
positively impacted by production cost efficiencies associated with the
anticipated higher sales volumes. Additionally, the Company expects to
increase the amount of higher margin toll processing revenue generated by the
Company's pickling facility throughout fiscal 1997.
The Company continues to actively manage the level at which selling, general
and administrative expenses are added to its cost structure. Sales increased
approximately 4% in the second quarter of 1997, while selling, general and
administrative costs decreased 5% from 1996. For the first half of fiscal
1997, sales increased approximately 11% while selling, general and
administrative costs remained flat compared with 1996. As a result, selling,
general and administrative expenses as a percentage of sales decreased to
5.8% and 5.9% for the quarter and six months ended March 31, 1997 from 6.4%
and 6.5% in the same periods a year ago.
The Company's equity in net income of its unconsolidated corporate joint
venture decreased to $350,000 and $703,000 for the quarter and six months
ended March 31, 1997 from $388,000 and $732,000 a year ago. These decreases
are principally the result of lower steel margins which offset the higher
sales levels achieved by the 50% owned corporate joint venture,
Mi-Tech Steel, Inc.
Interest expense increased to $1,284,000 and $2,499,000 for the quarter
and six months ended March 31, 1997 from $1,272,000 and $2,462,000 in
1996. These increases are the result of higher average borrowings used to
finance the capital addition and working capital needs of the Company in 1997.
The Company's effective income tax rate remained at approximately 36% in
the second quarter and six months ended March 31, 1997 and 1996.
8 of 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Cont.)
Liquidity and Capital Resources
- -------------------------------
At March 31, 1997, the Company had $77,713,000 of working capital,
maintained a current ratio of 2.5:1 and had total long-term debt at 44%
of total capitalization. The Company manages the levels of accounts
receivable, inventories and other working capital items in
relation to the trends in sales and the overall market. The Company
expects the sales trends to remain strong during the second half of the 1997
fiscal year based on the current backlogs and order entry activity. During
the first half of fiscal 1997 accounts receivalbe, inventories and other
working capital needs have increased to support the higher sales levels.
These working capital items were financed with borrowings from the Company's
bank line of credit. In the second half of fiscal 1997, the combination of
the expected strong sales levels and increased availability of raw material
will increase the inventory turnover, reducing the number of days carried in
inventory.
The Company's capital expenditures for the first half of 1997 totaled
$4,621,000. The Company has expanded its production and processing capacity
and added new processing capabilites over the last few years and expects
capital additions and investments in corporate joint ventures to approximate
$15 million for 1997. These expenditures have been financed primarily with
proceeds from long-term debt.
On April 1, 1997, the Company completed the purchase of 100% of the common
stock of Atlantic Coil Processing, Inc. (ACP) for approximately $19.6
million in cash, notes and assumption of liabilities. The Company financed
the transaction by borrowing approximately $10.9 million on the line of
credit, issuing $3.6 million of a note payable to the former ACP shareholders
and the assumption of $5.1 million in additional liabilities.
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. Mi-Tech Steel is anticipating significant capital
additions in 1997 to construct a pickling, slitting and cut-to-length
facility in Decatur, Alabama. In order to finance this project, Steel
Technologies will provide an additional equity contribution of $5 million
to the joint venture. Additional debt guarantees may be required in the
future.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Cont.)
Liquidity and Capital Resources
- -------------------------------
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 $18
million under its unsecured bank line of credit to be sufficient to
finance the capital expenditure plans, acquisition plans, joint venture
contributions as well as the working capital requirements of the next
twelve months. At this time the Company has no known material obligations,
commitments or demands which must be met beyond the next twelve months other
than the ten year notes and the line of credit. The ten year notes do not
require any principal payments until fiscal 1999 and the line of credit 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 or significant improvements in 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, 1997, the Company had $82,910,000 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 13
The Company maintains an equity investment of approximately $6 million in its
80% owned Mexican subsidiary. In accordance with Statement of Financial
Accounting Standard No. 52, "Foreign Currency Translation", the assets and
liabilities of the Mexican subsidiary have previously been translated into
U.S. dollars at the current rate of exchange existing at period end and
revenues and expenses were translated at the average monthly exchange rates.
Future currency fluctuations will be reflected as a component of stockholders'
equity. The cumulative inflation rate in Mexico over the three year period
ended December 31, 1996 was approximately 100%, resulting in the Mexican
economy being considered hyper-inflationary. The impact to the Company's
consolidated financial statements from accounting for the Company's investment
in a hyper-inflationary economy is not expected to be material.
The Company maintains an investment, principally in the preferred stock
of Processing Technology, Inc., a corporate joint venture. The Company
periodically evaluates 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 $9,500,000, of the joint
venture's loan and lease commitments. The conversion is not expected to
occur in the near term.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Cont.)
Liquidity and Capital Resources
- -------------------------------
The Company believes its manufacturing facilities are in compliance with
applicable federal and state environmental regulations. The Company is
not presently aware of any fact or circumstance which would require the
expenditure of material amounts for environmental compliance in the future.
10 of 13
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
The annual meeting of shareholders was held on January 23, 1997. The
matters voted upon at the meeting were the election of three directors
for three year terms and the ratification of independent auditors for the
current fiscal year.
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>
Ralph W. McIntyre 10,196,786 0 69,296
Jimmy Dan Conner 10,198,759 0 67,323
Andrew J. Payton 10,199,331 0 66,751
</TABLE>
The number of votes cast for, against or abstained with respect to the
selection of Coopers and Lybrand L.L.P. as independent auditors were as
follows:
<TABLE>
<CAPTION>
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
<C> <C> <C>
10,254,801 2,563 8,718
</TABLE>
11 of 13
PART II. OTHER INFORMATION (Cont.)
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) The following exhibit is filed as a part of this report:
10.1 -- Amended and Restated Loan Agreement dated as of March 26, 1997,
between the Registrant and PNC Bank, Kentucky, Inc., National
City Bank of Kentucky, NBD Bank, N.A., and SunTrust Bank,
Nashville, N.A.
10.2 -- Steel Technologies Inc. Restated Retirement Savings Plan
10.3 -- Stock Purchase Agreement between Registrant and shareholders of
Atlantic Coil Processing, Inc. effective April 1, 1997.
27 -- Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1997.
12 of 13
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 13, 1997
13 of 13
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------- ----------------------
27 -- Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997 AND CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED MARCH 31, 1997
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-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 6,411
<SECURITIES> 0
<RECEIVABLES> 45,995
<ALLOWANCES> (604)
<INVENTORY> 75,668
<CURRENT-ASSETS> 130,651
<PP&E> 142,003
<DEPRECIATION> (42,422)
<TOTAL-ASSETS> 242,756
<CURRENT-LIABILITIES> 52,938
<BONDS> 75,525
<COMMON> 16,749
0
0
<OTHER-SE> 88,137
<TOTAL-LIABILITY-AND-EQUITY> 242,756
<SALES> 157,829
<TOTAL-REVENUES> 157,829
<CGS> 140,154
<TOTAL-COSTS> 140,154
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 269
<INTEREST-EXPENSE> 2,499
<INCOME-PRETAX> 6,601
<INCOME-TAX> 2,401
<INCOME-CONTINUING> 4,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,200
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is made and
entered into as of March 26, 1997, by and among (i) STEEL TECHNOLO-
GIES 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 OF KENTUCKY, a national banking association with
principal office and place of business in Louisville, Kentucky
("National City"), (c) NBD BANK, N.A., a national banking associa-
tion with principal office and place of business in Detroit,
Michigan ("NBD"), and (d) SUNTRUST BANK, NASHVILLE, N.A., a
national banking association with principal office and place of
business in Nashville, Tennessee ("SunTrust") (each of PNC,
National City, NBD and SunTrust is 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").
PRELIMINARY STATEMENTS
A. Borrower, the Banks and the Agent are parties to
that certain Loan Agreement dated as of October 15, 1994 (the
"Original Loan Agreement"), as amended pursuant to (i) that certain
First Amendment to Loan Agreement dated as of January 17, 1997,
among the Borrower, the Banks and the Agent (the "First Amend-
ment"), (ii) that certain Second Amendment to Loan Agreement dated
as of April 6, 1995, among the Borrower, the Banks and the Agent
(the "Second Amendment"), (iii) that certain Third Amendment to
Loan Agreement dated as of October 14, 1995, among the Borrower,
the Banks and the Agent (the "Third Amendment"), and (iv) that
certain Fourth Amendment to Loan Agreement dated as of October 11,
1996, among the Borrower, the Banks and the Agent (the "Fourth
Amendment"), pursuant to which the Banks established a revolving
credit facility in the current maximum permitted principal amount
of Thirty Million Dollars ($30,000,000) in favor of the Borrower
(the "Revolver") for the purposes set forth in Section 2.5 of the
Original Loan Agreement, and the Line of Credit in the current
maximum permitted principal amount of Twenty-Five Million Dollars
($25,000,000) for the purposes set forth in the Fourth Amendment,
and PNC has established the Swing Line Loan Commitment described in
the Fourth Amendment.
B. The Borrower, the Banks and the Agent now desire to
enter into this Amended and Restated Loan Agreement (referred to
hereinafter as the "Loan Agreement") in order to (i) amend and
restate the Original Loan Agreement by incorporating the changes
effected by the First Amendment, the Second Amendment, the Third
Amendment and the Fourth Amendment, (ii) provide for the consent by
the Banks and the Agent to the acquisition by Borrower of all of
the issued and outstanding capital stock of Atlantic Coil Process-
ing, Inc., a North Carolina corporation ("Atlantic") that upon such
acquisition shall become a new Subsidiary of Borrower, (iii) permit
loans and advances from Borrower to Atlantic in a maximum aggregate
amount at any one time outstanding of $22,000,000, (iv) require
Borrower to cause Atlantic to deliver to the Agent, on or before
ninety (90) days following written notice to Borrower from the
Requisite Banks, as hereinafter defined, the absolute, uncondition-
al and joint and several guaranty of payment by Atlantic in favor
of Agent and the Banks of all of the Obligations, and (v) otherwise
to the effect set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein and for other good
and valuable consideration, the mutuality, receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree
as follows:
SECTION 1
DEFINITIONS
1. Definitions and Cross Reference. The following terms
used in this Loan Agreement shall have the following meanings:
1.1. "Adjusted LIBOR Rate" means, on the particular
Interest Rate Determination Date, the rate determined by dividing
(i) the per annum rate of interest equal to the offered rates for
deposits in Dollars for the applicable Interest Period which appear
on Page 3750 of the TELERATE rate reporting system or other similar
system as of approximately 13:00 A.M., Greenwich Mean Time on the
Interest Rate Determination Date, except as provided below, by (ii)
an amount equal to one minus the stated maximum rate (expressed as
a decimal) of all reserve requirements (including any marginal,
emergency, supplemental, special or other reserves) that is
specified on the first day of the applicable Interest Period by the
Board of Governors of the Federal Reserve System (or any successor
agency) for determining the maximum reserve requirement with re-
spect to eurocurrency funding (currently referred to as "Eurocur-
rency liabilities" in Regulation D of such Board) maintained by a
member bank of such System. It is expressly understood that each
Bank may or may not actually purchase any such time deposits and
obtain such funds and the Adjusted LIBOR Rate will be an estimate
and, for a variety of reasons, including changing market condi-
tions, the actual cost of funds to the Banks (if the Banks elect to
purchase funds in the form of time deposits on such date) might
vary from the Agent's estimate of the Adjusted LIBOR Rate. Each
determination by the Agent of the Adjusted LIBOR Rate shall be
conclusive and binding on the Borrower in the absence of manifest
error on the part of the Agent.
1.2. "Affected Bank" has the meaning assigned to that
term in Sections 2.1B, 2.2G(ii), 2.6C, 2.8A, 2.8B and 2.8C hereof.
1.3. "Affiliate" means, as applied to any Person, (i)
any other Person directly or indirectly controlling, controlled by,
or under common control with, that Person, (ii) any other Person
that, directly or indirectly, owns or controls, whether beneficial-
ly or as a trustee, guardian or other fiduciary, 10% or more of the
stock having ordinary voting power in the election of directors of
such Person, or (iii) each of such Person's directors and officers
appointed by the board of directors of such Person. For the
purposes of this definition, "control" (including with correlative
meanings, the terms "controlling," "controlled by" and "under
common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract
or otherwise.
1.4. "Agent" has the meaning assigned to that term in
the introduction to this Loan Agreement, and includes any successor
Agent under Section 9.13 hereof.
1.5. "And/or" means one or the other or both, or any
one or more or all, of the things or persons or parties in
connection with which the conjunction is used.
1.6. "Applicable Letter of Credit Fee" means each per
annum percentage set forth in the table appearing in Section
2.7F(ii) of this Loan Agreement.
1.7. "Applicable LIBOR Rate Margin" means each per annum
percentage set forth in the table appearing in Section 2.2A(ii) of
this Loan Agreement.
1.8. "Applicable Revolver Commitment Fee" means each per
annum percentage set forth in the table appearing in Section
2.3A(i) of this Loan Agreement.
1.9. "Application and Agreement For Letter of Credit"
means the document substantially in the form of Exhibit C annexed
hereto, as the same may be amended or modified from time to time by
PNC, with appropriate insertions and deletions, with respect to the
proposed issuance or amendment of a Letter of Credit.
1.10. "Assignment Agreement" means an Assignment
Agreement between an assigning Bank and its Eligible Assignee,
substantially in the form of Exhibit E-1 annexed hereto with
respect to the Revolving Loan Commitment, and Exhibit E-2 annexed
hereto, with respect to the Line of Credit Commitment.
1.11. "Atlantic" means Atlantic Coil Processing, Inc.,
a North Carolina corporation.
1.12. "Atlantic Guaranty Agreement" means the absolute,
unconditional and joint and several guaranty of payment by Atlantic
of the Obligations, substantially in the form of Exhibit A hereto.
1.13. "Authorized Officer" means the President, the
Chief Financial Officer and any other officer of the Borrower who,
by the Articles of Incorporation, Bylaws or Resolutions of the
Board of Directors of the Borrower, is authorized to execute and
deliver this Loan Agreement and the other Loan Instruments on
behalf of the Borrower.
1.14. "Bank" and "Banks" have the meanings assigned to
those terms in the introduction to this Loan Agreement and shall
include PNC in its individual capacity.
1.15. "Bankruptcy Code" means Title 11 of the United
States Code entitled "Bankruptcy" as now and hereafter in effect,
or any successor statute.
1.16. "Base Rate" means, at the time of its selection,
the higher of (i) the Prime Rate, or (ii) the Federal Funds Rate
plus one percent (1%); provided, in the event that, and during the
periods that, the Federal Funds Rate cannot be determined by the
Agent under the circumstances specified in Section 2.2 hereof, the
Base Rate shall be the Prime Rate.
1.17. "Base Rate Loans" means Revolving Loans, Swing
Line Loans or Line of Credit Advances made to the Borrower and
bearing interest at rates determined by reference to the Base Rate
as provided in Sections 2.2A and 2.2G hereof.
1.18. "Borrower" has the meaning assigned to that term
in the introduction to this Loan Agreement.
1.19. "Business Day" means (i) for all purposes other
than as covered by clause (ii) below, any day excluding Saturday,
Sunday and any day which is a legal holiday under the laws of the
jurisdiction in which each Bank maintains its office for purposes
of performing its obligations under this Loan Agreement as set
forth on the signature pages of this Loan Agreement or is a day on
which banking institutions located in such jurisdiction are
authorized or required by law or other governmental action to
close, and (ii) with respect to all notices, determinations,
fundings and payments in connection with the Adjusted LIBOR Rate,
any day which is a Business Day described in clause (i) above and
which is also a day for trading by and between banks in dollar
deposits in the London interbank market.
1.20. "Capital Expenditures" means, for any period, the
aggregate of all expenditures (whether in cash or accrued as
liabilities and including that portion of Capital Leases originally
incurred during such period which is capitalized on the balance
sheet of the Borrower) incurred by the Borrower during such period
that, in conformity with GAAP, are included in the balance sheet of
the Borrower.
1.21. "Capital Lease" means, as applied to any Person,
any lease of any property (whether real, personal or mixed) by that
Person as lessee which, in conformity with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that
Person.
1.22. "Change in Control" means (i) the acquisition by
any Person or "group" (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of more than 50% of
the Voting Stock of the Borrower, including any such acquisition by
merger or consolidation, or (ii) the acquisition by any Person or
"group" (as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended) of more than 20% of the Voting Stock of
the Borrower, including any such acquisition by merger or consoli-
dation, and, at any time following an acquisition described in this
clause (ii), the Continuing Directors shall not constitute a
majority of the Board of Directors of the Borrower.
1.23. "Closing Date" means October 15, 1994 or, if
later, the date on which the conditions set forth in Section 3.1
hereof are satisfied.
1.24. "Commitment Fee" or "Commitment Fees" has the
meaning specified in Section 2.3A hereof.
1.25. "Commitment Fee Pro Rata Shares" means, with
respect to each Bank's share of each Commitment Fee paid by the
Borrower, the percentage determined by dividing (i) the average
daily amount of the unused portion of such Bank's Revolving Loan
Commitment during the period for which the Commitment Fee is
payable, by (ii) the aggregate average daily amount of the unused
portions of all of the Banks' Revolving Loan Commitments during the
period for which the Commitment Fee is payable. For purposes of
determining the Banks' respective Commitment Fee Pro Rata Shares
from time to time, the Letter of Credit Usage shall constitute
usage of each Bank's Revolving Loan Commitment in accordance with
its Pro Rata Share.
1.26. "Compliance Certificate" means a certificate sub-
stantially in the form of Exhibit D annexed hereto delivered by the
Borrower to the Agent on behalf of the Banks pursuant to Section
5.3(c) hereof.
1.27. "Confidentiality Agreement" means a Confidenti-
ality Agreement between a potential Eligible Assignee and the
Borrower substantially in the form of Exhibit F annexed hereto.
1.28. "Consolidated Current Assets" means all current
assets of the Borrower and its Consolidated Subsidiaries as deter-
mined on a consolidated basis in accordance with GAAP consistently
applied.
1.29. "Consolidated Current Liabilities" means all
current liabilities of the Borrower and its Consolidated Subsidiar-
ies as determined on a consolidated basis in accordance with GAAP
consistently applied; provided, however, that the aggregate
principal balance of all Revolving Loans outstanding from time to
time under this Loan Agreement shall not constitute a Consolidated
Current Liability notwithstanding the accounting thereof under
GAAP.
1.30. "Consolidated Interest Expense" means, for any
period, total interest expense (including that attributable to
Capital Leases in conformity with GAAP) of the Borrower and its
Consolidated Subsidiaries on a consolidated basis with respect to
all outstanding Indebtedness of the Borrower and its Consolidated
Subsidiaries on a consolidated basis, including, without limita-
tion, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing
and net costs and benefits under interest rate agreements, whether
payable in cash or accrued (including amortization of discount),
all as determined on a consolidated basis in conformity with GAAP.
1.31. "Consolidated Long-Term Debt" means, as at any
date on which the amount thereof shall be determined, the aggregate
unpaid principal of all Indebtedness for borrowed money, the aggre-
gate amount due under all Capital Leases entered into by the Bor-
rower or any of its Consolidated Subsidiaries over the respective
terms of such Capital Leases, and the deferred purchase price of
property, in each case which is not payable within a period of one
year from the date determination of Consolidated Long-Term Debt is
being made, plus any such Indebtedness which is payable within one
year from the date determination of Consolidated Long-Term Debt is
being made but which may be renewed or extended at the option of
the particular obligor thereunder, all as determined on a consoli-
dated basis in accordance with GAAP.
1.32. "Consolidated Net Income" means, for any period,
the net income (or loss) of the Borrower and its Consolidated
Subsidiaries for such period taken as a single accounting period
determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded from Consolidated Net Income
any after-tax gains or losses attributable to the sale of assets
outside the ordinary course of business.
1.33. "Consolidated Rent Expense" means, for any
period, all rent, including, without limitation, all common area
maintenance charges, pass-through operating expenses and other
out-of-pocket operating expenses of the lessor characterized as
additional rent, paid or payable by the Borrower and its Consoli-
dated Subsidiaries during such period under all operating leases to
which the Borrower or any of its Consolidated Subsidiaries is a
party or is subject to or otherwise bound.
1.34. "Consolidated Subsidiaries" means at any particu-
lar time, Wabash, the Mexican Subsidiary, and from and after the
acquisition by Borrower of more than 50% of outstanding voting
stock of Atlantic, if applicable, Atlantic, together with all other
Subsidiaries of the Borrower whose accounts are or should be
consolidated with those of the Borrower in accordance with GAAP.
The Joint Ventures shall not be deemed to be Consolidated Subsid-
iaries for purposes of this Loan Agreement.
1.35. "Consolidated Tangible Net Worth" means, as at
any date on which the amount thereof shall be determined, (i) the
consolidated stockholders equity of the Borrower and its Consoli-
dated Subsidiaries, less (ii) the sum of the aggregate amount of
all intangible assets of the Borrower and its Consolidated Subsidi-
aries, including, without limitation, lease acquisition costs,
patents, patent rights, trademarks, goodwill, rights to refund and
indemnification and any other assets which would be treated as an
intangible asset under GAAP, plus the amount of any write-up in the
book value of any assets of the Borrower and its Consolidated
Subsidiaries in excess of the cost thereof to the Borrower and its
Consolidated Subsidiaries, in each case as determined by reference
to the most recent consolidated balance sheet of the Borrower, as
determined on a consolidated basis in accordance with GAAP.
1.36. "Consolidated Total Capitalization" means, as at
any date on which the amount thereof shall be determined, the sum
of the Consolidated Total Debt plus the stockholders' equity of the
Borrower as at such date, in each case as determined on a consoli-
dated basis in accordance with GAAP.
1.37. "Consolidated Total Debt" means, as at any date
on which the amount thereof shall be determined, (i) all Indebted-
ness for borrowed money of the Borrower and its Consolidated
Subsidiaries on a consolidated basis as at such date, including,
without limitation, all unpaid Obligations, all amounts due under
all Capital Leases entered into or assumed by the Borrower or any
of its Consolidated Subsidiaries and all Contingent Obligations of
the Borrower or any of its Consolidated Subsidiaries, all as
determined on a consolidated basis in accordance with GAAP.
1.38. "Contingent Obligation" means, as applied to any
Person, any direct or indirect liability, contingent or otherwise,
of that Person (i) with respect to any indebtedness, lease,
dividend, letter of credit or other obligation of another if the
primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of
such obligation of another that such obligation of another will be
paid or discharged, or that any agreements relating thereto will be
complied with, or that the holder of such obligation will be pro-
tected (in whole or in part) against loss in respect thereof, or
(ii) under any letter of credit issued for the account of or for
which that Person is otherwise liable for reimbursement thereof, or
(iii) under interest rate swap agreements, interest rate collar
agreements or other similar arrangements providing interest rate
protection, in each case as marked to market. Contingent Obliga-
tions shall include, without limitation, (a) the direct or indirect
guaranty, endorsement (otherwise than for collection or deposit in
the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of
another, and (b) any liability of such Person for the obligations
of another through any agreement (contingent or otherwise) (1) to
purchase, repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge
of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), (2) to maintain the
solvency of any balance sheet item, level of income or financial
condition of another, or (3) to make take-or-pay or similar pay-
ments if required regardless of non-performance by any other party
or parties to an agreement, if the case of any agreement described
under subclauses (1), (2) or (3) of this sentence the primary pur-
pose or intent thereof is as described in clause (i) of the preced-
ing sentence. The amount of any Contingent Obligation, as at any
time of determination, shall be equal to the amount of the obliga-
tion so guaranteed or otherwise supported at such time of determi-
nation which amount shall be deemed to be the amount of such obli-
gation guarantied, as reasonably estimated by the Borrower, if such
amount cannot be specifically determined at the time of determi-
nations. The term "Contingent Obligations" specifically includes,
with respect to the Borrower, all obligations of the Borrower to
reimburse PNC for all drafts honored by PNC under the existing
letters of credit issued by PNC for the account of the Borrower.
1.39. "Continuing Director" means any member of the
Board of Directors of the Borrower who is a member of such Board on
the Closing Date and any Person who is a member of such Board and
whose nomination as a director was approved by a majority of the
Continuing Directors then on the Board of Directors of the
Borrower.
1.40. "Covered Tax" means any Tax that is not an
Excluded Tax.
1.41. "Date of Determination" means, for purposes of
determining the applicable Pricing Level on any Pricing Level
Calculation Date, the forty-fifth (45th) day following the last day
of the most recent Fiscal Quarter of the Borrower.
1.42. "Default Rate" means, upon the occurrence and
during the continuation of the Events of Default referred to in
Sections 7(a) and 7(b) of this Loan Agreement, as well as upon the
acceleration of the maturity of the Obligations due to the
occurrence of any other Event of Default: (i) with respect to Line
of Credit Advances, Revolving Loans and Swing Line Loans, a
variable rate per annum equal to the sum of (a) two percent (2%)
per annum, plus (b) the Base Rate; and (ii) with respect to Letters
of Credit outstanding on the date of the occurrence of such Event
of Default or thereafter issued by PNC during the continuation of
such Event of Default (it being understood that PNC has no
obligation to issue any Letter of Credit upon the occurrence and
during the continuation of any Event of Default), a Letter of
Credit Fee equal to the sum of (a) two percent (2%) per annum, plus
(b) the Letter of Credit Fee Percentage.
1.43. "Dollars" means the lawful money of the United
States of America.
1.44. "Effective Date" means the effective date of this
Loan Agreement as defined in and subject to the conditions
described in Section 3.1 hereof.
1.45. "Eligible Assignees" means (i) each Bank and each
Affiliate of each Bank, (ii) any commercial bank, insurance com-
pany, savings bank or other financial institution to which a Bank
desires to sell all or a permitted portion of its Revolving Loans
and Revolving Loan Commitment pursuant to Section 10.A. hereof, and
(iii) any commercial bank, insurance company, savings bank or other
financial institution selected by the Borrower and to which the
Borrower directs any Bank to sell its Revolving Loans and Revolving
Loan Commitment pursuant to Section 10.A hereof.
1.46. "Eligible Investments" means (i) callable direct,
general obligations of the United States of America, or any obli-
gations unconditionally guaranteed as to the timely payment of
principal and interest by the full faith and credit of the United
States of America, (ii) bonds, notes or debentures issued by the
Federal Home Loan Banks, the Export-Import Banks of the United
States of America, the Federal National Mortgage Association, the
Government National Mortgage Association, or any agency or instru-
mentality of the government of the United States of America which
shall be established for the purpose of acquiring the obligations
of any of the foregoing, (iii) obligations of a deposit-taking
institution whose deposits are insured by the bank insurance fund
maintained by the Federal Deposit Insurance Corporation, provided
the principal plus interest to accrue over the term of the deposit
is fully insured by the Bank Insurance Fund, (iv) investment grade
securities with a maturity of one year or less, rated BBB or better
by Standard and Poor's Corporation or Baa or better by Moody's In-
vestor Services, Inc., and (v) such other investments as shall be
reasonably acceptable to the Agent.
1.47. "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any
successor statute.
1.48. "Events of Default" means the occurrence or
happening of any of the matters set forth in Section 7 hereof.
1.49. "Excluded Tax" means any of the following taxes,
levies, imposts, duties, deductions, withholdings or charges, and
all liabilities with respect thereto: (i) Taxes imposed on the net
income of a Bank, the Agent or a Tax Transferee (including without
limitation branch profits taxes, minimum taxes and taxes computed
under alternative methods, at least one of which is based on net
income (collectively referred to as net income taxes") by (A) the
United States of America, (B) the jurisdiction under the laws of
which such Bank, the Agent or Tax Transferee is organized or any
political subdivision thereof, or (C) the jurisdiction of such
Bank's, Tax Transferee's or the Agent's applicable lending office
or any political subdivision thereof, or (D) any jurisdiction in
which the Bank, the Agent or Tax Transferee is doing business, (ii)
any Taxes to the extent that they are in effect and would apply to
a payment to such Bank or the Agent, as applicable, as of the
Closing Date, or as of the date such Person becomes a Bank, in the
case of any Eligible Assignee pursuant to Section 10 hereof, (iii)
any Taxes that are in eft and would apply to a payment to a Tax
Transferee as of the date of acquisition of the Revolving Loans by
such Tax Transferee or the date of the change of lending office of
such Tax Transferee, as the case may be (provided however that a
Person shall not be considered a Tax Transferee for purposes of
this clause (iii) as a result of a change of its lending office or
the taking of any other steps pursuant to Section 2.9 hereof), (iv)
any Taxes to the extent of any credit or other Tax benefit avail-
able to such Bank, Tax Transferee or the Agent, as applicable, as a
result thereof, or (v) any Taxes that would not have been imposed
but for the failure by the Agent or such Bank or Tax Transferee, as
applicable, to provide and keep current any certification or other
documentation required to qualify for an exemption from or reduced
rate of any Tax.
1.50. "Federal Funds Rate" means the interest rate per
annum equal to the Weighted Average of the average national federal
funds rate which shall be computed on a monthly basis using the
daily average national federal funds rate as released each Business
Day by the Federal Reserve Bank of New York, provided that if the
Federal Reserve Bank of New York ceases releasing such information
such rate shall be obtained by the Agent from another generally
recognized source. For the purposes of this definition, the term
"Weighted Average" shall mean the quotient of (A) the sum of the
products for each day of the relevant calendar month of (1) each
Base Rate Loan multiplied by (2) the average national federal funds
rate for such day divided by (B) the aggregate amounts of all Base
Rate Loans for each day of such calendar month.
1.51. "Fiscal Quarter" means a fiscal quarter of the
Borrower. The Fiscal Quarters of the Borrower currently end on the
last day of December, March, June and September.
1.52. "Fiscal Year" means a fiscal year of the
Borrower. The Fiscal Year of the Borrower currently ends on
September 30 of each calendar year.
1.53. "Funding Date" means the date of the funding of a
Revolving Loan, a Swing Line Loan or a Line of Credit Advance.
1.54. "GAAP" means generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by
such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the
circumstances as of the date of determination, as applied in
accordance with the modifications contained in Section 5.3 hereof.
1.55. "Guaranty Agreements" mean, collectively, the
Wabash Guaranty Agreement and, upon the execution and delivery
thereof by Atlantic, the Atlantic Guaranty Agreement.
1.56. "Indebtedness" means, with respect to the
Borrower and each of its Consolidated Subsidiaries, (i) all
indebtedness for borrowed money, including, without limitation, all
reimbursement obligations of such Person in respect of all letters
of credit issued for the account of such Person, (ii) that portion
of obligations with respect to Capital Leases which is properly
classified as a liability on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for
borrowed money, (iv) any obligation owed for all or any part of the
deferred purchase price of property or services which purchase
price is (y) due more than six months from the date of incurrence
of the obligation in respect thereof, or (z) evidenced by a note or
similar written instrument, but excluding trade payables incurred
in the ordinary course of business, and (v) all indebtedness
secured by any Lien on any property or asset owned by such Person
regardless of whether the indebtedness secured thereby shall have
been assumed by such Person or is non-recourse to the credit of
such Person but only to the extent of the fair market value of any
such property or assets.
1.57. "Interest Payment Date" means (i) with respect to
each Base Rate Loan, the last day of each month during which such
Base Rate Loan is outstanding in whole or in part, and (ii) with
respect to each LIBOR Rate Loan, the last day of each Interest
Period applicable to such LIBOR Rate Loan; provided that in the
case of each Interest Period of six months, "Interest Payment Date"
shall also include each three month anniversary of the commencement
of that Interest Period.
1.58. "Interest Period" means any interest period
applicable to a LIBOR Rate Loan as determined pursuant to Section
2.2B hereof.
1.59. "Interest Rate Determination Date" means each
date on which the Agent shall quote the LIBOR Rate to the Borrower
for purposes of determining the LIBOR Rate in respect of an
Interest Period. The Interest Rate Determination Date shall be the
second Business Day prior to the first day of the related Interest
Period.
1.60. "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended to the date hereof and from time
to time hereafter.
1.61. "Joint Ventures" means, collectively, (i) Mi-Tech
Steel, Inc., a joint venture formed by the Borrower and Mitsui
Steel Development Company under the laws of the State of Delaware,
(ii) Processing Technology, Inc., a joint venture formed by the
Borrower, LTV Corporation and Mitsui Steel Development Company
under the laws of the State of Delaware, and (iii) all other part-
nerships or joint ventures to which the Borrower is now or in the
future a party and in which the Borrower has contributed capital
and/or to which the Borrower has made loan(s).
1.62. "Letters of Credit" means any letter of credit or
similar instrument issued by PNC for the account of the Borrower
pursuant to this Loan Agreement for the purpose of securing the
performance, payment, deposit or surety obligations of the Borrower
pursuant to purchase orders, contracts and/or operating leases or
Capital Leases entered into or proposed to be entered into or
assumed or proposed to be assumed by the Borrower in the ordinary
course of such business. The term "Letters of Credit" as used
herein specifically excludes the outstanding letters of credit
issued by PNC for the account of the Borrower and which are
described on Schedule 1.62 annexed hereto.
1.63. "Letter of Credit Fee" has the meaning assigned
to that term in Section 2.7F(ii) hereof.
1.64. "Letter of Credit Fee Percentage" means the
Applicable LIBOR Rate Margin in effect during a particular Pricing
Period in which a Letter of Credit is issued by PNC for the account
of the Borrower.
1.65. "Letter of Credit Usage" means, as at any date of
determination thereof, the sum of (i) the maximum aggregate amount
which is or at any time thereafter may become available for drawing
under all Letters of Credit then outstanding, plus (ii) the aggre-
gate unpaid amount of all drawings under all Letters of Credit
honored by PNC.
1.66. "Leverage Ratio" means, as of each Date of
Determination, (a) the Borrower's Consolidated Total Debt as of the
particular Date of Determination, divided by (b) the Borrower's
Consolidated Total Capitalization as of the particular Date of
Determination, in each case determined for the Borrower on a
consolidated basis in accordance with GAAP.
1.67. "LIBOR Rate" means the Adjusted LIBOR Rate plus
the Applicable LIBOR Rate Margin in effect for the particular
Interest Period.
1.68. "LIBOR Rate Loans" means Revolving Loans and Line
of Credit Advances made to the Borrower bearing interest at the
LIBOR Rate.
1.69. "Lien" means any lien, mortgage, pledge, security
interest, charge or encumbrance of any kind (including any condi-
tional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
1.70. "Line of Credit" means the revolving line of
credit in the original principal amount of Twenty-Five Million
Dollars ($25,000,000.00) established by the Banks in favor of the
Borrower pursuant to this Loan Agreement.
1.71. "Line of Credit Advances" means the advances
under the Line of Credit made from time to time by the Banks to the
Borrower pursuant to, and subject to the terms and conditions set
forth in, this Loan Agreement.
1.72. "Line of Credit Commitment" means the commitment
of each Bank to maintain or make Line of Credit Advances as set
forth in this Loan Agreement.
1.73. "Line of Credit Commitment Fee" or "Line of
Credit Commitment Fees" has the meaning specified in Section
2.3A(ii) of this Loan Agreement.
1.74. "Line of Credit Commitment Fee Pro Rata Shares"
means, with respect to each Bank's share of each Line of Credit
Commitment Fee paid by the Borrower, the percentage determined by
dividing (i) the average daily amount of the unused portion of such
Bank's Line of Credit Commitment during the period for which the
Line of Credit Commitment Fee is payable, by (ii) the aggregate
average daily amount of the unused portions of all of the Banks'
Line of Credit Commitments during the period for which the Line of
Credit Commitment Fee is payable.
1.75. "Line of Credit Commitment Termination Date"
means the Line of Credit Commitment Termination Date then in
effect, which shall originally be October 10, 1997, subject to
extension thereof pursuant to Section 2.1A.-2 of this Loan
Agreement or, if sooner, (i) the date as of which the Obligations
shall have become immediately due and payable pursuant to Section 7
of this Loan Agreement, or (ii) the date on which all of the
Obligations are paid in full and all Line of Credit Commitments are
reduced to zero.
1.76. "Line of Credit Notes" means, collectively, (i)
that certain Line of Credit Promissory Note dated October 11, 1996,
made by the Borrower, payable to the order of PNC, and in the face
principal amount of Nine Million Three Hundred Seventy-Five
Thousand Dollars ($9,375,000.00) (together with all amendments,
modifications, renewals, extensions, restatements and replacements
thereof, the "PNC Line of Credit Note"), (ii) that certain Line of
Credit Promissory Note dated October 11, 1996, made by the
Borrower, payable to the order of NBD, and in the face principal
amount of Six Million Two Hundred Fifty Thousand Dollars
($6,250,000.00) (together with all amendments, modifications,
renewals, extensions, restatements and replacements thereof, the
"NBD Line of Credit Note"), (iii) that certain Line of Credit
Promissory Note dated October 11, 1996, made by the Borrower,
payable to the order of SunTrust, and in the face principal amount
of Six Million Two Hundred Fifty Thousand Dollars ($6,250,000.00)
(together with all amendments, modifications, renewals, extensions,
restatements and replacements thereof, the "SunTrust Line of Credit
Note"), and (iv) that certain Line of Credit Promissory Note dated
October 11, 1996, made by the Borrower, payable to the order of
National City, and in the face principal amount of Three Million
One Hundred Twenty-Five Thousand Dollars ($3,125,000.00) (together
with all amendments, modifications, renewals, extensions, restate-
ments and replacements thereof, the "National City Line of Credit
Note").
1.77. "Loan Agreement" means this Amended and Restated
Loan Agreement dated as of March 26, 1997, as it may be amended,
supplemented or otherwise modified from time to time.
1.78. "Loan Instruments" means this Loan Agreement, the
Revolving Notes, the Line of Credit Notes, the Guaranty Agreement,
each Application and Agreement for Letter of Credit and all other
applications, reimbursement agreements and other documents or
certificates executed in favor of PNC relating to the Letters of
Credit, each Request for Revolving Loan, each Request for Line of
Credit Advance, each Request for Swing Line Loan, each Compliance
Certificate and all other agreements, documents and instruments
delivered by the Borrower pursuant to this Loan Agreement.
1.79. "Margin Stock" has the meaning assigned to that
term in Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
1.80. "Material Adverse Effect" means a material
adverse effect upon the business, operations, properties, assets,
condition or prospects (financial or otherwise) of the Borrower and
its Consolidated Subsidiaries on a consolidated basis.
1.81. "Mexican Subsidiary" means Transformadora y
Comercializadora de Metales S.A. de C.V., a corporation organized
and existing under the laws of Mexico.
1.82. "Note Purchase Agreement" means that certain Note
Agreement dated as of March 1, 1995, between the Borrower and the
Note Purchasers pursuant to which Borrower issued and severally
sold to the Note Purchasers the Senior Notes.
1.83. "Note Purchasers" means the institutional
investors that are parties to the Note Purchase Agreement with
Borrower.
1.84. "Note Purchasers Guaranty Agreements" means
guaranty agreements by Wabash and, if applicable, Atlantic, respec-
tively, identical in all respects to the Wabash Guaranty Agreement,
except given in favor of the Note Purchasers to guarantee the
obligations of the Borrower under the Note Purchase Agreement.
1.85. "Note Purchasers Intercreditor Agreement" means
the Intercreditor Agreement dated as of March 1, 1995 entered into
among Agent, each of the Banks and each of the Note Purchasers.
1.86. "Notice of Conversion/Continuation" means a
notice in the form of Exhibit G annexed hereto with respect to a
proposed conversion or continuation of a Revolving Loan or a Line
of Credit Advance.
1.87. "Obligations" means: (i) the entire unpaid
principal balance of and all interest accrued on the Revolving
Notes, (ii) the entire unpaid principal balance of and all interest
accrued on the Line of Credit Notes, and (iii) all other liabili-
ties owing by the Borrower to the Banks arising under or pursuant
to this Loan Agreement or the other Loan Instruments of any kind or
nature, present or future, and whether or not evidenced by any
note, guaranty or other instrument. The term "Obligations"
includes, without limitation, all interest, charges, expenses,
reasonable attorneys' fees and any other sums chargeable to the
Borrower under this Loan Agreement and/or any other Loan Instru-
ment.
1.88. "Offered Rate" means the interest rate quoted
from time to time by PNC to the Borrower as applicable to Swing
Line Loans. The Offered Rate shall constitute, on each Funding
Date of a Swing Line Loan, the offer quoted by an officer of PNC to
the Borrower on each such Funding Date of a Swing Line Loan.
1.89. "Officer's Certificate" means a certificate
executed on behalf of the Borrower by an Authorized Officer
pursuant to this Loan Agreement.
1.90. "Person" means any individual, sole proprietor-
ship, partnership, joint venture, trust, unincorporated organiza-
tion, association, corporation, other entity or group, institution,
party or government, whether federal, state, county, city,
municipal or other, or agency or division thereof.
1.91. "Potential Event of Default" means the occurrence
of any event or condition which, with the passage of time or the
giving of notice, or both, would become an Event of Default.
1.92. "Pricing Level" means, for any Pricing Period,
Pricing Level I, Pricing Level II or Pricing Level III, as may be
in effect for such Pricing Period; provided that the Default Rate
shall be in effect upon the occurrence and during the continuation
of any Event of Default.
1.93. "Pricing Level I" means the Pricing Level that
will be in effect for the applicable Pricing Period if, as of the
relevant Date of Determination, the Leverage Ratio of the Borrower
is equal to or less than .30 to 1.0.
1.94. "Pricing Level II" means the Pricing Level that
will be in effect for the applicable Pricing Period if, as of the
relevant Date of Determination, the Leverage Ratio of the Borrower
is greater than .30 to 1.0 but is less than .40 to 1.0.
1.95. "Pricing Level III" means the Pricing Level that
will be in effect for the applicable Pricing Period if, as of the
relevant Date of Determination, the Leverage Ratio of the Borrower
is equal to or greater than .40 to 1.0.
1.96. Pricing Level Calculation Date" means the date of
delivery to the Banks of the Compliance Certificate for the
preceding Fiscal Quarter of the Borrower pursuant to Section 5.3(c)
of this Loan Agreement.
1.97. "Pricing Period" means, with respect to any Date
of Determination, the period commencing on such Date of Determina-
tion and ending on the day immediately preceding the next Date of
Determination.
1.98. "Prime Rate" means at any time the interest rate
per annum most recently designated or announced by PNC as its
"Prime Rate" in effect at its principal office in Louisville,
Kentucky, it being expressly understood and agreed to by the
Borrower that the "Prime Rate" is the rate of interest designated
by PNC as its "Prime Rate" and such term does not necessarily mean
or imply that it is the lowest or best rate then available from the
Bank.
1.99. "Pro Rata Share" means, (i) with respect to each
Revolving Loan Commitment of each Bank, the percentage set forth
opposite that Bank's name on Schedule 2.1 annexed hereto, and (ii)
with respect to each Line of Credit Commitment of each Bank, the
percentage set forth opposite that Bank's name on Schedule 2.1
annexed hereto; provided that Schedule 2.1 shall be amended and
each Bank's Pro Rata Share shall be adjusted from time to time to
give effect to the addition or removal of any Bank as provided
herein or by assignment pursuant to Section 10 hereof.
1.100. "Purchase Money Indebtedness" means all
Indebtedness of the Borrower which is secured by a purchase money
security interest in the assets acquired by the Borrower with the
proceeds of such Indebtedness, but only to the extent such security
interest encumbers solely the assets acquired by the Borrower with
the proceeds of such Indebtedness and only secures the payment of
the Indebtedness incurred by the Borrower to acquire such assets.
1.101. "Regulation D" means Regulation D of the Board
of Governors of the Federal Reserve System as in effect from time
to time.
1.102. "Request for Line of Credit Advance" means the
request in the form of Exhibit I hereto with respect to a proposed
Line of Credit Advance to be delivered by the Borrower to the Agent
pursuant to Section 2.1C of this Loan Agreement.
1.103. "Request for Revolving Loan" means the Request
in the form of Exhibit B annexed hereto with respect to a proposed
Revolving Loan to be delivered by the Borrower to the Agent on
behalf of the Banks pursuant to Sections 2.1C and 3.3A hereof.
1.104. "Request for Swing Line Loan" means the request
in the form of Exhibit J hereto with respect to a proposed Swing
Line Loan to be delivered by the Borrower to PNC pursuant to
Section 2.11B of this Loan Agreement.
1.105. "Requisite Banks" means Banks holding at least
60% of the sum of the Total Utilization of Revolving Loan Commit-
ments and Total Utilization of Line of Credit Commitments as of the
date of determination of the Requisite Banks; provided, if there
are no Revolving Loans, Line of Credit Advances or Letters of
Credit outstanding as of the date of determination of the Requisite
Banks, the term "Requisite Banks" shall mean Banks holding at least
60% of the sum of the Revolving Loan Commitments and Line of Credit
Commitments as of the date of determination of the Requisite Banks.
It is expressly understood that the Total Utilization of Revolving
Loan Commitments for purposes of determination of the Requisite
Banks includes each Bank's obligation to make Revolving Loans in an
amount equal to its Pro Rata Share of all drawings under Letters of
Credit issued by PNC pursuant to this Loan Agreement.
1.106. "Restricted Junior Payment" means (i) any
dividend or other distribution, direct or indirect, on account of
any shares of any class of stock of the Borrower now or hereafter
outstanding, other than any dividend payable solely in shares of
capital stock or in options, warrants or other rights to purchase
capital stock, (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of stock of the Borrower, or
of any warrants, options or other rights to acquire any such shares
of stock, now or hereafter outstanding, or (iii) any payment or
prepayment of principal of, premium, if any, or interest on,
redemption, purchase, retirement, defeasance, sinking fund or
similar payment with respect to, any Subordinated Indebtedness.
1.107. "Revolver" means the revolving credit facility
established by the Banks in favor of the Borrower in the original
principal amount of Thirty Million Dollars ($30,000,000.00) pur-
suant to this Loan Agreement, pursuant to which the Borrower may
obtain Revolving Loans and Letters of Credit during the term of the
Revolver upon the terms and conditions set forth in this Loan
Agreement. All references to the "aggregate principal balance of
the Revolving Loans outstanding" or similar phrases in this Loan
Agreement 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 this loan Agree-
ment, and (ii) the then existing Letter of Credit Usage.
1.108. "Revolving Loan Commitment" or "Revolving Loan
Commitments" means (i) the commitment of each Bank to maintain or
make Revolving Loans and to make and/or participate in Letters of
Credit as set forth in Sections 2.1 and 2.7 hereof, and (ii) the
commitment of PNC to issue Letters of Credit as set forth in Sec-
tion 2.7 hereof.
1.109. "Revolving Loan Commitment Termination Date"
means the Revolving Loan Commitment Termination Date then in
effect, which currently shall be October 11, 1999, subject to
extension thereof pursuant to Section 2.1B hereof, or, if sooner,
(i) the date as of which the Obligations shall have become
immediately due and payable pursuant to Section 7 hereof, or (ii)
the date on which all of the Obligations are paid in full (includ-
ing, without limitation, the repayment, expiration, termination or
cash collateralization of Letters of Credit pursuant to this Loan
Agreement) and all Revolving Loan Commitments are reduced to zero.
1.110. "Revolving Loans" means the Revolving Loans
which the Banks have agreed to maintain or make pursuant to Section
2.1 hereof.
1.111. "Revolving Note" means, collectively, (i) that
certain Amended and Restated Revolving Promissory Note dated
October 11, 1996, made by the Borrower, payable to the order of
PNC, and in the face principal amount of Eleven Million Two Hundred
Fifty Thousand Dollars ($11,250,000.00), together with all
amendments, modifications, renewals, extensions, restatements and
replacements thereof, (ii) that certain Amended and Restated
Revolving Promissory Note dated October 11, 1996, made by the
Borrower, payable to the order of NBD, and in the face principal
amount of Seven Million Five Hundred Thousand Dollars
($7,500,000.00), together with all amendments, modifications,
renewals, extensions, restatements and replacements thereof, (iii)
that certain Amended and Restated Revolving Promissory Note dated
October 11, 1996, made by the Borrower, payable to the order of
SunTrust, and in the face principal amount of Seven Million Five
Hundred Thousand Dollars ($7,500,000.00), together with all
amendments, modifications, renewals, extensions, restatements and
replacements thereof, and (iv) that certain Amended and Restated
Revolving Promissory Note dated October 11, 1996, made by the
Borrower, payable to the order of National City, and in the face
principal amount of Three Million Seven Hundred Fifty Thousand
Dollars ($3,750,000.00), together with all amendments, modifica-
tions, renewals, extensions, restatements and replacements thereof.
1.112. "Senior Notes" means Borrower's $40,000,000
8.52% Senior Notes due March 1, 2005 that Borrower issued and
severally sold to the Note Purchasers pursuant to the Note Purchase
Agreement.
1.113. "Subordinated Indebtedness" means any Indebted-
ness of the Borrower now or hereafter owing to any Person and which
has been subordinated to the prior payment of the Obligations in a
manner satisfactory to the Banks.
1.114. "Subsidiary" means, with respect to the
Borrower, (i) any corporation of which more than 50% of the
outstanding voting stock is at the time owned by the Borrower or by
one or more of its Subsidiaries, and (ii) any Person controlled by
the Borrower or by one or more of its Subsidiaries, whether by
virtue of voting interest, other beneficial interest or by voting
agreement, proxy or otherwise. The Joint Ventures shall not be
deemed to be Subsidiaries for purposes of this Loan Agreement.
1.115. "Swing Line Loan Commitment" means the
commitment of PNC to maintain or make Swing Line Loans as set forth
in Section 2.11A of this Loan Agreement.
1.116. "Swing Line Loan Commitment Termination Date"
means the Swing Line Loan Commitment Termination Date then in
effect, which shall originally be October 10, 1997, subject to
extension thereof pursuant to Section 2.11C of this Loan Agreement,
or if sooner (i) the date as of which the Obligations shall have
become immediately due and payable pursuant to Section 7 of this
Loan Agreement, or (ii) the date on which all of the Obligations
are paid in full (including, without limitation, the repayment,
expiration, termination or cash collateralization of Letters of
Credit pursuant to this Loan Agreement) and the Swing Line Loan
Commitment is reduced to zero.
1.117. "Swing Line Loans" means the Swing Line Loans
which PNC has agreed to maintain or make pursuant to Section 2.11A
of this Loan Agreement.
1.118. "Swing Line Note" means that certain Swing Line
Loan Promissory Note dated October 11, 1996, made by Borrower,
payable to the order of PNC, and in the face principal amount of
$5,000,000, together with all amendments, modifications, renewals,
extensions, restatements and replacements thereof.
1.119. "Tax" or "Taxes" means any present or future
tax, levy, impost, duty, charge, governmental fee, deduction or
withholding of any nature and whatever called, by whomsoever, on
whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the overall net income" of a Person
shall be construed as a reference to a tax imposed by the jurisdic-
tion in which that Person's principal office (and/or, in the case
of a Bank, its lending office) is located on all or part of the net
income, profits or gains of that Person (whether worldwide, or only
insofar as such income, profits or gains are considered to arise in
or to relate to a particular jurisdiction, or otherwise).
1.120. "Tax Transferee" means any Person who acquires
any interest in the Revolving Loans (whether or not by operation of
law) or in the office to which a Bank or the Agent has transferred
its Revolving Loans for purposes of determining where the Revolving
Loans are made, accounted for or booked.
1.121. "Total Utilization of Revolving Loan Commit-
ments" means, as at any date of determination thereof, the sum of
(i) the aggregate principal amount of all outstanding Revolving
Loans, and (ii) the Letter of Credit Usage.
1.122. "Total Utilization of Line of Credit Commit-
ments" means, as at any day of determination thereof, the sum of
the aggregate principal amount of all outstanding Line of Credit
Advances.
1.123. "Voting Stock" means the shares of capital stock
or other securities of the Borrower entitled to vote generally in
the election of the directors of the Borrower.
1.124. "Wabash" means Wabash Steel Corporation, an
Indiana corporation.
1.125. "Wabash Guaranty Agreement" means that certain
Amended and Restated Guaranty Agreement required to be delivered by
Wabash in favor of Agent for the benefit of the Bank in satisfac-
tion of one of the conditions precedent to the Effective Date under
Section 3.1 and, if applicable, any and all amendments, modifica-
tions, renewals, extensions, restatements and replacements thereof
after the Effective Date, and which supersedes, replaces, amends
and restates the Guaranty Agreement dated as of March 1, 1995,
executed and delivered by Wabash in favor of the Agent for the
benefit of the Banks, as supplemented by (i) that certain Ratifica-
tion and Reaffirmation Agreement dated as of October 15, 1995,
executed and delivered by Wabash in favor of the Agent for the
benefit of the Banks, and (ii) that certain Second Ratification and
Reaffirmation Agreement dated as of October 11, 1996, executed and
delivered by Wabash in favor of the Agent for the benefit of the
Banks.
1.126. Accounting Terms. For purposes of this Loan
Agreement, all accounting terms not otherwise defined herein shall
have the meanings assigned to them in conformity with GAAP and all
financial statements and certificates and reports as to financial
matters required to be delivered to the Banks hereunder shall
(unless otherwise disclosed to the Banks in writing at the time of
delivery thereof in the manner described in Section 5.3(b) hereof)
be prepared in accordance with GAAP applied on a basis consistent
with GAAP.
1.127. Other Definitional Provisions. Any reference in
this Loan Agreement (i) to a Section, a Schedule or an Exhibit is a
reference to a section hereof, a schedule hereto or an exhibit
hereto, respectively; and (ii) to a subsection or a clause is,
unless otherwise stated, a reference to a subsection or a clause of
the Section or subsection in which the reference appears. In this
Loan Agreement the singular includes the plural and the plural the
singular; "hereof," "herein," "thereto," "hereunder" and the like
mean and refer to this Loan Agreement as a whole and not merely to
the specific section, paragraph or clause in which the respective
word appears; words importing any gender include the other genders;
references to statutes are to be construed as including all statu-
tory provisions consolidating, amending or replacing the statute
referred to; references to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible
visible form; the words "including," "includes" and "include" shall
be deemed to be followed by the words "without limitation"; refer-
ences to agreements and other contractual instruments shall be
deemed to include all subsequent amendments, supplements, assign-
ments and other modifications thereto, but only to the extent such
modifications are not prohibited by the terms of this Loan Agree-
ment, and references to Persons include their respective permitted
successors and assigns or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons.
SECTION 2
REVOLVER; LINE OF CREDIT AND SWING LINE LOANS
2. Revolver. Subject to the terms and conditions of this
Loan Agreement, the Banks hereby establish the Revolver in favor of
the Borrower in the principal amount of Thirty Million Dollars
($30,000,000.00). Pursuant to the Revolver, the Borrower may
obtain Revolving Loans pursuant to, and subject to the terms and
conditions set forth in, this Loan Agreement for the purposes set
forth in Section 2.5 hereof. The Revolver is subject to the
following terms and conditions:
2.1. Revolving Loan Commitments; Revolving Loans; Line
of Credit Commitment; Line of Credit Advances.
2.1A. Revolving Loan Commitments. Each Bank severally
agrees, subject to the limitations set forth below with respect to
the maximum amount of Revolving Loans permitted to be outstanding
from time to time, to lend to the Borrower from time to time during
the period from the Closing Date to but excluding the Revolving
Loan Commitment Termination Date an aggregate amount not exceeding
its Pro Rata Share of the aggregate Revolving Loan Commitments.
The original amount of each Bank's Revolving Loan Commitment is set
forth opposite its name on Schedule 2.1 annexed hereto and the
aggregate original amount of the Revolving Loan Commitments is
Thirty Million Dollars ($30,000,000.00); provided that the amount
of the Revolving Loan Commitments shall be reduced from time to
time by the amount of any reductions thereto made pursuant to
Section 2.4C hereof (it being understood that all references to the
Revolving Loan Commitments of the Banks set forth in this Loan
Agreement shall mean the initial Revolving Loan Commitments of the
Banks set forth on Schedule 2.1 annexed hereto as reduced by
voluntary reductions of the Revolving Loan Commitments effected by
the Borrower pursuant to Section 2.4C hereof). Each Bank's
Revolving Loan Commitment shall expire on the Revolving Loan
Commitment Termination Date and all Revolving Loans and all other
Obligations owed hereunder shall be paid in full no later than that
date. Amounts borrowed under this Section 2.1A may be repaid and
reborrowed to but excluding the Revolving Loan Commitment Termina-
tion Date, subject to the provisions of Section 2.4C hereof.
Anything contained in this Loan Agreement to the
contrary notwithstanding, the Revolving Loans and the Revolving
Loan Commitments shall be subject to the following limitations (and
the Borrower may be obligated to prepay Revolving Loans outstanding
by virtue of such limitations as required under Sections 2.4A(ii)
hereof):
(1) The amount otherwise available for borrowing under the
Revolving Loan Commitments as of the time of determination thereof
(other than to reimburse PNC for the amount of any drawings under
any Letters of Credit honored by PNC and not theretofore reimbursed
by the Borrower) shall be reduced by an amount equal to the Letter
of Credit Usage as of such time of determination; and
(2) The Total Utilization of Revolving Loan Commitments shall
not exceed the aggregate Revolving Loan Commitments.
2.1B. Term of Revolving Loan Commitments. The Revolving
Loan Commitments shall become effective immediately as of the
Closing Date, and as of the Closing Date, the Borrower may obtain
Revolving Loans and Letters of Credit subject to the terms and
conditions contained herein. The Revolving Loan Commitments shall
continue in effect until the Revolving Loan Commitment Termination
Date, unless sooner terminated (a) by the Banks upon the occurrence
and during the continuation of an Event of Default, or (b) by the
Borrower at any time in its sole and absolute discretion. The
Borrower may request, not less than sixty (60) days prior to
October 11, 1999 or any subsequent Revolving Loan Commitment
Termination Date, that the Revolving Loan Commitment Termination
Date be extended for a period selected by the Borrower and
acceptable to the Banks. The Agent shall notify the Borrower in
writing, within thirty (30) days of receipt of such request,
whether the Banks have elected to so extend the Revolving Loan
Commitment Termination Date. In the event the Agent fails to give
such written notice to the Borrower within such thirty (30) day
period, such failure shall constitute an affirmative election by
the Banks not to so extend the Revolving Loan Commitment Termina-
tion Date. The Revolving Loan Commitment Termination Date may only
be extended by the unanimous written consent of all of the Banks in
their sole and absolute discretion as communicated in writing to
the Agent. If any Bank elects not to extend the Revolving Loan
Commitment Termination Date, the Agent shall notify the Borrower
thereof and such Bank shall constitute an "Affected Bank" for pur-
poses of Section 10.E hereof. In the event the Banks elect not to
extend the Revolving Loan Commitment Termination Date, the Revolv-
ing Loan Commitments shall terminate, and the entire unpaid prin-
cipal balance of and all accrued and unpaid interest on the Revolv-
ing Loans and the other Obligations shall be respectively due and
payable in full to the Banks on the then Revolving Loan Commitment
Termination Date, subject at all times to the Banks' absolute right
to terminate the Revolving Loan Commitments upon the occurrence and
during the continuation of an Event of Default. Upon termination
of the Revolving Loan Commitments by the Banks upon the occurrence
and during the continuation of an Event of Default, or by the Bor-
rower at any time in its sole and absolute discretion, the entire
unpaid principal balance of and all accrued and unpaid interest on
the Revolving Loans and all other Obligations shall be respectively
due and payable in full to the Banks. The termination of the Re-
volving Loan Commitments, for whatever reason, shall not in any way
release or relieve the Borrower from its obligations incurred here-
under or in connection herewith or under the Revolving Notes or the
other Loan Instruments and the provisions hereof and of the Revolv-
ing Notes and the other Loan Instruments shall continue in full
force and effect until the Revolving Notes and all other Obliga-
tions have been respectively paid in full to the Banks. In the
event the Borrower terminates the Revolving Loan Commitments, which
the Borrower has the right to do at any time in its sole and abso-
lute discretion, the Borrower shall be obligated to pay the Revolv-
ing Notes and all other Obligations in full to the Banks, respec-
tively.
2.1A.-2 Line of Credit. The Banks hereby establish a
revolving line of credit in favor of the Borrower in the original
principal amount of Twenty-Five Million Dollars ($25,000,000.00)
(the "Line of Credit"). The Line of Credit shall be evidenced by
the Line of Credit Notes. Pursuant to the Line of Credit, the
Borrower may obtain Line of Credit Advances pursuant to, and
subject to the terms and conditions set forth in, this Loan
Agreement. The Line of Credit shall be subject to the following
terms and conditions:
(i) Term of Line of Credit. The Line of Credit
shall become effective immediately as of the date of this Loan
Agreement, and as of the date hereof, the Borrower may obtain
Line of Credit Advances, in each case subject to the terms and
conditions contained in this Loan Agreement. The Line of
Credit shall terminate on the Line of Credit Commitment
Termination Date, unless sooner terminated (a) by the Banks
upon the occurrence and during the continuation of an Event of
Default, or (b) by the Borrower at any time in its sole and
absolute discretion. The Borrower may request in writing, not
less than sixty (60) days prior to the current Line of Credit
Commitment Termination Date or any subsequent Line of Credit
Commitment Termination Date (which shall be 364 days from the
immediately preceding Line of Credit Commitment Termination
Date), that the Line of Credit Commitment Termination Date be
extended for a period selected by the Borrower and acceptable
to the Banks. The Agent shall notify the Borrower in writing,
within thirty (30) days of receipt of such request, whether
the Banks have elected to so extend the Line of Credit
Commitment Termination Date. In the event the Borrower fails
to receive such written notice from the Agent, such failure
shall constitute an affirmative election by the Banks not to
so extend the Line of Credit Commitment Termination Date. The
Line of Credit Commitment Termination Date may only be
extended by the unanimous written consent of all of the Banks
in their sole and absolute discretion as communicated in
writing to the Agent. If any Bank elects not to extend the
Line of Credit Commitment Termination Date, the Agent shall
notify the Borrower thereof and such Bank shall constitute an
"Affected Bank" for purposes of Section 10.E of the Loan
Agreement. In the event the Banks elect not to extend the Line
of Credit Commitment Termination Date, the Line of Credit
Commitments shall terminate, and the entire unpaid principal
balance of and all accrued and unpaid interest on the Line of
Credit Advances shall be due and payable in full to the Banks
on the then Line of Credit Commitment Termination Date,
subject at all times to the Banks' absolute right to terminate
the Line of Credit Commitments upon the occurrence and during
the continuation of an Event of Default. Upon termination of
the Line of Credit Commitments by the Banks upon the occur-
rence and during the continuation of an Event of Default, or
by the Borrower at any time in its sole and absolute discre-
tion, the entire unpaid principal balance of and all accrued
and unpaid interest on the Line of Credit Advances shall be
due and payable in full to the Banks and, in the case of the
occurrence and continuance of an Event of Default, the Bank
shall be entitled to all of the other rights and remedies
available to them thereupon under the Loan Instruments. The
termination of the Line of Credit Commitments, for whatever
reason, shall not in any way release or relieve the Borrower
from its obligations incurred hereunder or in connection
herewith or under the Line of Credit Notes or the other Loan
Instruments and the provisions hereof and of the Line of
Credit Notes and the other Loan Instruments shall continue in
full force and effect until the Line of Credit Notes and all
other Obligations have been respectively paid in full to the
Banks. In the event the Borrower terminates the Line of Credit
Commitments, which the Borrower has the right to do at any
time in its sole and absolute discretion, the Borrower shall
be obligated to pay the Line of Credit Notes in full to the
Banks at the time of such termination.
(ii) Purpose of Line of Credit. The Borrower agrees
that the proceeds of the Line of Credit and each Line of
Credit Advance obtained thereunder shall be used to support
working capital and the general corporate purposes of the
Borrower. The Borrower further agrees that no portion of the
proceeds of the Line of Credit or any Line of Credit Advance
obtained thereunder shall be used to purchase or carry any
margin stock, to extend credit to others for the purpose of
purchasing or carrying margin stock or for any purpose pro-
scribed by Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve
System.
(iii) Payments of Line of Credit. All payments on
the Line of Credit Notes shall be in legal tender of the
United States of America. If the date any payment due under
the Line of Credit Notes shall not be a Business Day, the
payment otherwise then due shall be due and payable on the
next succeeding Business Day (provided, interest shall
continue to accrue on each such non-Business Day)
2.1C Borrowing Mechanics. The obtaining by the Borrower
of each Revolving Loan and each Line of Credit Advance shall
be subject to the following terms and conditions:
(a) Base Rate Loans shall be in the minimum amount
of One Million Dollars ($1,000,000.00) and integral multiples
of One Hundred Thousand Dollars ($100,000.00) in excess of
that amount or, if less, the amount available to be borrowed
under either the Revolver or the Line of Credit at the time
the Base Rate Loan is requested by the Borrower. Subject to
there being sufficient availability under the Revolver and the
Line of Credit, as applicable, LIBOR Rate Loans shall be in
the minimum amount of Five Million Dollars ($5,000,000.00) and
integral multiples of One Million Dollars ($1,000,000.00) in
excess of that amount. Whenever the Borrower desires that the
Banks make a Revolving Loan and/or a Line of Credit Advance to
the Borrower, the Borrower shall deliver to the Banks a
Request for Revolving Loan or a Request for Line of Credit
Advance no later than 10:30 A.M. (Louisville, Kentucky time)
at least three (3) Business Days in advance of the proposed
Funding Date in the case of a LIBOR Rate Loan and on the day
of the proposed Funding Date in the case of a Base Rate Loan.
The Request for Revolving Loan and the Request for Line of
Credit Advance shall be in the form of Exhibits B and I,
respectively, attached hereto and made a part of this Loan
Agreement. Revolving Loans and Line of Credit Advances may be
continued as or converted into Base Rate Loans and LIBOR Rate
Loans in the manner provided in Section 2.2D hereof. In lieu
of delivering the above described Request for Revolving Loan
and the Request for Line of Credit Advance, the Borrower may
give the Agent telephonic notice by the required time of the
requested Revolving Loan and/or Line of Credit Advance under
this Section 2.1C; provided that such notice shall be promptly
confirmed in writing by delivery of a Request for Revolving
Loan and the Request for Line of Credit Advance to the Agent
on or before the applicable Funding Date.
(b) Neither the Agent nor the Banks shall incur
any liability to the Borrower in acting upon any telephonic
notice referred to above which the Agent and/or the Banks
believe in good faith to have been given by an Authorized
Officer or other person authorized to borrow on behalf of the
Borrower or for otherwise acting in good faith under this
Section 2.1C, and, upon funding of any Revolving Loans or any
Line of Credit Advances by the Banks in accordance with this
Loan Agreement pursuant to any telephonic notice, the Borrower
shall have effected such Revolving Loans or such Line of
Credit Advances hereunder.
(c) Except as provided in Sections 2.6B, 2.6C or
2.6F hereof, a Request for Revolving Loan or a Request for
Line of Credit Advance for a LIBOR Rate Loan (or telephonic
notice in lieu thereof) shall be irrevocable on and after the
related Interest Rate Determination Date, and the Borrower
shall be bound to borrow the particular LIBOR Rate Loan in
accordance therewith.
(d) The Agent shall make the proceeds of each
Revolving Loan and each Line of Credit Advance requested by
the Borrower available to the Borrower on the Funding Date by
causing an amount of same day funds equal to the proceeds of
such Revolving Loan and such Line of Credit Advance to be
credited to the account of the Borrower maintained with the
Banks.
(e) The Borrower shall have no right to obtain,
and the Banks shall have no obligation to make, any Revolving
Loan or any Line of Credit Advance if a Potential Event of
Default or an Event of Default has occurred and is continuing.
(f) Each request by the Borrower for a Revolving
Loan, a Line of Credit Advance or a Swing Line Loan shall, in
and of itself, constitute a continuing representation and
warranty by the Borrower to the Banks (i) that the Borrower
then is, and at the time the Revolving Loan, Line of Credit
Advance or Swing Line Loan is actually made will be, entitled
under this Loan Agreement to obtain the particular Revolving
Loan, Line of Credit Advance or Swing Line Loan, and (ii) that
all of the covenants, agreements, representations and warran-
ties made by the Borrower herein and in the other Loan
Instruments are true and correct, and have been fully complied
with, as of such date.
(g) The Borrower shall have no right to obtain any
Revolving Loan, Line of Credit Advance or Swing Line Loan
unless all of the terms and conditions set forth in this
Section 2.1C have been fully satisfied with regard to that
Revolving Loan, that Line of Credit Advance or that Swing Line
Loan.
2.1D Disbursement of Revolving Loans to the Borrower.
All Revolving Loans made to the Borrower under this Loan Agreement
shall be made by the Banks simultaneously and proportionately in
accordance with their respective Pro Rata Shares of the Revolving
Loan Commitments, it being understood that no Bank shall be
responsible for any default by any other Bank of that other Bank's
obligation to fund its Pro Rata Share of a Revolving Loan requested
hereunder by the Borrower, nor shall the Revolving Loan Commitment
of any Bank be increased or decreased as a result of the default by
any other Bank of that other Bank's obligation to fund its Pro Rata
Share of a Revolving Loan requested hereunder by the Borrower.
Promptly after receipt by the Agent of a Request For Revolving Loan
pursuant to Section 2.1C hereof (or telephonic notice in lieu
thereof), the Agent shall notify each Bank of the Revolving Loan
requested by the Borrower pursuant thereto. Each Bank shall make
its Pro Rata Share of each Revolving Loan to be made to the
Borrower available to the Agent, in same day funds, at the office
of the Agent located at 500 West Jefferson Street, Louisville,
Kentucky not later than 1:00 P.M. (Louisville, Kentucky time) on
the Funding Date. Except with respect to the reimbursement to PNC
for a drawing under a Letter of Credit issued by PNC as provided in
Section 2.7 hereof, upon satisfaction or waiver of the conditions
precedent specified in Section 3.l in the case of the initial
Revolving Loan on the initial Funding Date and Section 3.3 in the
case of a Revolving Loan on any subsequent Funding Date, the Agent
shall make the proceeds of each Revolving Loan requested by the
Borrower available to the Borrower on the Funding Date by causing
an amount of same day funds equal to the proceeds of the Banks'
respective Pro Rata Shares of such Revolving Loan received by the
Agent at its office located at the address set forth in the preced-
ing sentence to be credited to the account of the Borrower at such
office of the Agent or wired to an account designated by the Bor-
rower. All Revolving Loans shall be paid in full to the Agent on
the Revolving Loan Commitment Termination Date.
Unless the Agent shall have been notified by any Bank
prior to a Funding Date that such Bank does not intend to make
available to the Agent such Bank's Pro Rata Share of the Revolving
Loan requested on such Funding Date to be made to the Borrower, the
Agent may assume that such Bank has made such amount available to
the Agent on such Funding Date and the Agent may, in its sole
discretion, but shall not be obligated to, make available to the
Borrower a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to the Agent by
such Bank, the Agent shall be entitled to recover such correspond-
ing amount on demand from such Bank together with interest thereon,
for each day from such Funding Date until the date such amount is
paid to the Agent, at the customary rate set by the Agent for the
correction of errors among banks for three (3) Business Days and
thereafter at the Federal Funds Rate. If such Bank does not pay
such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrower thereof and
the Borrower shall immediately pay such corresponding amount to the
Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to the Agent, at
the interest rate borne by the particular Revolving Loan. Nothing
in this Section 2.1D shall be deemed to relieve any Bank from its
obligation to fulfill its Revolving Loan Commitment hereunder or to
prejudice any rights that the Borrower may have against any Bank as
a result of any default by such Bank hereunder. In the event any
Bank gives notice to the Agent that such Bank does not intend to
fund its Pro Rata Share of any Revolving Loan to be made to the
Borrower or in the event any Bank otherwise fails to fund its Pro
Rata Share of any Revolving Loan to be made to the Borrower, the
Agent shall promptly notify the other Banks and the Borrower of the
occurrence of any such event.
2.2. Interest on the Revolving Loans and the Line of
Credit Advances.
2.2A. Rates of Interest. Subject to the provisions
of Sections 2.2G and 2.6 hereof, each Revolving Loan and each
Line of Credit Advance made to the Borrower shall bear
interest on the unpaid principal amount thereof from the date
made through maturity (whether by acceleration or otherwise)
at either the Base Rate or the LIBOR Rate as provided below,
as the case may be. The applicable basis for determining the
rate of interest with respect to Revolving Loans and/or Line
of Credit Advances made to the Borrower shall be selected by
the Borrower initially at the time a Request for Revolving
Loan or a Request for Line of Credit Advance is delivered to
the Agent pursuant to Section 2.1A hereof. The basis for
determining the interest rate with respect to any Revolving
Loan or any Line of Credit Advance made to the Borrower may be
changed from time to time pursuant to Section 2.2D hereof. If
on any day a Revolving Loan or a Line of Credit Advance is
outstanding to the Borrower with respect to which notice has
not been delivered to the Banks in accordance with the terms
of this Loan Agreement specifying the applicable basis for
determining the rate of interest to apply to such Revolving
Loan or such Line of Credit Advance then, for that day, that
Revolving Loan or that Line of Credit Advance shall be deemed
a Base Rate Loan and shall bear interest at the Base Rate.
Subject to the provisions of Sections 2.6B and 2.6C
hereof, Revolving Loans and/or Line of Credit Advances shall
bear interest through maturity as follows:
(i) If a Base Rate Loan, then at a rate per
annum equal to the Base Rate;
(ii) If a LIBOR Rate Loan, then at a rate per
annum equal to the LIBOR Rate; provided that, on each
Date of Determination, commencing with the first such
date to occur after October 11, 1996, the Applicable
LIBOR Rate Margin in effect for the Pricing Period
commencing on such Date of Determination and continuing
for the term of the Pricing Period that begins on such
Date of Determination shall be the Applicable LIBOR Rate
Margin corresponding to the Pricing Level in effect for
such Pricing Period, as applicable:
Applicable
Pricing Level LIBOR Rate Margin
Pricing Level I .500%
Pricing Level II .575%
Pricing Level III .625%
Notwithstanding anything in the foregoing to the
contrary, if any Compliance Certificate delivered by the
Borrower demonstrating the appropriate Pricing Level shall
prove to be incorrect (as determined by reference to the
Borrower's financial statements or otherwise), such Compliance
Certificate shall no longer be in effect, and the Banks shall
notify the Borrower of such incorrectness and shall calculate
the difference between the amount of interest actually paid by
the Borrower on the basis of such incorrect Compliance
Certificate and the amount of interest which would have been
due had such incorrect Compliance Certificate not been
delivered. The Agent shall notify the Borrower of the amount
of such difference, if any, in a statement setting forth the
method of calculation of such amount (which calculation, in
the absence of demonstrable error, shall be deemed correct)
and the Borrower shall pay such amount to the Agent, for the
benefit of the Banks, within three (3) Business Days of such
notice.
2.2B. LIBOR Interest Periods. In connection with
each LIBOR Rate Loan made to the Borrower, the Borrower may,
pursuant to the Request for Revolving Loan, Request for Line
of Credit Advance or Notice of Conversion/Continuation, as the
case may be, select an interest period (each an "Interest
Period") to be applicable to such LIBOR Rate Loan, which
Interest Period shall be at the Borrower's option either a
one, two, three or six month period, provided that:
(i) the initial Interest Period for any LIBOR
Rate Loan made to the Borrower shall commence on the
Funding Date of such LIBOR Rate Loan, in the case of a
Revolving Loan or a Line of Credit Advance initially
made as a LIBOR Rate Loan, or on the date specified in
the applicable Notice of Conversion/Continuation, in the
case of a Base Rate Loan converted to a LIBOR Rate Loan;
(ii) in the case of immediately successive
Interest Periods applicable to a LIBOR Rate Loan made to
the Borrower continued as such pursuant to a Notice of
Conversion/ Continuation, each successive Interest
Period shall commence on the day on which the next
preceding Interest Period expires;
(iii) if an Interest Period would otherwise
expire on a day that is not a Business Day, such
Interest Period shall expire on the next succeeding
Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business
Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period
shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the
last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period)
shall, subject to clause (iii) of this Section 2.2B, end
on the last Business Day of a calendar month;
(v) there shall be no more than seven (7)
Interest Periods relating to the LIBOR Rate Loans made
to the Borrower outstanding at any time, unless there
are Base Rate Loans outstanding, in which event there
shall be no more than six (6) Interest Periods relating
to LIBOR Rate Loans outstanding at such time;
(vi) in the event the Borrower fails to speci-
fy an Interest Period in the particular Request for
Revolving Loan, Request for Line of Credit Advance
and/or Notice of Conversion/Continuation, the Borrower
shall be deemed to have selected an Interest Period of
one month; and
(vii) no Interest Period shall extend beyond
the then stated maturity date of the Revolver or the
Line of Credit, as applicable.
2.2C. Interest Payments. Subject to the provisions
of Section 2.2E hereof, interest shall be payable on the
Revolving Loans and the Line of Credit Advances made to the
Borrower as follows:
(i) interest on each Base Rate Loan shall be
payable in arrears on the last day of each Fiscal
Quarter, upon any prepayment or repayment of any such
Revolving Loan or Line of Credit Advance (to the extent
accrued on the amount being prepaid or repaid) and at
maturity (including final maturity); all the interest on
the Base Rate Loans shall be computed based upon the
actual number of days elapsed over an assumed year of
three hundred sixty-five -(365) or three hundred
sixty-six (366) days; and
(ii) interest on each LIBOR Rate Loan shall be
payable in arrears on the last day of an Interest
Period, if the Interest Period is one, two or three
months, or shall be payable in arrears on the ninetieth
(90th) day of each Interest Period and on the last day
of the Interest Period if the Interest Period is six
months, upon the date of any prepayment or repayment of
such LIBOR Rate Loan (to the extent accrued on the
amount being prepaid or repaid) and at maturity
(including final maturity); all the interest on the
LIBOR Rate Loans shall be computed based upon the actual
number of days elapsed over an assumed year of three
hundred sixty (360) days.
2.2D. Conversion or Continuation. Subject to the
provisions of Section 2.6 hereof, the Borrower shall have the
option (i) to convert at any time all or any part of outstand-
ing Revolving Loans made to the Borrower from Revolving Loans
bearing interest at a rate determined by reference to one
basis to Revolving Loans bearing interest at a rate determined
by reference to an alternative basis, (ii) to convert at any
time all or any part of outstanding Line of Credit Advances
made to the Borrower from Line of Credit Advances bearing
interest at a rate determined by reference to one basis to
Line of Credit Advances bearing interest at a rate determined
by reference to an alternative basis, or (iii) upon the
expiration of any Interest Period applicable to a LIBOR Rate
Loan made to the Borrower, to continue all or any portion of
such LIBOR Rate Loan as a LIBOR Rate Loan, and the succeeding
Interest Period of such continued LIBOR Rate Loan shall
commence on the last day of the current Interest Period with
respect thereto; provided however that a LIBOR Rate Loan may
only be converted into a Base Rate Loan on the expiration date
of the Interest Period applicable thereto.
The Borrower shall deliver a Notice of
Conversion/Continuation to the Agent no later than 10:30
A.M. (Louisville, Kentucky time) on the same Business
Day in advance of the proposed conversion/continuation
date (in the case of a conversion to a Base Rate Loan)
and at least three (3) Business Days in advance of the
proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a LIBOR Rate Loan).
A Notice of Conversion/Continuation shall specify (i)
the proposed conversion/continuation date (which shall
be a Business Day), (ii) the amount of the Revolving
Loan or the Line of Credit Advance to be
converted/continued, (iii) the nature of the proposed
conversion/continuation, (iv) in the case of a
conversion to, or continuation of, a LIBOR Rate Loan,
the requested Interest Period, and (v) in the case of a
conversion to, or a continuation of, a LIBOR Rate Loan,
that no Event of Default has occurred and is continuing.
In lieu of delivering the above-described Notice of
Conversion/Continuation, the Borrower may give the Banks
telephonic notice by the required time of any proposed
conversion/continuation under this Section 2.2D;
provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Con-
tinuation to the Agent on or before the proposed conver-
sion/continuation date.
Neither the Agent nor the Bank shall incur any
liability to the Borrower in acting upon any telephonic
notice referred to above that the Agent believes in good
faith to have been given by an Authorized Officer of the
Borrower or for otherwise acting in good faith under
this Section 2.2D, and upon conversion or continuation
of the applicable basis for determining the interest
rate with respect to any Revolving Loans or any Line of
Credit Advances made to the Borrower in accordance with
this Loan Agreement pursuant to any such telephonic
notice, the Borrower shall have effected a conversion or
continuation, as the case may be, hereunder.
Except as otherwise provided in Sections 2.6B,
2.6C and 2.6F hereof, a Notice of Conver-
sion/Continuation for conversion to, or continuation of,
a LIBOR Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest
Rate Determination Date and the Borrower shall be bound
to effect the conversion or continuation in accordance
therewith.
2.2E. Post-Maturity Interest. All installments of
accrued interest on and all unpaid principal of the Revolving
Notes and/or the Line of Credit Notes not paid to the Banks
when due or within fifteen (15) days thereafter shall bear
interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable Bankruptcy laws)
at the Default Rate until such overdue installments of accrued
interest and unpaid principal have been paid in full to the
Banks. Payment or acceptance of the increased rates of
interest provided for in this Section 2.2E is not a permitted
alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit
any rights or remedies of the Agent or any Bank.
2.2F. Computation of Interest. In computing interest
on any Revolving Loan or any Line of Credit Advance made to
the Borrower, the date of the making of such Revolving Loan or
such Line of Credit Advance or the first day of an Interest
Period applicable to such Revolving Loan or such Line of
Credit Advance or, with respect to a Base Rate Loan being
converted from a LIBOR Rate Loan, the date of conversion of
such LIBOR Rate Loan to such Base Rate Loan, as the case may
be, shall be included, and the date of payment of such
Revolving Loan or such Line of Credit Advance or the expira-
tion date of an Interest Period applicable to such Revolving
Loan or such Line of Credit Advance or, with respect to a Base
Rate Loan being converted to a LIBOR Rate Loan, the date of
conversion of such Base Rate Loan to such LIBOR Rate Loan
shall be excluded; provided that if a Revolving Loan or a Line
of Credit Advance is repaid on the same day on which it is
made, one day's interest shall be paid on that Revolving Loan
or that Line of Credit Advance.
2.2G. Special Provisions Governing Federal Funds
Rate.
(i) Federal Funds Rate Unascertainable. In
the event that, on any date on which a Federal Funds
Rate would otherwise be set, the Agent shall have
determined (which determination shall be final and
conclusive) that, by reason of circumstances affecting
the reporting of the average national federal funds rate
by the Federal Reserve Bank of New York or such other
agency then reporting such rate, reasonable means do not
exist for ascertaining the Federal Funds Rate, the Agent
shall give prompt notice of such determination to the
Borrower and to the Banks and, until the Agent notifies
the Borrower and the Banks that the circumstances giving
rise to such determination no longer exist, all Base
Rate Loans then or thereafter outstanding shall bear
interest at the Prime Rate.
(ii) Impracticability of Offering Federal
Funds Rate by Any Bank. In the event that any Bank shall
determine, in good faith, that it is impracticable or
impossible for such Bank to offer funds to the Borrower
at the Federal Funds Rate because changes in market
conditions and/or in such Bank's cost of funds occurring
after the Closing Date have made it not feasible for
such Bank to realize the anticipated and
bargained-for-yield hereunder, then such Bank shall be
an "Affected Bank" hereunder and shall promptly notify
the Agent of such impracticability. The Agent upon
receipt of such notice shall notify the Borrower that
all Base Rate Loans from the Affected Bank shall
thereafter bear interest at the Prime Rate. Nothing in
this Section 2.2G(ii) shall affect the obligation of any
Bank other than an Affected Bank to make or maintain
Revolving Loans and/or Line of Credit Advances as, or to
convert Revolving Loans and/or Line of Credit Advances
to, Base Rate Loans in accordance with the other terms
of this Loan Agreement.
2.3. Fees.
2.3A.
(i) Revolver Commitment Fee. The Borrower
agrees to pay the Agent, for the benefit of the Banks in
proportion to their respective Commitment Fee Pro Rata
Shares, commitment fees (the "Commitment Fees") for the
period from and including October 11, 1996 to and
excluding the Revolving Loan Commitment Termination
Date, equal to the average of the daily excess of the
Revolving Loan Commitments (as reduced pursuant to
Section 2.4C hereof) over the aggregate principal amount
of Revolving Loans plus the Letter of Credit Usage
multiplied by the Applicable Revolver Commitment Fee per
annum. The Commitment Fees shall be calculated on the
basis of a 360-day year and the actual number of days
elapsed and shall be payable quarterly in arrears on the
last day of each Fiscal Quarter, commencing on the first
such day to occur after October 11, 1996, and on the
Revolving Loan Commitment Termination Date. The Borrower
shall have no liability to any Banks for any Commitment
Fees paid to the Agent which the Agent does not properly
remit to such Banks, and any such Bank's sole remedy in
respect thereof shall be against the Agent. The
Applicable Revolver Commitment Fee in effect for the
Pricing Period commencing on the first day of each
Fiscal Quarter and continuing for the term of the Fiscal
Quarter that begins on such first day of the Fiscal
Quarter shall be the Applicable Revolver Commitment Fee
corresponding to the Pricing Level in effect for such
period, as applicable:
Applicable Revolver
Pricing Level Commitment Fee
Pricing Level I .175%
Pricing Level II .200%
Pricing Level III .225%
(ii) Line of Credit Commitment Fee. Borrower
agrees to pay to the Agent, for the benefit of the Banks
in proportion to their respective Line of Credit Commit-
ment Fee Pro Rata Shares, commitment fees ("the Line of
Credit Commitment Fees") for the period from and includ-
ing October 11, 1996 to and excluding the Line of Credit
Termination Date, equal to the average of the daily
excess of the Line of Credit Commitments (as reduced
pursuant to Section 2.4C hereof) over the aggregate
principal amount of Line of Credit Advances multiplied
by one eighth of one percent (0.125%) per annum. The
Line of Credit Commitment Fees shall be calculated on
the basis of a 360-day year and the actual number of
days elapsed and shall be payable quarterly in arrears
on the last day of each Fiscal Quarter, commencing on
the first such date to occur after October 11, 1996, and
on the Line of Credit Commitment Termination Date. The
Borrower shall have no liability to any Bank for any
Line of Credit Commitment Fees paid to the Agent which
the Agent does not properly remit to such Bank, and any
such Bank's sole remedy in respect thereof shall be
against the Agent.
2.3B. Other Fees. The Borrower agrees to pay to the
Agent such fees for serving as the Agent hereunder in the amounts
and at the times agreed to in writing between the Borrower and the
Agent.
2.4. Prepayments and Payments; Reductions in Revolving
Loan and Line of Credit Commitments. The parties to this Loan
Agreement stipulate that the provisions of this Section 2.4 shall
apply to the Line of Credit Advances with the same force and effect
as such provisions apply to Revolving Loans.
2.4A. Prepayments.
(i) Voluntary Prepayments of Revolving Loans Made to the
Borrower. The Borrower may at any time prepay Revolving Loans by
giving to the Agent, in the case of Base Rate Loans, notice of
intent to prepay such Base Rate Loans by 11:00 A.M. Louisville,
Kentucky time on the date the Borrower elects to prepay such Base
Rate Loans and, in the case of LIBOR Rate Loans, notice of intent
to prepay by 11:00 A.M., Louisville, Kentucky time one (1) Business
Day prior to the date the Borrower elects to prepay such LIBOR Rate
Loans (which notice the Agent will promptly transmit by telecopy,
telex or telephone to each Bank), provided that each such prepay-
ment shall be in a minimum amount of Two Hundred Fifty Thousand
Dollars ($250,000.00) and integral multiples of Fifty Thousand
Dollars ($50,000.00) in excess of that amount; provided further
that in the event that the Borrower prepays a LIBOR Rate Loan
pursuant to this Section 2.4A or pays a LIBOR Rate Loan pursuant to
any other Section of this Loan Agreement on a date that is other
than the expiration date of the Interest Period applicable thereto,
the Borrower shall compensate the Banks receiving such prepayments
in accordance with the provisions of Section 2.6D hereof. If the
Borrower has given notice of prepayment as aforesaid, the principal
amount of the Revolving Loans specified in such notice shall become
due and payable on the prepayment date specified therein.
(ii) Mandatory Prepayments. The Borrower shall from time to
time prepay the Revolving Loans to the extent necessary to give
effect to the limitations set forth in Section 2.1A hereof.
All prepayments of the Revolving Loans made to the
Borrower shall be applied to the outstanding Revolving Loans in the
manner directed by the Borrower and, if no direction is given by
the Borrower to the Agent, first to Base Rate Loans to the full
extent thereof and then to LIBOR Rate Loans.
2.4B. General Provisions Regarding Payments.
(i) Manner and Time of Payment. Except as provided in Section
2.7 hereof, all payments by the Borrower of principal, interest and
fees hereunder and under the Revolving Notes shall be made without
defense, setoff and counterclaim and in same day funds and
delivered to the Agent not later than 12:00 Noon (Louisville,
Kentucky time) on the date due at its office located at 500 West
Jefferson Street, Louisville, Kentucky, for the account of the
Banks. Funds received by the Agent after that time shall be deemed
to have been paid by the Borrower on the next succeeding Business
Day. The Borrower hereby authorizes the Agent to charge its
accounts with the Agent in order to cause timely payment to be made
to the Agent of all principal, interest and fees due hereunder
(subject to sufficient funds being available in its account for
that purpose).
(ii) Apportionment of Payments. The Agent shall apportion all
principal and interest payments made by the Borrower to the payment
in full of all outstanding Revolving Loans, in each case propor-
tionately to the Banks' respective Pro Rata Shares. Subject to the
penultimate sentence of Section 2.7E hereof, the Agent (or, in the
case of payments received by PNC from the Borrower after payments
have been made to PNC by the Banks pursuant to Section 2.7E hereof,
PNC) shall promptly distribute to each Bank at its primary address
set forth below its name on the appropriate signature page hereof
or such other address as any Bank may request, its share of all
such payments received by the Agent (or PNC in respect of Letters
of Credit, including all Letter of Credit Fees) and the Commitment
Fees of such Bank when received by the Agent pursuant to Section
2.3A hereof. Notwithstanding the foregoing provisions of this
Section 2.4B(ii), if, pursuant to the provisions of Section 2.6C
hereof, any Notice of Conversion/Continuation is withdrawn as to
any Affected Bank or if any Affected Bank makes Base Rate Loans to
the Borrower in lieu of its Pro Rata Share of any LIBOR Rate Loans,
the Agent shall give effect thereto in apportioning payments
received thereafter. The Borrower shall have no liability to any
Bank for any payments made to the Agent which the Agent does not
properly remit to such Bank, and any such Bank's sole remedy in
respect thereof shall be against the Agent.
(iii) Payments on Business Days. Whenever any payment to be
made hereunder or under the Revolving Notes shall be stated to be
due on a day that is not a Business Day, such payment shall be made
on the next succeeding Business Day and such extension of time
shall be included in the computation of the payment of interest
hereunder or under the Revolving Notes or of the Commitment Fees
hereunder, as the case may be.
2.4C. Voluntary Reductions of Revolving Loan Commitments.
The Borrower shall have the right, at any time and from time to
time, to terminate in whole or permanently reduce in part, without
premium or penalty, the Revolving Loan Commitments in an amount up
to the amount by which the Revolving Loan Commitments exceed the
Total Utilization of Revolving Loan Commitments. The Borrower
shall give not less than five (5) Business Days' prior written
notice to the Agent designating the date (which shall be a Business
Day) of such termination or reduction and the amount of any partial
reduction of the Revolving Loan Commitments. Within one (1)
Business Day after receipt of a notice of such termination or
partial reduction, the Agent shall notify each Bank of the proposed
termination or reduction. Such termination or partial reduction of
the Revolving Loan Commitments shall be effective on the date
specified in the Borrower's notice and shall reduce the Revolving
Loan Commitment of each Bank in proportion to its Pro Rata Share.
Any such partial reduction of the Revolving Loan Commitments shall
be in an aggregate minimum amount of Five Million Dollars
($5,000,000.00), and integral multiples of One Million Dollars
($1,000,000.00) in excess of that amount.
2.5. Use of Proceeds.
2.5A. Revolving Loans and Letters of Credit. The
proceeds of the Revolving Loans shall be used by the Borrower for
its working capital and other general corporate purposes. The
Letters of Credit shall be used for general corporate purposes,
including, without limitation, to secure the Borrower's legal
obligations under bonds, permits, licenses and contracts to which
the Borrower is a party or otherwise subject.
2.5B. Margin Regulations. No portion of the proceeds of
any Revolving Loans shall be used by the Borrower in any manner
which might cause the making of the Revolving Loans or the applica-
tion of the proceeds thereof to violate Regulation G, Regulation U,
Regulation T, or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to
violate the Securities and Exchange Act of 1934, in each case as in
effect on the date or dates of the making of any such Revolving
Loan and such use of the proceeds thereof. If requested by any
Bank, the Borrower shall execute and deliver to such Bank a com-
pleted Federal Reserve Form U-1.
2.6. Special Provisions Governing LIBOR Rate Loans.
The parties to this Loan Agreement stipulate that the provisions of
this Section 2.6 shall apply to the Line of Credit Advances with
the same force and effect as such provisions apply to Revolving
Loans.
Notwithstanding any other provision of this Loan
Agreement to the contrary, the following provisions shall govern
with respect to LIBOR Rate Loans as to the matters covered:
2.6A. Determination of Applicable Interest Rate. As soon
as practicable after 10:00 A.M. Louisville, Kentucky time on each
Interest Rate Determination Date, the Agent shall furnish to the
Borrower a best efforts quote of the Adjusted LIBOR Rate to apply
to the particular LIBOR Rate Loan. The Agent will in addition
confirm to the Borrower and each Bank in writing the actual
Adjusted LIBOR Rate on the Funding Date of the particular LIBOR
Rate Loan, and the determination of each Adjusted LIBOR Rate by the
Agent, provided that the Agent shall have determined the Adjusted
LIBOR Rate in good faith, shall be final, conclusive and binding
upon all parties in the absence of manifest or demonstrable error
and shall apply to the particular LIBOR Rate Loan for the appli-
cable Interest Period.
2.6B. Inability to Determine Applicable Interest Rate.
In the event that the Agent shall have determined in good faith
(which determination shall be final and conclusive and binding upon
all parties hereto), on any Interest Rate Determination Date or
Funding Date with respect to any LIBOR Rate Loans, that by reason
of circumstances occurring after the date of this Loan Agreement
affecting the London interbank market, adequate and fair means do
not exist for ascertaining the interest rate applicable to such
LIBOR Rate Loans on the basis provided for in the definition of
Adjusted LIBOR Rate, the Agent shall on such date give notice (by
telecopy or by telephone confirmed in writing) to the Borrower and
each Bank of such determination, whereupon (i) no Revolving Loans
may be made as, or converted to, LIBOR Rate Loans until such time
as the Agent notifies the Borrower and the Banks that the circum-
stances giving rise to such notice no longer exist; (ii) any Notice
of Conversion/Continuation given by the Borrower with respect to
the Revolving Loans in respect of which such determination was made
shall be deemed to be rescinded by the Borrower, and (iii) any
Request For Revolving Loan given by the Borrower with respect to
the Revolving Loans in respect of which such determination was made
shall be deemed to be a request to make Base Rate Loans.
2.6C. Illegality or Impracticability of LIBOR Rate Loans.
In the event that on any date any Bank shall have determined in
good faith (which determination shall be final and conclusive and
binding upon all parties hereto but shall be made only after
consultation with the Borrower and the Agent) that the making,
maintaining or continuation of its LIBOR Rate Loans (i) has become
unlawful as a result of compliance by such Bank in good faith with
any law, treaty, governmental rule, regulation, guideline or order
(or would conflict with any such treaty, governmental rule, regula-
tion, guideline or order not having the force of law even though
the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Bank material hardship,
as a result of contingencies occurring after the date of this Loan
Agreement which materially and adversely affect the London inter-
bank market or the position of such Bank in that market, then, and
in any such event, such Bank shall be an "Affected Bank" and it
shall as soon as practicable but in no event later than the next
Business Day give notice (by telecopy or by telephone confirmed in
writing) to the Borrower and the Agent of such determination (which
notice the Agent shall promptly transmit to each other Bank).
Thereafter, (a) the obligation of the Affected Bank to make Re-
volving Loans as, or to convert Revolving Loans to, LIBOR Rate
Loans shall be suspended until such notice shall be withdrawn by
the Affected Bank, (b) to the extent such determination by the
Affected Bank relates to a LIBOR Rate Loan then being requested by
the Borrower pursuant to a Request For Revolving Loan or a Notice
of Conversion/Continuation, the Affected Bank shall make such LIBOR
Rate Loan as (or convert such LIBOR Rate Loan to, as the case may
be) a Base Rate Loan, and (c) the Affected Bank's obligation to
maintain its outstanding LIBOR Rate Loans, as the case may be (the
"Affected Loans"), shall be terminated at the earlier to occur of
the expiration of the Interest Period then in effect with respect
to the Affected Loans or when required by law, and the Affected
Loans shall automatically convert into Base Rate Loans on the date
of such termination. Notwithstanding the foregoing, to the extent
a determination by an Affected Bank as described above relates to a
LIBOR Rate Loan then being requested by the Borrower pursuant to a
Request For Revolving Loan or a Notice of Conversion/Continuation,
the Borrower shall have the option to rescind such Request For
Revolving Loan or Notice of Conversion/Continuation as to all the
Banks by giving notice (by telecopy or by telephone confirmed in
writing) to the Agent of such rescission on the date on which the
Affected Bank gives notice of its determination as described above
(which notice of rescission the Agent shall promptly transmit to
each other Bank). Except as provided in the immediately preceding
sentence, nothing in this Section 2.6C shall affect the obligation
of any Bank other than an Affected Bank to make or maintain
Revolving Loans as, or to convert Revolving Loans to, LIBOR Rate
Loans in accordance with the terms of this Loan Agreement.
2.6D. Compensation For Breakage or Non-Commencement of
Interest Periods. The Borrower shall compensate each Bank, within
fifteen (15) days after written request by that Bank (which request
shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without
limitation, any interest paid by that Bank to lenders of funds bor-
rowed by it to make or carry its LIBOR Rate Loans and any reason-
able loss, expense or liability sustained by that Bank in connec-
tion with the liquidation or re-employment of such funds) which
that Bank may sustain: (i) if for any reason (other than a default
by that Bank or the conversion of such Bank's Request For Revolving
Loan from a request to make LIBOR Rate Loans into a request to make
Base Rate Loans pursuant to Section 2.6B or 2.6C hereof) a bor-
rowing of any LIBOR Rate Loan does not occur on a date specified
therefor in a Request For Revolving Loan or a telephonic request
for borrowing, or a conversion to or continuation of any LIBOR Rate
Loan does not occur on a date specified therefor in a Notice of
Conversion/Continuation or a telephonic request for conversion or
continuation, (ii) if any prepayment or conversion of any of its
LIBOR Rate Loans occurs on a date that is not the last day of an
Interest Period applicable to that LIBOR Rate Loan, even if the
Borrower gave written notice of the intended prepayment to the
Agent in accordance with the provisions of Section 2.1A hereof,
(iii) if any prepayment of any of its LIBOR Rate Loans is not made
on any date specified in a notice of prepayment given by the Bor-
rower, or (iv) as a consequence of any other default by the Bor-
rower to repay its LIBOR Rate Loans when required by the terms of
this Loan Agreement. Each Bank seeking compensation from the Bor-
rower pursuant to this Section 2.6D shall deliver to the Borrower a
certificate setting forth the calculation of the compensation
claimed to be due to such Bank within thirty (30) days after the
occurrence of the event giving rise to such claim for compensation,
which calculations shall be binding upon the Borrower in the
absence of manifest or demonstrable error
2.6E. Booking of LIBOR Rate Loans. Any Bank may make,
carry or transfer LIBOR Rate Loans at, to, or for the account of
any of its branch offices or the office of an Affiliate of that
Bank; provided however that if any transfer of LIBOR Rate Loans
from the office where such LIBOR Rate Loans originated shall mate-
rially and unreasonably increase the cost to the Borrower of such
LIBOR Rate Loans, such transfer may occur only if required (x) by
the introduction of or any change (including, without limitation,
any change by way of imposition or increase of reserve require-
ments) in or in the interpretation of any law or regulation, or (y)
to comply with any guideline or request from any central bank or
other governmental authority or quasi-governmental authority exer-
cising control over banks or financial institutions generally
(whether or not such guideline or request shall have the force of
law).
2.6F. LIBOR Rate Loans After Default. After the occur-
rence and during the continuation of an Event of Default, (i) the
Borrower may not elect to have a Revolving Loan be made or
maintained as, or converted to, a LIBOR Rate Loan after the expi-
ration of any Interest Period then in effect for that Revolving
Loan, (ii) subject to the provisions of Section 2.6D hereof, any
Request For Revolving Loan or Notice of Conversion/Continuation
given by the Borrower with respect to a requested borrowing or
conversion/continuation that has not yet occurred shall be deemed
to be rescinded by the Borrower, and (iii) all LIBOR Rate Loans and
Base Rate Loans shall thereupon bear interest at the Default Rate
until the Event of Default is cured or the Revolving Loans are paid
in full to the Banks and the Revolving Loan Commitments have
expired or have been terminated by the Borrower or the Banks.
2.7. Letters of Credit.
2.7A. Letters of Credit. Subject to the terms and condi-
tions of this Loan Agreement and in reliance upon the repre-
sentations and warranties of the Borrower set forth herein, the
Borrower may request, in accordance with the provisions of this
Section 2.7A, that on and after the Closing Date, PNC issue Letters
of Credit for the account of the Borrower denominated in Dollars.
Issuances of Letters of Credit shall be subject to the following
limitations:
(i) The Borrower may not request that PNC issue
any Letter of Credit if, after giving effect to such
issuance, (y) the total Letter of Credit Usage would
exceed Ten Million Dollars ($10,000,000), or (z) the
Total Utilization of Revolving Loan Commitments would
exceed the Revolving Loan Commitments as the amount
available under such Revolving Loan Commitments may be
limited from time to time pursuant to the second para-
graph of Section 2.1A hereof or shall be reduced from
time to time pursuant to Section 2.4C hereof.
(ii) In no event shall PNC issue, reissue, amend or
permit the extension of: (y) any Letter of Credit having
an expiration date later than the Revolving Loan Commit-
ment Termination Date in effect at the time of issuance,
reissuance, amendment or extension (automatic or other-
wise) thereof; or (z) subject to the foregoing clause
(y), any Letter of Credit having an expiration date more
than one year after its date of issuance; provided that
subject to the foregoing clause (y), this clause (z)
shall not prevent PNC from agreeing that a Letter of
Credit will automatically be extended annually for one
or more periods each not to exceed one year if PNC does
not cancel such extension, subject to the Banks
extending the Revolving Loan Commitment Termination
Date.
It shall be a condition precedent to the issuance of any
Letter of Credit in accordance with the provisions of this Section
2.7 that each condition set forth in Sections 3.2 and 3.3 of this
Loan Agreement shall have been satisfied.
Immediately upon the issuance of each Letter of Credit,
each Bank shall be deemed to, and hereby agrees to, have irrevoca-
bly purchased from PNC a participation in such Letter of Credit and
drawings thereunder in an amount equal to such Bank's Pro Rata
Share of the maximum amount which is or at any time may become
available to be drawn thereunder.
Each Letter of Credit shall provide that it shall be
subject to the Uniform Customs and Practice of Documentary Credits
(1993 Revision), International Chamber of Commerce Brochure No.
500, or any successor thereto. Each Letter of Credit may provide
that PNC may (but shall not be required to) pay the beneficiary
thereof upon the occurrence of an Event of Default and the
acceleration of the maturity of the Revolving Loans or, if payment
is not then due to the beneficiary, provide for the deposit of
funds in an account to secure payment to the beneficiary and that
any funds so deposited shall be paid to the beneficiary of the
Letter of Credit if conditions to such payment are satisfied or
returned to PNC for distribution to the Banks (or, if all Obliga-
tions shall have been indefeasibly paid in full, to the Borrower)
if no payment to the beneficiary has been made and thirty (30) days
after the final date available for drawings under the Letter of
Credit has passed. Each payment or deposit of funds by PNC as
provided in this paragraph shall be treated for all purposes of
this Loan Agreement as a drawing duly honored by PNC under the
related Letter of Credit.
2.7B. Notice of Issuance. Whenever the Borrower desires
the issuance of a Letter of Credit, the Borrower shall deliver to
PNC an Application and Agreement for Letter of Credit in the form
of Exhibit C annexed hereto no later than 10:00 A.M. (Louisville,
Kentucky time) at least ten (10) Business Days, or in each case
such shorter period as may be agreed to by PNC in any particular
instance, in advance of the proposed date of issuance. The
Application and Agreement for Letter of Credit shall specify (i)
the proposed date of issuance (which shall be a Business Day under
the laws of the Commonwealth of Kentucky), (ii) the face amount of
the Letter of Credit, (iii) the expiration date of the Letter of
Credit, (iv) the name and address of the beneficiary, and (v) a
summary of the purpose and contemplated terms of such Letter of
Credit. Prior to the date of issuance of any Letter of Credit, the
Borrower shall specify a precise description of the documents and
the proposed text of any certificate to be presented by the
beneficiary under such Letter of Credit which, if presented by the
beneficiary prior to the expiration date of the Letter of Credit,
would require PNC to make payment under the Letter of Credit;
provided that PNC, in its sole reasonable judgment, may require
changes in any such documents and certificates; provided further
that no Letter of Credit shall require payment against a conforming
draft to be made thereunder on the same Business Day (under the
laws of the Commonwealth of Kentucky) that such draft is presented
if such presentation is made after 11:00 A.M. (Louisville, Kentucky
time) on such Business Day. In determining whether to pay under
any Letter of Credit, PNC shall be responsible only to determine
that the documents and certificates required to be delivered under
that Letter of Credit have been delivered and that they comply on
their face with the requirements of that Letter of Credit; pro-
vided, further, nothing contained in this Section 2.7B shall be
deemed to prejudice the right of the Borrower to recover from PNC
in respect of any amounts paid by PNC under any Letter of Credit in
the event that it is determined by a court of competent jurisdic-
tion that the payment with respect to such Letter of Credit by PNC
constituted gross negligence or willful misconduct on the part of
PNC.
2.7C. Delivery of Copies of Letters of Credit and Letter
of Credit Amendments. PNC shall, promptly after the issuance of
each Letter of Credit, or any amendment or cancellation thereto,
furnish each other Bank with a copy of such Letter of Credit or of
such amendment or cancellation, as the case may be, together with,
in the case of the issuance of any Letter of Credit, the amount of
their risk participation therein, which shall be each Bank's Pro
Rata Share of the stated amount of such Letter of Credit.
2.7D. Payment of Amounts Drawn Under Letters of Credit.
In the event of any drawing under any Letter of Credit by the
beneficiary thereof, PNC shall promptly notify the Borrower of such
drawing, and the Borrower shall reimburse PNC on the date on which
such drawing is honored in an amount in same day funds equal to the
amount of such drawing. The Borrower shall have the right to
obtain a Revolving Loan (subject to the limitations set forth in
Section 2.1A hereof) in an amount sufficient to repay in full any
such drawing honored by PNC under a Letter of Credit.
2.7E. Payment by Banks with Respect to Letters of Credit.
In the event that the Borrower shall fail to reimburse PNC as
provided in Section 2.7D hereof in an amount equal to the amount of
any drawing honored by PNC under a Letter of Credit issued by PNC,
PNC shall promptly notify each Bank of the unreimbursed amount of
such drawing and of such Bank's respective participation therein,
which participation shall be equal to such Bank's Pro Rata Share of
the unreimbursed amount of such drawing. Each Bank shall make
available to PNC an amount equal to its respective participation in
same day funds, at the offices of PNC located at 500 West Jefferson
Street, Louisville, Kentucky, not later than 1:00 P.M. (Louisville,
Kentucky time) on the Business Day (under the laws of the Common-
wealth of Kentucky) after the date notified by PNC, and each such
amount so made available by each Bank will be deemed a Revolving
Loan made by such Bank to the Borrower under this Loan Agreement as
of the date such amount is so made available to PNC. In the event
that any Bank fails to make available to PNC the amount of such
Bank's participation in such Letter of Credit as provided in this
Section 2.7E, PNC shall be entitled to recover such amount on
demand from such Bank together with interest at the customary rate
set by PNC for the correction of errors among banks for three
Business Days and thereafter at the Federal Funds Rate. Nothing in
this Section 2.7 shall be deemed to prejudice the right of any Bank
to recover from PNC any amounts made available by such Bank to PNC
pursuant to this Section 2.7E in the event that it is determined by
a court of competent jurisdiction that the payment made by PNC with
respect to a Letter of Credit in respect of which reimbursement was
made by such Bank constituted gross negligence or willful miscon-
duct on the part of PNC. PNC shall distribute to each other Bank
which has paid all amounts payable by it under this Section 2.7E
with respect to any Letter of Credit issued by PNC such other Banks
Pro Rata Share of all payments received by PNC from the Borrower in
reimbursement of drawings honored by PNC under such Letter of
Credit, as the case may be, when such payments are received.
Notwithstanding anything to the contrary herein, each Bank which
has paid all amounts payable by it under this Section 2.7E shall
have a direct right to reimbursement of such amounts from the
Borrower, subject to the procedures for reimbursing Banks set forth
in this Section 2.7.
2.7F. Compensation. The Borrower agrees to pay, without
duplication, the following amounts to PNC with respect to each such
Letter of Credit issued by PNC for the account of the Borrower:
(i) With respect to each Letter of Credit a letter
of credit issuance fee payable to PNC equal to 1/8th of 1% per
annum of the maximum amount available from time to time to be
drawn under such Letter of Credit, calculated on the basis of
a 360-day year and the actual number of days elapsed and
payable in immediately available funds quarterly in advance to
PNC until the expiration of such Letter of Credit;
(ii) With respect to each Letter of Credit a letter
of credit fee (the "Letter of Credit Fee") payable to PNC for
the account of the Banks (and to be shared by the Banks as
provided in Section 2.7E hereof) equal to the per annum
Applicable Letter of Credit Fee multiplied by the maximum
amount available from the time to time to be drawn under such
Letter of Credit, calculated on the basis of a 360-day year
and the actual number of days elapsed and payable in immedi-
ately available funds quarterly in advance on the first Busi-
ness Day immediately succeeding the last day of each Fiscal
Quarter and upon expiration of such Letter of Credit; provid-
ed, however, upon the occurrence and during the continuation
of any Event of Default, the Letter of Credit Fee shall equal
two percent (2%) per annum plus the Applicable Letter of
Credit Fee in effect on the date of the occurrence of such
Event of Default;
On each Date of Determination, commencing with the first
such date to occur after October 11, 1996, the Applicable Letter of
Credit Fee in effect for the Pricing Period commencing on such Date
of Determination and continuing for the term of the Pricing Period
that begins on such Date of Determination shall be the Applicable
Letter of Credit Fee corresponding to the Pricing Level in effect
for such Pricing Period, as follows:
Applicable Letter
Pricing Level of Credit Fee
Pricing Level I .500%
Pricing Level II .575%
Pricing Level III .625%
(iii) With respect to drawings made under any Letter
of Credit, interest, payable in immediately available funds to
PNC on demand, on the amount paid by PNC in respect of each
drawing from the date of the drawing through the date such
amount is reimbursed by the Borrower at a variable rate equal
to the Base Rate then in effect for Base Rate Loans made or
available to be made to the Borrower;
(iv) With respect to the issuance, amendment or
transfer of each Letter of Credit and each drawing made
thereunder, documentary and processing charges payable to PNC
in accordance with PNC's standard schedule for such charges in
effect at the time of such issuance, amendment, transfer or
drawing, as the case may be; and
(v) Promptly upon receipt by PNC of the amount
described in subsections (ii) and (iii) of this Section 2.7F,
PNC shall distribute to each Bank its pro rata share of such
amount.
2.7G. Obligations Absolute. Subject to the right of the
Borrower and the Banks to seek damages in the event that a court of
competent jurisdiction determines that PNC acted in bad faith
and/or committed gross negligence or willful misconduct in honoring
any draft presented under any Letter of Credit issued by PNC, the
obligation of the Borrower to reimburse PNC for drawings made under
such Letter of Credit and the obligation of the Banks under Section
2.7E hereof to reimburse PNC in accordance with their Pro Rata
Shares for drawings made under such Letter of Credit shall be
unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Loan Agreement under all circum-
stances including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of such Letter of
Credit;
(ii) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against a beneficiary
or any transferee of such Letter of Credit (or any Persons for whom
any such transferee may be acting), the Agent, any Bank or any
other Person, whether in connection with this Loan Agreement, the
transactions contemplated herein or any unrelated transaction
(including any underlying transaction between the Borrower and the
beneficiary for which such Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(iv) payment by PNC under such Letter of Credit against
presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit;
(v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(vi) the fact that an Event of Default or a Potential Event of
Default under this Loan Agreement shall have occurred and be
continuing.
As between the Borrower and PNC, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of
Credit issued by PNC for the account of the Borrower by, the re-
spective beneficiaries of such Letters of Credit. In furtherance
and not in limitation of the foregoing, PNC shall not be responsi-
ble: (i) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connec-
tion with the application for and issuance of such Letters of
Credit, even if it should in fact prove to be in any or all re-
spects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any such letter of
Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for
any reason; (iii) for failure of the beneficiary of any such Letter
of Credit to comply fully with conditions required in order to draw
upon such Letter of Credit; (iv) for errors, omissions, interrup-
tions or delays in transmission or delivery of any messages, by
mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter
of Credit or of the proceeds thereof; (vii) for the misapplication
by the beneficiary of any such Letter of Credit of the proceeds of
any drawing under such Letter of Credit; and (viii) for any conse-
quences arising from causes beyond the control of PNC, including,
without limitation, any act or omission, whether rightful or wrong-
ful, of any present or future government agency or authority. None
of the above shall affect, impair, or prevent the vesting of any of
PNC's rights or powers hereunder; provided however, that PNC shall
be responsible for any payment PNC makes under any Letter of Credit
against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of
Credit in the event such payment constitutes bad faith, gross
negligence or willful misconduct of PNC as determined by a court of
competent jurisdiction.
In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by PNC under or in connection with the Letters of Credit
issued by it or the related certificates, if taken or omitted in
good faith and without bad faith, gross negligence or willful
misconduct, shall not put PNC under any resulting liability to the
Borrower or the Banks.
Notwithstanding anything to the contrary contained in
this Section 2.7, the Borrower shall have no obligation to
indemnify PNC in respect of any liability incurred by PNC arising
out of the bad faith, gross negligence or willful misconduct of
PNC, as determined by a court of competent jurisdiction, or out of
the wrongful dishonor by PNC of proper demand for payment made
under the Letters of Credit issued by it.
2.7H. Computation of Interest. Interest payable pursuant
to this Section 2.7 shall be computed on the basis of a 360-day
year and the actual number of days elapsed in the period during
which it accrues.
2.7I. Amendments. The Borrower may request that PNC
enter into one or more amendments of any Letter of Credit issued by
PNC for the account of the Borrower by delivering to PNC an Appli-
cation and Agreement For Letter of Credit specifying (i) the pro-
posed date of the amendment, and (ii) the requested amendment. PNC
shall be entitled to enter into amendments with respect to the
Letters of Credit issued by it; provided however that any such
amendment extending the expiry date, changing the letter of Credit
Fee Percentage, or increasing the stated amount of any Letter of
Credit shall only be permitted if PNC would be permitted to issue a
new Letter of Credit having such an expiry date, different Letter
of Credit Fee Percentage, or stated amount under this Section 2.7
on the date of the amendment.
2.8. Increased Costs; Taxes; Capital Adequacy. The
parties to this Loan Agreement stipulate that the provisions of
this Section 2.8 shall apply to the Line of Credit Advances with
the same force and effect as such provisions apply to Revolving
Loans.
2.8A. Compensation for Increased Costs and Taxes. In the
event that any Bank shall determine in good faith (which deter-
mination shall, absent manifest or demonstrable error, be final and
conclusive and binding upon all parties hereto) that any law,
treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a
court or governmental authority, in each case that becomes effec-
tive after the date hereof, or compliance by such Bank with any
guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-govern-
mental authority, and which has the force of law and first becomes
effective after the Closing Date:
(i) subjects such Bank (or its applicable lending office) to
any additional Covered Tax with respect to this Loan Agreement or
any of the Revolving Loans or any of its obligations hereunder, or
changes the basis of taxation of payments to such Bank (or its
applicable lending office) of principal, interest, fees or any
other amount payable hereunder (but not changes in Excluded Taxes);
(ii) imposes, modifies or holds applicable any additional
reserve (including without limitation any marginal, emergency,
supplemental, special or other reserve), special deposit, compulso-
ry loan, FDIC insurance or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, or
advances or loans by, or other credit extended by, or any other
acquisition of funds by, the Bank (or its applicable lending
office) (other than any such reserve or other requirements with
respect to LIBOR Rate Loans that are reflected in the definition of
Adjusted LIBOR Rate, as the case may be); or
(iii) imposes any other condition on or affecting such Bank
(or its applicable lending office) or its obligations hereunder or
the London interbank market, other than with respect to Taxes; and
the result of any of the foregoing is to increase the cost to such
Bank of agreeing to make, making or maintaining Revolving Loans
hereunder or to reduce any amount received or receivable by such
Bank (or its applicable lending office) with respect thereto, then,
in any such case, the Borrower shall promptly pay to such Bank,
upon demand, such additional amount or amounts (in the form of an
increased rate of, or a different method of calculating, interest
as such Bank in its reasonable discretion shall determine) as may
be necessary to compensate such Bank on an after-tax basis for any
such increased cost or reduction in amounts received or receivable
hereunder; provided that any increased cost arising as a result of
any of the foregoing other than in respect of Taxes shall apply
only to LIBOR Rate loans; provided further, such Bank shall have
the right to seek such additional compensation from the Borrower
only if such Bank has given the Borrower not less than ninety (90)
days prior written notice of such Bank's intent to seek such
additional compensation from the Borrower and only if such Bank is
generally seeking to recover the additional costs of the type
referred to in this Section 2.8A from its other borrowers similarly
situated; provided even further, each Bank that seeks additional
compensation from the Borrower pursuant to this Section 2.8A shall
be an Affected Bank and such Bank shall be entitled to such
additional compensation from the Borrower only if the Borrower has
not replaced such Bank pursuant to Section 10 hereof within the
ninety (90) day notice period provided above. Such Bank shall
deliver to the Borrower a written statement, setting forth in
reasonable detail the basis for calculating the additional amounts
owed to such Bank under this Section 2.8A, which statement shall be
conclusive and binding upon all parties hereto absent manifest or
demonstrable error.
2.8B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by the
Borrower under this Loan Agreement and the other Loan Instruments
to or for the benefit of any Bank or the Agent or any Person who
acquires any interest in the Revolving Loans pursuant to the
provisions hereof shall be paid free and clear of and (except to
the extent required by law) without any deduction or withholding on
account of any Covered Tax imposed, levied, collected, withheld or
assessed by or within the United States of America or any political
subdivision in or of the United States of America or any other
jurisdiction from or to which a payment is made by or on behalf of
the Borrower or by any federation or organization of which the
United States of America or any such jurisdiction is a member at
the time of payment.
(ii) Grossing-up of Payments. If the Borrower or any other
Person is required by law to make any deduction or withholding on
account of any Covered Tax from any sum paid or payable by the
Borrower to the Agent or any Bank under any of the Loan Instru-
ments;
(1) The Borrower shall notify the Agent of any such require-
ment or any change in any such requirement as soon as the Borrower
becomes aware of it;
(2) The Borrower shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if the
liability to pay is imposed on the Borrower) for its own account or
(if that liability is imposed on the Agent or such Bank, as the
case may be) on behalf of and in the name of the Agent or such
Bank;
(3) The sum payable by the Borrower in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, the Agent or such Bank,
as the case may be, receives on the due date and retains (free from
any liability in respect of any such deduction, withholding or
payment) a net sum equal to what it would have received and so
retained had no such deduction, withholding or payment in respect
of Covered Taxes been required or made; and
(4) Within thirty (30) days after paying any sum from which it
is required by law to make any deduction or withholding, and within
thirty (30) days after the due date of payment of any Tax which it
is required to pay by clause (b) above, the Borrower shall deliver
to the Agent evidence satisfactory to the other affected parties of
such deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be
paid to any Bank under clause (3) above except to the extent that
any change after the date hereof in any such requirement for a
deduction, withholding or payment as is mentioned therein shall
result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Loan Agreement in
respect of payments to such Bank; provided, further, such Bank
shall have the right to seek such additional amounts under this
Section 2.8B from the Borrower only if such Bank has given the
Borrower not less than ninety (90) days prior written notice of
such Bank's intent to seek such additional amounts from the Bor-
rower and only if such Bank is generally seeking to recover the
additional amounts of the type referred to in this Section 2.8B
from its other borrowers similarly situated; provided even further,
each Bank that seeks additional amounts from the Borrower-pursuant
to this Section 2.8B shall be an Affected Bank and such Bank shall
be entitled to such additional amounts from the Borrower only if
the Borrower has not replaced such Bank pursuant to Section 10
hereof within the ninety (90) day notice period provided above.
(iii) Tax Refund. If the Borrower determines in good faith
that a reasonable basis exists for contesting a Covered Tax, the
relevant Bank or Tax Transferee or the Agent, as applicable, shall
cooperate with the Borrower in challenging such Tax at the
Borrower's expense if requested by the Borrower (it being under-
stood and agreed that neither the Agent nor any Bank shall have any
obligation to contest, or any responsibility for contesting, any
Tax). If any Tax Transferee, any Bank or the Agent, as applicable,
receives a refund (whether by way of a direct payment or by offset
of any Covered Tax for which a payment has been made pursuant to
this Section 2.8) the amount of such refund (together with any
interest received thereon) shall be paid to the Borrower to the
extent payment has been made in full pursuant to this Section 2.8.
(iv) U.S. Tax Certificates. Each Bank that is organized under
the laws of any jurisdiction other than the United States or any
state or other political subdivision thereof shall deliver to the
Agent for transmission to the Borrower, on or prior to the Closing
Date (in the case of each Bank listed on the signature pages
hereof) or on the date (and as a condition to effectiveness) of the
Assignment Agreement pursuant to which it becomes a Bank (in the
case of each other Bank), and at such other times as may be
necessary in the determination of the Borrower or the Agent (each
in the reasonable exercise of its discretion), such certificates,
documents or other evidence, properly completed and duly executed
by such Bank (including, without limitation, Internal Revenue
Service Form 1001 or Form 4224 or any other certificate or
statement of exemption required by Treasury Regulations Section
1.1441-4(a) or Section 1.1441-6(c) or any successor thereto) to
establish that such Bank is not subject to deduction or withholding
of United States federal income tax under Section 1441 or 1442 of
the Internal Revenue Code or otherwise (or under any comparable
provisions of any successor statute) with respect to any payments
to such Bank of principal, interest, fees or other amounts payable
under any of the Loan Instruments. The Borrower shall be required
to pay any additional amount to any such Bank under clause (3) of
Section 2.8B(ii) hereof if such Bank shall have failed to satisfy
the requirements of the immediately preceding sentence; provided
that if such Bank shall have satisfied such requirements on the
Closing Date (in the case of each Bank listed on the signature
pages hereof) or on the date of the Assignment Agreement pursuant
to which it became a Bank (in the case of each other Bank), nothing
in this Section 2.8B(iv) shall relieve the Borrower of its obli-
gation to pay any additional amounts pursuant to clause (3) of
Section 2.8B(ii) hereof in the event that, as a result of any
change in applicable law, such Bank is no longer properly entitled
to deliver certificates, documents or other evidence at a subse-
quent date establishing the fact that such Bank is not subject to
withholding as described in the immediately preceding sentence.
2.8C. Capital Adequacy Adjustment. If any Bank shall
have determined in good faith that the adoption, effectiveness,
phase-in or applicability of any law, rule or regulation (or any
provision thereof) regarding capital adequacy, or any change
therein or in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by
any Bank (or its applicable lending office) with any guideline,
request or directive regarding capital adequacy of any such govern-
mental authority, central bank or comparable agency, and which has
the force of law and first becomes effective after the Closing
Date, has or will have the effect of reducing the rate of return on
the capital of such Bank or any corporation controlling such Bank
as a consequence of, or with reference to, such Bank's Revolving
Loans or Revolving Loan Commitment or other Obligations hereunder
to a level below that which such Bank or such controlling corpora-
tion would have achieved but for such adoption, effectiveness,
phase-in, applicability, change or compliance (taking into consid-
eration the policies of such Bank or such controlling corporation
with regard to capital adequacy), then from time to time, within
ten (10) Business Days after demand by such Bank (with a copy of
such demand to the Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank or such
controlling corporation on an after-tax basis for such reduction as
and when incurred; provided, such Bank shall have the right to seek
such additional compensation from the Borrower only if such Bank
has given the Borrower not less than ninety (90) days prior written
notice of such Bank's intent to seek such additional compensation
from the Borrower and only if such Bank is generally seeking to
recover such additional compensation of the type contemplated in
this Section 2.8C from its other borrowers similarly situated pro-
vided further, each Bank that seeks additional compensation from
the Borrower pursuant to this Section 2.8C shall be an Affected
Bank and such Bank shall be entitled to such additional compensa-
tion from the Borrower only if the Borrower has not replaced such
Bank pursuant to Section 10 hereof within the ninety (90) day
notice period provided above. Each Bank, upon determining in good
faith that any additional amounts will be payable pursuant to this
Section 2.8C, will give prompt written notice thereof to the Bor-
rower, which notice shall set forth the basis of the calculation of
such additional amounts, although the failure to give any such
notice shall not release or diminish any of the Borrower's obli-
gations to pay additional amounts under this Section 2.8C.
2.9. Banks' Obligation to Mitigate. The parties to
this Loan Agreement stipulate that the provisions of this Section
2.9 shall apply to the Line of Credit Advances with the same force
and effect as such provisions apply to Revolving Loans.
Each Bank agrees that, as promptly as practicable after
the officer of such Bank responsible for administering the
Revolving Loans under this Loan Agreement becomes aware of the
occurrence of an event or the existence of a condition that would
cause such Bank to become an Affected Bank or that would entitle
such Bank to receive payments under Section 2.6 or 2.8 hereof, it
will, to the extent not inconsistent with such Bank's internal
policies, use reasonable efforts (i) to make, fund or maintain the
Revolving Loan Commitment of such Bank or the Affected Loans of
such Bank through another lending office of such Bank, or (ii) take
such other reasonable measures if as a result thereof the circum-
stances which would cause such Bank to be an Affected Bank would
cease to exist or the additional amounts which would otherwise be
required to be paid to such Bank pursuant to Section 2.6 or 2.8
hereof would be materially reduced and if, as determined by such
Bank in its sole discretion, the making, funding or maintaining of
such Revolving Loan Commitment or Revolving Loans through such
other lending office or in accordance with such other measures, as
the case may be, would not otherwise materially adversely affect
such Revolving Loan Commitments or Revolving Loans or the interests
of such Bank; provided that such Bank will not be obligated to
utilize such other lending office pursuant to this Section 2.9
unless the Borrower agree to pay all expenses incurred by such Bank
in utilizing such other lending office. A certificate as to the
amount of any such expenses payable by the Borrower pursuant to
this Section 2.9 (setting forth in reasonable detail the basis for
requesting such amount) submitted by such Bank to the Borrower
shall be conclusive absent manifest or demonstrable error.
2.10. Records. The parties to this Loan Agreement
stipulate that the provisions of this Section 2.10 shall apply to
the Line of Credit Advances with the same force and effect as such
provisions apply to Revolving Loans.
2.10A. The Agent shall record the names and addresses
of the Banks and the Revolving Loan Commitments and the Revolving
Loans (or participations therein) of each Bank from time to time in
the electronic records of the Agent. The Borrower, the Agent and
the Banks may treat each Person whose name is so recorded in the
electronic records of the Agent as a Bank hereunder for all pur-
poses of this Loan Agreement. Printouts of the Agent's electronic
records shall be available for inspection by the Borrower or any
Bank at any reasonable time and from time to time upon reasonable
prior notice to the Agent.
2.10B. The Agent shall record the Revolving Loan
Commitment and the Revolving Loans from time to time of each Bank
made to the Borrower and each repayment or prepayment in respect of
the principal amount of the Revolving Loans of each Bank made to
the Borrower in the Agent's electronic records. Any such recorda-
tion in accordance with the terms of this Loan Agreement shall be
conclusive and binding on the Borrower absent manifest error; pro-
vided, that failure to make any such recordation, or any error in
such recordation, shall not affect the Borrower's obligation to
repay all Revolving Loans to the Banks in accordance with this Loan
Agreement and the Revolving Notes.
2.10C. Each Bank shall record on its internal records
its Pro Rata Share of each Revolving Loan made by it to the Bor-
rower and each payment in respect thereof. Any such recordation in
accordance with the terms of this Loan Agreement shall be conclu-
sive and binding on the Borrower absent manifest error; provided,
that failure to make any such recordation, or any error in such
recordation, shall not affect the Borrower's obligation to repay
all Revolving Loans to the Banks in accordance with this Loan
Agreement; provided further, that in the event of any inconsistency
between the Agent's electronic records and any Bank's records, the
Agent's electronic records shall govern in the absence of manifest
or demonstrable error.
2.11. Swing Line Loans.
2.11A. Swing Line Loan Commitment. Subject to
the terms and conditions of this Loan Agreement and in reliance
upon the representations and warranties of the Borrower set forth
herein, PNC hereby agrees, subject to the limitations set forth
below with respect to the maximum amount of Swing Line Loans per-
mitted to be outstanding from time to time, to make a portion of
its Revolving Loan Commitment and a portion of its Line of Credit
Commitment available to the Borrower from time to time during the
period up to but not including the Revolving Loan Commitment Termi-
nation Date and the Line of Credit Commitment Termination Date,
respectively, in an aggregate principal amount of up to Five
Million Dollars ($5,000,000.00), by making Swing Line Loans to the
Borrower, notwithstanding the fact that such Swing Line Loans, when
aggregated with PNC's outstanding Revolving Loans and Line of
Credit Advances, may exceed PNC's Revolving Loan Commitment or its
Line of Credit Commitment. PNC's commitment to make Swing Line
Loans to the Borrower pursuant to this Section 2.11 is herein
called its "Swing Line Loan Commitment." In no event shall (a) the
aggregate principal amount of Swing Line Loans outstanding at any
time exceed the Swing Line Loan Commitment, or (b) the aggregate
principal amount of Revolving Loans, Line of Credit Advances and
Swing Line Loans outstanding at any time exceed the sum of the
aggregate Revolving Loan Commitments reduced by the aggregate
Letter of Credit Usage at such time plus the aggregate Line of
Credit Commitments. Any reduction of the Revolving Loan Commitments
or the Line of Credit Commitments made pursuant to Section 2.4
hereof which reduces the Revolving Loan Commitments and the Line of
Credit Commitments below the then current amount of the Swing Line
Loan Commitment shall result in an automatic corresponding
reduction of the Swing Line Loan Commitment to the amount of the
Revolving Loan Commitments and Line of Credit Commitments, as so
reduced, without any further action on the part of PNC.
PNC's Swing Line Loan Commitment shall constitute a
364-day facility and shall be renewable from time to time at the
sole option of PNC upon not less than thirty (30) days' prior
written notice to the Borrower; Provided, that all outstanding
Swing Line Loans on the date of cancellation of the Swing Line Loan
Commitment, if such date is earlier than the Revolving Loan
Commitment Termination Date or the Line of Credit Commitment
Termination Date shall be paid in full to PNC with Revolving Loans
and/or Line of Credit Advances made by the Banks in accordance with
their respective Pro Rata Shares in the manner set forth in Section
2.1D herein; provided further, the Swing Line Loan Commitment shall
expire on either the Revolving Loan Commitment Termination Date or
the Line of Credit Termination Date and all Swing Line Loans shall
be paid in full to PNC no later than such date.
All Swing Line Loans shall bear interest on the unpaid
principal amount thereof from the date made through maturity
(whether by acceleration or otherwise) at a rate per annum equal to
the Offered Rate, shall be payable monthly in arrears and shall not
be entitled to be converted into LIBOR Rate Loans unless and until
such Swing Line Loans are converted to Revolving Loans or Line of
Credit Advances in accordance with Section 2.11C hereof. Swing Line
Loans made on any Funding Date may be in any amount up to Five
Million Dollars ($5,000,000.00), or, if less, the positive
difference between Five Million Dollars ($5,000,000.00) and the
aggregate principal amount of all Swing Line Loans then outstand-
ing. All Swing Line Loans together with accrued interest thereon
shall be evidenced by the Swing Line Note. All Swing Line Loans
shall be paid in full to PNC on the Swing Line Loan Commitment
Termination Date.
2.11B. Request For Swing Line Loans. Whenever the
Borrower desires to obtain a Swing Line Loan pursuant to Section
2.11A hereof, it shall deliver to PNC a Request For Swing Line Loan
no later than 1:00 P.M. (Louisville, Kentucky time) on the proposed
Funding Date. The Request For Swing Line Loan shall specify (i) the
proposed Funding Date (which shall be a Business Day), and (ii) the
amount of the proposed Swing Line Loan. In lieu of delivering the
above-described Request For Swing Line Loan, the Borrower may give
PNC telephonic notice by the required time of any proposed
borrowing under this Section 2.11B; provided that such notice shall
be promptly confirmed in writing by delivery of a Request For Swing
Line Loan to PNC prior to or promptly after the Funding Date of the
requested Swing Line Loan.
Neither the Agent nor any Bank shall incur any liability
to the Borrower in acting upon any telephonic notice referred to
above which PNC believes in good faith to have been given by a duly
Authorized Officer or other Person authorized to borrow on behalf
of the Borrower or for otherwise acting in good faith under this
Section 2.11B and, upon funding of Swing Line Loans by PNC in
accordance with this Loan Agreement pursuant to any telephonic
notice, the Borrower shall have effected such Swing Line Loans
hereunder.
2.11C. Reimbursement to PNC for Swing Line Loans. PNC
shall notify each Bank on Tuesday of each week of any Swing Line
Loans that are outstanding, and, within one (1) Business Day after
receipt of such notice, each Bank, including PNC, shall make a
Revolving Loan (which shall initially be funded as a Base Rate
Loan) or a Line of Credit Advance (which shall initially be funded
as a Base Rate Loan), in each case as directed by PNC, in an amount
equal to such Bank's Pro Rata Share of the amount of the Swing Line
Loans outstanding on the date notice is given to the Banks to fund
their Pro Rata Shares of the Swing Line Loans; provided, however,
the obligation of each Bank to make any such Revolving Loan or Line
of Credit Advance is subject to the condition that (i) PNC believed
in good faith that all conditions under Section 2.1C(f) hereof to
the making of such Swing Line Loan were satisfied at the time such
Swing Line Loan was made, or (ii) the satisfaction of any such
condition not satisfied had been waived by the Requisite Banks
prior to or at the time such Swing Line Loan was made. In the case
of Revolving Loans or Line of Credit Advances made by Banks other
than PNC under the immediately preceding sentence, each such Bank
shall make the amount of its Revolving Loan or Line of Credit
Advance available to the Agent, in same day funds, at the office of
the Agent located at 500 West Jefferson Street, Louisville,
Kentucky 40202, not later than 1:00 P.M. (Louisville, Kentucky
time) on the required Business Day. The proceeds of such Revolving
Loans or Line of Credit Advances shall be immediately delivered to
PNC (and not to the Borrower) and applied to repay the outstanding
Swing Line Loans. On the day such Revolving Loans or Line of Credit
Advances are made, PNC's Pro Rata Share of the outstanding Swing
Line Loans shall be deemed to be paid with the proceeds of a
Revolving Loan or Line of Credit Advance made by PNC and such
portion of the Swing Line Loans deemed to be so paid shall no
longer be outstanding as Swing Line Loans, shall no longer be due
under the Swing Line Note and shall be due under the Revolving Note
issued by the Borrower to PNC or the PNC Line of Credit Note. The
Borrower authorizes the Agent to charge the Borrower's accounts
with the Agent (up to the amount available in each such account) in
order to immediately pay PNC the amount of such outstanding Swing
Line Loans to the extent amounts received from the Banks, including
amounts deemed to be received from PNC, are not sufficient to repay
in full such outstanding Swing Line Loans. If any portion of any
such amount paid (or deemed to be paid) to PNC should be recovered
by or on behalf of the Borrower from PNC in bankruptcy, by
assignment for the benefit of creditors or otherwise, the loss of
the amount so recovered shall be ratably shared among all of the
Banks that have made Revolving Loans or Line of Credit Advances
pursuant to this Section 2.11C in the manner contemplated by
Section 10 hereof. Subject to the proviso contained in the first
sentence of this paragraph, each Bank's obligation to make the
Revolving Loans referred to in this Section 2.11C and each Bank's
obligation to make Line of Credit Advances shall be absolute and
unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Bank may have against
PNC, the Borrower or anyone else for any reason whatsoever; (ii)
the occurrence or continuance of an Event of Default or a Potential
Event of Default; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) the acceleration or
maturity of any Revolving Loans or the termination of the Revolving
Loan Commitments after the making of any Swing Line Loan; (v) the
acceleration or maturity of any Line of Credit Advances or the
termination of the Line of Credit Commitments after the making of
any Swing Line Loan; (vi) any breach of this Loan Agreement by the
Borrower or any other Bank; or (vii) any other circumstance,
happening or event whatsoever, whether or not similar to any of the
foregoing. All Swing Line Loans outstanding on the Revolving Loan
Commitment Termination Date or on the Line of Credit Commitment
Termination Date shall be paid in full to PNC on such date.
In the event that the Borrower has filed for protection
under the Bankruptcy Code or any other bankruptcy laws, each Bank
shall upon request by PNC acquire without recourse or warranty an
undivided participation interest equal to such Bank's Pro Rata
Share of any Swing Line Loan otherwise required to be repaid by
such Bank pursuant to the preceding paragraph by paying to PNC on
the date on which such Bank would otherwise have been required to
make a Revolving Loan or Line of Credit Advance in respect of such
Swing Line Loan pursuant to the preceding paragraph, in immediately
available funds, an amount equal to such Bank's Pro Rata Share of
such Swing Line Loan, and no Revolving Loans and no Line of Credit
Advances shall be made by such Bank pursuant to the preceding
paragraph. If such amount is not in fact made available to PNC by
that Bank on the date when Revolving Loans or Line of Credit
Advances would otherwise be required to be made pursuant to the
preceding paragraph, PNC shall be entitled to recover such amount
on demand from that Bank together with interest accrued from such
date at the customary rate set by PNC for the correction of errors
among banks for three Business Days and thereafter at the Base
Rate. From and after the date on which any Bank purchases an
undivided participation interest in a Swing Line Loan pursuant to
this paragraph, PNC shall promptly distribute to such Bank such
Bank's Pro Rata Share of all payments of principal and interest in
respect of such Swing Line Loan.
A copy of each notice given by PNC to the Banks pursuant
to the second preceding paragraph shall be promptly delivered by
PNC to the Borrower. Upon the making of a Revolving Loan or a Line
of Credit Advance by a Bank pursuant to this Section 2.11C, the
amount so funded shall become due under the Revolving Note or the
Line of Credit Note issued by the Borrower to such Bank and shall
no longer be owed under the Swing Line Note.
Notwithstanding anything herein to the contrary, PNC
shall not be obligated to make any Swing Line Loans if it has
elected after the occurrence of a Potential Event of Default or
Event of Default not to make Swing Line Loans and has notified the
Borrower in writing or by telephone of such election. PNC shall
promptly give notice to the Banks of such election not to make
Swing Line Loans.
SECTION 3
CONDITIONS PRECEDENT
3. Effective Date; Other Stipulations.
3.1. Conditions to Effectiveness of Loan Agreement.
This Loan Agreement shall be effective on that date (the "Effective
Date") on which each of the following documents (collectively, the
"Amendment Documents") has been executed by each of the parties to
them and delivered to the Agent, on behalf of the Banks:
[i] this Loan Agreement, duly executed by the
Borrower; and
[ii] an Amended and Restated Guaranty Agreement,
substantially in the form of Exhibit K, duly executed and
delivered by Wabash; and
[iii] Certified Resolutions of the Board of
Directors of the Borrower, authorizing the execution and
delivery by Borrower of this Loan Agreement; and
[iv] supplemental written opinions of counsel to
the Borrower and Wabash, respectively, substantially in the
form of Exhibits H-1 and H-2 hereto.
If each of the Amendment Documents has not been fully
executed and delivered to the Agent on or before April 15, 1997,
this Loan Agreement shall be voidable at any time thereafter upon
notice given by Borrower to the Banks or by notice given by the
Agent, acting at the direction of the Requisite Banks, to the
Borrower.
3.1A. Upon the Effective Date, this Loan Agreement shall
supersede and replace the Original Loan Agreement as modified by
the First Amendment, Second Amendment, Third Amendment and Fourth
Amendment, and from and after the Effective Date each reference to
the "Loan Agreement" or words of like import shall mean and be
deemed a reference to this Loan Agreement.
3.2. Conditions to All Letters of Credit.
[intentionally omitted].
3.3. Conditions to All Revolving Loans and Letters of
Credit. The obligation of the Banks to make Revolving Loans to the
Borrower and the obligation of PNC to issue or extend the stated
expiration date of each Letter of Credit is subject to the follow-
ing further conditions precedent:
3.3A. The Agent shall have received with respect to each
Revolving Loan, in accordance with the provisions of Section 2.1C
of this Loan Agreement, an originally executed Request For
Revolving Loan, in each case signed by an Authorized Officer of the
Borrower.
3.3B. PNC shall have received with respect to each Letter
of Credit, in accordance with the provisions of Section 2.7B of
this Loan Agreement, an originally executed Application and
Agreement For Letter of Credit relating to such Letter of Credit,
in each case signed by an Authorized Officer of the Borrower.
3.3C. As of the Funding Date of the Revolving Loan or the
date of issuance or extension of the stated expiration date of the
Letter of Credit:
(i) The representations and warranties contained herein, as
originally stated or as updated in writing from time to time by the
Borrower, shall be true and correct in all material respects on and
as of that date to the same extent as though made on and as of that
date;
(ii) No event shall have occurred and be continuing or would
result from the funding of the Revolving Loan or the issuance or
extension of the stated expiration date of such Letter of Credit
which would constitute an Event of Default;
(iii) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Bank
from making that Revolving Loan or PNC from issuing or extending
the stated expiration date of that Letter of Credit; and
(iv) No injunction or other restraining order shall have been
issued and no hearing to cause an injunction or other restraining
order to be issued shall be pending or noticed with respect to any
action, suit or proceeding seeking to enjoin or otherwise prevent
the consummation of this Loan Agreement or the making of the
Revolving Loans hereunder or the issuance or extension of the
respective stated expiration dates of the Letters of Credit
hereunder.
SECTION 4
REPRESENTATIONS AND WARRANTIES
4. Representations and Warranties. The Borrower represents
and warrants to the Banks as follows, which representations and
warranties shall be deemed restated as of each Funding Date and the
date of the issuance of or the extension of the expiration date of
each Letter of Credit, and shall survive the execution and delivery
of this Loan Agreement:
4.1. Organization, Standing, etc. The Borrower is a
corporation duly organized and validly existing under the laws of
the Commonwealth of Kentucky. The Borrower has all requisite power
and authority to own and operate its properties, to carry on its
business as now conducted and proposed to be conducted, to execute
and deliver this Loan Agreement and the other Loan Instruments to
which it is a party, and to carry out the terms hereof and thereof.
The Borrower has delivered to the Agent a true and complete copy of
its Articles of Incorporation and Bylaws as in effect on the date
hereof.
4.2. Qualification. The Borrower is duly qualified to
transact business as a foreign corporation and is in good standing
as a foreign corporation in each jurisdiction in respect of which
the failure to be so qualified would have a Material Adverse
Effect.
4.3. Use of Proceeds. The Borrower's uses of the
Revolving Loans made to the Borrower (a) will at all times be legal
and proper corporate uses of the Borrower, and such uses are
consistent with all applicable laws and statutes as in effect as of
the date hereof, and (b) will not violate or result in a violation
of Regulations G, U, T or X of the Board of Governors of the
Federal Reserve System.
4.4. Intellectual Property. The Borrower owns or pos-
sesses such assets, licenses, patents, patent applications, copy-
rights, trademarks, trademark applications, trade names, fran-
chises, consents, authorizations and service marks and rights with
respect to the foregoing which are necessary to be owned or
possessed by the Borrower to prevent a Material Adverse Effect.
4.5. Contracts; Labor Disputes. The Borrower is not a
party to any contract or agreement, or subject to any charge,
corporate restriction, judgment, decree or order, which has or
could be reasonably foreseen to have a Material Adverse Effect.
There are no strikes or walkouts relating to any labor contracts
binding upon the Borrower.
4.6. Accuracy of Financial Reports. The audited
financial statements of the Borrower for its Fiscal Year 1996 and
the interim unaudited financial statements of the Borrower as at
and for the period ending December 31, 1996, in each case which
have been delivered to the Banks, have been prepared in accordance
with GAAP and fairly and accurately present the financial condition
of the Borrower on a consolidated basis as of the dates and for the
periods ended reflected in such financial statements; provided,
such interim financial statements shall be without footnotes and
shall be subject to normal year-end adjustments. There have been
no material adverse changes in the financial condition of the
Borrower on a consolidated basis subsequent to the periods ended
reflected in such financial statements.
4.7. Disclosure. Neither this Loan Agreement nor any
other Loan Instrument furnished to the Agent on behalf of the Banks
by or on behalf of the Borrower in connection with the transactions
contemplated hereby taken as a whole contains any statement of any
material fact which is untrue or omits to state a material fact
necessary in order to make the statements contained herein or
therein not misleading. There is no fact known to the Borrower
(other than which is hereafter disclosed in any document filed by
the Borrower with the Securities and Exchange Commission or is
otherwise disclosed by the Borrower in writing to the Agent) which
materially adversely affects the financial condition of the Bor-
rower on a consolidated basis which has not been set forth in this
Loan Agreement or in the other Loan Instruments furnished to the
Banks by or on behalf of the Borrower in connection with the trans-
actions contemplated hereby. The Borrower is currently solvent,
and neither the issuance and delivery of the Revolving Notes to the
Banks, nor the performance of the transactions contemplated here-
under, will render the Borrower insolvent, inadequately capitalized
to undertake the transactions contemplated hereunder or to under-
take the business in which it is presently engaged or about to
engage or render the Borrower unable to pay its debts as they
become due. The Borrower is not currently contemplating either the
filing of a petition by it or the commencement of a case by it
under the Bankruptcy Code or any other insolvency laws or the
liquidation of all or a major portion of its property, and the
Borrower does not have any knowledge of any Person contemplating
the filing of any such petition or commencement of any such case
against the Borrower.
4.8. Tax Returns and Payments. The Borrower has filed
all tax returns required by law to be filed by it and has paid all
taxes, assessments and other governmental charges levied upon its
properties, assets, income and franchises, other than those not yet
delinquent and those taxes, assessments and other governmental
charges the non-payment of which would not have a Material Adverse
Effect. The charges, accruals and reserves on the books of the
Borrower in respect of its taxes are adequate in the opinion of the
Borrower. The Borrower does not know of any unpaid assessment for
additional taxes.
4.9. Indebtedness, etc. As of the date of this Loan
Agreement, and without regard to the transactions contemplated
hereunder, the Borrower does not have any outstanding Indebtedness
other than the Indebtedness identified on Schedule 4.10 annexed
hereto and other Indebtedness the principal amount of which does
not exceed One Million Dollars ($1,000,000.00) in the aggregate.
4.10. Title to Properties; Liens. The Borrower has
good and marketable title to all of its properties and assets and
none of such properties or assets is or will be, as of the Closing
Date, subject to any Lien except (i) the Liens identified on
Schedule 4.10 annexed hereto and other liens which secure Indebted-
ness the principal amount of which does not exceed One Million
Dollars ($1,000,000.00) in the aggregate, and (ii) other
non-consensual Liens which in the aggregate are not substantial in
amount, do not secure any Indebtedness, do not in any case
materially detract from the value of the property subject thereto
or materially impair the operations of the Borrower and would
either singularly or in the aggregate have a Material Adverse
Effect.
4.11. Operating Leases. The Borrower enjoys quiet
possession under all operating leases to which it is a party as
lessee, and all of such operating leases are to the best knowledge
of the Borrower, after due inquiry, validly existing and in full
force and effect, and, to the best knowledge of the Borrower, after
due inquiry, neither the lessor nor the Borrower as lessee is in
default under any of such operating leases to an extent which has
or could be reasonably foreseen to have a Material Adverse Effect.
None of such operating leases contains any provision restricting
the incurrence of Indebtedness by the lessee or any unusual or
burdensome provision which has or could be reasonably foreseen to
have a Material Adverse Effect.
4.12. Litigation, etc. Except as described on Schedule
4.12 annexed hereto (as the same may be updated in writing from
time to time by the Borrower), there is no action, proceeding or
investigation pending or, to the best knowledge of the Borrower,
threatened (or any basis therefor known to the Borrower) which
questions the validity of this Loan Agreement, the Revolving Notes
or the other Loan Instruments or any action taken or to be taken
pursuant hereto or thereto or which if determined adversely to the
Borrower would in the Borrower's reasonable judgment result, either
in any case or in the aggregate, in any Material Adverse Effect.
4.13. Authorization; Compliance with Other Instruments,
etc. The execution, delivery and performance of this Loan Agree-
ment, the Revolving Notes and the other Loan Instruments to which
the Borrower is a party have been duly authorized by all necessary
corporate action on the part of the Borrower, will not result in
any violation of or be in conflict with or constitute a default
under the Articles of Incorporation or By-Laws of the Borrower or
any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to the Borrower, or result in
the creation of any Lien upon any of the properties or assets of
the Borrower. The Borrower is not in material violation of its
Articles of Incorporation or By-Laws or any agreement or instrument
to which it is a party, or, to the Borrower's best knowledge, any
judgment, decree, order, statute, rule or governmental regulation
applicable to the Borrower. Without limiting the generality of the
foregoing, to the best knowledge of the Borrower, the Borrower is
in compliance with all federal and state laws and all rules, regu-
lations and administrative orders of all state and local commis-
sions or authorities which are applicable to the Borrower or to the
operation of its business the non-compliance of which could result
in a Material Adverse Effect.
4.14. Enforceability. This Loan Agreement, the
Revolving Notes and the other Loan Instruments to which the
Borrower is a party constitute the valid and binding obligations of
the Borrower, legally enforceable against the Borrower in accor-
dance with their respective terms, except to the extent the
enforceability of the Loan Agreement, the Revolving Notes and the
other Loan Instruments is subject to the effect of applicable laws
affecting the rights of creditors generally and equitable princi-
ples.
4.15. Governmental Consent. To the best knowledge of
the Borrower, the Borrower is not currently required to obtain any
order, consent, approval or authorization of, and is not currently
required to make any declaration or filing with, any governmental
authority in connection with the execution and delivery of this
Loan Agreement or the negotiation, offer, issue, sale and delivery
of the Revolving Notes, or in connection with the execution, deliv-
ery and performance of the other Loan Instruments, and the failure
to so obtain any such order, consent, approval or authorization or
to make any such declaration or filing would result in a Material
Adverse Effect.
4.16. Investment Company Act Status. The Borrower is
not an "investment company", as such term is defined in the
Investment Company Act of 1940, as amended.
4.17. Regulation G, etc. None of the Revolving Loans
will be used, directly or indirectly, by the Borrower for the
purpose of reducing or retiring any Indebtedness which was
originally incurred to purchase or carry any Margin Stock or for
any other purpose which might constitute the transactions contem-
plated hereby a "purpose credit" within the meaning of Regulation G
or Regulation U of the Board of Governors of the Federal Reserve
System, or cause this Loan Agreement to violate Regulation G,
Regulation U, Regulation T, Regulation X or any other regulation of
the Board of Governors of the Federal Reserve System or the
Securities Exchange Act of 1934.
4.18. Holding Company Act. The Borrower is not a
"Holding Company" or a "Subsidiary Company" of a "Holding Company",
or an "Affiliate" of a "Holding Company" or of a "Subsidiary
Company" of a "Holding Company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
4.19. Employee Retirement Income Security Act of 1974.
The Borrower (a) has not incurred any material accumulated funding
deficiency within the meaning of ERISA, (b) has not incurred any
material liability to the Pension Benefit Guaranty Corporation
established under ERISA (or any successor thereto under ERISA) in
connection with any employee benefit plan established or maintained
by the Borrower, nor has the Borrower had any tax assessed against
it by the Internal Revenue Service for any alleged violation under
Section 4975 of the Internal Revenue Code, and (c) has not and does
not participate in any Multi-Employer Pension Plan within the
meaning of Section 3(37) of ERISA except as approved by the Banks
and set forth on Schedule 4.19 attached hereto. Further, to the
Borrower's knowledge, each employee benefit plan established or
maintained by the Borrower is in compliance in all material
respects with ERISA and all other applicable laws, and no pro-
hibited transaction within the meaning of Section 4975 of the
Internal Revenue Code has occurred with respect to any such
employee benefit plan established or maintained by the Borrower.
4.20. Environmental Matters.
4.20A. As used herein, the term "Environmental
Law(s)" means any federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning any Hazardous
Substance, as now or at any time hereafter in effect. As used
herein, the term "Hazardous Substance(s)" shall have the meaning
ascribed in any Environmental Law to any hazardous, toxic or
dangerous waste, substance, pollutant or material.
4.20B. The Borrower represents and warrants, to its
knowledge, and except as otherwise disclosed in writing to the
Agent on behalf of the Banks prior to the date of this Loan Agree-
ment, that neither the Borrower nor any other Person within the
Borrower's knowledge or control, including any lessee of the
Borrower's property, has ever caused or permitted any Hazardous
Substance to be released, spilled or disposed of on, under or at
the Borrower's property nor any part thereof which has resulted in
or could reasonably be foreseen to result in a Material Adverse
Effect. Further, to the Borrower's knowledge, no portion of the
Borrower's property has ever been used by the Borrower or any other
person as a dump site or storage site, whether permanent or
temporary, for any Hazardous Substance, except in substantial
compliance with all Environmental Laws or except as otherwise
disclosed in writing to the Banks prior to the date of this Loan
Agreement.
4.20C. The Borrower shall, except as otherwise sepa-
rately disclosed in writing to the Agent on behalf of the Banks
prior to the date of this Loan Agreement, give the Banks prompt
written notice of any litigation or administrative proceeding
involving a claim against the Borrower which (i) asserts or alleges
that (a) the Borrower has violated any Environmental Law, (b) the
Borrower is required to clean up or take other response action due
to the release or threatened release or transportation of any
Hazardous Substance, or (c) the Borrower is required to pay all or
a portion of the cost of any past, present or future cleanup or
other response action which arises out of or is related to the
release or threatened release or transportation of any Hazardous
Substance, and (ii) if true, would have a Material Adverse Effect.
4.21. Schedule of Guaranties. Annexed hereto as
Schedule 4.21 is a list of all guaranty agreements or similar
instruments to which the Borrower is currently a party or which is
otherwise binding upon the Borrower.
4.22. Subsidiaries and Joint Ventures. Annexed hereto
as Schedule 4.22 is a list of all existing Subsidiaries and Joint
Ventures of the Borrower.
4.23. Events of Default. There are no Potential Events
of Default or Events of Default existing as of the Closing Date.
SECTION 5
AFFIRMATIVE COVENANTS
5. Affirmative Covenants. The Borrower hereby covenants
and agrees that until the Revolving Notes have been respectively
paid in full to the Banks, the Borrower will perform and observe
all of the following provisions unless waived in writing by the
Requisite Banks:
5.1. Maintenance of Assets; Casualty Insurance. The
Borrower will, insofar as it is not prevented by causes beyond its
control, maintain or cause to be maintained in good repair, working
order and condition its assets used or useful in its business in a
manner and to the extent necessary to prevent a Material Adverse
Effect. The Borrower will in addition, insofar as it is not pre-
vented by causes beyond its control, make or cause to be made all
appropriate repairs, renewals and replacements to its assets to the
extent necessary to prevent a Material Adverse Effect. The Bor-
rower will maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to its assets
and business against loss or damage of the kinds customarily in-
sured against by corporations of established reputation engaged in
the same or a similar business and similarly situated, in such
types and amounts as are customarily carried under similar circum-
stances by such other corporations.
5.2. Monetary Obligations.
(a) The Borrower will pay and discharge promptly as they
become due and payable all taxes, assessments and other gov-
ernmental charges levied upon it or its income or upon any of its
properties or assets or in respect of its franchises, business,
income or profits, or upon any part thereof, as well as all lawful
claims of any kind (including claims for labor, materials and
supplies) which, if unpaid, might by law become a lien or a charge
upon its property before any of the same become delinquent; pro-
vided, however, the Borrower shall not be obligated to pay any such
tax, assessment or charge (i) if the non-payment thereof would not
have a Material Adverse Effect, or (ii) if the non-payment thereof
would have a Material Adverse Effect but the Borrower is contesting
the amount or validity of, or its liability for, any such taxes,
assessments or charges in good faith and by appropriate proceedings
promptly initiated and diligently conducted by the Borrower and the
Borrower has established such reserve or other appropriate provi-
sion, if any, as shall be required by GAAP in respect thereof. The
Borrower will satisfy or cause to be satisfied the minimum annual
funding standard within the meaning of ERISA for any employee
benefit plan established or maintained by the Borrower which is
subject to such minimum funding standards under ERISA, and the Bor-
rower will not permit any tax or penalty to be incurred by it as a
result of any failure to satisfy any such minimum funding require-
ment or as a result of any violation of the provisions of Section
4975 of the Internal Revenue Code or of any regulation issued
thereunder.
(b) The Borrower will pay in full all its other debts,
obligations and liabilities allowed hereunder before the same
become delinquent, unless (i) the non-payment thereof would not
have a Material Adverse Effect, or (ii) the non-payment thereof
would have a Material Adverse Effect but the same are being con-
tested in good faith by the Borrower, the Borrower has established
adequate reserves for the payment of the same in accordance with
GAAP, and the contesting thereof does not involve the risk of
forfeiture or loss of any of the Borrower's assets.
5.3. Financial Statements and Other Reports. The Bor-
rower will furnish to the Agent on behalf of the Banks:
(a) As soon as reasonably possible, and in any event within
one hundred twenty (120) days after the end of each Fiscal Year,
the audited balance sheet of the Borrower as at the end of such
Fiscal Year, and the related audited statements of income and cash
flows of the Borrower for such Fiscal Year, on a consolidated
basis, together with statements in comparative form for the
previous Fiscal Year, all in reasonable detail and accompanied by
the opinion thereon of independent public accountants selected by
the Borrower and reasonably acceptable to the Banks (the Banks
acknowledge and agree that Coopers & Lybrand or any other "Big 6"
accounting firm hereafter selected by the Borrower shall be
acceptable to the Banks), which opinion shall be in a form
generally recognized as unqualified and shall state that such
financial statements have been prepared in accordance with GAAP
applied on a basis consistent with that of the preceding Fiscal
Year (except for such changes, if any, as shall be specified and
approved by such accountants in such opinion) and that the audit by
such accountants in connection with such financial statements has
been made in accordance with GAAP relating to auditing;
(b) As soon as reasonably possible, and in any event within
forty-five (45) days after the end of each Fiscal Quarter in each
Fiscal Year, an unaudited balance sheet of the Borrower as at the
end of such Fiscal Quarter, and related unaudited statements of
income and cash flows of the Borrower for such Fiscal Quarter, on a
consolidated basis, all in reasonable detail, prepared in
accordance with GAAP consistently applied and certified to be true,
accurate and complete by the Chief Financial Officer of the
Borrower; provided, such interim financial statements shall be
without footnotes and shall be subject to normal year-end adjust-
ments;
(c) Together with each delivery of financial statements
pursuant to subdivisions (a) and (b) above, (i) a Certificate of
the President or Chief Financial Officer of the Borrower setting
forth the maximum amount of all guaranty agreements and similar
instruments issued by the Borrower for the account of each Joint
Venture and each Subsidiary, and (ii) a Compliance Certificate (A)
stating that the Chief Financial Officer of the Borrower has
reviewed the relevant terms of this Loan Agreement and has no
knowledge of any event or condition which constitutes a Potential
Event of Default or an Event of Default hereunder, or, if any such
Potential Event of Default or Event of Default existed or exists,
specifying the nature and period of existence thereof and what
action the Borrower has taken or is taking or proposes to take with
respect thereto, and (B) demonstrating in reasonable detail
compliance at the end of such accounting period with Section 6.2,
relating to Indebtedness, Section 6.4, relating to Liens, Section
6.5, relating to investments and loans, and Sections 6.8 through
6.11, relating to financial covenants;
(d) Forthwith upon any principal officer of the Borrower
obtaining knowledge of, or receiving notice of any claim of or
action taken with respect to, any condition or event which
constitutes a Potential Event of Default or an Event of Default
(including, without limitation, knowledge that any claim by any
creditor has been made that there exists, or that any action has
been taken by any creditor with respect to, any default as set
forth in Section 7(h) hereof), an Officers' Certificate specifying
the nature and period of existence thereof and what action the
Borrower has taken or is taking or propose to take with respect
thereto;
(e) Promptly upon receipt thereof, a copy of any final
management letter submitted to the Borrower by its independent
certified public accountants in connection with the examination of
the financial statements of the Borrower made by such accountants;
(f) Promptly upon the filing thereof with the Securities and
Exchange Commission, copies of all reports hereafter filed by the
Borrower with the Securities and Exchange Commission;
(g) Copies of all annual and, upon written request by the
Requisite Banks, interim, financial statements, including balance
sheets and statements of income and cash flows, prepared in respect
of the Joint Ventures, promptly upon receipt thereof by the
Borrower; provided, the Borrower shall be obligated to deliver any
such financial statements to the Agent on behalf of the Banks only
if the delivery thereof to the Agent on behalf of the Banks does
not violate the joint venture agreement under which any such Joint
Venture was formed or any other agreement or any applicable law to
which the Borrower is subject;
(h) With reasonable promptness, such other information and
data with respect to the Borrower as from time to time may be
reasonably requested by the Requisite Banks; provided, the Borrower
shall be obligated to deliver any financial statements pertaining
to the Joint Ventures only if the delivery thereof to the Agent on
behalf of the Banks does not violate the joint venture agreement
under which any such Joint Venture was formed or any other
agreement or any applicable law to which the Borrower is subject;
and
(i) Promptly upon receipt thereof, copies of such notices,
reports or other documents received by the Borrower which discloses
facts which, if true, could reasonably be expected to have a
Material Adverse Effect on the Borrower.
The Borrower shall deliver to the Agent on behalf of the
Banks at the same time as the delivery of any annual or quarterly
financial statement under this Section 5.3, (i) a description in
reasonable detail of any variation between the application of
accounting principles employed in the preparation of such statement
and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial
statements (which variation materially affects the presentation of
the financial position or results of operations of the Borrower)
and (ii) reasonable estimates of the difference between such
statements arising as a consequence thereof.
The Banks shall keep confidential all of the financial
statements and other information furnished to the Banks pursuant to
this Loan Agreement other than any such information which has
otherwise been publicly disclosed or is in the public domain, and
each Bank shall cooperate with the Borrower in establishing a joint
privilege with respect to all such non-public information furnished
to such Bank; provided, subject to the foregoing, each Bank shall
have the right to furnish copies of such financial statements and
other information furnished to each Bank (A) to any proposed
Eligible Assignee of such Bank pursuant to Section 10 hereof,
subject to such proposed Eligible Assignee executing a Confidenti-
ality Agreement as required under Section 10 hereof, (B) to
governmental agencies having jurisdiction over such Bank and which
request copies of such financial statements and/or other informa-
tion, (C) if required to under applicable rules of civil procedure
to any appropriate Person in any litigation involving or affecting
such Bank, provided such Bank shall give notice to the Borrower of
such Bank's receipt of the subpoena or other request to furnish
such information and the Borrower shall have the right at its
expense to seek an appropriate protective order in such litigation
preserving the confidentiality of any non-public information
furnished to such Bank, and (D) to any appropriate Person in
connection with the enforcement by such Bank of its rights under
this Loan Agreement and the Revolving Note issued to it.
5.4. Financial Records. The Borrower will maintain a
system of accounting established and administered in accordance
with GAAP consistently applied, and will set aside on its books all
such proper reserves as shall be required by GAAP.
5.5. Permits, Certificates, Leases, Licenses, etc. The
Borrower will obtain, maintain and comply at all times with all
permits, certificates, licenses, approvals, authorizations, leases
and other instruments necessary or appropriate for the conduct of
its business as presently conducted or as contemplated to be con-
ducted in the future; provided, the Borrower shall not be in vio-
lation of this Section 5.5 if the failure to obtain any such
permit, certificate, license, approval, authorization, lease or
other instrument would not have a Material Adverse Effect.
5.6. Notice. The Borrower will notify the Agent on
behalf of the Banks in writing, within no more than ten (10) Busi-
ness Days (and without the benefit of any grace period afforded in
any provision of this Loan Agreement or any other Loan Instrument)
after the Borrower learns of any of the following: (i) the exis-
tence or occurrence of any Potential Event of Default under this
Loan Agreement and/or any of the other Loan Instruments, (ii) that
any representation or warranty made herein or in the other Loan
Instruments shall, for any reason, not be or shall cease in any
material respect to be true and complete and not misleading, or
(iii) the institution of, or adverse determination in, any liti-
gation involving a claim against the Borrower in excess of the sum
of One Million Dollars ($1,000,000.00) which is not fully covered
by insurance (other than any deductible), describing the nature
thereof, what happened with respect thereto, and what steps are
being taken by the Borrower with respect thereto.
5.7. Further Assurances. The Borrower will from time
to time hereafter execute and deliver, or will cause to be executed
and delivered, such additional instruments, certificates or docu-
ments and will take all such further actions, as the Banks may
reasonably request for the purposes of implementing or effectuating
the provisions of this Loan Agreement and/or the other Loan Instru-
ments; provided, the Borrower shall not be required to grant or
create any consensual or voluntary lien on or security interest in
any of its assets pursuant to this Section 5.7. Upon the exercise
by the Agent of any power, right, privilege or remedy pursuant to
the Loan Instruments which requires any consent, approval, regis-
tration, qualification or authorization of any Person, the Borrower
will execute and deliver, or will cause the execution and delivery
of, all applications, certificates, instruments and other documents
and papers that the Agent requires in order to obtain any such
consent, approval, registration, qualification or authorization.
5.8. Preservation of Existence, Leases, etc. The Bor-
rower will at all times preserve and keep in full force and effect,
to the extent necessary to prevent a Material Adverse Effect, its
corporate existence, rights, patents, trademarks, service marks,
trade names, copyrights, licenses, consents and authorizations and
operating leases and Capital Leases to which the Borrower is a
party, other than any changes to any of the same effected by the
Borrower in the ordinary course of business, and the Borrower shall
comply with all applicable laws and regulations.
5.9. Comprehensive General Liability Insurance. The
Borrower will, in addition to obtaining and maintaining all insur-
ance required under Section 5.1 hereof, obtain and maintain compre-
hensive general liability insurance with an insurance company
licensed to do business in all jurisdictions wherein the Borrower
transacts business in such amounts and upon such terms and condi-
tions as are reasonably satisfactory to the Agent; the Agent ac-
knowledges that the insurance currently maintained by the Borrower
as described in the Certificate of Insurance delivered to the Agent
satisfies the provisions of this Section 5.9 as of the Closing
Date.
5.10. Hazardous Materials.
5.10A. The Borrower covenants that (i) the Borrower
will not violate any Environmental Law, as such term is defined in
Section 4.20 hereof, in connection with the use, ownership, lease,
maintenance or operation of all real property owned or leased by it
and the conduct of business thereon if such violation would result
in or could reasonably be foreseen as resulting in a Material Ad-
verse Effect, and (ii) the Borrower, its agents, employees, lessees
and independent contractors, will operate the Borrower's real prop-
erty and will receive, handle, use, store, treat, transport and
dispose of all Hazardous Substances, as such term is defined in
Section 4.20 hereof, in compliance in all material respects with
all Environmental Laws; provided, in the event the Borrower re-
ceives notice from any appropriate governmental agency to the
effect that the Borrower is in violation of any Environmental Law,
the same shall not constitute a default hereunder to the extent the
Borrower seeks to correct any such violation in good faith and with
due diligence.
5.10B. If the Borrower receives any written notice
from any governmental agency or "potentially responsible party"
within the meaning of the Environmental Laws regarding (i) the
happening of any event involving any Hazardous Substance, or (ii)
any noncompliance with regard to any environmental matter, and as a
result thereof the Borrower would suffer a Material Adverse Effect,
the Borrower shall immediately notify the Banks orally and in
writing thereof and shall provide the Banks with copies of any
written notice or information.
5.10C. The Borrower agrees to indemnify each Bank and
hold each Bank harmless from and against any and all losses, lia-
bilities, including strict liability, damages, injuries, expenses,
including reasonable attorneys' fees, claims for damage to the
environment, claims for fines or civil penalties, costs of any
settlement or judgment and claims of any and every kind whatsoever
paid, incurred or suffered by or asserted against the Bank by any
Person for, with respect to or as a direct or indirect result of
the presence on or under the Borrower's property of, or the release
or threatened release or transportation of, any Hazardous Substance
or arising under any Environmental Law; provided that the incur-
rence by any such Bank of any such losses, liabilities, damages,
injuries, expenses, claims for damage to the environment, claims
for fines or civil penalties, costs of any settlement or judgment
and other claims is not the result of any gross negligence or will-
ful misconduct committed by that Bank. The Borrower's indemnifi-
cation obligations hereunder include, without limitation, costs
incurred by any Bank in connection with any investigation of site
conditions or any clean up, removal or restoration work required by
any federal, state or local governmental agency or political subdi-
vision because of Hazardous Substances present in or about the Bor-
rower's property. The indemnification obligations of the Borrower
shall survive the payment of the Obligations to the Banks and the
termination of this Loan Agreement.
5.11. Compliance by Consolidated Subsidiaries. The
Borrower covenants and agrees to cause each of its Consolidated
Subsidiaries, whether now existing or hereafter created or
acquired, to comply with all of the covenants set forth in Section
5 and Sections 6.1 through 6.7 and Section 6.12 hereof. The
covenants set forth in Sections 6.8 through 6.11 hereof are
calculated on a consolidated basis and shall be determined solely
by reference to the consolidated financial statements of the
Borrower and its Consolidated Subsidiaries.
5.12. Delivery of Atlantic Guaranty. Borrower shall
cause the following to be delivered to Agent for the benefit of the
Banks on or before ninety (90) days following written notice to
Borrower from the Requisite Banks given on or at any time after, if
applicable, the date that Atlantic becomes a Subsidiary of
Borrower, and failure of Borrower to do so shall constitute an
Event of Default: (i) the Atlantic Guaranty Agreement, and (ii) an
opinion of counsel for Atlantic to the effect that Atlantic is
validly existing and the Atlantic Guaranty Agreement has been duly
executed and delivered by a duly authorized corporate officer of
Atlantic.
SECTION 6
NEGATIVE COVENANTS
6. Negative Covenants. The Borrower hereby covenants and
agrees that until the Revolving Notes have been paid in full to the
Banks, the Borrower will perform and observe all of the following
provisions:
6.1. Mergers. Dissolutions and Other Extraordinary
Events. The Borrower will not, without the prior written consent
of the Requisite Banks, which consent shall not be unreasonably
withheld:
(a) Be or become a party to any consolidation, reorganization
(including, without limitation, the types referred to in Section
368 of the Code) merger or recapitalization, other than (i) any
merger of a Subsidiary into the Borrower, (ii) any merger of a
Subsidiary into another Subsidiary, or (iii) any merger pursuant to
which the Borrower or any Subsidiary of the Borrower is the
surviving corporation; or
(b) Sell, lease, assign, transfer or dispose of all or a
material portion of its assets other than in the ordinary course of
the Borrower's business as historically conducted.
6.2. Indebtedness. The Borrower will not, without the
prior written consent of the Requisite Banks, directly or indi-
rectly, create, incur, assume, guarantee, agree to purchase or
repurchase or provide funds in respect of, or otherwise become
liable with respect to any Indebtedness or Contingent Obligation
other than
(a) the Revolving Notes;
(b) current liabilities of the Borrower (other than for
borrowed money) incurred in the ordinary course of its business and
in accordance with customary trade practices;
(c) Purchase Money Indebtedness incurred by the Borrower to
finance Capital Expenditures, up to Five Million Dollars
($5,000,000.00) in aggregate principal amount at any one time
outstanding, subject to the limitation that any such Purchase Money
Indebtedness may only be secured by those assets acquired by the
Borrower with the proceeds of such Purchase Money Indebtedness;
(d) Indebtedness the proceeds of which are used to permanently
reduce the Revolving Loan Commitments pursuant to Section 2.4A(i)
hereof;
(e) the Indebtedness and Contingent Obligations identified on
Schedule 4.10 annexed hereto;
(f) the Line of Credit Notes;
(g) the Swing Line Note;
(h) the Senior Notes; and
(i) the Note Purchasers Guaranty Agreements, provided neither
of the same is modified or amended without the prior written
consent of the Banks.
6.3. Use of Assets. The Borrower will not use, or
cause or permit the use of, any of its assets in any manner which
could result in a Material Adverse Effect.
6.4. Liens. The Borrower will not, without the prior
written consent of the Requisite Banks, directly or indirectly
create, incur, assume or permit to continue in existence (other
than existing Liens permitted under this Loan Agreement), any Lien
on, or pledge or deposit of, or conditional sale or other title
retention agreement (including any Capital Lease which in accor-
dance with GAAP would constitute Indebtedness) with respect to, any
property or asset now owned or hereafter acquired by the Borrower,
provided that the restrictions in this Section 6.4 shall not
prohibit:
(a) Liens securing all Purchase Money Indebtedness permitted
under Section 6.2(c) hereof, provided that (i) each such Lien shall
at all times be confined solely to the item of property acquired
with the proceeds of such Purchase Money Indebtedness, and (ii) no
such Lien shall be permitted unless at the time of the creation of
such Lien the incurrence of such Purchase Money Indebtedness would
be permitted by Section 6.2 hereof;
(b) liens for taxes, assessments or other governmental charges
the payment of which is not at the time required for the reasons
set forth by the proviso to the first sentence of Section 5.2(a);
(c) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, contractors and materialmen incurred in
the ordinary course of business for sums not yet due or being
contested by the Borrower in good faith and by appropriate
proceedings promptly initiated and diligently conducted, if the
Borrower shall have made such reserve or other appropriate provi-
sion, if any, as shall be required by GAAP in connection therewith;
(d) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment
insurance and other types of social security or to secure the
performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, performance and return of money bonds and
other similar obligations (exclusive of obligations for the payment
of borrowed money) for sums not yet due or being contested by the
Borrower in good faith and by appropriate proceedings promptly
initiated and diligently conducted, if the Borrower shall have made
such reserve or other appropriate provision, if any, as shall be
required by GAAP in connection therewith;
(e) easements, rights-of-way, restrictions and other similar
charges or encumbrances incurred in the ordinary course of business
which do not in the aggregate materially detract from the value of
the property of the Borrower or materially impair the use thereof
in the operation of its business and which do not interfere with
the ordinary conduct of the business of the Borrower;
(f) Liens, charges, encumbrances and priority claims which (i)
are incidental to the conduct of the business of the Borrower and
the ownership of its properties and assets, (ii) were not incurred
in connection with the borrowing of money or the obtaining of
advances of credit, and (iii) do not in the aggregate materially
detract from the value of the property of the Borrower or material-
ly impair the use thereof in the operation of its business;
(g) security interests created under Capital Leases expressly
permitted to be entered into by the Borrower pursuant to Section
6.2 hereof;
(h) the Liens identified on Schedule 4.10 annexed hereto;
(i) common law liens encumbering goods acquired by the
Borrower the acquisition of which has been financed through a
"trade" or "commercial" letter of credit issued for the account of
the Borrower; and
(j) other liens securing amounts not in excess of Two Hundred
Fifty Thousand Dollars ($250,000.00) in principal amount (including
capitalized interest) at any one time outstanding.
6.5. Investments, Loans, etc. The Borrower will not,
without the prior written consent of the Requisite Banks, directly
or indirectly, purchase or otherwise acquire the stock or other
securities or the properties or assets of any other Person, or make
any investment in or any loan, advance or capital contribution to
any other Person, provided that
(i) the Borrower may purchase or otherwise acquire and own
Eligible Investments;
(ii) the Borrower may purchase or otherwise acquire goods and
services in the ordinary course of business and in accordance with
customary trade practices;
(iii) the Borrower may make Capital Expenditures subject to
the limitation on the incurrence of Purchase Money Indebtedness set
forth in Sections 6.2(c) and 6.4(a) hereof;
(iv) so long as no Event of Default or Potential Event of
Default has occurred and is continuing or would result therefrom,
the Borrower (A) may contribute capital and/or make loans to its
Mexican Subsidiary in an amount not to exceed Ten Million Dollars
($10,000,000.00) during the term of the Loan Agreement, and (B) may
increase its existing investment in and/or make loans to its other
Consolidated Subsidiaries;
(v) the Borrower may extend, renew and/or reissue its guaranty
of payment of each and every promissory note now or hereafter
issued by Processing Technology, Inc. to National City to evidence
the Two Million Dollars ($2,000,000) line of credit established by
National City in favor of Processing Technology, Inc.;
(vi) the Borrower may extend, renew and/or reissue from time
to time any guaranties of payment up to an aggregate amount of Six
Million Two Hundred fifty Thousand Dollars ($6,250,000.00) of the
unpaid principal of and/or unpaid interest on each and every
promissory note now or hereafter issued by Mi-Tech Steel, Inc.;
(vii) so long as no Event of Default or Potential Event of
Default has occurred and is continuing or would result therefrom,
the Borrower may increase its existing investment in the Joint
Ventures, subject to the limitation set forth in subpart (viii)
below; and
(viii) the Borrower may incur guarantees and other Contingent
Obligations and/or expend funds, including, without limitation, by
making loans, up to a maximum aggregate amount of Five Million
Dollars ($5,000,000.00), in connection with the acquisition of the
assets, debt or equity interests of any Person, provided that any
such acquisition, on a pro forma basis after giving effect to any
such acquisition, will not cause the Borrower to be in violation of
any of the covenants set forth in Sections 6.8 through 6.11 hereof,
as evidenced by a duly completed Compliance Certificate delivered
to the Agent, and provided that no Event of Default or Potential
Event of Default shall exist. For purposes of the Five Million
Dollar ($5,000,000.00) limitation set forth in this Section
6.5(viii), the amount of any Contingent Obligation incurred by the
Borrower shall be deemed to equal the maximum dollar amount of
liability of the Borrower under the particular Contingent Obliga-
tion.
(ix) so long as no Event of Default or Potential Event of
Default has occurred and is continuing or would result therefrom
the Borrower (A) may contribute capital and/or make loans to Mi-
Tech Steel, Inc., or guarantee the obligations of Mi-Tech Steel,
Inc. in an aggregate amount not to exceed Ten Million Dollars
($10,000,000.00) during the term of the Loan Agreement, and (B) may
increase its existing investment in and/or make loans to its other
Consolidated Subsidiaries.
(x) so long as no Event of Default or Potential Event of
Default has occurred and is continuing or would result therefrom
the Borrower (A) may acquire all of the issued and outstanding
capital stock of Atlantic, provided such acquisition is concluded
on or before May 15, 1997, and provided that the total purchase
price paid by or for the account of Borrower in cash or other
property does not exceed the amount of $7,250,000, and (B) from and
after the acquisition by Borrower of all of the issued and
outstanding capital stock of Atlantic, (a) may contribute capital
and/or make loans to Atlantic in an amount not to exceed Twenty-Two
Million Dollars ($22,000,000) in the aggregate outstanding at any
one time during the term of the Loan Agreement, and (b) may
increase its existing investment in and/or make loans to its other
Consolidated Subsidiaries.
6.6. Restricted Junior Payments. The Borrower will not
make any Restricted Junior Payments after the occurrence and during
the continuation of any Event of Default.
6.7. Agreements and Licenses. The Borrower will not
transfer, terminate, cancel, modify or amend, encumber, or commit a
default under, any operating lease or Capital Lease to which the
Borrower is a party, or any license, permit, consent, approval or
authorization necessary or appropriate for the conduct of the Bor-
rower's business, if the same would result in a Material Adverse
Effect.
6.8. Consolidated Current Ratio. The Borrower will not
permit the ratio of its Consolidated Current Assets to its Consoli-
dated Current Liabilities to be less than 1.5 to 1.0 as at any
Fiscal Quarter end.
6.9. Consolidated Total Debt to Consolidated Total
Capitalization. The Borrower will not permit the ratio of its
Consolidated Total Debt to its Consolidated Total Capitalization to
exceed .55 to 1.0 as at any Fiscal Quarter end.
6.10. Consolidated Interest Expense and Consolidated
Rent Expense Coverage Ratio. The Borrower will not permit, as at
each Fiscal Quarter end, the ratio of (a) its Consolidated Net
Income plus Consolidated Interest Expense, provisions for all taxes
and Consolidated Rent Expense for the four-Fiscal Quarter period
ended on such Fiscal Quarter end, to (b) the sum of its Consolidat-
ed Interest Expense and Consolidated Rent Expense for the
four-Fiscal Quarter period ended on such Fiscal Quarter end, to be
less than 3.0 to 1.0 as at any Fiscal Quarter end.
6.11. Minimum Consolidated Tangible Net Worth. The
Borrower will not permit its Consolidated Tangible Net Worth:
(i) As of September 30, 1996 to be less than Eighty-Five
Million Dollars ($85,000,000); and
(ii) As of each subsequent Fiscal Quarter end of the Borrower
after September 30, 1996, to be less than the sum of the Minimum
Consolidated Tangible Net Worth required of the Borrower as of the
immediately preceding Fiscal Quarter end plus fifty percent (50%)
of the Borrower's Consolidated Net Income for its Fiscal Quarter
then ended plus one hundred percent (100%) of the net proceeds from
any equity offering completed after October 11, 1996.
For purposes of this Section 6.11, any net losses
hereafter incurred by the Borrower will not reduce the amount of
the Minimum Consolidated Tangible Net Worth required to be
maintained by the Borrower pursuant to this Section 6.11.
6.12. Transactions with Affiliates. The Borrower will
not directly or indirectly enter into any operating lease or
Capital Lease or other transaction with any Affiliate of the
Borrower which would have a Material Adverse Effect.
SECTION 7
EVENTS OF DEFAULT; ACCELERATION
7. Events of Default; Acceleration. If any of the
following events ("Events of Default") shall occur:
(a) If the Borrower shall default in the payment of any
interest on any of the Revolving Notes, the Line of Credit Notes or
the Swing Line Note when the same becomes due and payable and any
such default continues for ten (10) Business Days; or
(b) If the Borrower shall default in the payment of any
principal of any of the Revolving Notes, the Line of Credit Notes
or the Swing Line Note when the same becomes due and payable and
any such default continues for ten (10) Business Days; or
(c) If the Borrower shall breach or default in the performance
or observance of any of the provisions of Sections 6.1, 6.6, 6.7,
6.8, 6.9, 6.10 or 6.11 and such breach or default is not cured
within thirty (30) days after the Agent has given written notice of
such breach or default to the Borrower; or
(d) If the Borrower shall default in the performance of or
compliance with any covenant, obligation or provision contained in
this Loan Agreement (other than those referred to above in this
Section 7), and any such default shall not have been remedied (i)
within thirty (30) days after the date written notice of such
default shall have been delivered to the Borrower, or (ii) if such
default cannot be cured within such thirty (30) day period, within
such longer period of time as may be necessary to effect such cure,
but in any event within sixty (60) days after written notice of
such default shall have been delivered to the Borrower, provided
that the Borrower commences to cure the particular default within
such thirty (30) day period and prosecutes the cure to completion
with due diligence within sixty (60) days after written notice of
such default shall have been delivered to the Borrower; or
(e) If any material representation or warranty made in writing
by or on behalf of the Borrower herein or pursuant hereto or
otherwise in connection with the transactions contemplated hereby
shall have been materially false or misleading or incorrect when
made and the Borrower shall have known or should have known of the
falsity, misleading nature of or incorrectness of such repre-
sentation or warranty when it was made, and the Borrower fails to
cause such representation or warranty to cease to be materially
false, misleading or incorrect within thirty (30) days after writ-
ten notice of such materially false, misleading or incorrect rep-
resentation or warranty shall have been delivered to the Borrower;
or
(f) If the Borrower shall default (as principal or guarantor
or other surety or otherwise) in the payment of any principal of or
premium, if any, or interest on any other Indebtedness in respect
of borrowed money or any Capital Lease or in the deferred purchase
price of property which, at the time of the Borrower's default in
the payment thereof, has an unpaid balance in excess of One Million
Dollars ($1,000,000.00), or if the Borrower defaults in the
performance of or compliance with any term of any documents
evidencing Indebtedness of the Borrower or of any agreement relat-
ing thereto, and (i) such default shall continue for more than the
period of grace, if any, specified therein and shall not have been
waived pursuant thereto, (ii) the Borrower shall not be contesting
the amount or validity of, or its liability for, any such Indebt-
edness or Capital Lease or deferred purchase price of property in
good faith and by appropriate proceedings promptly initiated and
diligently conducted by the Borrower and in which all actions
against the property of the Borrower have been stayed, and (iii)
the holder of such Indebtedness has an immediate right under
applicable law to accelerate the maturity of such Indebtedness by
virtue of such default and expiration of the applicable grace
period; or
(g) If the Borrower shall discontinue its business or shall
make an assignment for the benefit of its creditors, or shall fail
generally to pay its debts as such debts become due, or shall apply
for or consent to the appointment of or taking possession by a
trustee, receiver or liquidator (or other similar official) of any
substantial part of its property, or if the Borrower shall take any
action in furtherance of its dissolution or liquidation; or
(h) If the Borrower shall commence a case or have an order for
relief entered against it under the federal bankruptcy laws, as now
or hereafter constituted, or any other applicable bankruptcy,
insolvency or other similar law, or if, within thirty (30) days
after the commencement against the Borrower of a case under the
Bankruptcy Code, as now or hereafter constituted, or any other
applicable bankruptcy, insolvency or other similar law, such case
shall have been consented to or shall not have been dismissed or
all orders or proceedings thereunder affecting the operations or
the business of the Borrower shall not have been stayed, or if the
stay of any such order or proceeding shall thereafter be set aside,
or if within sixty (60) days after the entry of a decree appointing
a trustee, receiver or liquidator (or other similar official) of
any substantial part of the property of the Borrower, such appoint-
ment shall not have been vacated; or
(i) If a final uninsured judgment which, with other out-
standing final judgments against the Borrower exceeds an aggregate
of One Million Dollars ($1,000,000.00), shall be rendered against
the Borrower and (i) if, prior to the availability of any execution
thereon, such judgment shall not have been discharged or execution
thereof shall not have been stayed pending appeal, or if, after the
expiration of any such stay, such judgment shall not have been dis-
charged, or (ii) the Borrower shall not have established adequate
reserves on its books in respect of such final uninsurable judgment
or judgments; or
(j) If the Borrower experiences a Change in Control without
the prior written consent of the Banks;
then (i) upon the occurrence of any Event of Default described in
clause (h) of this Section 7 with respect to the Borrower, the
Revolving Loan Commitment of each Bank shall terminate and the
respective unpaid principal balances of the Revolving Notes to-
gether with all accrued interest thereon and all other Obligations
of the Borrower to the Banks shall automatically become immediately
due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived
by the Borrower, or (ii) upon the occurrence of any other Event of
Default referred to in this Section 7, the Agent, with the written
consent of the Requisite Banks at any time at their option, shall
by written notice to the Borrower, terminate the Banks' respective
Revolving Loan Commitments and declare the respective unpaid prin-
cipal balances of the Revolving Notes together with all accrued
interest thereon and all other Obligations of the Borrower to the
Banks to be due and payable in full to the Banks, without present-
ment, demand, protest or other requirements of any kind, all of
which are hereby waived by the Borrower. Upon the occurrence of
any Event of Default, the Banks shall have no obligation to make
additional Revolving Loans to the Borrower, PNC shall have no
obligation to issue or extend the expiration date of any Letters of
Credit, and the Borrower shall immediately deposit with the Agent
an amount in "good and collected" funds equal to the then-existing
Letter of Credit Usage to secure all Obligations of the Borrower in
respect of all outstanding Letters of Credit.
Any amendment or modification of this Loan Agreement
shall, except as otherwise expressly provided herein, require the
affirmative written consent of the Requisite Banks; provided,
notwithstanding anything herein to the contrary, the following
shall require the affirmative written consent of all of the Banks:
(i) the termination, cancellation or release of any Loan Instru-
ment, (ii) the decrease in the interest rate(s) borne by the
Revolving Loans, other than decreases in the interest rate(s) borne
by the Revolving Loans by virtue of any decreases in the Federal
Funds Rate or the Adjusted LIBOR Rate, in each case as expressly
contemplated herein, (iii) the decrease in the Letter of Credit Fee
Percentage, (iv) any extension of the stated maturity date of the
Revolving Loan Commitments pursuant to Section 2.1B hereof, (v) any
extension of the due dates of any installments of accrued interest
on the Revolving Loans, (vi) any reduction in the Pro Rata Share of
any Bank except as expressly contemplated or permitted in this Loan
Agreement, (vii) any change in the provision that Banks holding
more than 60% of the Total Utilization of Revolving Loan Commit-
ments constitute the Requisite Banks, (viii) any amendment, modi-
fication or termination of the Guaranty Agreement and/or any re-
lease of Wabash Steel Corporation from any of its obligations
thereunder, or (ix) any amendment of the provisions of this
paragraph.
SECTION 8
REMEDIES
8. Remedies.
8.1. Defaults. Upon the occurrence and during the con-
tinuation of any Event of Default, the Agent, at the direction of
the Requisite Banks, shall proceed to protect and enforce the
rights of the Banks by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any
agreement contained herein, in the Revolving Notes or in the other
Loan Instruments, or for an injunction against a violation of any
of the terms hereof or thereof, or in aid of the exercise of any
power granted hereby or thereby or by law. In case of a default in
the payment of any principal of or premium, if any, or interest on
the Revolving Notes or upon acceleration thereof, the Borrower will
pay to the Banks such further amount as shall be sufficient to
cover the costs and expenses of collection thereof, including (to
the extent permitted by law), without limitation, reasonable
attorneys' fees, expenses and disbursements (including allocable
costs of in-house counsel of the Agent or any Bank).
8.2. Offset. If any Event of Default shall occur and
be continuing and regardless of whether or not the Banks have
accelerated the maturity date of the Revolving Notes or any of the
other Obligations, each Bank shall have the right then, or at any
time thereafter, to setoff against any and all deposit balances and
other sums and Indebtedness and other property then held or owed by
that Bank to or for the credit or account of the Borrower, all
without notice to or demand upon the Borrower or any other Person,
all such notices and demands being hereby expressly waived by the
Borrower, and in and on all of which the Borrower hereby grants
each Bank a Lien to secure the payment of the Obligations. All
amounts received by a Bank pursuant to the exercise of its right of
setoff against any deposit balances or other sums and Indebtedness
and other property then held or owed by such Bank to or for the
credit or account of the Borrower shall be shared pro rata with the
other Banks and applied to the payment of the Obligations in the
manner set forth in Section 12.4 hereof.
8.3. Rights Cumulative. All of the rights and remedies
of the Banks and/or the Agent, in its capacity as agent for the
Banks, as applicable, upon the occurrence of an Event of Default
shall be cumulative to the greatest extent permitted by law, and
shall be in addition to all those rights and remedies afforded the
Banks at law or in equity or under the other Loan Instruments.
8.4. Payment of Costs and Expenses. All of the costs,
expenses, damages and liabilities, including, without limitation,
all reasonable attorneys' fees, incurred by and imposed upon the
Banks with respect to, in connection with or as a result of any
action taken or omitted to be taken pursuant to this Loan Agreement
and the other Loan Instruments shall be paid by, and shall be the
sole and joint and several responsibility of, the Borrower.
SECTION 9
THE AGENT
9. The Agent. The parties to this Loan Agreement stipulate
that the provisions of this Section 9 shall apply to the Line of
Credit Advances with the same force and effect as such provisions
apply to Revolving Loans.
9.1. Appointment. Each Bank hereby irrevocably desig-
nates, appoints and authorizes PNC to act as Agent for such Bank
under this Loan Agreement and to execute and deliver or accept on
behalf of each of the Banks the other Loan Instruments. Each Bank
hereby irrevocably authorizes, and each holder of any Revolving
Note by the acceptance of such Revolving Note shall be deemed
irrevocably to authorize, the Agent to take such action on behalf
of such Bank and such holder under the provisions of this Loan
Agreement and the other Loan Instruments and any other instruments
and agreements referred to herein, and to exercise such powers and
to perform such duties hereunder as are specifically delegated to
or required of the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. PNC agrees to act as
the Agent on behalf of the Banks to the extent provided in this
Loan Agreement.
9.2. Delegation of Duties. The Agent may perform any
of its duties hereunder by or through agents or employees (provided
such delegation is exercised with reasonable care and does not con-
stitute a relinquishment of its duties as Agent) and, subject to
Sections 9.5, 9.6 and 9.7 hereof, shall be entitled to engage and
pay for the advice or services of any attorneys, accountants or
other experts concerning all matters pertaining to its duties here-
under and to rely upon any advice so obtained, provided reasonable
care is used in the selection of the foregoing experts.
9.3. Nature of Duties; Independent Credit
Investigation. The Agent shall have no duties or responsibilities
except those expressly set forth in this Loan Agreement and the
other Loan Instruments and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read
into this Loan Agreement or shall otherwise exist. The duties of
the Agent shall be mechanical and administrative in nature and
shall include the duty to provide to each Bank an executed original
of such Bank's Revolving Note and an executed original of this Loan
Agreement and a copy of the other Loan Instruments; the Agent shall
not have by reason of this Loan Agreement a fiduciary or trust
relationship in respect of any Bank; and nothing in this Loan
Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect of
this Loan Agreement except as expressly set forth herein. Each
Bank expressly acknowledges (i) that the Agent has not made any
representations or warranties to it and that no act which the Agent
hereafter takes, including any review of the affairs of the
Borrower, shall be deemed to constitute any representation or
warranty by the Agent to any Bank; (ii) that it has made and will
continue to make, without reliance upon the Agent, its own
independent investigation of the financial condition and affairs
and its own appraisal of the creditworthiness of the Borrower in
connection with this Loan Agreement and the making and continuance
of the Revolving Loans hereunder; and (iii) except as expressly
provided herein, that the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to
provide any Bank with any credit or other information with respect
thereto, whether coming into its possession before the making of
any Revolving Loan or at any time or times thereafter
9.4. Actions in Discretion of the Agent; Instructions
from the Banks. The Agent agrees, upon the written request of the
Requisite Banks, to take or refrain from taking any action of the
type specified as being within the Agent's rights, powers or dis-
cretion herein; provided that the Agent shall not be required to
take any action which exposes the Agent to legal liability or which
is contrary to this Loan Agreement or any other Loan Instrument or
applicable law. In the absence of a request by the Requisite
Banks, the Agent shall have authority, in its sole discretion, to
take or not to take any such action, unless this Loan Agreement
specifically requires the consent of the Requisite Banks or all of
the Banks. Any action taken or failure to act pursuant to such
instructions or discretion shall be binding on the Banks, subject
to the provisions of Section 9.6 hereof. Subject to the provisions
of Section 9.6 hereof, no Bank shall have any right of action what-
soever against the Agent as a result of the Agent acting or re-
fraining from acting hereunder in accordance with the instructions
of the Requisite Banks or the Banks, as applicable, or in the
absence of such instructions, in the absolute discretion of the
Agent.
9.5. Reimbursement and Indemnification of the Agent and
the Banks by the Borrower. The Borrower unconditionally agrees to
pay or reimburse the Agent and each Bank and save the Agent and
each Bank harmless against (i) liability for the payment of all
reasonable and necessary out-of-pocket costs, expenses and dis-
bursements for which reimbursement is customarily obtained, in-
cluding fees and expenses of counsel and consultants (including
allocable costs of in-house counsel of the Agent and each Bank),
incurred by the Agent and/or any Bank (a) in connection with the
preparation, negotiation, printing, execution, administration,
interpretation and performance of this Loan Agreement and the other
Loan Instruments, (b) relating to any requested amendments, waivers
or consents pursuant to the provisions hereof, (c) in connection
with the enforcement of this Loan Agreement or any other Loan In-
strument or collection of amounts due hereunder or thereunder or
the proof and allowability of any claim arising under this Loan
Agreement or any other Loan Instrument, whether in bankruptcy or
receivership proceedings or otherwise, and (d) in any workout or
restructuring or in connection with the protection, preservation,
exercise or enforcement of any of the terms hereof or of any rights
hereunder or under any other Loan Instrument or in connection with
any foreclosure, collection or bankruptcy proceedings, and (ii) all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted
against the Agent and/or any Bank, in its capacity as such, in any
way relating to or arising out of this Loan Agreement or any other
Loan Instrument or any action taken or omitted by the Agent and/or
any Bank hereunder or thereunder; provided that the Borrower shall
not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (A) if the same results from the gross
negligence or willful misconduct of the Agent or any Bank, or (B)
if the Borrower were not given notice of the subject claim and the
opportunity to participate in the defense thereof, at its expense,
or (C) if the same results from a compromise or settlement
agreement entered into without the consent of the Borrower which
consent shall not be unreasonably withheld.
9.6. Exculpatory Provisions. Neither the Agent nor any
of its directors, officers, employees, agents or affiliates shall
(i) be liable to any Bank for any action taken or omitted to be
taken by it or them hereunder, or in connection herewith including
pursuant to any other Loan Instruments, unless caused by its or
their own gross negligence or willful misconduct, (ii) be respon-
sible in any manner to any of the Banks for the effectiveness,
enforceability, genuineness, validity or the due execution of this
Loan Agreement or any other Loan Instrument or for any recital,
representation, warranty, document, certificate, report or state-
ment herein or made or furnished under or in connection with this
Loan Agreement or any other Loan Instrument, or (iii) be under any
obligation to any of the Banks to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or condi-
tions hereof or thereof on the part of the Borrower, or the finan-
cial condition of the Borrower, or the existence or possible
existence of any Event of Default or Potential Event of Default
under the Loan Instruments. Neither the Agent nor any Bank nor any
of their respective directors, officers, employees, agents, attor-
neys or affiliates shall be liable to the Borrower or any other
Person for consequential damages resulting from any breach of con-
tract, tort or other wrong in connection with the negotiation,
documentation or administration of the Loan Instruments or the
collection of the Revolving Loans.
9.7. Reimbursement and Indemnification of the Agent by
the Banks. Each Bank agrees to reimburse and indemnify the Agent
(to the extent not reimbursed by the Borrower and without limiting
the obligation of the Borrower to do so) in proportion to its Pro
Rata Share from and against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent, in its capacity as
such, in any way relating to or arising out of this Loan Agreement
or any other Loan Instrument or any action taken or omitted by the
Agent hereunder or thereunder, provided that no such reimbursement
shall be required with respect to expenses incurred by the Agent
during the time period through the Closing Date and no Bank shall
be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (i) if the same relates to or arises out of the
Agent's gross negligence or willful misconduct, or (ii) if such
Bank was not given notice of the subject claim and the opportunity
to participate in the defense thereof, at its expense, or (iii) if
the same results from a compromise and settlement agreement entered
into without the consent of the Requisite Banks, which consent
shall not be unreasonably withheld.
9.8. Reliance by the Agent. The Agent shall be
entitled to rely upon any writing, telegram, telex or teletype
message, facsimile, resolution, notice, consent, certificate,
letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine
and correct and to have been signed, sent or made by the proper
Person or Persons, and upon the advice and opinions of counsel and
other professional advisers selected by the Agent. The Agent shall
be fully justified in failing or refusing to take any action
hereunder unless it shall first be indemnified to its satisfaction
by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such
action.
9.9. Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Potential
Event of Default or Event of Default unless the Agent has received
written notice from a Bank or the Borrower referring to this Loan
Agreement, specifically describing such Potential Event of Default
or Event of Default and stating that such notice is a "notice of
default."
9.10. The Banks in Their Individual Capacities. With
respect to its Revolving Loan Commitment and the Revolving Loans
made by it, the Agent shall have the same rights and powers here-
under as any other Bank and may exercise the same as though it were
not the Agent, and the term "Banks" shall, unless the context
otherwise indicates, include the Agent in its individual capacity.
PNC and its Affiliates and each of the Banks and their respective
Affiliates may, without liability to account, except as prohibited
herein, make loans to, accept deposits from, discount drafts for,
act as trustee under indentures of, and generally engage in any
kind of banking or trust business with, the Borrower and its
Affiliates, in the case of the Agent, as though it were not acting
as Agent hereunder and in the case of each Bank, as though such
Bank were not a Bank hereunder.
9.11. Holders of Revolving Notes. The Agent may deem
and treat any payee of any Revolving Note as the owner thereof for
all purposes hereof unless and until written notice of the
assignment or transfer thereof shall have been filed with the
Agent. Any request, authority or consent of any Person who at the
time of making such request or giving such authority or consent is
the holder of any Revolving Note shall be conclusive and binding on
any subsequent holder, transferee or assignee of such Revolving
Note or of any Revolving Note or Revolving Notes issued in exchange
therefor.
9.12. Equalization of the Banks. The Banks and the
holders of any participations in any Revolving Notes agree among
themselves that, with respect to all amounts received by any Bank
or any such holder for application on any Obligation hereunder or
under any Revolving Note or other Loan Instrument or under any such
participation, whether received by voluntary payment, by realiza-
tion upon security, by the exercise of the right of setoff or
banker's lien, by counterclaim or by any other non-pro rata source,
equitable adjustment will be made in the manner stated in the
following sentence so that, in effect, all such excess amounts will
be shared ratably among the Banks and such holders in proportion to
their interests in payments under the Revolving Notes. The Banks
or any such holder receiving any such amount shall purchase for
cash from each of the other Banks an interest in such Bank's Re-
volving Loans in such amount as shall result in a ratable partici-
pation by the Banks and each holder in the aggregate unpaid amount
under the Revolving Notes, provided that if all or any portion of
such excess amount is thereafter recovered from the Bank or the
holder making such purchase, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, to-
gether with interest or other amounts, if any, required by law
(including court order) to be paid by the Bank or the holder making
such purchase.
9.13. Successor Agent. The Agent may resign as Agent
with the consent of the Borrower, such consent not to be
unreasonably withheld, upon not less than thirty (30) days prior
written notice given to the Borrower and the Banks. If the Agent
shall resign under this Loan Agreement, then either (i) the
Requisite Banks shall appoint from among the Banks a successor
agent for the Banks, subject to the consent to such successor agent
by the Borrower, such consent not to be unreasonably withheld, or
(ii) if a successor agent shall not be so appointed and approved
within the thirty (30) day period following the Agent's notice to
the Banks of its resignation, then the Agent shall appoint, with
the consent of the Borrower, such consent not to be unreasonably
withheld, a successor agent who shall serve as Agent until such
time as the Requisite Banks appoint, and the Borrower consents,
which consent shall not be unreasonably withheld, to the appoint-
ment of, a successor agent. Upon its appointment pursuant to
either clause (i) or (ii) above, such successor agent shall succeed
to the rights, powers and duties of the Agent and the term "Agent"
shall mean such successor agent, effective upon its appointment,
and the former Agent's rights, powers and duties as Agent shall be
terminated without any other or further act or deed on the part of
such former Agent or any of the other parties to this Loan
Agreement. After the resignation of any Agent hereunder, the
provisions of this Section 9.13 shall not by reason of such
resignation be deemed to release the Agent from liability for any
actions taken or not taken by it while it was the Agent under this
Loan Agreement.
9.14. Calculations. In the absence of gross negligence
or willful misconduct, the Agent shall not be liable for any error
in computing the amount payable to any Bank whether in respect of
the Revolving Loans or the fees or other amounts due to the Banks
under this Loan Agreement. In the event an error in computing any
amount payable to any Bank is made, the Agent, the Borrower and
each affected Bank shall, forthwith upon discovery of such error,
make such adjustments as shall be required to correct such error,
and any compensation therefor will be calculated at the Federal
Funds Rate.
9.15. Beneficiaries. Except as set forth in Sections
9.5 and 9.13 hereof, the provisions of this Section 9 are solely
for the benefit of the Agent and the Banks, and the Borrower shall
not have any right to rely on or enforce any of the provisions
hereof. In performing its functions and duties under this Loan
Agreement, the Agent shall act solely as agent of the Banks and
does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for
the Borrower or any other Person.
SECTION 10
ASSIGNMENTS AND PARTICIPATIONS
10. Assignments and Participations in Revolving Loans and
Revolving Notes. The parties to this Loan Agreement stipulate that
the provisions of this Section 10 shall apply to the Line of Credit
Advances with the same force and effect as such provisions apply to
Revolving Loans.
10A. Each Bank shall have the right at any time, upon
prior written notice to, and with the prior written consent of, the
Borrower and the Agent, which consent shall not be unreasonably
withheld, to sell, assign, transfer or negotiate all or a permitted
portion of such Bank's Revolving Loans and Revolving Loan Commit-
ment to one or more Eligible Assignees. Each Bank shall, following
a demand by the Borrower after a demand by such Bank pursuant to
Section 2.2G(ii), 2.6C, 2.8A, 2.8B or 2.8C hereof, or upon the
failure by a Bank to extend the Revolving Loan Commitment Termina-
tion Date pursuant to Section 2.1B hereof, sell, assign, transfer
or negotiate all or any part of its Revolving Loans and Revolving
Loan Commitment to one or more Eligible Assignees selected or
approved by the Borrower; provided that prior to receiving any
confidential or other material information regarding the Borrower
or the transactions contemplated by this Loan Agreement, any
Eligible Assignee shall have entered into a Confidentiality Agree-
ment; provided further that any such assignment shall become
effective five (5) Business Days after the Agent's receipt of (x) a
written notice of such assignment from the assigning Bank, (y)
processing and recordation fees of Two Thousand Dollars ($2,000)
from the assigning Bank in connection with the Agent's recording of
such sale, assignment, transfer or negotiation, and (z) an Assign-
ment Agreement executed by the assignee and assignor; provided
still further that no Bank shall make any assignment to any Eligi-
ble Assignee in a principal amount of less than Five Million
Dollars ($5,000,000) unless, after giving effect to such assign-
ment, the assigning Bank will have no Revolving Loans or Revolving
Loan Commitment hereunder; provided still further, each such
assignment made as a result of a demand by the Borrower pursuant to
this Section 10.A shall be arranged by the Borrower at its expense
(including without limitation, the processing and recordation fee
referred to in (y) above) after consultation with the Agent, shall
be to an Eligible Assignee(s) acceptable to the Agent as confirmed
in a written notice to the Borrower, and shall be either an assign-
ment of all of the rights and obligations of the assigning Bank
under this Loan Agreement or an assignment of a portion of such
rights and obligations made concurrently with another assignment or
other such assignments which together constitute all of the rights
and obligations of the assigning Bank under this Loan Agreement.
In the case of any sale, assignment, transfer or negotiation of all
or part of the Revolving Loans and the Revolving Loan Commitments
authorized under this Section 10.A, the assignee, transferee or
recipient shall have, to the extent of such sale, assignment,
transfer or negotiation, the same rights, benefits and obligations
as it would if it were a Bank hereunder, including, without
limitation (x) the right to approve or disapprove actions which, in
accordance with the terms hereof, require the approval of the
Requisite Banks or the Banks, as applicable, and (y) the obligation
to fund Revolving Loans directly to the Agent pursuant to Section 2
hereof. Upon its receipt of any Assignment Agreement delivered by
an assigning Bank pursuant to this Section 10.A, the Agent shall
record the information contained therein in the records of the
Agent.
10B. Notwithstanding Section 10.A hereof, each Bank may
grant participations in all or any part of its Revolving Loans and
Revolving Loan Commitment to one or more of its Affiliates; pro-
vided that (i) any such disposition shall not, without the consent
of the Borrower, require the Borrower to file a registration
statement with the Securities and Exchange Commission or apply to
qualify the Revolving Loans or the Revolving Notes or any other
Loan Instrument under the blue sky law of any state; (ii) the
holder of any such participation shall not be entitled to require
such Bank to take or omit to take any action hereunder except
action directly extending the final maturity of any portion of the
principal amount of or interest on a Revolving Loan allocated to
such participation or a reduction of the principal amount of or the
rate of interest payable on the Revolving Loans, or payments due in
repayment of draws under Letters of Credit allocable to such par-
ticipation; and (iii) neither the Agent nor the Borrower shall have
any duty or obligation to deal directly with the holder of any such
participation but instead shall be entitled to continue to deal
directly with the Bank that granted such participation.
10C. No Bank shall, as between the Borrower and that
Bank, be relieved of any of its obligations hereunder as a result
of any granting of participations in all or any part of the Revolv-
ing Loans or Revolving Loan Commitment or other Obligations owed to
such Bank to any Affiliate of such Bank. Each Bank shall, as be-
tween the Borrower and that Bank, be relieved of its obligations
hereunder as a result of any sale, assignment, transfer or negotia-
tion of all or any part of the Revolving Loans or Revolving Loan
Commitment of that Bank or other Obligations owed to such Bank made
in accordance with Section 10.A hereof.
10D. Notwithstanding the provisions of Section 10.A.
hereof, no Bank shall be entitled to assign all or any portion of
its Revolving Loans or Revolving Loan Commitment under this Loan
Agreement pursuant to Section 10.A. hereof unless (x) such assign-
ing Bank shall have given the other Banks a first right to acquire
or purchase the portion of the Bank's Revolving Loans and Revolving
Loan Commitment being assigned. The assigning or selling Bank
shall notify the Agent of the amount of its Revolving Loans and Re-
volving Loan Commitment it intends to transfer and the Agent shall
give each other Bank notice thereof and shall determine within
forty-five (45) days the amount, if any, that the other Banks elect
to acquire, such amount to be allocated pro rata among such Banks
in accordance with their respective Revolving Loan Commitments
unless such Banks otherwise agree to the contrary. The provisions
of this Section 10.D. shall not apply to the sale by any Bank of
participations in its Revolving Loans and Revolving Loan Commitment
to any Affiliate of such Bank.
10E. In the event any Bank becomes an Affected Bank pur-
suant to Section 2.1B, 2.2G, 2.6C, 2.8A, 2.8B or 2.8C hereof and
the Borrower elects, at its sole option, to replace the Affected
Bank with an Eligible Assignee(s) selected by the Borrower and
approved of in writing by the Agent, which approval shall not be
unreasonably withheld, the Borrower shall, prior to selecting any
replacement Eligible Assignee for the Affected Bank, offer to the
other Banks for a period of sixty (60) days the right to increase
their respective Revolving Loan Commitments by an aggregate amount
equal to the Revolving Loan Commitment of the Affected Bank, such
Revolving Loan Commitment of the Affected Bank to be allocated pro
rata among the other Banks in accordance with their respective
Revolving Loan Commitments unless such other Banks otherwise agree
to the contrary. In the event the Banks (other than the Affected
Bank) elect not to increase their respective Revolving Loan Com-
mitments or fail to respond to the Borrower within the sixty (60)
day period referenced above, the Borrower shall have the right to
replace the Affected Bank with an Eligible Assignee(s). Each Bank
agrees that, in the event it becomes an Affected Bank, such Bank
will sell its Revolving Loan and Revolving Loan Commitment to the
other Banks and/or an Eligible Assignee(s), as the case may be, if
directed by the Borrower, in accordance with the provisions of this
Section 10.E. The Affected Bank and the Eligible Assignee(s) shall
be obligated to execute and deliver an Assignment Agreement in
favor of the Agent.
SECTION 11
INDEMNITY
The Borrower shall indemnify and hold harmless the
Banks, their respective successors, assigns, agents and employees,
from and against any and all claims, actions, suits, proceedings,
costs, expenses, damages, fines, penalties and liabilities,
including, without limitation, reasonable attorneys' fees and
costs, arising out of and/or connected with the transactions
contemplated hereunder. Provided, the Borrower shall have no
obligation to indemnify the Banks for any loss caused by the Banks'
gross negligence or willful misconduct. At each Bank's request,
the Borrower shall, at its own cost and expense, defend or cause to
be defended any and all such actions or suits that may be brought
against the applicable Bank and, in any event, shall satisfy, pay
and discharge any and all judgments, awards, penalties, costs and
fines that may be recovered against the applicable Bank in any such
action, plus all attorneys' fees and costs related thereto to the
extent permitted by applicable law; provided, however, that each
Bank shall give the Borrower, to the extent the applicable Bank
seeks indemnification from the Borrower under this Section 11,
written notice of any such claim, demand or suit as soon as
practicable after the applicable Bank has received written notice
thereof, and the applicable Bank shall not settle any such claim,
demand or suit, if the applicable Bank seeks indemnification
therefor from the Borrower, without first giving notice to Borrower
of the applicable Bank's desire to settle and obtaining the consent
of Borrower to the same, which consent Borrower hereby agrees not
to unreasonably withhold.
SECTION 12
MISCELLANEOUS
12.1. Submission to Jurisdiction, etc. The Borrower
hereby irrevocably agrees that any legal action, suit or proceeding
against the Borrower with respect to the obligations and liabili-
ties of the Borrower hereunder or any other matter under or arising
out of or in connection with this loan Agreement or for recognition
or enforcement of any judgment rendered in any such action, suit or
proceeding may be brought in the United States District Court of
the Western District of Kentucky or in the courts of the Common-
wealth of Kentucky, as the Requisite Banks may elect, and, by exe-
cution and delivery of this Loan Agreement, the Borrower hereby
irrevocably accepts and submits to the non-exclusive jurisdiction
of each of the aforesaid courts in personam generally and uncondi-
tionally with respect to any such action, suit or proceeding in-
volving the Borrower and in respect of the Borrower's property.
The Borrower further agrees that final judgment against the Bor-
rower in any action, suit or proceeding referred to herein shall be
conclusive after all appeals have been exhausted or waived by the
Borrower, and may thereafter be enforced in any other jurisdiction,
within or outside the United States of America, by suit on the
judgment, a certified or exemplified copy of which shall be conclu-
sive evidence of the fact and of the amount of the Borrower's obli-
gations and liabilities. The Borrower further irrevocably consents
and agrees to the service of any and all legal process, summons,
notices and documents out of any of the aforesaid courts in any
such action, suit or proceeding by mailing copies thereof by regis-
tered or certified air mail, postage prepaid, to the Borrower at
the address set forth in Section 12.3 below or by serving copies
thereof upon any statutory agent for service of process of the
Borrower. The Borrower agrees that service upon the Borrower as
provided for herein shall constitute valid and effective personal
service upon the Borrower and that the failure of any statutory
agent to give any notice of such service to the Borrower shall not
impair or affect in any way the validity of such service or any
judgment rendered in any action or proceeding based thereon. Noth-
ing herein shall, or shall be construed so as to, limit the right
of the Banks to bring actions, suits or proceedings with respect to
the obligations and liabilities of the Borrower under, or any other
matter arising out of or in connection with, this Loan Agreement
and/or the other Loan Instruments, or for recognition or enforce-
ment of any judgment rendered in any such action, suit or proceed-
ing, in the courts of whatever jurisdiction in which property of
the Borrower may be found or as otherwise shall to the Requisite
Banks seem appropriate, or to affect the rights to service of
process in any jurisdiction in any manner permitted by law. In
addition, the Borrower hereby irrevocably and unconditionally
waives any objection which the Borrower may now or hereafter have
to the laying of venue of any of the aforesaid actions, suits or
proceedings arising out of or in connection with this Loan Agree-
ment and/or the other Loan Instruments brought in the Circuit Court
of Jefferson County, Kentucky or in the United States District
Court for the Western District of Kentucky, and hereby further
irrevocably and unconditionally waives and agrees not to plead or
claim that any such action, suit or proceeding brought in either
such court has been brought in an inconvenient forum.
12.2. Role of the Banks. Notwithstanding any of the
terms or conditions hereof or of the other Loan Instruments to the
contrary, the Banks shall not have, and by their execution and
acceptance of this Loan Agreement hereby expressly disclaim, any
obligation or responsibility for the management, conduct or
operation of the business and affairs of the Borrower. Any term or
condition hereof, or of any of the other Loan Instruments,
permitting the Banks to take or refrain from taking any action with
respect to the Borrower shall be deemed solely to permit the Banks
to audit and review the management, operation and conduct of the
business and affairs of the Borrower, and may not be relied upon by
any other Person. Further, the Banks shall not have, have not
assumed, and by their execution and acceptance of this Loan
Agreement hereby expressly disclaim, any liability or responsibili-
ty for the payment or performance of any indebtedness or obligation
of the Borrower, and no term or condition hereof, or of any of the
other Loan Instruments, shall be construed otherwise.
12.3. Notices. All notices required or permitted to be
given hereunder shall be given in writing and shall be personally
delivered or sent by telecopier, by express courier service or by
registered or certified United States mail, return receipt re-
quested, postage prepaid, addressed as follows (or to such other
address as to which any party hereto shall have given the other
written notice):
If to the Borrower: Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
Attn: Mr. Kenneth Bates,
Chief Financial Officer
Telephone: (502) 245-2110
Telecopy: (502) 245-3821
cc: William E. Hellmann, Esq.
Stites & Harbison
Suite 1800
400 West Market Street
Louisville, KY 40202
Telephone: (502) 587-3400
Telecopy: (502) 587-6391
If to the Banks: At the telecopy number or address speci-
fied below the signature of the applica-
ble Bank
cc: Ms. Arlene M. Ohler
Assistant Vice President
Manager
PNC Securities Corp.
Multi-Bank Loan Administration
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Telephone: (412) 762-3627
Telecopy: (412) 762-8672
cc: Arthur A. Rouse, Esq.
Wyatt, Tarrant & Combs
2700 Citizens Plaza
Louisville, KY 40202
Telephone: (502) 562-7508
Telecopy: (502) 589-0309
All notices hereunder shall be deemed given upon the
earliest of (a) actual delivery in person or by telecopier, (b) one
(1) Business Day after delivery to an express courier service, or
(c) three (3) Business Days after having been deposited in the
United States mails, in accordance with the foregoing.
12.4. Ratable Sharing. Each Bank agrees with each
other Bank that (i) with respect to all amounts received by them
which are applicable to the payment of principal of or interest on
the Revolving Loans and amounts payable in respect of the Letters
of Credit or Commitment Fees, including, without limitation, all
amounts received by such Bank pursuant to the exercise of the right
of setoff pursuant to Section 8.2 hereof, equitable adjustment will
be made so that, in effect, all such amounts will be shared among
the Banks proportionately in accordance with their respective Pro
Rata Shares whether received by voluntary payment, by the exercise
of the right of set-off or banker's lien, by counterclaim or cross
action or by the enforcement of any or all of the Obligations, and
(ii) if any of them shall exercise any right of counterclaim, set-
off, banker's lien or similar right with respect to amounts owed by
the Borrower hereunder or in respect of the Letters of Credit, that
Bank shall apportion the amount recovered as a result of the exer-
cise of such right pro rata in accordance with (a) all amounts
outstanding at such time owed by the Borrower to it hereunder, and
(b) all amounts otherwise owed by the Borrower to it, and (iii) if
any of them shall thereby through the exercise of any right of
counterclaim, set-off, banker's lien or otherwise, or as adequate
protection of a deposit treated as cash collateral under the Bank-
ruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal and interest due with respect to the
Revolving Loans made by that Bank or amounts payable in respect of
any Letter of Credit or any participation therein, or any other
amount payable hereunder (collectively, the "Aggregate Amount Due"
to such Bank), which is greater than the proportion received by any
other Bank in respect of the Aggregate Amount Due to such other
Bank, then the Bank receiving such proportionately greater payment
shall (y) notify each other Bank and the Agent of such receipt and
(z) purchase participations (which it shall be deemed to have done
simultaneously upon the receipt of such payment) in the Aggregate
Amounts Due to the other Banks so that all recoveries of Aggregate
Amounts Due shall be shared by the Banks in proportion to their
respective Pro Rata Shares; provided that if all of part of such
proportionately greater payment received by such purchasing Bank is
thereafter recovered from such Bank, those purchases shall be
rescinded and the purchase prices paid for such participations
shall be returned to that Bank to the extent of such recovery, but
without interest. The Borrower expressly consents to the foregoing
arrangements and agrees that any participant in respect of any
Revolving Loan may exercise any and all rights of banker's lien,
set-off or counterclaim with respect to any and all rights of
banker's lien, set-off or counterclaim with respect to any and all
monies owing by the Borrower to that participant as fully as if
that participant were a Bank in the amount of such participation
held by that participant.
12.5. Waiver. No course of dealing in respect of, nor
any omission or delay in the exercise of, any right, power, remedy
or privilege by the Banks shall operate as a waiver thereof, nor
shall any right, power, remedy or privilege of the Banks be
exclusive of any other right, power, remedy or privilege referred
to herein or in any related document or now or hereafter available
at law, in equity, in bankruptcy, by statute or otherwise. Each
such right, power, remedy or privilege may be exercised by the
Banks, either independently or concurrently with others, and as
often and in such order as the Banks may deem expedient. No waiver
or consent granted by the Banks in respect of this Loan Agreement,
the Revolving Notes or the other Loan Instruments shall be binding
upon the Banks unless specifically granted in writing by a duly
authorized officer of each Bank, which writing shall be strictly
construed.
12.6. Survival of Representations and Warranties. All
representations, warranties and covenants of the Borrower contained
herein or in the other Loan Instruments or made pursuant hereto
shall survive the execution and delivery of the Loan Instruments.
Further, the indemnities set forth in Sections 5.11 and 11 hereof
shall survive the payment of the Revolving Notes and the other
Obligations.
12.7. Invalidity. If any part of this Loan Agreement
shall be adjudged invalid or unenforceable, whether in general or
in any particular circumstance, then such partial invalidity or
enforceability shall not cause the remainder of this Loan Agreement
to be or to become invalid or unenforceable, and if a provision
hereof is held invalid or unenforceable in one or more of its
applications, the parties hereto agree that said provision shall
remain in effect in all valid applications that are severable from
the invalid or unenforceable application or applications.
12.8. Assignment. This Loan Agreement may not be
assigned by the Borrower without the prior written consent of the
Banks. All rights of the Banks hereunder shall inure to the
benefit of their respective permitted successors and assigns, and
all obligations, covenants and agreements of the Borrower shall
bind its successors and assigns, if any.
12.9. Governing Law. This Loan Agreement and the
rights and obligations of the parties hereunder shall, in all
respects, be governed by and construed in accordance with the laws
of the Commonwealth of Kentucky.
12.10. Section Headings. The section headings of this
Loan Agreement are inserted herein solely for convenience of
reference and shall not affect the construction or interpretation
of the provisions hereof.
12.11. Entire Agreement. This Loan Agreement, the
Revolving Notes and the other Loan Instruments constitute the
entire agreement among the Banks and the Borrower with respect to
the subject matter hereof.
12.12. Costs and Expenses. The Borrower agrees to
reimburse PNC for all charges, expenses, out-of-pocket costs and
fees incurred by PNC in the preparation, negotiation, documenta-
tion, amendment, execution and administration (other than the
ordinary and customary expenses of administration) of this Loan
Agreement and all other Loan Instruments, including without
limitation: the reasonable fees of PNC's counsel and agreed loan or
commitment fees. All obligations of the Borrower under this
Section 12.12 shall survive the termination or cancellation of this
Loan Agreement for any reason whatsoever.
12.13. Time of the Essence. Time shall be of the
essence in the payment and performance of all of the Borrower's
obligations under this Loan Agreement, the Revolving Notes and the
other Loan Instruments.
12.14. No Oral Modifications. This Loan Agreement may
be modified only in writing executed by the Requisite Banks (or all
of the Banks to the extent applicable) and the Borrower.
12.15. Counterparts. This Loan Agreement 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.
12.16. Delivery to the Agent Only. Notwithstanding any
provision or inference to the contrary set forth herein, all
notices, financial statements, certificates, documents, instruments
and other items or information required to be given, provided,
furnished or delivered by the Borrower under this Loan Agreement
shall be delivered solely to the Agent and not to all of the Banks,
unless the Borrower at its sole option otherwise elects to deliver
any such notices, financial statements, certificates, documents,
instruments and other items or information to all of the Banks.
[Signatures Commence on Next Page]
IN WITNESS WHEREOF, the parties hereto have caused this
Loan Agreement to be duly executed as of the day and year first
above written.
(the "Borrower")
STEEL TECHNOLOGIES INC.
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
("PNC")
PNC BANK, KENTUCKY, INC.
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
Address: PNC Bank, Kentucky, Inc.
Citizens Plaza
500 West Jefferson Street
Louisville, KY 40202
Attn: Ralph A. Phillips
Vice President
Telephone: (502) 581-4543
Telecopy: (502) 581-2302
("National City")
NATIONAL CITY BANK OF KENTUCKY
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
Address: 101 South Fifth Street
Louisville, KY 40202
Attn: Deroy Scott
Vice President
Telephone: (502) 581-7821
Telecopy: (502) 581-4424
("NBD")
NBD BANK, N.A.
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
Address: One Indiana Square
Suite 302
Indianapolis, IN 46266
Attn: Randall K. Stephens
Telephone: (317) 266-6704
Telecopy: (317) 266-6042
("SunTrust")
SUNTRUST BANK, NASHVILLE, N.A.
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
Address: 201 Fourth Avenue North
Nashville, TN 37219
Attn: Jeffrey L. Howard
Group Vice President
Telephone: (615) 748-5579
Telecopy: (615) 259-4119
(collectively, the "Banks")
(the "Agent")
PNC BANK, KENTUCKY, INC., in its
capacity as Agent
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
E:\AAR\PNCAMD3.AGM
AMENDED AND RESTATED LOAN AGREEMENT
Dated as of March 26, 1997
by and among
STEEL TECHNOLOGIES INC.
and
PNC BANK, KENTUCKY, INC.,
NATIONAL CITY BANK OF KENTUCKY,
NBD BANK, N.A., and
SUNTRUST BANK, NASHVILLE, N.A.
and
PNC BANK, KENTUCKY, INC.,
in its capacity as agent for the Banks
TABLE OF CONTENTS
Page
1. Definitions and Cross Reference 2
2. Revolver. 22
2.1. Revolving Loan Commitments; Revolving Loans;
Line of Credit Commitment; Line of Credit
Advances 22
2.2. Interest on the Revolving Loans and the Line
of Credit Advances 29
2.3. Fees 35
2.4. Prepayments and Payments; Reductions in
Revolving Loan and Line of Credit Commitments 36
2.5. Use of Proceeds 38
2.6. Special Provisions Governing LIBOR Rate Loans 38
2.7. Letters of Credit 41
2.8. Increased Costs; Taxes; Capital Adequacy 48
2.9. Banks' Obligation to Mitigate 53
2.10. Records 53
2.11. Swing Line Loans 54
3. Effective Date; Other Stipulations. 58
3.1. Conditions to Effectiveness of Loan Agreement 58
3.2. Conditions to All Letters of Credit 59
3.3. Conditions to All Revolving Loans and
Letters of Credit 59
4. Representations and Warranties 60
4.1. Organization, Standing, etc. 60
4.2. Qualification 60
4.3. Use of Proceeds 60
4.4. Intellectual Property 60
4.5. Contracts; Labor Disputes 61
4.6. Accuracy of Financial Reports 61
4.7. Disclosure 61
4.8. Tax Returns and Payments 62
4.9. Indebtedness, etc. 62
4.10. Title to Properties; Liens 62
4.11. Operating Leases 62
4.12. Litigation, etc. 62
4.13. Authorization; Compliance with
Other Instruments, etc. 63
4.14. Enforceability 63
4.15. Governmental Consent 63
4.16. Investment Company Act Status 64
4.17. Regulation G, etc. 64
4.18. Holding Company Act 64
4.19. Employee Retirement Income Security
Act of 1974 64
4.20. Environmental Matters 64
4.21. Schedule of Guaranties 65
4.22. Subsidiaries and Joint Ventures 65
4.23. Events of Default 65
5. Affirmative Covenants 65
5.1. Maintenance of Assets; Casualty Insurance 66
5.2. Monetary Obligations 66
5.3. Financial Statements and Other Reports 67
5.4. Financial Records 69
5.5. Permits, Certificates, Leases, Licenses, etc. 69
5.6. Notice. 70
5.7. Further Assurances 70
5.8. Preservation of Existence, Leases, etc. 70
5.9. Comprehensive General Liability Insurance 70
5.10. Hazardous Materials 71
5.11. Compliance by Consolidated Subsidiaries 72
5.12. Delivery of Atlantic Guaranty 72
6. Negative Covenants 72
6.1. Mergers 72
6.2. Indebtedness 73
6.3. Use of Assets 73
6.4. Liens 73
6.5. Investments, Loans, etc. 75
6.6. Restricted Junior Payments 77
6.7. Agreements and Licenses 77
6.8. Consolidated Current Ratio 77
6.9. Consolidated Total Debt to Consolidated
Total Capitalization 77
6.10. Consolidated Interest Expense and
Consolidated Rent Expense Coverage Ratio 77
6.11. Minimum Consolidated Tangible Net Worth 77
6.12. Transactions with Affiliates 78
7. Events of Default; Acceleration 78
8. Remedies 81
8.1. Defaults 81
8.2. Offset 81
8.3. Rights Cumulative 82
8.4. Payment of Costs and Expenses 82
9. The Agent 82
9.1. Appointment 82
9.2. Delegation of Duties 82
9.3. Nature of Duties; Independent Credit
Investigation 82
9.4. Actions in Discretion of the Agent;
Instructions from the Banks 83
9.5. Reimbursement and Indemnification of
the Agent and the Banks by the Borrower 83
9.6. Exculpatory Provisions 84
9.7. Reimbursement and Indemnification of the
Agent by the Banks 85
9.8. Reliance by the Agent 85
9.9. Notice of Default 85
9.10. The Banks in Their Individual Capacities 86
9.11. Holders of Revolving Notes 86
9.12. Equalization of the Banks 86
9.13. Successor Agent 87
9.14. Calculations 87
9.15. Beneficiaries 87
10. Assignments and Participations in Revolving Loans and
Revolving Notes 88
11. Indemnity 90
12. Miscellaneous 91
12.1. Submission to Jurisdiction, etc. 91
12.2. Role of the Banks 92
12.3. Notices 92
12.4. Ratable Sharing 93
12.5. Waiver 94
12.6. Survival of Representations and Warranties 95
12.7. Invalidity 95
12.8. Assignment 95
12.9. Governing Law 95
12.10. Section Headings 95
12.11. Entire Agreement 95
12.12. Costs and Expenses 95
12.13. Time of the Essence 96
12.14. No Oral Modifications 96
12.15. Counterparts 96
12.16. Delivery to the Agent Only 96
ADOPTION AGREEMENT #003
NONSTANDARDIZED CODE 401(k) PROFIT SHARING PLAN
The undersigned, Steel Technologies Inc.
("Employer"), by executing this Adoption Agreement, elects to
become a participating Employer in the Benefit Actuaries, Inc.
Defined Contribution Prototype Plan (basic plan document # 01) by
adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The Employer makes the following
elections granted under the provisions of the Prototype Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is: (Choose
(a) or (b))
[ ] (a) A discretionary Trustee. See Section 10.03[A] of the Plan.
[X ] (b) A nondiscretionary Trustee. See Section 10.03[B] of the
Plan. [Note: The Employer may not elect Option (b) if a Custodian
executes the Adoption Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is Steel
Technologies Inc. Retirement Savings Plan.
1.07 EMPLOYEE. The following Employees are not eligible to participate
in the Plan: (Choose (a) or at least one of (b) through (g))
[ ] (a) No exclusions.
[ X ] (b) Collective bargaining employees (as defined in Section
1.07 of the Plan). [Note: If the Employer excludes union employees from
the Plan, the Employer must be able to provide evidence that retirement
benefits were the subject of good faith bargaining.]
[ ] (c) Nonresident aliens who do not receive any earned
income (as defined in Code 911(d)(2)) from the Employer which
constitutes United States source income (as defined in Code 861(a)(3)).
[ ] (d) Commission Salesmen.
[ ] (e) Any Employee compensated on a salaried basis.
[ ] (f) Any Employee compensated on an hourly basis.
[ ] (g) (Specify)
Leased Employees. Any Leased Employee treated as an Employee under
Section 1.31 of the Plan, is: (Choose (h) or (i))
[X ] (h) Not eligible to participate in the Plan.
[ ] (i) Eligible to participate in the Plan, unless excluded
by reason of an exclusion classification elected under this Adoption
Agreement Section 1.07.
Related Employers. If any member of the Employer's related group (as
defined in Section 1.30 of the Plan) executes a Participation Agreement
to this Adoption Agreement, such member's Employees are eligible to
participate in this Plan, unless excluded by reason of an exclusion
classification elected under this Adoption Agreement Section 1.07. In
addition: (Choose (j) or (k))
[ ] (j) No other related group member's Employees are eligible
to participate in the Plan.
[ ] (k) The following nonparticipating related group member's
Employees are eligible to participate in the Plan unless excluded by
reason of an exclusion classification elected under this Adoption
Agreement Section 1.07:
1.12 COMPENSATION.
Treatment of elective contributions. (Choose (a) or (b))
[X ] (a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.
[ ] (b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least one of
(d) through (j))
[X ] (c) No modifications other than as elected under Options (a) or
(b).
[ ] (d) The Plan excludes Compensation in excess of $ .
[ ] (e) In lieu of the definition in Section 1.12 of the Plan,
Compensation means any earnings reportable as W-2 wages for Federal
income tax withholding purposes, subject to any other election under
this Adoption Agreement Section 1.12.
[ ] (f) The Plan excludes bonuses.
[ ] (g) The Plan excludes overtime.
[ ] (h) The Plan excludes Commissions.
[ ] (i) Compensation will not include Compensation from a related
employer (as defined in Section 1.30 of the Plan) that has not executed
a Participation Agreement in this Plan unless, pursuant to Adoption
Agreement Section 1.07, the Employees of that related employer are
eligible to participate in this Plan.
[ ] (j) (Specify).
If, for any Plan Year, the Plan uses permitted disparity in the
contribution or allocation formula elected under Article III, any
election of Options (f), (g), (h) or (j) is ineffective for such Plan
Year with respect to any Nonhighly Compensated Employee.
Special definition for matching contributions. "Compensation" for
purposes of any matching contribution formula under Article III means:
(Choose (k) or (l) only if applicable)
[X ] (k) Compensation as defined in this Adoption Agreement Section
1.12.
[ ] (l) (Specify)
Special definition for salary reduction contributions. An Employee's
salary reduction agreement applies to his Compensation determined prior
to the reduction authorized by that salary reduction agreement, with the
following exceptions: (Choose (m) or at least one of (n) or (o), if
applicable)
[X ] (m) No exceptions.
[ ] (n) If the Employee makes elective contributions to another plan
maintained by the Employer, the Advisory Committee will determine the
amount of the Employee's salary reduction contribution for the
withholding period: (Choose (1) or (2))
[ ] (1) After the reduction for such period of elective
contributions to the other plan(s).
[ ] (2) Prior to the reduction for such period of elective
contributions to the other plan(s).
[ ] (o) (Specify)
PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
[X ] (a) The 12 consecutive month period ending every September 30
.
[ ] (b) (Specify)
.
Limitation Year. The Limitation Year is: (Choose (c) or (d))
[ X] (c) The Plan Year.
[ ] (d) The 12 consecutive month period ending every
.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is
.
Restated Plan. The restated Effective Date is January 1, 1997
.
This Plan is a substitution and amendment of an existing
retirement plan(s) originally established August 1, 1993
. [Note: See the Effective Date Addendum.]
1.27 HOUR OF SERVICE. The crediting method for Hours of Service is:
(Choose (a) or (b))
[X ] (a) The actual method.
[ ] (b) The ___________________________________________ equivalency
method, except:
[ ] (1) No exceptions.
[ ] (2) The actual method applies for purposes of: (Choose at least
one)
[ ] (i) Participation under Article II.
[ ] (ii) Vesting under Article V.
[ ] (iii) Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly
payroll periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the predecessor
service the Plan must credit by reason of Section 1.29 of the Plan, the
Plan credits Service with the following predecessor employer(s): Mi-
Tech Steel Inc. (for Steel Technologies employees) and Steel
Technologies Inc. (for Mi-Tech Steel Inc. employees).
Service with the designated predecessor employer(s) applies: (Choose
at least one of (a) or (b); (c) is available only in addition to (a) or
(b))
[X ] (a) For purposes of participation under Article II.
[X ] (b) For purposes of vesting under Article V.
[ ] (c) Except the following Service:
Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach
a schedule to this Adoption Agreement, in the same format as this
Section 1.29, designating additional predecessor employers and the
applicable service crediting elections.]
N/A 1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in
the Plan and also participates in a plan maintained by the leasing
organization: (Choose (a) or (b))
[ ] (a) The Advisory Committee will determine the Leased Employee's
allocation of Employer contributions under Article III without taking
into account the Leased Employee's allocation, if any, under the leasing
organization's plan.
[ ] (b) The Advisory Committee will reduce a Leased Employee's
allocation of Employer nonelective contributions (other than designated
qualified nonelective contributions) under this Plan by the Leased
Employee's allocation under the leasing organization's plan, but only to
the extent that allocation is attributable to the Leased Employee's
service provided to the Employer. The leasing organization's plan:
[ ] (1) Must be a money purchase plan which would satisfy the
definition under Section 1.31 of a safe harbor plan, irrespective of
whether the safe harbor exception applies.
[ ] (2) Must satisfy the features and, if a defined benefit plan,
the method of reduction described in an addendum to this Adoption
Agreement, numbered 1.31.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee
must satisfy the following eligibility conditions: (Choose (a) or (b) or
both; (c) is optional as an additional election)
[ ] (a) Attainment of age (specify age, not
exceeding 21).
[X ] (b) Service requirement. (Choose one of (1) through (3))
[X ] (1) One Year of Service.
[ ] (2) months (not exceeding 12)
following the Employee's Employment Commencement Date.
[ ] (3) One Hour of Service.
[ ] (c) Special requirements for non-401(k) portion of plan. (Make
elections under (1) and under (2))
(1) The requirements of this Option (c) apply to participation in:
(Choose at least one of (i) through (iii))
[ ] (i) The allocation of Employer nonelective contributions and
Participant forfeitures.
[ ] (ii) The allocation of Employer matching contributions (including
forfeitures allocated as matching contributions).
[ ] (iii) The allocation of Employer qualified nonelective
contributions.
(2) For participation in the allocations described in (1), the
eligibility conditions are: (Choose at least one of (i) through (iv))
[ ] (i) (one or two) Year(s) of Service, without an
intervening Break in Service (as described in Section 2.03(A) of the
Plan) if the requirement is two Years of Service.
[ ] (ii) months (not exceeding 24) following the
Employee's Employment Commencement Date.
[ ] (iii) One Hour of Service.
[ ] (iv) Attainment of age (Specify age, not
exceeding 21).
Plan Entry Date. "Plan Entry Date" means the Effective Date and: (Choose
(d), (e) or (f))
[ ] (d) Semi-annual Entry Dates. The first day of the Plan Year and
the first day of the seventh month of the Plan Year.
[ ] (e) The first day of the Plan Year
[X ] (f) (Specify entry dates) January 1, April 1, July 1 and
October 1
.
Time of Participation. An Employee will become a Participant (and, if
applicable, will participate in the allocations described in Option
(c)(1)), unless excluded under Adoption Agreement Section 1.07, on the
Plan Entry Date (if employed on that date): (Choose (g), (h) or (i))
[X ] (g) immediately following
[ ] (h) immediately preceding
[ ] (i) nearest
the date the Employee completes the eligibility conditions described in
Options (a) and (b) (or in Option (c)(2) if applicable) of this Adoption
Agreement Section 2.01. [Note: The Employer must coordinate the
selection of (g), (h) or (i) with the "Plan Entry Date" selection in
(d), (e) or (f). Unless otherwise excluded under Section 1.07, the
Employee must become a Participant by the earlier of: (1) the first day
of the Plan Year beginning after the date the Employee completes the age
and service requirements of Code 410(a); or (2) 6 months after the date
the Employee completes those requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01 apply
to: (Choose (j) or (k))
[X ] (j) All Employees of the Employer, except: (Choose (1) or (2))
[X ] (1) No exceptions.
[ ] (2) Employees who are Participants in the Plan as of the
Effective Date.
[ ] (k) Solely to an Employee employed by the Employer after.
If the Employee was employed by the Employer on or before the
specified date, the Employee will become a Participant: (Choose (1), (2)
or (3))
[ ] (1) On the latest of the Effective Date, his Employment
Commencement Date or the date he attains age (not
to exceed 21).
[ ] (2) Under the eligibility conditions in effect under the Plan
prior to the restated Effective Date. If the restated Plan required more
than one Year of Service to participate, the eligibility condition under
this Option (2) for participation in the Code 401(k) arrangement under
this Plan is one Year of Service for Plan Years beginning after December
31, 1988. [For restated plans only]
[ ] (3) (Specify)
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
[X ] (a) 1,000 Hours of Service
[ ] (b) Hours of Service
during an eligibility computation period to receive credit for a Year of
Service. [Note: The Hours of Service requirement may not exceed 1,000.]
Eligibility computation period. After the initial eligibility
computation period described in Section 2.02 of the Plan, the Plan
measures the eligibility computation period as: (Choose (c) or (d))
[ ] (c) The 12 consecutive month period beginning with each
anniversary of an Employee's Employment Commencement Date.
[X ] (d) The Plan Year, beginning with the Plan Year which includes
the first anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule
described in Section 2.03(B) of the Plan: (Choose (a) or (b))
[X ] (a) Does not apply to the Employer's Plan.
[ ] (b) Applies to the Employer's Plan.
2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))
[X ] (a) Does not permit an eligible Employee or a Participant to
elect not to participate.
[ ] (b) Does permit an eligible Employee or a Participant to elect
not to participate in accordance with Section 2.06 and with the
following rules: (Complete (1), (2), (3) and (4))
(1) An election is effective for a Plan Year if filed no later than
.
(2) An election not to participate must be effective for at least
Plan Year(s).
(3) Following a re-election to participate, the Employee or
Participant:
[ ] (i) May not again elect not to participate for any subsequent
Plan Year.
[ ] (ii) May again elect not to participate, but not earlier than the
Plan Year following the Plan Year in which the re-election first was
effective.
(4) (Specify)
[Insert "N/A" if no other rules apply].
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
Part I. [Options (a) through (g)] Amount of Employer's contribution. The
Employer's annual contribution to the Trust will equal the total amount
of deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions, as determined under this
Section 3.01. (Choose any combination of (a), (b), (c) and (d), or
choose (e))
[X ] (a) Deferral contributions (Code 401(k) arrangement). (Choose
(1) or (2) or both)
[X ] (1) Salary reduction arrangement. The Employer must contribute
the amount by which the Participants have reduced their Compensation for
the Plan Year, pursuant to their salary reduction agreements on file
with the Advisory Committee. A reference in the Plan to salary reduction
contributions is a reference to these amounts.
[ ] (2) Cash or deferred arrangement. The Employer will contribute
on behalf of each Participant the portion of the Participant's
proportionate share of the cash or deferred contribution which he has
not elected to receive in cash. See Section 14.02 of the Plan. The
Employer's cash or deferred contribution is the amount the Employer may
from time to time deem advisable which the Employer designates as a cash
or deferred contribution prior to making that contribution to the Trust.
[X ] (b) Matching contributions. The Employer will make matching
contributions in accordance with the formula(s) elected in Part II of
this Adoption Agreement Section 3.01.
[X ] (c) Designated qualified nonelective contributions. The
Employer, in its sole discretion, may contribute an amount which it
designates as a qualified nonelective contribution.
[X ] (d) Nonelective contributions. (Choose any combination of (1)
through (4))
[X ] (1) Discretionary contribution. The amount (or additional
amount) the Employer may from time to time deem advisable.
[ ] (2) The amount (or additional amount) the Employer may from time
to time deem advisable, separately determined for each of the following
classifications of Participants: (Choose (i) or (ii))
[ ] (i) Nonhighly Compensated Employees and Highly Compensated
Employees.
[ ] (ii) (Specify classifications)
.
Under this Option (2), the Advisory Committee will allocate the amount
contributed for each Participant classification in accordance with Part
II of Adoption Agreement Section 3.04, as if the Participants in that
classification were the only Participants in the Plan.
[ ] (3) % of the Compensation of all
Participants under the Plan, determined for the Employer's taxable year
for which it makes the contribution. [Note: The percentage selected may
not exceed 15%.]
[ ] (4) % of Net Profits but not more than $
.
[ ] (e) Frozen Plan. This Plan is a frozen Plan effective
The Employer will not contribute to the Plan with respect to any
period following the stated date.
Net Profits. The Employer: (Choose (f) or (g))
[X ] (f) Need not have Net Profits to make its annual contribution
under this Plan.
[ ] (g) Must have current or accumulated Net Profits exceeding $
to make the following contributions: (Choose at least one)
[ ] (1) Cash or deferred contributions described in Option (a)(2).
[ ] (2) Matching contributions described in Option (b), except:
.
[ ] (3) Qualified nonelective contributions described in Option (c).
[ ] (4) Nonelective contributions described in Option (d).
The term "Net Profits" means the Employer's net income or profits for
any taxable year determined by the Employer upon the basis of its books
of account in accordance with generally accepted accounting practices
consistently applied without any deductions for Federal and state taxes
upon income or for contributions made by the Employer under this Plan or
under any other employee benefit plan the Employer maintains. The term
"Net Profits" specifically excludes
. [Note: Enter "N/A" if no exclusions apply.]
If the Employer requires Net Profits for matching contributions and the
Employer does not have sufficient Net Profits under Option (g), it will
reduce the matching contribution under a fixed formula on a prorata
basis for all Participants. A Participant's share of the reduced
contribution will bear the same ratio as the matching contribution the
Participant would have received if Net Profits were sufficient bears to
the total matching contribution all Participants would have received if
Net Profits were sufficient. If more than one member of a related group
(as defined in Section 1.30) execute this Adoption Agreement, each
participating member will determine Net Profits separately but will not
apply this reduction unless, after combining the separately determined
Net Profits, the aggregate Net Profits are insufficient to satisfy the
matching contribution liability. "Net Profits" includes both current and
accumulated Net Profits.
Part II. [Options (h) through (j)] Matching contribution formula. [Note:
If the Employer elected Option (b), complete Options (h), (i) and (j).]
Steel Technologies Inc. (see attached for the Mi-Tech Steel matching
contribution formula)
[X ] (h) Amount of matching contributions. For each Plan Year, the
Employer's matching contribution is: (Choose any combination of (1),
(2), (3), (4) and (5))
[ ] (1) An amount equal to % of each Participant's
eligible contributions for the Plan Year.
[ ] (2) An amount equal to % of each Participant's first tier
of eligible contributions for the Plan Year, plus the following matching
percentage(s) for the following subsequent tiers of eligible
contributions for the Plan Year:
.
[X ] (3) Discretionary formula.
[X ] (i) An amount (or additional amount) equal to a matching
percentage the Employer from time to time may deem advisable of the
Participant's eligible contributions for the Plan Year.
[ ] (ii) An amount (or additional amount) equal to a matching
percentage the Employer from time to time may deem advisable of each
tier of the Participant's eligible contributions for the Plan Year.
[ ] (4) An amount equal to the following percentage of each
Participant's eligible contributions for the Plan Year, based on the
Participant's Years of Service:
Number of Years of Service Matching
Percentage
The Advisory Committee will apply this formula by determining Years of
Service as follows:
.
[ ] (5) A Participant's matching contributions may not: (Choose (i)
or (ii))
[ ] (i) Exceed
.
[ ] (ii) Be less than
.
Related Employers. If two or more related employers (as defined in
Section 1.30) contribute to this Plan, the related employers may elect
different matching contribution formulas by attaching to the Adoption
Agreement a separately completed copy of this Part II. Note: Separate
matching contribution formulas create separate current benefit
structures that must satisfy the minimum participation test of Code
401(a)(26).]
[ ] (i) Definition of eligible contributions. Subject to the
requirements of Option (j), the term "eligible contributions" means:
(Choose any combination of (1) through (3))
[ ] (1) Salary reduction contributions.
[ ] (2) Cash or deferred contributions (including any part of the
Participant's proportionate share of the cash or deferred contribution
which the Employer defers without the Participant's election).
[ ] (3) Participant mandatory contributions, as designated in
Adoption Agreement Section 4.01. See Section 14.04 of the Plan.
[ ] (j) Amount of eligible contributions taken into account. When
determining a Participant's eligible contributions taken into account
under the matching contributions formula(s), the following rules apply:
(Choose any combination of (1) through (4))
[ ] (1) The Advisory Committee will take into account all eligible
contributions credited for the Plan Year.
[ ] (2) The Advisory Committee will disregard eligible contributions
exceeding
.
[X ] (3) The Advisory Committee will treat as the first tier of
eligible contributions, an amount not exceeding: 3% of compensation
paid during the applicable allocation period
The subsequent tiers of eligible contributions are: the next 3% of
compensation paid during the applicable allocation period
[X ] (4) (Specify) No match to the Canton, Michigan facility of
Steel Technologies Inc.
.
Part III. [Options (k) and (l)]. Special rules for Code 401(k)
Arrangement. (Choose (k) or (l), or both, as applicable)
[X ] (k) Salary Reduction Agreements. The following rules and
restrictions apply to an Employee's salary reduction agreement: (Make a
selection under (1), (2), (3) and (4))
(1) Limitation on amount. The Employee's salary reduction
contributions: (Choose (i) or at least one of (ii) or (iii))
[ ] (i) No maximum limitation other than as provided in the Plan.
[ X] (ii) May not exceed 15% of Compensation for the Plan Year,
subject to the annual additions limitation described in Part 2 of
Article III and the 402(g) limitation described in Section 14.07 of the
Plan.
[ ] (iii) Based on percentages of Compensation must equal at least
.
(2) An Employee may revoke, on a prospective basis, a salary reduction
agreement: (Choose (i), (ii), (iii) or (iv))
[ ] (i) Once during any Plan Year but not later than
of the Plan Year.
[X ] (ii) As of any Plan Entry Date.
[ ] (iii) As of the first day of any month.
[ ] (iv) (Specify, but must be at least once per Plan Year).
(3) An Employee who revokes his salary reduction agreement may file a
new salary reduction agreement with an effective date: (Choose (i),
(ii), (iii) or (iv))
[ ] (i) No earlier than the first day of the next Plan Year.
[X ] (ii) As of any subsequent Plan Entry Date.
[ ] (iii) As of the first day of any month subsequent to the month in
which he revoked an Agreement.
[ ] (iv) (Specify, but must be at least once per Plan Year following
the Plan Year of revocation)
.
(4) A Participant may increase or may decrease, on a prospective
basis, his salary reduction percentage or dollar amount: (Choose (i),
(ii), (iii) or (iv))
[ ] (i) As of the beginning of each payroll period.
[ ] (ii) As of the first day of each month.
[X ] (iii) As of any Plan Entry Date.
[ ] (iv) (Specify, but must permit an increase or a decrease at least
once per Plan Year) .
[ ] (l) Cash or deferred contributions. For each Plan Year for which
the Employer makes a designated cash or deferred contribution, a
Participant may elect to receive directly in cash not more than the
following portion (or, if less, the 402(g) limitation described in
Section 14.07 of the Plan) of his proportionate share of that cash or
deferred contribution: (Choose (1) or (2))
[ ] (1) All or any portion.
[ ] (2)
%.
3.04 CONTRIBUTION ALLOCATION. The Advisory Committee will allocate
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions in accordance with Section
14.06 and the elections under this Adoption Agreement Section 3.04.
Part I. [Options (a) through (d)]. Special Accounting Elections. (Choose
whichever elections are applicable to the Employer's Plan)
[ X] (a) Matching Contributions Account. The Advisory Committee will
allocate matching contributions to a Participant's: (Choose (1) or (2);
(3) is available only in addition to (1))
[ X] (1) Regular Matching Contributions Account.
[ ] (2) Qualified Matching Contributions Account.
[ ] (3) Except, matching contributions under Option(s)
___________________ of Adoption Agreement Section 3.01 are allocable to
the Qualified Matching Contributions Account.
[X ] (b) Special Allocation Dates for Salary Reduction Contributions.
The Advisory Committee will allocate salary reduction contributions as
of the Accounting Date and as of the following additional allocation
dates: each payroll date
.
[X ] (c) Special Allocation Dates for Matching Contributions. The
Advisory Committee will allocate matching contributions as of the
Accounting Date and as of the following additional allocation dates:
the last day of each month
[X ] (d) Designated Qualified Nonelective Contributions - Definition
of Participant. For purposes of allocating the designated qualified
nonelective contribution, "Participant" means: (Choose (1), (2) or (3))
[ ] (1) All Participants.
[X ] (2) Participants who are Nonhighly Compensated Employees for the
Plan Year.
[ ] (3) (Specify)
.
Part II. Method of Allocation - Nonelective Contribution. Subject to any
restoration allocation required under Section 5.04, the Advisory
Committee will allocate and credit each annual nonelective contribution
(and Participant forfeitures treated as nonelective contributions) to
the Employer Contributions Account of each Participant who satisfies the
conditions of Section 3.06, in accordance with the allocation method
selected under this Section 3.04. If the Employer elects Option (e)(2),
Option (g)(2) or Option (h), for the first 3% of Compensation allocated
to all Participants, "Compensation" does not include any exclusions
elected under Adoption Agreement Section 1.12 (other than the exclusion
of elective contributions), and the Advisory Committee must take into
account the Participant's Compensation for the entire Plan Year. (Choose
an allocation method under (e), (f), (g) or (h); (i) is mandatory if the
Employer elects (f), (g) or (h); (j) is optional in addition to any
other election.)
[X ] (e) Nonintegrated Allocation Formula. (Choose (1) or (2))
[X ] (1) The Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for
the Plan Year.
[ ] (2) The Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for
the Plan Year. For purposes of this Option (2), "Participant" means, in
addition to a Participant who satisfies the requirements of Section 3.06
for the Plan Year, any other Participant entitled to a top heavy minimum
allocation under Section 3.04(B), but such Participant's allocation will
not exceed 3% of his Compensation for the Plan Year.
[ ] (f) Two-Tiered Integrated Allocation Formula - Maximum
Disparity. First, the Advisory Committee will allocate the annual
Employer nonelective contributions in the same ratio that each
Participant's Compensation plus Excess Compensation for the Plan Year
bears to the total Compensation plus Excess Compensation of all
Participants for the Plan Year. The allocation under this paragraph, as
a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (5.7%, 5.4% or
4.3%) listed under the Maximum Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for
the Plan Year.
[ ] (g) Three-Tiered Integrated Allocation Formula. First, the
Advisory Committee will allocate the annual Employer nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for
the Plan Year. The allocation under this paragraph, as a percentage of
each Participant's Compensation may not exceed the applicable percentage
(5.7%, 5.4% or 4.3%) listed under the Maximum Disparity Table following
Option (i). Solely for purposes of the allocation in this first
paragraph, "Participant" means, in addition to a Participant who
satisfies the requirements of Section 3.06 for the Plan Year: (Choose
(1) or (2))
[ ] (1) No other Participant.
[ ] (2) Any other Participant entitled to a top heavy minimum
allocation under Section 3.04(B), but such Participant's allocation
under this Option (g) will not exceed 3% of his Compensation for the
Plan Year.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's
Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Excess
Compensation, may not exceed the allocation percentage in the first
paragraph.
Finally, the Advisory Committee will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for
the Plan Year.
[ ] (h) Four-Tiered Integrated Allocation Formula. First, the
Advisory Committee will allocate the annual Employer nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for
the Plan Year, but not exceeding 3% of each Participant's Compensation.
Solely for purposes of this first tier allocation, a "Participant"
means, in addition to any Participant who satisfies the requirements of
Section 3.06 for the Plan Year, any other Participant entitled to a top
heavy minimum allocation under Section 3.04(B) of the Plan.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's
Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding 3%
of each Participant's Excess Compensation.
As a third tier allocation, the Advisory Committee will allocate the
annual Employer contributions in the same ratio that each Participant's
Compensation plus Excess Compensation for the Plan Year bears to the
total Compensation plus Excess Compensation of all Participants for the
Plan Year. The allocation under this paragraph, as a percentage of each
Participant's Compensation plus Excess Compensation, must not exceed the
applicable percentage (2.7%, 2.4% or 1.3%) listed under the Maximum
Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for
the Plan Year.
[ ] (i) Excess Compensation. For purposes of Option (f), (g) or (h),
"Excess Compensation" means Compensation in excess of the following
Integration Level: (Choose (1) or (2))
[ ] (1) % (not exceeding 100%) of the taxable wage
base, as determined under Section 230 of the Social Security Act, in
effect on the first day of the Plan Year: (Choose any combination of (i)
and (ii) or choose (iii))
[ ] (i) Rounded to
(but not exceeding the taxable wage base).
[ ] (ii) But not greater than $ .
[ ] (iii) Without any further adjustment or limitation.
[ ] (2) $ [Note: Not
exceeding the taxable wage base for the Plan Year in which this Adoption
Agreement first is effective.]
Maximum Disparity Table. For purposes of Options (f), (g) and (h), the
applicable percentage is:
Integration Level (as Applicable Percentages for
Applicable Percentages
percentage of taxable wage base) Option (f) or Option (g)
for Option (h)
100%
5.7% 2.7%
More than 80% but less than 100% 5.4%
2.4%
More than 20% (but not less than $10,001)
and not more than 80% 4.3%
1.3%
20% (or $10,000, if greater) or less 5.7%
2.7%
[ ] (j) Allocation offset. The Advisory Committee will reduce a
Participant's allocation otherwise made under Part II of this Section
3.04 by the Participant's allocation under the following qualified
plan(s) maintained by the Employer:
.
The Advisory Committee will determine this allocation reduction: (Choose
(1) or (2))
[ ] (1) By treating the term "nonelective contribution" as including
all amounts paid or accrued by the Employer during the Plan Year to the
qualified plan(s) referenced under this Option (j). If a Participant
under this Plan also participates in that other plan, the Advisory
Committee will treat the amount the Employer contributes for or during a
Plan Year on behalf of a particular Participant under such other plan as
an amount allocated under this Plan to that Participant's Account for
that Plan Year. The Advisory Committee will make the computation of
allocation required under the immediately preceding sentence before
making any allocation of nonelective contributions under this Section
3.04.
[ ] (2) In accordance with the formula provided in an addendum to
this Adoption Agreement, numbered 3.04(j).
Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum
allocation to which he is entitled under Section 3.04(B): (Choose (k) or
(l))
[X ] (k) The Employer will make any necessary additional contribution
to the Participant's Account, as described in Section 3.04(B)(7)(a) of
the Plan.
[ ] (l) The Employer will satisfy the top heavy minimum allocation
under the following plan(s) it maintains:
. However, the Employer will make any necessary additional contribution
to satisfy the top heavy minimum allocation for an Employee covered only
under this Plan and not under the other plan(s) designated in this
Option (l). See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan, the Employer may provide in an
addendum to this Adoption Agreement, numbered Section 3.04, any
modifications to the Plan necessary to satisfy the top heavy
requirements under Code 416.
Related employers. If two or more related employers (as defined in
Section 1.30) contribute to this Plan, the Advisory Committee must
allocate all Employer nonelective contributions (and forfeitures treated
as nonelective contributions) to each Participant in the Plan, in
accordance with the elections in this Adoption Agreement Section 3.04:
(Choose (m) or (n))
[ ] (m) Without regard to which contributing related group
member employs the Participant.
[X ] (n) Only to the Participants directly employed by the
contributing Employer. If a Participant receives Compensation from more
than one contributing Employer, the Advisory Committee will determine
the allocations under this Adoption Agreement Section 3.04 by prorating
among the participating Employers the Participant's Compensation and, if
applicable, the Participant's Integration Level under Option (i).
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation
required under Sections 5.04 or 9.14, the Advisory Committee will
allocate a Participant forfeiture in accordance with Section 3.04:
(Choose (a) or (b); (c) and (d) are optional in addition to (a) or (b))
[ ] (a) As an Employer nonelective contribution for the Plan Year in
which the forfeiture occurs, as if the Participant forfeiture were an
additional nonelective contribution for that Plan Year.
[X] (b) To reduce the Employer matching contributions and
nonelective contributions for the Plan Year: (Choose (1) or (2))
[X ] (1) in which the forfeiture occurs.
[ ] (2) immediately following the Plan Year in which the forfeiture
occurs.
[ ] (c) To the extent attributable to matching contributions:
(Choose (1), (2) or (3))
[ ] (1) In the manner elected under Options (a) or (b).
[ ] (2) First to reduce Employer matching contributions for the Plan
Year: (Choose (i) or (ii))
[ ] (i) in which the forfeiture occurs,
[ ] (ii) immediately following the Plan Year in which the forfeiture
occurs,
then as elected in Options (a) or (b).
[ ] (3) As a discretionary matching contribution for the Plan Year
in which the forfeiture occurs, in lieu of the manner elected under
Options (a) or (b).
[ ] (d) First to reduce the Plan's ordinary and necessary
administrative expenses for the Plan Year and then will allocate any
remaining forfeitures in the manner described in Options (a), (b) or
(c), whichever applies. If the Employer elects Option (c), the
forfeitures used to reduce Plan expenses: (Choose (1) or (2))
[ ] (1) relate proportionately to forfeitures described in Option
(c) and to forfeitures described in Options (a) or (b).
[ ] (2) relate first to forfeitures described in Option _________.
Allocation of forfeited excess aggregate contributions. The Advisory
Committee will allocate any forfeited excess aggregate contributions (as
described in Section 14.09): (Choose (e), (f) or (g))
[X ] (e) To reduce Employer matching contributions for the Plan Year:
(Choose (1) or (2))
[X ] (1) in which the forfeiture occurs.
[ ] (2) immediately following the Plan Year in which the forfeiture
occurs.
[ ] (f) As Employer discretionary matching contributions for the
Plan Year in which forfeited, except the Advisory Committee will not
allocate these forfeitures to the Highly Compensated Employees who
incurred the forfeitures.
[ ] (g) In accordance with Options (a) through (d), whichever
applies, except the Advisory Committee will not allocate these
forfeitures under Option (a) or under Option (c)(3) to the Highly
Compensated Employees who incurred the forfeitures.
3.06 ACCRUAL OF BENEFIT.
Compensation taken into account. For the Plan Year in which the Employee
first becomes a Participant, the Advisory Committee will determine the
allocation of any cash or deferred contribution, designated qualified
nonelective contribution or nonelective contribution by taking into
account: (Choose (a) or (b))
[ ] (a) The Employee's Compensation for the entire Plan Year.
[X ] (b) The Employee's Compensation for the portion of the Plan Year
in which the Employee actually is a Participant in the Plan.
Accrual Requirements. Subject to the suspension of accrual requirements
of Section 3.06(E) of the Plan, to receive an allocation of cash or
deferred contributions, matching contributions, designated qualified
nonelective contributions, nonelective contributions and Participant
forfeitures, if any, for the Plan Year, a Participant must satisfy the
conditions described in the following elections: (Choose (c) or at least
one of (d) through (f))
[ ] (c) Safe harbor rule. If the Participant is employed by the
Employer on the last day of the Plan Year, the Participant must complete
at least one Hour of Service for that Plan Year. If the Participant is
not employed by the Employer on the last day of the Plan Year, the
Participant must complete at least 501 Hours of Service during the Plan
Year.
[X ] (d) Hours of Service condition. The Participant must complete
the following minimum number of Hours of Service during the Plan Year:
(Choose at least one of (1) through (5))
[X ] (1) 1,000 Hours of Service. Applies to nonelective
contributions and QNECs only.
[ ] (2) (Specify, but the number of Hours of Service may not exceed
1,000)
.
[ ] (3) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of: (Choose (i), (ii) or
(iii))
[ ] (i) Death.
[ ] (ii) Disability.
[ ] (iii) Attainment of Normal Retirement Age in the current Plan Year
or in a prior Plan Year.
[ ] (4) Hours of Service (not exceeding 1,000) if
the Participant terminates employment with the Employer during the Plan
Year, subject to any election in Option (3).
[ ] (5) No Hour of Service requirement for an allocation of the
following contributions:
.
[ ] (e) Employment condition. The Participant must be employed by
the Employer on the last day of the Plan Year, irrespective of whether
he satisfies any Hours of Service condition under Option (d), with the
following exceptions: (Choose (1) or at least one of (2) through (5))
[ ] (1) No exceptions.
[ ] (2) Termination of employment because of death.
[ ] (3) Termination of employment because of disability.
[ ] (4) Termination of employment following attainment of Normal
Retirement Age.
[ ] (5) No employment condition for the following contributions:
.
[X ] (f) (Specify other conditions, if applicable): Collectively
bargained employees at the Canton, Michigan facility of Steel
Technologies Inc. are not eligible to receive an allocation of either
the Matching Contribution or Nonelective Employer Contribution
.
Suspension of Accrual Requirements. The suspension of accrual
requirements of Section 3.06(E) of the Plan: (Choose (g), (h) or (i))
[X ] (g) Applies to the Employer's Plan.
[ ] (h) Does not apply to the Employer's Plan.
[ ] (i) Applies in modified form to the Employer's Plan, as
described in an addendum to this Adoption Agreement, numbered Section
3.06(E).
Special accrual requirements for matching contributions. If the Plan
allocates matching contributions on two or more allocation dates for a
Plan Year, the Advisory Committee, unless otherwise specified in Option
(l), will apply any Hours of Service condition by dividing the required
Hours of Service on a prorata basis to the allocation periods included
in that Plan Year. Furthermore, a Participant who satisfies the
conditions described in this Adoption Agreement Section 3.06 will
receive an allocation of matching contributions (and forfeitures treated
as matching contributions) only if the Participant satisfies the
following additional condition(s): (Choose (j) or at least one of (k) or
(l))
[X ] (j) No additional conditions.
[ ] (k) The Participant is not a Highly Compensated Employee for the
Plan Year. This Option (k) applies to: (Choose (1) or (2))
[ ] (1) All matching contributions.
[ ] (2) Matching contributions described in Option(s) __________ of
Adoption Agreement Section 3.01.
[ ] (l) (Specify)
.
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15
apply, the Excess Amount attributed to this Plan equals: (Choose (a),
(b) or (c))
[ ] (a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code 415), times
(ii) the ratio of (1) the amount allocated to the Participant as of
such date under this Plan divided by (2) the total amount allocated as
of such date under all qualified defined contribution plans (determined
without regard to the limitations of Code 415).
[X ] (b) The total Excess Amount.
[ ] (c) None of the Excess Amount.
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of the
Plan: (Choose (a) or (b))
[ ] (a) Does not apply to the Employer's Plan because the Employer
does not maintain and never has maintained a defined benefit plan
covering any Participant in this Plan.
[X ] (b) Applies to the Employer's Plan. To the extent necessary to
satisfy the limitation under Section 3.18, the Employer will reduce:
(Choose (1) or (2))
[ ] (1) The Participant's projected annual benefit under the defined
benefit plan under which the Participant participates.
[X ] (2) Its contribution or allocation on behalf of the Participant
to the defined contribution plan under which the Participant
participates and then, if necessary, the Participant's projected annual
benefit under the defined benefit plan under which the Participant
participates.
[Note: If the Employer selects (a), the remaining options in this
Section 3.18 do not apply to the Employer's Plan.]
Coordination with top heavy minimum allocation. The Advisory Committee
will apply the top heavy minimum allocation provisions of Section
3.04(B) of the Plan with the following modifications: (Choose (c) or at
least one of (d) or (e))
[X ] (c) No modifications.
[ ] (d) For Non-Key Employees participating only in this Plan, the
top heavy minimum allocation is the minimum allocation described in
Section 3.04(B) determined by substituting _________% (not less than 4%)
for "3%," except: (Choose (i) or (ii))
[ ] (i) No exceptions.
[ ] (ii) Plan Years in which the top heavy ratio exceeds 90%.
[ ] (e) For Non-Key Employees also participating in the defined
benefit plan, the top heavy minimum is: (Choose (1) or (2))
[ ] (1) 5% of Compensation (as determined under Section 3.04(B) or
the Plan) irrespective of the contribution rate of any Key Employee,
except: (Choose (i) or (ii))
[ ] (i) No exceptions.
[ ] (ii) Substituting "71/2%" for "5%" if the top heavy ratio does not
exceed 90%.
[ ] (2) 0%. [Note: The Employer may not select this Option (2)
unless the defined benefit plan satisfies the top heavy minimum benefit
requirements of Code 416 for these Non-Key Employees.]
Actuarial Assumptions for Top Heavy Calculation. To determine the top
heavy ratio, the Advisory Committee will use the following interest rate
and mortality assumptions to value accrued benefits under a defined
benefit plan:
.
If the elections under this Section 3.18 are not appropriate to satisfy
the limitations of Section 3.18, or the top heavy requirements under
Code 416, the Employer must provide the appropriate provisions in an
addendum to this Adoption Agreement.
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. The Plan: (Choose (a) or
(b); (c) is available only with (b))
[ X] (a) Does not permit Participant nondeductible contributions.
[ ] (b) Permits Participant nondeductible contributions, pursuant to
Section 14.04 of the Plan.
[ ] (c) The following portion of the Participant's nondeductible
contributions for the Plan Year are mandatory contributions under Option
(i)(3) of Adoption Agreement Section 3.01: (Choose (1) or (2))
[ ] (1) The amount which is not less than:
.
[ ] (2) The amount which is not greater than:
.
Allocation dates. The Advisory Committee will allocate nondeductible
contributions for each Plan Year as of the Accounting Date and the
following additional allocation dates: (Choose (d) or (e))
[ ] (d) No other allocation dates.
[ ] (e) (Specify)
.
As of an allocation date, the Advisory Committee will credit all
nondeductible contributions made for the relevant allocation period.
Unless otherwise specified in (e), a nondeductible contribution relates
to an allocation period only if actually made to the Trust no later than
30 days after that allocation period ends.
4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION. Subject to
the restrictions of Article VI, the following distribution options apply
to a Participant's Mandatory Contributions Account, if any, prior to his
Separation from Service: (Choose (a) or at least one of (b) through (d))
[ ] (a) No distribution options prior to Separation from Service.
[ ] (b) The same distribution options applicable to the Deferral
Contributions Account prior to the Participant's Separation from
Service, as elected in Adoption Agreement Section 6.03.
[ ] (c) Until he retires, the Participant has a continuing election
to receive all or any portion of his Mandatory Contributions Account if:
(Choose (1) or at least one of (2) through (4))
[ ] (1) No conditions.
[ ] (2) The mandatory contributions have accumulated for at least
Plan Years since the Plan Year for which contributed.
[ ] (3) The Participant suspends making nondeductible
contributions for a period of months.
[ ] (4) (Specify)
.
[ ] (d) (Specify)
.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))
[X ] (a) 65 [State age, but may not
exceed age 65].
[ ] (b) The later of the date the Participant attains
(_____) years of age or the (_____)
anniversary of the first day of the Plan Year in which the Participant
commenced participation in the Plan. [The age selected may not exceed
age 65 and the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under
Section 5.02 of the Plan: (Choose (a) or choose one or both of (b) and
(c))
[ ] (a) Does not apply.
[X ] (b) Applies to death.
[X ] (c) Applies to disability.
5.03 VESTING SCHEDULE.
Deferral Contributions Account/Qualified Matching Contributions
Account/Qualified Nonelective Contributions Account/Mandatory
Contributions Account. A Participant has a 100% Nonforfeitable interest
at all times in his Deferral Contributions Account, his Qualified
Matching Contributions Account, his Qualified Nonelective Contributions
Account and in his Mandatory Contributions Account.
Regular Matching Contributions Account/Employer Contributions Account.
With respect to a Participant's Regular Matching Contributions Account
and Employer Contributions Account, the Employer elects the following
vesting schedule: (Choose (a) or (b); (c) and (d) are available only as
additional options)
[ ] (a) Immediate vesting. 100% Nonforfeitable at all times. [Note:
The Employer must elect Option (a) if the eligibility conditions under
Adoption Agreement Section 2.01(c) require 2 years of service or more
than 12 months of employment.]
[X ] (b) Graduated Vesting Schedules.
Top Heavy Schedule
(Mandatory)
Years of Nonforfeitable
Service Percentage
Less than 1 0%
1 0%
2 0%
3
100%
4 100%
5 100%
6 or more 100%
Non Top Heavy Schedule
(Optional)
Years of Nonforfeitable
Service Percentage
Less than 1 0%
1 0%
2 0%
3 0%
4 0%
5 100%
6 100%
7 or more 100%
[ ] (c) Special vesting election for Regular Matching Contributions
Account. In lieu of the election under Options (a) or (b), the Employer
elects the following vesting schedule for a Participant's Regular
Matching Contributions Account: (Choose (1) or (2))
[ ] (1) 100% Nonforfeitable at all times.
[ ] (2) In accordance with the vesting schedule described in the
addendum to this Adoption Agreement, numbered 5.03(c). [Note: If the
Employer elects this Option (c)(2), the addendum must designate the
applicable vesting schedule(s) using the same format as used in Option
(b).]
[Note: Under Options (b) and (c)(2), the Employer must complete a Top
Heavy Schedule which satisfies Code 416. The Employer, at its option,
may complete a Non Top Heavy Schedule. The Non Top Heavy Schedule must
satisfy Code 411(a)(2). Also see Section 7.05 of the Plan.]
[X ] (d) The Top Heavy Schedule under Option (b) (and, if applicable,
under Option (c)(2)) applies: (Choose (1) or (2))
[X ] (1) Only in a Plan Year for which the Plan is top heavy.
[ ] (2) In the Plan Year for which the Plan first is top heavy and
then in all subsequent Plan Years. [Note: The Employer may not elect
Option (d) unless it has completed a Non Top Heavy Schedule.]
Minimum vesting. (Choose (e) or (f))
[X ] (e) The Plan does not apply a minimum vesting rule.
[ ] (f) A Participant's Nonforfeitable Accrued Benefit will
never be less than the lesser of $ or his
entire Accrued Benefit, even if the application of a graduated vesting
schedule under Options (b) or (c) would result in a smaller
Nonforfeitable Accrued Benefit.
Life Insurance Investments. The Participant's Accrued Benefit
attributable to insurance contracts purchased on his behalf under
Article XI is: (Choose (g) or (h))
[ ] (g) Subject to the vesting election under Options (a), (b) or
(c).
[ ] (h) 100% Nonforfeitable at all times, irrespective of the
vesting election under Options (b) or (c)(2).
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/
RESTORATION OF FORFEITED ACCRUED BENEFIT. The deemed cash-out rule
described in Section 5.04(C) of the Plan: (Choose (a) or (b))
[ ] (a) Does not apply.
[X ] (b) Will apply to determine the timing of forfeitures for 0%
vested Participants. A Participant is not a 0% vested Participant if he
has a Deferral Contributions Account.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the
basis of the following 12 consecutive month periods: (Choose (a) or (b))
[X ] (a) Plan Years.
[ ] (b) Employment Years. An Employment Year is the 12 consecutive
month period measured from the Employee's Employment Commencement Date
and each successive 12 consecutive month period measured from each
anniversary of that Employment Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee
must complete during a vesting computation period to receive credit for
a Year of Service is: (Choose (c) or (d))
[X ] (c) 1,000 Hours of Service.
[ ] (d) Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically
excludes the following Years of Service: (Choose (a) or at least one of
(b) through (e))
[ ] (a) None other than as specified in Section 5.08(a) of the Plan.
[ ] (b) Any Year of Service before the Participant attained the age
of (_____). [Note: The age selected may not
exceed age 18.]
[ ] (c) Any Year of Service during the period the Employer did not
maintain this Plan or a predecessor plan.
[X ] (d) Any Year of Service before a Break in Service if the number
of consecutive Breaks in Service equals or exceeds the greater of 5 or
the aggregate number of the Years of Service prior to the Break. This
exception applies only if the Participant is 0% vested in his Accrued
Benefit derived from Employer contributions at the time he has a Break
in Service. Furthermore, the aggregate number of Years of Service before
a Break in Service do not include any Years of Service not required to
be taken into account under this exception by reason of any prior Break
in Service.
[ ] (e) Any Year of Service earned prior to the effective date of
ERISA if the Plan would have disregarded that Year of Service on account
of an Employee's Separation from Service under a Plan provision in
effect and adopted before January 1, 1974.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code 411(d)(6) Protected Benefits. The elections under this Article VI
may not eliminate Code 411(d)(6) protected benefits. To the extent the
elections would eliminate a Code 411(d)(6) protected benefit, see
Section 13.02 of the Plan. Furthermore, if the elections liberalize the
optional forms of benefit under the Plan, the more liberal options apply
on the later of the adoption date or the Effective Date of this Adoption
Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means ninety days
following termination unless the participant has reached his Normal
Retirement Age or has reached age 55 and 10 years of service, in which
case his distribution date shall be as soon as practical after his
Separation from Service. . [Note: The Employer must specify the
appropriate date(s). The specified distribution dates primarily
establish annuity starting dates and the notice and consent periods
prescribed by the Plan. The Plan allows the Trustee an administratively
practicable period of time to make the actual distribution relating to a
particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for
distribution of a Nonforfeitable Accrued Benefit not exceeding $3,500
is: (Choose (a), (b), (c), (d) or (e))
[ ] (a) of
the Plan Year beginning
after the Participant's Separation from Service.
[X ] (b) ninety days
following the Participant's Separation from Service.
[ ] (c)
of the Plan Year after the Participant incurs
Break(s) in Service (as defined in Article V).
[ ] (d)
following the Participant's attainment of Normal Retirement Age, but not
earlier than
days following his Separation from Service.
[X ] (e) (Specify) If the Participant separates from service on or
after his Normal Retirement Age or the date he reaches age 55 and 10
years of service, his distribution date shall be as soon as practical
after he separates from service.
.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to Section 6.01(A)(3), is:
(Choose (f), (g) or (h))
[X ] (f) as soon as administratively feasible
after the Participant terminates employment because of disability.
[ ] (g) The same as if the Participant had terminated employment
without disability.
[ ] (h) (Specify)
.
Hardship. (Choose (i) or (j))
[X ] (i) The Plan does not permit a hardship distribution to a
Participant who has separated from Service.
[ ] (j) The Plan permits a hardship distribution to a Participant
who has separated from Service in accordance with the hardship
distribution policy stated in: (Choose (1), (2) or (3))
[ ] (1) Section 6.01(A)(4) of the Plan.
[ ] (2) Section 14.11 of the Plan.
[ ] (3) The addendum to this Adoption Agreement, numbered Section
6.01.
Default on a Loan. If a Participant or Beneficiary defaults on a loan
made pursuant to a loan policy adopted by the Advisory Committee
pursuant to Section 9.04, the Plan: (Choose (k), (l) or (m))
[ ] (k) Treats the default as a distributable event. The Trustee, at
the time of the default, will reduce the Participant's Nonforfeitable
Accrued Benefit by the lesser of the amount in default (plus accrued
interest) or the Plan's security interest in that Nonforfeitable Accrued
Benefit. To the extent the loan is attributable to the Participant's
Deferral Contributions Account, Qualified Matching Contributions Account
or Qualified Nonelective Contributions Account, the Trustee will not
reduce the Participant's Nonforfeitable Accrued Benefit unless the
Participant has separated from Service or unless the Participant has
attained age 591/2.
[ ] (l) Does not treat the default as a distributable event. When an
otherwise distributable event first occurs pursuant to Section 6.01 or
Section 6.03 of the Plan, the Trustee will reduce the Participant's
Nonforfeitable Accrued Benefit by the lesser of the amount in default
(plus accrued interest) or the Plan's security interest in that
Nonforfeitable Accrued Benefit.
[ ] (m) (Specify)
.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will
apply Section 6.02 of the Plan with the following modifications: (Choose
(a) or at least one of (b), (c), (d) and (e))
[X ] (a) No modifications.
[ ] (b) Except as required under Section 6.01 of the Plan, a lump
sum distribution is not available:
.
[ X] (c) An installment distribution: (Choose (1) or at least one of
(2) or (3))
[X ] (1) Is not available under the Plan.
[ ] (2) May not exceed the lesser of
years or the maximum period permitted under Section 6.02.
[ ] (3) (Specify)
.
[ X] (d) The Plan permits the following annuity options: none
.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See
Section 6.04(E). [Note: The Employer may specify additional annuity
options in an addendum to this Adoption Agreement, numbered 6.02(d).]
[ ] (e) If the Plan invests in qualifying Employer securities, as
described in Section 10.03(F), a Participant eligible to elect
distribution under Section 6.03 may elect to receive that distribution
in Employer securities only in accordance with the provisions of the
addendum to this Adoption Agreement, numbered 6.02(e).
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who
is eligible to make distribution elections under Section 6.03 of the
Plan may elect to commence distribution of his Nonforfeitable Accrued
Benefit: (Choose at least one of (a) through (c))
[ ] (a) As of any distribution date, but not earlier than
of the Plan
Year beginning after the Participant's Separation from Service.
[X ] (b) As of the following date(s): (Choose at least one of Options
(1) through (6))
[ ] (1) Any distribution date after the close of the Plan Year in
which the Participant attains Normal Retirement Age.
[X ] (2) Any distribution date following his Separation from Service
with the Employer.
[ ] (3) Any distribution date in the
Plan Year(s) beginning after his Separation from Service.
[ ] (4) Any distribution date in the Plan Year after the
Participant incurs ____________________ Break(s) in Service (as defined
in Article V).
[ ] (5) Any distribution date following attainment of age
and completion of at least Years of Service
(as defined in Article V).
[ ] (6) (Specify)
.
[ ] (c) (Specify)
.
The distribution events described in the election(s) made under Options
(a), (b) or (c) apply equally to all Accounts maintained for the
Participant unless otherwise specified in Option (c).
Participant Elections Prior to Separation from Service - Regular
Matching Contributions Account and Employer Contributions Account.
Subject to the restrictions of Article VI, the following distribution
options apply to a Participant's Regular Matching Contributions Account
and Employer Contributions Account prior to his Separation from Service:
(Choose (d) or at least one of (e) through (h))
[X ] (d) No distribution options prior to Separation from Service.
[ ] (e) Attainment of Specified Age. Until he retires, the
Participant has a continuing election to receive all or any portion of
his Nonforfeitable interest in these Accounts after he attains: (Choose
(1) or (2))
[ ] (1) Normal Retirement Age.
[ ] (2) years of age and is at
least __________% vested in these Accounts. [Note: If the percentage is
less than 100%, see the special vesting formula in Section 5.03.]
[ ] (f) After a Participant has participated in the Plan for a
period of not less than ______ years and he is 100% vested in these
Accounts, until he retires, the Participant has a continuing election to
receive all or any portion of the Accounts. [Note: The number in the
blank space may not be less than 5.]
[ ] (g) Hardship. A Participant may elect a hardship distribution
prior to his Separation from Service in accordance with the hardship
distribution policy: (Choose (1), (2) or (3); (4) is available only as
an additional option)
[ ] (1) Under Section 6.01(A)(4) of the Plan.
[ ] (2) Under Section 14.11 of the Plan.
[ ] (3) Provided in the addendum to this Adoption Agreement,
numbered Section 6.03.
[ ] (4) In no event may a Participant receive a hardship
distribution before he is at least _________% vested in these Accounts.
[Note: If the percentage in the blank is less than 100%, see the special
vesting formula in Section 5.03.]
[ ] (h) (Specify)
.
[Note: The Employer may use an addendum, numbered 6.03, to provide
additional language authorized by Options (b)(6), (c), (g)(3) or (h) of
this Adoption Agreement Section 6.03.]
Participant Elections Prior to Separation from Service - Deferral
Contributions Account, Qualified Matching Contributions Account and
Qualified Nonelective Contributions Account. Subject to the restrictions
of Article VI, the following distribution options apply to a
Participant's Deferral Contributions Account, Qualified Matching
Contributions Account and Qualified Nonelective Contributions Account
prior to his Separation from Service: (Choose (i) or at least one of (j)
through (l))
[ ] (i) No distribution options prior to Separation from Service.
[ ] (j) Until he retires, the Participant has a continuing election
to receive all or any portion of these Accounts after he attains:
(Choose (1) or (2))
[ ] (1) The later of Normal Retirement Age or age 591/2.
[ ] (2) Age (at least 591/2).
[X ] (k) Hardship. A Participant, prior to this Separation from
Service, may elect a hardship distribution from his Deferral
Contributions Account in accordance with the hardship distribution
policy under Section 14.11 of the Plan.
[X ] (l) (Specify) Amount of hardship distribution is limited to
lesser of (1) Participant's Deferral Contribution Account balance or (2)
the cumulative amount the Participant has deferred (less the amount of
any prior hardship distribution). [Note: Option (l) may not permit in
service distributions prior to age 591/2 (other than hardship) and may
not modify the hardship policy described in Section 14.11.]
Sale of trade or business/subsidiary. If the Employer sells
substantially all of the assets (within the meaning of Code 409(d)(2))
used in a trade or business or sells a subsidiary (within the meaning of
Code 409(d)(3)), a Participant who continues employment with the
acquiring corporation is eligible for distribution from his Deferral
Contributions Account, Qualified Matching Contributions Account and
Qualified Nonelective Contributions Account: (Choose (m) or (n))
[X ] (m) Only as described in this Adoption Agreement Section 6.03
for distributions prior to Separation from Service.
[ ] (n) As if he has a Separation from Service. After March 31,
1988, a distribution authorized solely by reason of this Option (n) must
constitute a lump sum distribution, determined in a manner consistent
with Code 401(k)(10) and the applicable Treasury regulations.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The
annuity distribution requirements of Section 6.04: (Choose (a) or (b))
[X ] (a) Apply only to a Participant described in Section 6.04(E) of
the Plan (relating to the profit sharing exception to the joint and
survivor requirements).
[ ] (b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other
than a distribution from a segregated Account and other than a
corrective distribution described in Sections 14.07, 14.08, 14.09 or
14.10 of the Plan) occurs more than 90 days after the most recent
valuation date, the distribution will include interest at: (Choose (a),
(b) or (c))
[X ] (a) 0 % per annum. [Note: The percentage may equal 0%.]
[ ] (b) The 90 day Treasury bill rate in effect at the beginning of
the current valuation period.
[ ] (c) (Specify)
.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. Pursuant
to Section 14.12, to determine the allocation of net income, gain or
loss: (Complete only those items, if any, which are applicable to the
Employer's Plan)
[X ] (a) For salary reduction contributions, the Advisory Committee
will: (Choose (1), (2), (3), (4) or (5))
[X ] (1) Apply Section 9.11 without modification.
[ ] (2) Use the segregated account approach described in Section
14.12.
[ ] (3) Use the weighted average method described in Section
14.12, based on a weighting period.
[ ] (4) Treat as part of the relevant Account at the beginning of
the valuation period __________% of the salary reduction contributions:
(Choose (i) or (ii))
[ ] (i) made during that valuation period.
[ ] (ii) made by the following specified time:
.
[ ] (5) Apply the allocation method described in the addendum to
this Adoption Agreement numbered 9.11(a).
[X ] (b) For matching contributions, the Advisory Committee will:
(Choose (1), (2), (3) or (4))
[X ] (1) Apply Section 9.11 without modification.
[ ] (2) Use the weighted average method described in Section
14.12, based on a weighting period.
[ ] (3) Treat as part of the relevant Account at the beginning of
the valuation period __________% of the matching contributions allocated
during the valuation period.
[ ] (4) Apply the allocation method described in the addendum to
this Adoption Agreement numbered 9.11(b).
[ ] (c) For Participant nondeductible contributions, the Advisory
Committee will: (Choose (1), (2), (3), (4) or (5))
[ ] (1) Apply Section 9.11 without modification.
[ ] (2) Use the segregated account approach described in Section
14.12.
[ ] (3) Use the weighted average method described in Section
14.12, based on a weighting
period.
[ ] (4) Treat as part of the relevant Account at the beginning of
the valuation period __________% of the Participant nondeductible
contributions: (Choose (i) or (ii))
[ ] (i) made during that valuation period.
[ ] (ii) made by the following specified time:
.
[ ] (5) Apply the allocation method described in the addendum to
this Adoption Agreement numbered 9.11(c).
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.03 INVESTMENT POWERS. Pursuant to Section 10.03[F] of the Plan, the
aggregate investments in qualifying Employer securities and in
qualifying Employer real property: (Choose (a) or (b))
[ ] (a) May not exceed 10% of Plan assets.
[X ] (b) May not exceed 100 % of Plan assets. [Note: The
percentage may not exceed 100%.]
10.14 VALUATION OF TRUST. In addition to each Accounting Date, the
Trustee must value the Trust Fund on the following valuation date(s):
(Choose (a) or (b))
[ ] (a) No other mandatory valuation dates.
[X ] (b) (Specify) The plan is valued daily
.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective
Date specified in Adoption Agreement Section 1.18 is different than the
restated effective date for at least one of the provisions listed in
this addendum. In lieu of the restated Effective Date in Adoption
Agreement Section 1.18, the following special effective dates apply:
(Choose whichever elections apply)
[ ] (a) Compensation definition. The Compensation definition of
Section 1.12 (other than the $200,000 limitation) is effective for Plan
Years beginning after . [Note: May not be
effective later than the first day of the first Plan Year beginning
after the Employer executes this Adoption Agreement to restate the Plan
for the Tax Reform Act of 1986, if applicable.]
[ ] (b) Eligibility conditions. The eligibility conditions specified
in Adoption Agreement Section 2.01 are effective for Plan Years
beginning after
.
[ ] (c) Suspension of Years of Service. The suspension of Years of
Service rule elected under Adoption Agreement Section 2.03 is effective
for Plan Years beginning after .
[ ] (d) Contribution/allocation formula. The contribution formula
elected under Adoption Agreement Section 3.01 and the method of
allocation elected under Adoption Agreement Section 3.04 is effective
for Plan Years beginning after
.
[ ] (e) Accrual requirements. The accrual requirements of Section
3.06 are effective for Plan Years beginning after
.
[ ] (f) Employment condition. The employment condition of Section
3.06 is effective for Plan Years beginning after
.
[ ] (g) Elimination of Net Profits. The requirement for the Employer
not to have net profits to contribute to this Plan is effective for Plan
Years beginning after . [Note: The
date specified may not be earlier than December 31, 1985.]
[ ] (h) Vesting Schedule. The vesting schedule elected under
Adoption Agreement Section 5.03 is effective for Plan Years beginning
after
.
[ ] (i) Allocation of Earnings. The special allocation provisions
elected under Adoption Agreement Section 9.11 are effective for Plan
Years beginning after .
[ ] (j) (Specify)
.
For Plan Years prior to the special Effective Date, the terms of the
Plan prior to its restatement under this Adoption Agreement will control
for purposes of the designated provisions. A special Effective Date may
not result in the delay of a Plan provision beyond the permissible
Effective Date under any applicable law requirements.
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian)
under the Prototype Plan and Trust. The Employer hereby agrees to the
provisions of this Plan and Trust, and in witness of its agreement, the
Employer by its duly authorized officers, has executed this Adoption
Agreement, and the Trustee (and Custodian, if applicable) signified its
acceptance, on this day of January, 19 97 .
Name and EIN of Employer: Steel Technologies Inc. EIN: 61-0712014
Signed:
Name(s) of Trustee: The Charles Schwab Trust Company
Signed:
Name of Custodian:
Signed:
Note: A Trustee is mandatory, but a Custodian is optional. See Section
10.03 of the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this Plan
for ERISA reporting purposes (Form 5500 Series) is: 002
.
Use of Adoption Agreement. Failure to complete properly the elections in
this Adoption Agreement may result in disqualification of the Employer's
Plan. The 3-digit number assigned to this Adoption Agreement (see page
1) is solely for the Regional Prototype Plan Sponsor's recordkeeping
purposes and does not necessarily correspond to the plan number the
Employer designated in the prior paragraph.
Reliance on Notification Letter. The Employer may not rely on the
Regional Prototype Plan Sponsor's notification letter covering this
Adoption Agreement. For reliance on the Plan's qualification, the
Employer must obtain a determination letter from the applicable IRS Key
District office.
PARTICIPATION AGREEMENT
For Participation by Additional Employers
The undersigned Employer, by executing this Participation Agreement,
elects to become a Participating Employer in the Plan identified in
Section 1.03 of the accompanying Adoption Agreement, as if the
Participating Employer were a signatory to that Agreement. The
Participating Employer accepts, and agrees to be bound by, all of the
elections granted under the provisions of the Prototype Plan as made by
Steel Technologies Inc.
, the Signatory Employer to the Execution Page of the Adoption
Agreement.
1. The Effective Date of the undersigned Employer's participation in
the designated Plan is: January 1, 1997
.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[X ] (b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as The Mi-Tech Steel
Inc. 401(k) Savings Plan
, and having an original effective date of
.
Dated this _____ day of January , 19 97 .
Name of Participating Employer: Mi-Tech Steel Inc.
Signed:
Participating
Employer's EIN: 62-1317462
Acceptance by the Signatory Employer to the Execution Page of the
Adoption Agreement and by the Trustee.
Name of Signatory Employer: Steel Technologies Inc.
Accepted:__________________
[Date] Signed:
Name(s) of
Trustee: The Charles Schwab Trust Company
Accepted:___________________
[Date]
Signed:
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for
important Prototype Plan information.]
AGREE/stetd3a
Part II. [Options (h) through (j)] Matching contribution formula. [Note:
If the Employer elected Option (b), complete Options (h), (i) and (j).]
Mi-Tech Steel Inc.
[X ] (h) Amount of matching contributions. For each Plan Year, the
Employer's matching contribution is: (Choose any combination of (1),
(2), (3), (4) and (5))
[ ] (1) An amount equal to % of each Participant's
eligible contributions for the Plan Year.
[X ] (2) An amount equal to 100 % of each Participant's first tier
of eligible contributions for the Plan Year, plus the following matching
percentage(s) for the following subsequent tiers of eligible
contributions for the Plan Year: 50%
.
[ ] (3) Discretionary formula.
[ ] (i) An amount (or additional amount) equal to a matching
percentage the Employer from time to time may deem advisable of the
Participant's eligible contributions for the Plan Year.
[ ] (ii) An amount (or additional amount) equal to a matching
percentage the Employer from time to time may deem advisable of each
tier of the Participant's eligible contributions for the Plan Year.
[ ] (4) An amount equal to the following percentage of each
Participant's eligible contributions for the Plan Year, based on the
Participant's Years of Service:
Number of Years of Service Matching
Percentage
The Advisory Committee will apply this formula by determining Years of
Service as follows:
.
[ ] (5) A Participant's matching contributions may not: (Choose (i)
or (ii))
[ ] (i) Exceed
.
[ ] (ii) Be less than
.
Related Employers. If two or more related employers (as defined in
Section 1.30) contribute to this Plan, the related employers may elect
different matching contribution formulas by attaching to the Adoption
Agreement a separately completed copy of this Part II. Note: Separate
matching contribution formulas create separate current benefit
structures that must satisfy the minimum participation test of Code
401(a)(26).]
[ ] (i) Definition of eligible contributions. Subject to the
requirements of Option (j), the term "eligible contributions" means:
(Choose any combination of (1) through (3))
[ ] (1) Salary reduction contributions.
[ ] (2) Cash or deferred contributions (including any part of the
Participant's proportionate share of the cash or deferred contribution
which the Employer defers without the Participant's election).
[ ] (3) Participant mandatory contributions, as designated in
Adoption Agreement Section 4.01. See Section 14.04 of the Plan.
[X ] (j) Amount of eligible contributions taken into account. When
determining a Participant's eligible contributions taken into account
under the matching contributions formula(s), the following rules apply:
(Choose any combination of (1) through (4))
[ ] (1) The Advisory Committee will take into account all eligible
contributions credited for the Plan Year.
[ ] (2) The Advisory Committee will disregard eligible contributions
exceeding
.
[X ] (3) The Advisory Committee will treat as the first tier of
eligible contributions, an amount not exceeding: 1% of compensation
The subsequent tiers of eligible contributions are: the next 4% of
compensation
[ ] (4) (Specify)
.
ALPHABETICAL LISTING OF DEFINITIONS
Section Reference
Plan Definition (Page Number)
100% Limitation 3.19(l) (10)
Account 1.14 (5)
Accounting Date 1.20 (5)
Accrued Benefit 1.15 (5)
Actual Deferral Percentage ("ADP") Test 14.08 (6)
Adoption Agreemen 1.04 (1)
Advisory Committee 1.06 (2)
Annual Addition 3.19(a) (7)
Average Contribution Percentage Test 14.09 (8)
Beneficiary 1.11 (3)
Break in Service for Eligibility Purpo 2.03 (1)
Break in Service for Vesting Purposes 5.07 (3)
Cash-out Distribution 5.04 (1)
Code 1.25 (6)
Code 411(d)(6) Protected Benefits 13.02 (1)
Compensation 1.12 (3)
Compensation for Code 401(k) Purpose 14.03(f) (2)
Compensation for Code 415 Purposes 3.19(b) (8)
Compensation for Top Heavy Purposes 1.33(B)(3) (9)
Contract(s) 11.03(c) (2)
Custodian Designation 10.03[B] (3)
Deemed Cash-out Rule 5.04(C) (2)
Deferral Contributions 14.03(g) (2)
Deferral Contributions Account 14.06(A) (4)
Defined Benefit Plan 3.19(i) (9)
Defined Benefit Plan Fraction 3.19(j) (9)
Defined Contribution Plan 3.19(h) (8)
Defined Contribution Plan Fraction 3.19(k) (9)
Determination Date 1.33(B)(7) (10)
Disability 1.28 (7)
Distribution Date 6.01 (1)
Distribution Restrictions 14.03(m) (3)
Earned Income 1.13 (5)
Effective Date 1.18 (5)
Elective Deferrals 14.03(h) (2)
Elective Transfer 13.06(A) (3)
Eligible Employee 14.03(c) (2)
Employee 1.07 (2)
Employee Contributions 14.03(n) (3)
Employer 1.01 (1)
Employer Contribution Account 14.06 (4)
Employer for Code 415 Purposes 3.19(c) (8)
Employer for Top Heavy Purposes 1.33(B)(6) (10)
Employment Commencement Date 2.02 (1)
ERISA 1.24 (6)
Excess Aggregate Contributions 14.09(D) (9)
Excess Amount 3.19(d) (8)
Excess Contributions 14.08 (7)
Exempt Participant 8.01 (1)
Forfeiture Break in Service 5.08 (3)
Section Reference
Plan Definition (Page Number)[COMMENT1]
Group Trust Fund 10.16 (7)
Hardship 6.01(A)(4) (1)
Hardship for Code 401(k) Purposes 14.11(A) (11)
Highly Compensated Employee 1.09 (2)
Highly Compensated Group 14.03(d) (2)
Hour of Service 1.27 (6)
Incidental Insurance Benefits 11.01(A) (1)
Insurable Participant 11.03(d) (2)
Investment Manager 9.04(i) (1)
Issuing Insurance Company 11.03(b) (2)
Joint and Survivor Annuity 6.04(A) (6)
Key Employee 1.33(B)(1) (9)
Leased Employees 1.31 (8)
Limitation Year 1.17 and 3.19(e) (5 and 8)
Loan Policy 9.04(A) (2)
Mandatory Contributions 14.04(A) (3)
Mandatory Contributions Account 14.04(A) (3)
Master or Prototype Plan 3.19(f) (8)
Matching Contributions 14.03(i) (2)
Maximum Permissible Amount 3.19(g) (8)
Minimum Distribution Incidental Benefit 6.02(A) (3)
Multiple Use Limitation 14.10 (10)
Named Fiduciary 10.03[D] (5)
Nonelective Contributions 14.03(j) (2)
Nonforfeitable 1.16 (5)
Nonhighly Compensated Employee 14.03(b) (2)
Nonhighly Compensated Group 14.03(e) (2)
Non-Key Employee 1.33(B)(2) (9)
Nontransferable Annuity 1.23 (5)
Normal Retirement Age 5.01 (1)
Owner-Employee 1.08 (2)
Paired Plans 1.34 (10)
Participant 1.10 (3)
Participant Deductible Contributions 4.02 (1)
Participant Forfeiture 3.05 (3)
Participant Loans 10.03[E] (4)
Participant Nondeductible Contributions 4.01 (1)
Permissive Aggregation Group 1.33(B)(5) (10)
Plan 1.03 (1)
Plan Administrator 1.05 (1)
Plan Entry Date 1.19 (5)
Plan Year 1.17 (5)
Policy 11.03(a) (2)
Predecessor Employer 1.29 (7)
Preretirement Survivor Annuity 6.04(B) (6)
Qualified Domestic Relations Order 6.07 (8)
Qualified Matching Contributions 14.03(k) (2)
Qualified Nonelective Contributions 14.03(l) (3)
Qualifying Employer Real Property 10.03[F] (5)
Qualifying Employer Securities 10.03[F] (5)
Section Reference
Plan Definition (Page Number)
Related Employers 1.30 (7)
Required Aggregation Group 1.33(B)(4) (9)
Required Beginning Date 6.01(B) (2)
Rollover Contributions 4.03 (1)
Self-Employed Individual 1.08 (2)
Service 1.26 (6)
Term Life Insurance Contract 11.03 (2)
Top Heavy Minimum Allocation 3.04(B) (1)
Section Reference
Plan Definition (Page Number)
Top Heavy Ratio 1.33 (9)
Trust 1.21 (5)
Trustee 1.02 (1)
Trustee Designation 10.03[A] (1)
Trust Fund 1.22 (5)
Weighted Average Allocation Method 14.12 (11)
Year of Service for Eligibility Purposes 2.02 (1)
Year of Service for Vesting Purposes 5.06 (3)
AGREE/define
BENEFIT ACTUARIES, INC.
DEFINED CONTRIBUTION PROTOTYPE PLAN AND TRUST AGREEMENT
BASIC PLAN DOCUMENT # 01
Benefit Actuaries
, in its capacity as Prototype Plan Sponsor, establishes this Prototype
Plan intended to conform to and qualify under 401 and 501 of the
Internal Revenue Code of 1986, as amended. An Employer establishes a
Plan and Trust under this Prototype Plan by executing an Adoption
Agreement. If the Employer adopts this Plan as a restated Plan in
substitution for, and in amendment of, an existing plan, the provisions
of this Plan, as a restated Plan, apply solely to an Employee whose
employment with the Employer terminates on or after the restated
Effective Date of the Employer's Plan. If an Employee's employment with
the Employer terminates prior to the restated Effective Date, that
Employee is entitled to benefits under the Plan as the Plan existed on
the date of the Employee's termination of employment.
ARTICLE I
DEFINITIONS
1.01 "Employer" means Steel Technologies Inc. or any other employer who
with the written consent of Steel Technologies Inc. adopts the Plan.
1.02 "Trustee" means the person or persons who as Trustee execute the
Employer's Adoption Agreement, or any successor in office who in writing
accepts the position of Trustee. The Employer must designate in its
Adoption Agreement whether the Trustee will administer the Trust as a
discretionary Trustee or as a nondiscretionary Trustee. If a person acts
as a discretionary Trustee, the Employer also may appoint a Custodian.
See Article X.
1.03 "Plan" means the retirement plan established or continued by the
Employer in the form of this Agreement, including the Adoption Agreement
under which the Employer has elected to participate in this Prototype
Plan. The Employer must designate the name of the Plan in its Adoption
Agreement. An Employer may execute more than one Adoption Agreement
offered under this Prototype Plan, each of which will constitute a
separate Plan and Trust established or continued by that Employer. The
Plan and the Trust created by each adopting Employer is a separate Plan
and a separate Trust, independent from the plan and the trust of any
other employer adopting this Prototype Plan. All section references
within the Plan are Plan section references unless the context clearly
indicates otherwise.
1.04 "Adoption Agreement" means the document executed by each Employer
adopting this Prototype Plan. The terms of this Prototype Plan as
modified by the terms of an adopting Employer's Adoption Agreement
constitute a separate Plan and Trust to be construed as a single
Agreement. Each elective provision of the Adoption Agreement corresponds
by section reference to the section of the Plan which grants the
election. Each Adoption Agreement offered under this Prototype Plan is
either a Nonstandardized Plan or a Standardized Plan, as identified in
the preamble to that Adoption Agreement. The provisions of this
Prototype Plan apply equally to Nonstandardized Plans and to
Standardized Plans unless otherwise specified.
1.05 "Plan Administrator" is Steel Technologies Inc. unless Steel
Technologies Inc. designates another person to hold the position of Plan
Administrator. In addition to his other duties, the Plan Administrator
has full responsibility for compliance with the reporting and disclosure
rules under ERISA as respects this Agreement.
1.06 "Advisory Committee" means the Employer's Advisory Committee as
from time to time constituted.
1.07 "Employee" means any employee (including a Self-Employed
Individual) of the Employer. The Employer must specify in its Adoption
Agreement any Employee, or class of Employees, not eligible to
participate in the Plan. If the Employer elects to exclude collective
bargaining employees, the exclusion applies to any employee of the
Employer included in a unit of employees covered by an agreement which
the Secretary of Labor finds to be a collective bargaining agreement
between employee representatives and one or more employers unless the
collective bargaining agreement requires the employee to be included
within the Plan. The term "employee representatives" does not include
any organization more than half the members of which are owners,
officers, or executives of the Employer.
1.08 "Self-Employed Individual/Owner-Employee." "Self-Employed
Individual" means an individual who has Earned Income (or who would have
had Earned Income but for the fact that the trade or business did not
have net earnings) for the taxable year from the trade or business for
which the Plan is established. "Owner-Employee" means a Self-Employed
Individual who is the sole proprietor in the case of a sole
proprietorship. If the Employer is a partnership, "Owner-Employee" means
a Self-Employed Individual who is a partner and owns more than 10% of
either the capital or profits interest of the partnership.
1.09 "Highly Compensated Employee" means an Employee who, during the
Plan Year or during the preceding 12-month period:
(a) is a more than 5% owner of the Employer (applying the constructive
ownership rules of Code 318, and applying the principles of Code 318,
for an unincorporated entity);
(b) has Compensation in excess of $75,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year);
(c) has Compensation in excess of $50,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year) and is part of
the top-paid 20% group of employees (based on Compensation for the
relevant year); or
(d) has Compensation in excess of 50% of the dollar amount prescribed in
Code 415(b)(1)(A) (relating to defined benefit plans) and is an officer
of the Employer.
If the Employee satisfies the definition in clause (b), (c) or (d) in
the Plan Year but does not satisfy clause (b), (c) or (d) during the
preceding 12-month period and does not satisfy clause (a) in either
period, the Employee is a Highly Compensated Employee only if he is one
of the 100 most highly compensated Employees for the Plan Year. The
number of officers taken into account under clause (d) will not exceed
the greater of 3 or 10% of the total number (after application of the
Code 414(q) exclusions) of Employees, but no more than 50 officers. If
no Employee satisfies the Compensation requirement in clause (d) for the
relevant year, the Advisory Committee will treat the highest paid
officer as satisfying clause (d) for that year.
For purposes of this Section 1.09, "Compensation" means Compensation as
defined in Section 1.12, except any exclusions from Compensation elected
in the Employer's Adoption Agreement Section 1.12 do not apply, and
Compensation must include "elective contributions" (as defined in
Section 1.12). The Advisory Committee must make the determination of who
is a Highly Compensated Employee, including the determinations of the
number and identity of the top paid 20% group, the top 100 paid
Employees, the number of officers includible in clause (d) and the
relevant Compensation, consistent with Code 414(q) and regulations
issued under that Code section. The Employer may make a calendar year
election to determine the Highly Compensated Employees for the Plan
Year, as prescribed by Treasury regulations. A calendar year election
must apply to all plans and arrangements of the Employer. For purposes
of applying any nondiscrimination test required under the Plan or under
the Code, in a manner consistent with applicable Treasury regulations,
the Advisory Committee will treat a Highly Compensated Employee and all
family members (a spouse, a lineal ascendant or descendant, or a spouse
of a lineal ascendant or descendant) as a single Highly Compensated
Employee, but only if the Highly Compensated Employee is a more than 5%
owner or is one of the 10 Highly Compensated Employees with the greatest
Compensation for the Plan Year. This aggregation rule applies to a
family member even if that family member is a Highly Compensated
Employee without family aggregation.
The term "Highly Compensated Employee" also includes any former Employee
who separated from Service (or has a deemed Separation from Service, as
determined under Treasury regulations) prior to the Plan Year, performs
no Service for the Employer during the Plan Year, and was a Highly
Compensated Employee either for the separation year or any Plan Year
ending on or after his 55th birthday. If the former Employee's
Separation from Service occurred prior to January 1, 1987, he is a
Highly Compensated Employee only if he satisfied clause (a) of this
Section 1.09 or received Compensation in excess of $50,000 during: (1)
the year of his Separation from Service (or the prior year); or (2) any
year ending after his 54th birthday.
1.10 "Participant" is an Employee who is eligible to be and becomes a
Participant in accordance with the provisions of Section 2.01.
1.11 "Beneficiary" is a person designated by a Participant who is or
may become entitled to a benefit under the Plan. A Beneficiary who
becomes entitled to a benefit under the Plan remains a Beneficiary under
the Plan until the Trustee has fully distributed his benefit to him. A
Beneficiary's right to (and the Plan Administrator's, the Advisory
Committee's or a Trustee's duty to provide to the Beneficiary)
information or data concerning the Plan does not arise until he first
becomes entitled to receive a benefit under the Plan.
1.12 "Compensation" means, except as provided in the Employer's
Adoption Agreement, the Participant's Earned Income, wages, salaries,
fees for professional service and other amounts received for personal
services actually rendered in the course of employment with the Employer
maintaining the plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips and bonuses). The
Employer must elect in its Adoption Agreement whether to include
elective contributions in the definition of Compensation. "Elective
contributions" are amounts excludible from the Employee's gross income
under Code 125, 402(a)(8), 402(h) or 403(b), and contributed by the
Employer, at the Employee's election, to a Code 401(k) arrangement, a
Simplified Employee Pension, cafeteria plan or tax-sheltered annuity.
The term "Compensation" does not include:
(a) Employer contributions (other than "elective contributions," if
includible in the definition of Compensation under Section 1.12 of the
Employer's Adoption Agreement) to a plan of deferred compensation to the
extent the contributions are not included in the gross income of the
Employee for the taxable year in which contributed, on behalf of an
Employee to a Simplified Employee Pension Plan to the extent such
contributions are excludible from the Employee's gross income, and any
distributions from a plan of deferred compensation, regardless of
whether such amounts are includible in the gross income of the Employee
when distributed.
(b) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by an Employee
either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture.
(c) Amounts realized from the sale, exchange or other disposition of
stock acquired under a stock option described in Part II, Subchapter D,
Chapter 1 of the Code.
(d) Other amounts which receive special tax benefits, such as premiums
for group term life insurance (but only to the extent that the premiums
are not includible in the gross income of the Employee), or
contributions made by an Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Code 403(b) (whether or not the contributions are
excludible from the gross income of the Employee), other than "elective
contributions," if elected in the Employer's Adoption Agreement.
Any reference in this Plan to Compensation is a reference to the
definition in this Section 1.12, unless the Plan reference specifies a
modification to this definition. The Advisory Committee will take into
account only Compensation actually paid for the relevant period. A
Compensation payment includes Compensation by the Employer through
another person under the common paymaster provisions in Code 3121 and
3306.
(A) Limitations on Compensation.
(1) Compensation dollar limitation. For any Plan Year beginning after
December 31, 1988, the Advisory Committee must take into account only
the first $200,000 (or beginning January 1, 1990, such larger amount as
the Commissioner of Internal Revenue may prescribe) of any Participant's
Compensation. For any Plan Year beginning prior to January 1, 1989, this
$200,000 limitation (but not the family aggregation requirement
described in the next paragraph) applies only if the Plan is top heavy
for such Plan Year or operates as a deemed top heavy plan for such Plan
Year.
(2) Application of compensation limitation to certain family members.
The $200,000 Compensation limitation applies to the combined
Compensation of the Employee and of any family member aggregated with
the Employee under Section 1.09 who is either (i) the Employee's spouse;
or (ii) the Employee's lineal descendant under the age of 19. If, for a
Plan Year, the combined Compensation of the Employee and such family
members who are Participants entitled to an allocation for that Plan
Year exceeds the $200,000 (or adjusted) limitation, "Compensation" for
each such Participant, for purposes of the contribution and allocation
provisions of Article III, means his Adjusted Compensation. Adjusted
Compensation is the amount which bears the same ratio to the $200,000
(or adjusted) limitation as the affected Participant's Compensation
(without regard to the $200,000 Compensation limitation) bears to the
combined Compensation of all the affected Participants in the family
unit. If the Plan uses permitted disparity, the Advisory Committee must
determine the integration level of each affected family member
Participant prior to the proration of the $200,000 Compensation
limitation, but the combined integration level of the affected
Participants may not exceed $200,000 (or the adjusted limitation). The
combined Excess Compensation of the affected Participants in the family
unit may not exceed $200,000 (or the adjusted limitation) minus the
affected Participants' combined integration level (as determined under
the preceding sentence). If the combined Excess Compensation exceeds
this limitation, the Advisory Committee will prorate the Excess
Compensation limitation among the affected Participants in the family
unit in proportion to each such individual's Adjusted Compensation minus
his integration level. If the Employer's Plan is a Nonstandardized Plan,
the Employer may elect to use a different method in determining the
Adjusted Compensation of the affected Participants by specifying that
method in an addendum to the Adoption Agreement, numbered Section 1.12.
(B) Nondiscrimination. For purposes of determining whether the Plan
discriminates in favor of Highly Compensated Employees, Compensation
means Compensation as defined in this Section 1.12, except: (1) the
Employer may elect to include or to exclude elective contributions,
irrespective of the Employer's election in its Adoption Agreement
regarding elective contributions; and (2) the Employer will not give
effect to any elections made in the "modifications to Compensation
definition" section of Adoption Agreement Section 1.12. The Employer's
election described in clause (1) must be consistent and uniform with
respect to all Employees and all plans of the Employer for any
particular Plan Year. If the Employer's Plan is a Nonstandardized Plan,
the Employer, irrespective of clause (2), may elect to exclude from this
nondiscrimination definition of Compensation any items of Compensation
excludible under Code 414(s) and the applicable Treasury regulations,
provided such adjusted definition conforms to the nondiscrimination
requirements of those regulations.
1.13 "Earned Income" means net earnings from self-employment in the
trade or business with respect to which the Employer has established the
Plan, provided personal services of the individual are a material income
producing factor. The Advisory Committee will determine net earnings
without regard to items excluded from gross income and the deductions
allocable to those items. The Advisory Committee will determine net
earnings after the deduction allowed to the Self-Employed Individual for
all contributions made by the Employer to a qualified plan and, for Plan
Years beginning after December 31, 1989, the deduction allowed to the
Self-Employed under Code 164(f) for self-employment taxes.
1.14 "Account" means the separate account(s) which the Advisory
Committee or the Trustee maintains for a Participant under the
Employer's Plan.
1.15 "Accrued Benefit" means the amount standing in a Participant's
Account(s) as of any date derived from both Employer contributions and
Employee contributions, if any.
1.16 "Nonforfeitable" means a Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to the
Participant's Accrued Benefit.
1.17 "Plan Year" means the fiscal year of the Plan, the consecutive
month period specified in the Employer's Adoption Agreement. The
Employer's Adoption Agreement also must specify the "Limitation Year"
applicable to the limitations on allocations described in Article III.
If the Employer maintains Paired Plans, each Plan must have the same
Plan Year.
1.18 "Effective Date" of this Plan is the date specified in the
Employer's Adoption Agreement.
1.19 "Plan Entry Date" means the date(s) specified in Section 2.01 of
the Employer's Adoption Agreement.
1.20 "Accounting Date" is the last day of an Employer's Plan Year.
Unless otherwise specified in the Plan, the Advisory Committee will make
all Plan allocations for a particular Plan Year as of the Accounting
Date of that Plan Year.
1.21 "Trust" means the separate Trust created under the Employer's
Plan.
1.22 "Trust Fund" means all property of every kind held or acquired by
the Employer's Plan, other than incidental benefit insurance contracts.
1.23 "Nontransferable Annuity" means an annuity which by its terms
provides that it may not be sold, assigned, discounted, pledged as
collateral for a loan or security for the performance of an obligation
or for any purpose to any person other than the insurance company. If
the Plan distributes an annuity contract, the contract must be a
Nontransferable Annuity.
1.24 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.25 "Code" means the Internal Revenue Code of 1986, as amended.
1.26 "Service" means any period of time the Employee is in the employ
of the Employer, including any period the Employee is on an unpaid leave
of absence authorized by the Employer under a uniform, nondiscriminatory
policy applicable to all Employees. "Separation from Service" means the
Employee no longer has an employment relationship with the Employer
maintaining this Plan.
1.27 "Hour of Service" means:
(a) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment, for the performance of duties. The Advisory Committee credits
Hours of Service under this paragraph (a) to the Employee for the
computation period in which the Employee performs the duties,
irrespective of when paid;
(b) Each Hour of Service for back pay, irrespective of mitigation of
damages, to which the Employer has agreed or for which the Employee has
received an award. The Advisory Committee credits Hours of Service under
this paragraph (b) to the Employee for the computation period(s) to
which the award or the agreement pertains rather than for the
computation period in which the award, agreement or payment is made; and
(c) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment (irrespective of whether the employment relationship is
terminated), for reasons other than for the performance of duties during
a computation period, such as leave of absence, vacation, holiday, sick
leave, illness, incapacity (including disability), layoff, jury duty or
military duty. The Advisory Committee will credit no more than 501 Hours
of Service under this paragraph (c) to an Employee on account of any
single continuous period during which the Employee does not perform any
duties (whether or not such period occurs during a single computation
period). The Advisory Committee credits Hours of Service under this
paragraph (c) in accordance with the rules of paragraphs (b) and (c) of
Labor Reg. 2530.200b-2, which the Plan, by this reference, specifically
incorporates in full within this paragraph (c).
The Advisory Committee will not credit an Hour of Service under more
than one of the above paragraphs. A computation period for purposes of
this Section 1.27 is the Plan Year, Year of Service period, Break in
Service period or other period, as determined under the Plan provision
for which the Advisory Committee is measuring an Employee's Hours of
Service. The Advisory Committee will resolve any ambiguity with respect
to the crediting of an Hour of Service in favor of the Employee.
(A) Method of crediting Hours of Service. The Employer must elect in
its Adoption Agreement the method the Advisory Committee will use in
crediting an Employee with Hours of Service. For purposes of the Plan,
"actual" method means the determination of Hours of Service from records
of hours worked and hours for which the Employer makes payment or for
which payment is due from the Employer. If the Employer elects to apply
an "equivalency" method, for each equivalency period for which the
Advisory Committee would credit the Employee with at least one Hour of
Service, the Advisory Committee will credit the Employee with: (i) 10
Hours of Service for a daily equivalency; (ii) 45 Hours of Service for a
weekly equivalency; (iii) 95 Hours of Service for a semimonthly payroll
period equivalency; and (iv) 190 Hours of Service for a monthly
equivalency.
(B) Maternity/paternity leave. Solely for purposes of determining
whether the Employee incurs a Break in Service under any provision of
this Plan, the Advisory Committee must credit Hours of Service during an
Employee's unpaid absence period due to maternity or paternity leave.
The Advisory Committee considers an Employee on maternity or paternity
leave if the Employee's absence is due to the Employee's pregnancy, the
birth of the Employee's child, the placement with the Employee of an
adopted child, or the care of the Employee's child immediately following
the child's birth or placement. The Advisory Committee credits Hours of
Service under this paragraph on the basis of the number of Hours of
Service the Employee would receive if he were paid during the absence
period or, if the Advisory Committee cannot determine the number of
Hours of Service the Employee would receive, on the basis of 8 hours per
day during the absence period. The Advisory Committee will credit only
the number (not exceeding 501) of Hours of Service necessary to prevent
an Employee's Break in Service. The Advisory Committee credits all Hours
of Service described in this paragraph to the computation period in
which the absence period begins or, if the Employee does not need these
Hours of Service to prevent a Break in Service in the computation period
in which his absence period begins, the Advisory Committee credits these
Hours of Service to the immediately following computation period.
1.28 "Disability" means the Participant, because of a physical or mental
disability, will be unable to perform the duties of his customary
position of employment (or is unable to engage in any substantial
gainful activity) for an indefinite period which the Advisory Committee
considers will be of long continued duration. A Participant also is
disabled if he incurs the permanent loss or loss of use of a member or
function of the body, or is permanently disfigured, and incurs a
Separation from Service. The Plan considers a Participant disabled on
the date the Advisory Committee determines the Participant satisfies the
definition of disability. The Advisory Committee may require a
Participant to submit to a physical examination in order to confirm
disability. The Advisory Committee will apply the provisions of this
Section 1.28 in a nondiscriminatory, consistent and uniform manner. If
the Employer's Plan is a Nonstandardized Plan, the Employer may provide
an alternate definition of disability in an addendum to its Adoption
Agreement, numbered Section 1.28.
1.29 SERVICE FOR PREDECESSOR EMPLOYER. If the Employer maintains the
plan of a predecessor employer, the Plan treats service of the Employee
with the predecessor employer as service with the Employer. If the
Employer does not maintain the plan of a predecessor employer, the Plan
does not credit service with the predecessor employer, unless the
Employer identifies the predecessor in its Adoption Agreement and
specifies the purposes for which the Plan will credit service with that
predecessor employer.
1.30 RELATED EMPLOYERS. A related group is a controlled group of
corporations (as defined in Code 414(b)), trades or businesses (whether
or not incorporated) which are under common control (as defined in Code
414(c)) or an affiliated service group (as defined in Code 414(m) or
in Code 414(o)). If the Employer is a member of a related group, the
term "Employer" includes the related group members for purposes of
crediting Hours of Service, determining Years of Service and Breaks in
Service under Articles II and V, applying the Participation Test and the
Coverage Test under Section 3.06(E), applying the limitations on
allocations in Part 2 of Article III, applying the top heavy rules and
the minimum allocation requirements of Article III, the definitions of
Employee, Highly Compensated Employee, Compensation and Leased Employee,
and for any other purpose required by the applicable Code section or by
a Plan provision. However, an Employer may contribute to the Plan only
by being a signatory to the Execution Page of the Adoption Agreement or
to a Participation Agreement to the Employer's Adoption Agreement. If
one or more of the Employer's related group members become Participating
Employers by executing a Participation Agreement to the Employer's
Adoption Agreement, the term "Employer" includes the participating
related group members for all purposes of the Plan, and "Plan
Administrator" means the Employer that is the signatory to the Execution
Page of the Adoption Agreement.
If the Employer's Plan is a Standardized Plan, all Employees of the
Employer or of any member of the Employer's related group, are eligible
to participate in the Plan, irrespective of whether the related group
member directly employing the Employee is a Participating Employer. If
the Employer's Plan is a Nonstandardized Plan, the Employer must specify
in Section 1.07 of its Adoption Agreement, whether the Employees of
related group members that are not Participating Employers are eligible
to participate in the Plan. Under a Nonstandardized Plan, the Employer
may elect to exclude from the definition of "Compensation" for
allocation purposes any Compensation received from a related employer
that has not executed a Participation Agreement and whose Employees are
not eligible to participate in the Plan.
1.31 LEASED EMPLOYEES. The Plan treats a Leased Employee as an Employee
of the Employer. A Leased Employee is an individual (who otherwise is
not an Employee of the Employer) who, pursuant to a leasing agreement
between the Employer and any other person, has performed services for
the Employer (or for the Employer and any persons related to the
Employer within the meaning of Code 144(a)(3)) on a substantially full
time basis for at least one year and who performs services historically
performed by employees in the Employer's business field. If a Leased
Employee is treated as an Employee by reason of this Section 1.31 of the
Plan, "Compensation" includes Compensation from the leasing organization
which is attributable to services performed for the Employer.
(A) Safe harbor plan exception. The Plan does not treat a Leased
Employee as an Employee if the leasing organization covers the employee
in a safe harbor plan and, prior to application of this safe harbor plan
exception, 20% or less of the Employer's Employees (other than Highly
Compensated Employees) are Leased Employees. A safe harbor plan is a
money purchase pension plan providing immediate participation, full and
immediate vesting, and a nonintegrated contribution formula equal to at
least 10% of the employee's compensation without regard to employment by
the leasing organization on a specified date. The safe harbor plan must
determine the 10% contribution on the basis of compensation as defined
in Code 415(c)(3) plus elective contributions (as defined in Section
1.12).
(B) Other requirements. The Advisory Committee must apply this Section
1.31 in a manner consistent with Code 414(n) and 414(o) and the
regulations issued under those Code sections. The Employer must specify
in the Adoption Agreement the manner in which the Plan will determine
the allocation of Employer contributions and Participant forfeitures on
behalf of a Participant if the Participant is a Leased Employee covered
by a plan maintained by the leasing organization.
1.32 SPECIAL RULES FOR OWNER-EMPLOYEES. The following special provisions
and restrictions apply to Owner-Employees:
(a) If the Plan provides contributions or benefits for an Owner-
Employee or for a group of Owner-Employees who controls the trade or
business with respect to which this Plan is established and the Owner-
Employee or Owner-Employees also control as Owner-Employees one or more
other trades or businesses, plans must exist or be established with
respect to all the controlled trades or businesses so that when the
plans are combined they form a single plan which satisfies the
requirements of Code 401(a) and Code 401(d) with respect to the
employees of the controlled trades or businesses.
(b) The Plan excludes an Owner-Employee or group of Owner-Employees if
the Owner-Employee or group of Owner-Employees controls any other trade
or business, unless the employees of the other controlled trade or
business participate in a plan which satisfies the requirements of Code
401(a) and Code 401(d). The other qualified plan must provide
contributions and benefits which are not less favorable than the
contributions and benefits provided for the Owner-Employee or group of
Owner-Employees under this Plan, or if an Owner-Employee is covered
under another qualified plan as an Owner-Employee, then the plan
established with respect to the trade or business he does control must
provide contributions or benefits as favorable as those provided under
the most favorable plan of the trade or business he does not control. If
the exclusion of this paragraph (b) applies and the Employer's Plan is a
Standardized Plan, the Employer may not participate or continue to
participate in this Prototype Plan and the Employer's Plan becomes an
individually-designed plan for purposes of qualification reliance.
(c) For purposes of paragraphs (a) and (b) of this Section 1.32, an
Owner-Employee or group of Owner-Employees controls a trade or business
if the Owner-Employee or Owner-Employees together (1) own the entire
interest in an unincorporated trade or business, or (2) in the case of a
partnership, own more than 50% of either the capital interest or the
profits interest in the partnership.
1.33 DETERMINATION OF TOP HEAVY STATUS. If this Plan is the only
qualified plan maintained by the Employer, the Plan is top heavy for a
Plan Year if the top heavy ratio as of the Determination Date exceeds
60%. The top heavy ratio is a fraction, the numerator of which is the
sum of the present value of Accrued Benefits of all Key Employees as of
the Determination Date and the denominator of which is a similar sum
determined for all Employees. The Advisory Committee must include in the
top heavy ratio, as part of the present value of Accrued Benefits, any
contribution not made as of the Determination Date but includible under
Code 416 and the applicable Treasury regulations, and distributions
made within the Determination Period. The Advisory Committee must
calculate the top heavy ratio by disregarding the Accrued Benefit (and
distributions, if any, of the Accrued Benefit) of any Non-Key Employee
who was formerly a Key Employee, and by disregarding the Accrued Benefit
(including distributions, if any, of the Accrued Benefit) of an
individual who has not received credit for at least one Hour of Service
with the Employer during the Determination Period. The Advisory
Committee must calculate the top heavy ratio, including the extent to
which it must take into account distributions, rollovers and transfers,
in accordance with Code 416 and the regulations under that Code
section.
If the Employer maintains other qualified plans (including a simplified
employee pension plan), or maintained another such plan which now is
terminated, this Plan is top heavy only if it is part of the Required
Aggregation Group, and the top heavy ratio for the Required Aggregation
Group and for the Permissive Aggregation Group, if any, each exceeds
60%. The Advisory Committee will calculate the top heavy ratio in the
same manner as required by the first paragraph of this Section 1.33,
taking into account all plans within the Aggregation Group. To the
extent the Advisory Committee must take into account distributions to a
Participant, the Advisory Committee must include distributions from a
terminated plan which would have been part of the Required Aggregation
Group if it were in existence on the Determination Date. The Advisory
Committee will calculate the present value of accrued benefits under
defined benefit plans or simplified employee pension plans included
within the group in accordance with the terms of those plans, Code 416
and the regulations under that Code section. If a Participant in a
defined benefit plan is a Non-Key Employee, the Advisory Committee will
determine his accrued benefit under the accrual method, if any, which is
applicable uniformly to all defined benefit plans maintained by the
Employer or, if there is no uniform method, in accordance with the
slowest accrual rate permitted under the fractional rule accrual method
described in Code 411(b)(1)(C). If the Employer maintains a defined
benefit plan, the Employer must specify in Adoption Agreement Section
3.18 the actuarial assumptions (interest and mortality only) the
Advisory Committee will use to calculate the present value of benefits
from a defined benefit plan. If an aggregated plan does not have a
valuation date coinciding with the Determination Date, the Advisory
Committee must value the Accrued Benefits in the aggregated plan as of
the most recent valuation date falling within the twelve-month period
ending on the Determination Date, except as Code 416 and applicable
Treasury regulations require for the first and second plan year of a
defined benefit plan. The Advisory Committee will calculate the top
heavy ratio with reference to the Determination Dates that fall within
the same calendar year.
(A) Standardized Plan. If the Employer's Plan is a Standardized Plan,
the Plan operates as a deemed top heavy plan in all Plan Years, except,
if the Standardized Plan includes a Code 401(k) arrangement, the
Employer may elect to apply the top heavy requirements only in Plan
Years for which the Plan actually is top heavy. Under a deemed top heavy
plan, the Advisory Committee need not determine whether the Plan
actually is top heavy. However, if the Employer, in Adoption Agreement
Section 3.18, elects to override the 100% limitation, the Advisory
Committee will need to determine whether a deemed top heavy Plan's top
heavy ratio for a Plan Year exceeds 90%.
(B) Definitions. For purposes of applying the provisions of this
Section 1.33:
(1) "Key Employee" means, as of any Determination Date, any Employee
or former Employee (or Beneficiary of such Employee) who, for any Plan
Year in the Determination Period: (i) has Compensation in excess of 50%
of the dollar amount prescribed in Code 415(b)(1)(A) (relating to
defined benefit plans) and is an officer of the Employer; (ii) has
Compensation in excess of the dollar amount prescribed in Code
415(c)(1)(A) (relating to defined contribution plans) and is one of the
Employees owning the ten largest interests in the Employer; (iii) is a
more than 5% owner of the Employer; or (iv) is a more than 1% owner of
the Employer and has Compensation of more than $150,000. The
constructive ownership rules of Code 318 (or the principles of that
section, in the case of an unincorporated Employer,) will apply to
determine ownership in the Employer. The number of officers taken into
account under clause (i) will not exceed the greater of 3 or 10% of the
total number (after application of the Code 414(q) exclusions) of
Employees, but no more than 50 officers. The Advisory Committee will
make the determination of who is a Key Employee in accordance with Code
416(i)(1) and the regulations under that Code section.
(2) "Non-Key Employee" is an employee who does not meet the definition
of Key Employee.
(3) "Compensation" means Compensation as determined under Section 1.09
for purposes of identifying Highly Compensated Employees.
(4) "Required Aggregation Group" means: (i) each qualified plan of the
Employer in which at least one Key Employee participates at any time
during the Determination Period; and (ii) any other qualified plan of
the Employer which enables a plan described in clause (i) to meet the
requirements of Code 401(a)(4) or of Code 410.
(5) "Permissive Aggregation Group" is the Required Aggregation Group
plus any other qualified plans maintained by the Employer, but only if
such group would satisfy in the aggregate the requirements of Code
401(a)(4) and of Code 410. The Advisory Committee will determine the
Permissive Aggregation Group.
(6) "Employer" means the Employer that adopts this Plan and any
related employers described in Section 1.30.
(7) "Determination Date" for any Plan Year is the Accounting Date of
the preceding Plan Year or, in the case of the first Plan Year of the
Plan, the Accounting Date of that Plan Year. The "Determination Period"
is the 5 year period ending on the Determination Date.
1.34 "Paired Plans" means the Employer has adopted two Standardized
Plan Adoption Agreements offered with this Prototype Plan, one Adoption
Agreement being a Paired Profit Sharing Plan and one Adoption Agreement
being a Paired Pension Plan. A Paired Profit Sharing Plan may include a
Code 401(k) arrangement. A Paired Pension Plan must be a money purchase
pension plan or a target benefit pension plan. Paired Plans must be the
subject of a favorable opinion letter issued by the National Office of
the Internal Revenue Service. This Prototype Plan does not pair any of
its Standardized Plan Adoption Agreements with Standardized Plan
Adoption Agreements under a defined benefit prototype plan.
1.35 PLAN MAINTAINED BY MORE THAN ONE EMPLOYER
(A) Treatment of Employers. If more than one employer maintains this
Plan, then for purposes of determining Service and Hours of Service, the
Advisory Committee will treat all Employers maintaining this Plan as a
single employer.
(B) Plan Allocations. The Advisory Committee will account separately
for each Employer's contributions under the Plan. In this respect, the
Advisory Committee will allocate each Employer's contributions to the
Trustee for a Plan Year, in accordance with Article III, to the accounts
of those Participants actually employed by that Employer during the Plan
Year. The advisory Committee will attribute Participant forfeitures to
the Employer or Employers that actually employed the forfeited
Participant in the year of the forfeiture. For this purpose,
Compensation will mean Compensation paid during the Plan Year by an
Employer to those Participants actually employed by that Employer during
that Plan Year.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY. Each Employee becomes a Participant in the Plan in
accordance with the participation option selected by the Employer in its
Adoption Agreement. If this Plan is a restated Plan, each Employee who
was a Participant in the Plan on the day before the Effective Date
continues as a Participant in the Plan, irrespective of whether he
satisfies the participation conditions in the restated Plan, unless
otherwise provided in the Employer's Adoption Agreement.
2.02 YEAR OF SERVICE - PARTICIPATION. For purposes of an Employee's
participation in the Plan under Adoption Agreement Section 2.01, the
Plan takes into account all of his Years of Service with the Employer,
except as provided in Section 2.03. "Year of Service" means an
eligibility computation period during which the Employee completes not
less than the number of Hours of Service specified in the Employer's
Adoption Agreement. The initial eligibility computation period is the
first 12 consecutive month period measured from the Employment
Commencement Date. The Plan measures succeeding eligibility computation
periods in accordance with the option selected by the Employer in its
Adoption Agreement. If the Employer elects to measure subsequent periods
on a Plan Year basis, an Employee who receives credit for the required
number of Hours of Service during the initial eligibility computation
period and during the first applicable Plan Year will receive credit for
two Years of Service under Article II. "Employment Commencement Date"
means the date on which the Employee first performs an Hour of Service
for the Employer. If the Employer elects a service condition under
Adoption Agreement Section 2.01 based on months, the Plan does not apply
any Hour of Service requirement after the completion of the first Hour
of Service.
2.03 BREAK IN SERVICE - PARTICIPATION. An Employee incurs a "Break in
Service" if during any 12 consecutive month period he does not complete
more than 500 Hours of Service with the Employer. The "12 consecutive
month period" under this Section 2.03 is the same 12 consecutive month
period for which the Plan measures "Years of Service" under Section
2.02.
(A) 2-year Eligibility. If the Employer elects a 2 years of service
condition for eligibility purposes under Adoption Agreement Section
2.01, the Plan treats an Employee who incurs a one year Break in Service
and who has never become a Participant as a new Employee on the date he
first performs an Hour of Service for the Employer after the Break in
Service.
(B) Suspension of Years of Service. The Employer must elect in its
Adoption Agreement whether a Participant will incur a suspension of
Years of Service after incurring a one year Break in Service. If this
rule applies under the Employer's Plan, the Plan disregards a
Participant's Years of Service (as defined in Section 2.02) earned prior
to a Break in Service until the Participant completes another Year of
Service and the Plan suspends the Participant's participation in the
Plan. If the Participant completes a Year of Service following his Break
in Service, the Plan restores that Participant's pre-Break Years of
Service (and the Participant resumes active participation in the Plan)
retroactively to the first day of the computation period in which the
Participant earns the first post-Break Year of Service. The initial
computation period under this Section 2.03(B) is the 12 consecutive
month period measured from the date the Participant first receives
credit for an Hour of Service following the one year Break in Service
period. The Plan measures any subsequent periods, if necessary, in a
manner consistent with the computation period selection in Adoption
Agreement Section 2.02. This Section 2.03(B) does not affect a
Participant's vesting credit under Article V and, during a suspension
period, the Participant's Account continues to share fully in Trust Fund
allocations under Section 9.11. Furthermore, this Section 2.03(B) will
not result in the restoration of any Year of Service disregarded under
the Break in Service rule of Section 2.03(A).
2.04 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose employment
with the Employer terminates will re-enter the Plan as a Participant on
the date of his re-employment, subject to the Break in Service rule, if
applicable, under Section 2.03(B). An Employee who satisfies the Plan's
eligibility conditions but who terminates employment with the Employer
prior to becoming a Participant will become a Participant on the later
of the Plan Entry Date on which he would have entered the Plan had he
not terminated employment or the date of his re-employment, subject to
the Break in Service rule, if applicable, under Section 2.03(B). Any
Employee who terminates employment prior to satisfying the Plan's
eligibility conditions becomes a Participant in accordance with Adoption
Agreement Section 2.01.
2.05 CHANGE IN EMPLOYEE STATUS. If a Participant has not incurred a
Separation from Service but ceases to be eligible to participate in the
Plan, by reason of employment within an employment classification
excluded by the Employer under Adoption Agreement Section 1.07, the
Advisory Committee must treat the Participant as an Excluded Employee
during the period such a Participant is subject to the Adoption
Agreement exclusion. The Advisory Committee determines a Participant's
sharing in the allocation of Employer contributions and Participant
forfeitures, if applicable, by disregarding his Compensation paid by the
Employer for services rendered in his capacity as an Excluded Employee.
However, during such period of exclusion, the Participant, without
regard to employment classification, continues to receive credit for
vesting under Article V for each included Year of Service and the
Participant's Account continues to share fully in Trust Fund allocations
under Section 9.11.
If an Excluded Employee who is not a Participant becomes eligible to
participate in the Plan by reason of a change in employment
classification, he will participate in the Plan immediately if he has
satisfied the eligibility conditions of Section 2.01 and would have been
a Participant had he not been an Excluded Employee during his period of
Service. Furthermore, the Plan takes into account all of the
Participant's included Years of Service with the Employer as an Excluded
Employee for purposes of vesting credit under Article V.
2.06 ELECTION NOT TO PARTICIPATE. If the Employer's Plan is a
Standardized Plan, the Plan does not permit an otherwise eligible
Employee nor any Participant to elect not to participate in the Plan. If
the Employer's Plan is a Nonstandardized Plan, the Employer must specify
in its Adoption Agreement whether an Employee eligible to participate,
or any present Participant, may elect not to participate in the Plan.
For an election to be effective for a particular Plan Year, the Employee
or Participant must file the election in writing with the Plan
Administrator not later than the time specified in the Employer's
Adoption Agreement. The Employer may not make a contribution under the
Plan for the Employee or for the Participant for the Plan Year for which
the election is effective, nor for any succeeding Plan Year, unless the
Employee or Participant re-elects to participate in the Plan. After an
Employee's or Participant's election not to participate has been
effective for at least the minimum period prescribed by the Employer's
Adoption Agreement, the Employee or Participant may re-elect to
participate in the Plan for any Plan Year and subsequent Plan Years. An
Employee or Participant may re-elect to participate in the Plan by
filing his election in writing with the Plan Administrator not later
than the time specified in the Employer's Adoption Agreement. An
Employee or Participant who re-elects to participate may again elect not
to participate only as permitted in the Employer's Adoption Agreement.
If an Employee is a Self-Employed Individual, the Employee's election
(except as permitted by Treasury regulations without creating a Code
401(k) arrangement with respect to that Self-Employed Individual) must
be effective no later than the date the Employee first would become a
Participant in the Plan and the election is irrevocable. The Plan
Administrator must furnish an Employee or a Participant any form
required for purposes of an election under this Section 2.06. An
election timely filed is effective for the entire Plan Year.
A Participant who elects not to participate may not receive a
distribution of his Accrued Benefit attributable either to Employer or
to Participant contributions except as provided under Article IV or
under Article VI. However, for each Plan Year for which a Participant's
election not to participate is effective, the Participant's Account, if
any, continues to share in Trust Fund allocations under Article IX.
Furthermore, the Employee or the Participant receives vesting credit
under Article V for each included Year of Service during the period the
election not to participate is effective.
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
Part 1. Amount of Employer Contributions and Plan Allocations: Sections
3.01 through 3.06
3.01 AMOUNT. For each Plan Year, the Employer contributes to the Trust
the amount determined by application of the contribution option selected
by the Employer in its Adoption Agreement. The Employer may not make a
contribution to the Trust for any Plan Year to the extent the
contribution would exceed the Participants' Maximum Permissible Amounts.
The Employer contributes to this Plan on the condition its contribution
is not due to a mistake of fact and the Revenue Service will not
disallow the deduction for its contribution. The Trustee, upon written
request from the Employer, must return to the Employer the amount of the
Employer's contribution made by the Employer by mistake of fact or the
amount of the Employer's contribution disallowed as a deduction under
Code 404. The Trustee will not return any portion of the Employer's
contribution under the provisions of this paragraph more than one year
after:
(a) The Employer made the contribution by mistake of fact; or
(b) The disallowance of the contribution as a deduction, and then,
only to the extent of the disallowance.
The Trustee will not increase the amount of the Employer contribution
returnable under this Section 3.01 for any earnings attributable to the
contribution, but the Trustee will decrease the Employer contribution
returnable for any losses attributable to it. The Trustee may require
the Employer to furnish it whatever evidence the Trustee deems necessary
to enable the Trustee to confirm the amount the Employer has requested
be returned is properly returnable under ERISA.
3.02 DETERMINATION OF CONTRIBUTION. The Employer, from its records,
determines the amount of any contributions to be made by it to the Trust
under the terms of the Plan.
3.03 TIME OF PAYMENT OF CONTRIBUTION. The Employer may pay its
contribution for each Plan Year in one or more installments without
interest. The Employer must make its contribution to the Plan within the
time prescribed by the Code or applicable Treasury regulations. Subject
to the consent of the Trustee, the Employer may make its contribution in
property rather than in cash, provided the contribution of property is
not a prohibited transaction under the Code or under ERISA.
3.04 CONTRIBUTION ALLOCATION.
(A) Method of Allocation. The Employer must specify in its Adoption
Agreement the manner of allocating each annual Employer contribution to
this Trust.
(B) Top Heavy Minimum Allocation. The Plan must comply with the
provisions of this Section 3.04(B), subject to the elections in the
Employer's Adoption Agreement.
(1) Top Heavy Minimum Allocation Under Standardized Plan. Subject to
the Employer's election under Section 3.04(B)(3), the top heavy minimum
allocation requirement applies to a Standardized Plan for each Plan
Year, irrespective of whether the Plan is top heavy.
(a) Each Participant employed by the Employer on the last day of the
Plan Year will receive a top heavy minimum allocation for that Plan
Year. The Employer may elect in Section 3.04 of its Adoption Agreement
to apply this paragraph (a) only to a Participant who is a Non-Key
Employee.
(b) Subject to any overriding elections in Section 3.18 of the
Employer's Adoption Agreement, the top heavy minimum allocation is the
lesser of 3% of the Participant's Compensation for the Plan Year or the
highest contribution rate for the Plan Year made on behalf of any
Participant for the Plan Year. However, if the Employee participates in
Paired Plans, the top heavy minimum allocation is 3% of his
Compensation. If, under Adoption Agreement Section 3.04, the Employer
elects to apply paragraph (a) only to a Participant who is a Non-Key
Employee, the Advisory Committee will determine the "highest
contribution rate" described in the first sentence of this paragraph (b)
by reference only to the contribution rates of Participants who are Key
Employees for the Plan Year.
(2) Top Heavy Minimum Allocation Under Nonstandardized Plan. The top
heavy minimum allocation requirement applies to a Nonstandardized Plan
only in Plan Years for which the Plan is top heavy. Except as provided
in the Employer's Adoption Agreement, if the Plan is top heavy in any
Plan Year:
(a) Each Non-Key Employee who is a Participant and is employed by the
Employer on the last day of the Plan Year will receive a top heavy
minimum allocation for that Plan Year, irrespective of whether he
satisfies the Hours of Service condition under Section 3.06 of the
Employer's Adoption Agreement; and
(b) The top heavy minimum allocation is the lesser of 3% of the Non-
Key Employee's Compensation for the Plan Year or the highest
contribution rate for the Plan Year made on behalf of any Key Employee.
However, if a defined benefit plan maintained by the Employer which
benefits a Key Employee depends on this Plan to satisfy the
antidiscrimination rules of Code 401(a)(4) or the coverage rules of
Code 410 (or another plan benefiting the Key Employee so depends on
such defined benefit plan), the top heavy minimum allocation is 3% of
the Non-Key Employee's Compensation regardless of the contribution rate
for the Key Employees.
(3) Special Election for Standardized Code 401(k) Plan. If the
Employer's Plan is a Standardized Code 401(k) Plan, the Employer may
elect in Adoption Agreement Section 3.04 to apply the top heavy minimum
allocation requirements of Section 3.04(B)(1) only for Plan Years in
which the Plan actually is a top heavy plan.
(4) Special Definitions. For purposes of this Section 3.04(B), the
term "Participant" includes any Employee otherwise eligible to
participate in the Plan but who is not a Participant because of his
Compensation level or because of his failure to make elective deferrals
under a Code 401(k) arrangement or because of his failure to make
mandatory contributions. For purposes of subparagraph (1)(b) or (2)(b),
"Compensation" means Compensation as defined in Section 1.12, except
Compensation does not include elective contributions, irrespective of
whether the Employer has elected to include these amounts in Section
1.12 of its Adoption Agreement, any exclusion selected in Section 1.12
of the Adoption Agreement (other than the exclusion of elective
contributions) does not apply, and any modification to the definition of
Compensation in Section 3.06 does not apply.
(5) Determining Contribution Rates. For purposes of this Section
3.04(B), a Participant's contribution rate is the sum of all Employer
contributions (not including Employer contributions to Social Security)
and forfeitures allocated to the Participant's Account for the Plan Year
divided by his Compensation for the entire Plan Year. However, for
purposes of satisfying a Participant's top heavy minimum allocation in
Plan Years beginning after December 31, 1988, the Participant's
contribution rate does not include any elective contributions under a
Code 401(k) arrangement nor any Employer matching contributions
allocated on the basis of those elective contributions or on the basis
of employee contributions, except a Nonstandardized Plan may include in
the contribution rate any matching contributions not necessary to
satisfy the nondiscrimination requirements of Code 401(k) or of Code
401(m).
If the Employee is a Participant in Paired Plans, the Advisory Committee
will consider the Paired Plans as a single Plan to determine a
Participant's contribution rate and to determine whether the Plans
satisfy this top heavy minimum allocation requirement. To determine a
Participant's contribution rate under a Nonstandardized Plan, the
Advisory Committee must treat all qualified top heavy defined
contribution plans maintained by the Employer (or by any related
Employers described in Section 1.30) as a single plan.
(6) No Allocations. If, for a Plan Year, there are no allocations of
Employer contributions or forfeitures for any Participant (for purposes
of Section 3.04 (B)(1)(b)) or for any Key Employee (for purposes of
Section 3.04(B)(2)(b)), the Plan does not require any top heavy minimum
allocation for the Plan Year, unless a top heavy minimum allocation
applies because of the maintenance by the Employer of more than one
plan.
(7) Election of Method. The Employer must specify in its Adoption
Agreement the manner in which the Plan will satisfy the top heavy
minimum allocation requirement.
(a) If the Employer elects to make any necessary additional
contribution to this Plan, the Advisory Committee first will allocate
the Employer contributions (and Participant forfeitures, if any) for the
Plan Year in accordance with the provisions of Adoption Agreement
Section 3.04. The Employer then will contribute an additional amount for
the Account of any Participant entitled under this Section 3.04(B) to a
top heavy minimum allocation and whose contribution rate for the Plan
Year, under this Plan and any other plan aggregated under paragraph (5),
is less than the top heavy minimum allocation. The additional amount is
the amount necessary to increase the Participant's contribution rate to
the top heavy minimum allocation. The Advisory Committee will allocate
the additional contribution to the Account of the Participant on whose
behalf the Employer makes the contribution.
(b) If the Employer elects to guarantee the top heavy minimum
allocation under another plan, this Plan does not provide the top heavy
minimum allocation and the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) under the Plan
solely in accordance with the allocation method selected under Adoption
Agreement Section 3.04.
3.05 FORFEITURE ALLOCATION. The amount of a Participant's Accrued
Benefit forfeited under the Plan is a Participant forfeiture. The
Advisory Committee will allocate Participant forfeitures in the manner
specified by the Employer in its Adoption Agreement. The Advisory
Committee will continue to hold the undistributed, non-vested portion of
a terminated Participant's Accrued Benefit in his Account solely for his
benefit until a forfeiture occurs at the time specified in Section 5.09
or if applicable, until the time specified in Section 9.14. Except as
provided under Section 5.04, a Participant will not share in the
allocation of a forfeiture of any portion of his Accrued Benefit.
3.06 ACCRUAL OF BENEFIT. The Advisory Committee will determine the
accrual of benefit (Employer contributions and Participant forfeitures)
on the basis of the Plan Year in accordance with the Employer's
elections in its Adoption Agreement.
(A) Compensation Taken Into Account. The Employer must specify in its
Adoption Agreement the Compensation the Advisory Committee is to take
into account in allocating an Employer contribution to a Participant's
Account for the Plan Year in which the Employee first becomes a
Participant. For all other Plan Years, the Advisory Committee will take
into account only the Compensation determined for the portion of the
Plan Year in which the Employee actually is a Participant. The Advisory
Committee must take into account the Employee's entire Compensation for
the Plan Year to determine whether the Plan satisfies the top heavy
minimum allocation requirement of Section 3.04(B). The Employer, in an
addendum to its Adoption Agreement numbered 3.06(A), may elect to
measure Compensation for the Plan Year for allocation purposes on the
basis of a specified period other than the Plan Year.
(B) Hours of Service Requirement. Subject to the applicable minimum
allocation requirement of Section 3.04, the Advisory Committee will not
allocate any portion of an Employer contribution for a Plan Year to any
Participant's Account if the Participant does not complete the
applicable minimum Hours of Service requirement specified in the
Employer's Adoption Agreement.
(C) Employment Requirement. If the Employer's Plan is a Standardized
Plan, a Participant who, during a particular Plan Year, completes the
accrual requirements of Adoption Agreement Section 3.06 will share in
the allocation of Employer contributions for that Plan Year without
regard to whether he is employed by the Employer on the Accounting Date
of that Plan Year. If the Employer's Plan is a Nonstandardized Plan, the
Employer must specify in its Adoption Agreement whether the Participant
will accrue a benefit if he is not employed by the Employer on the
Accounting Date of the Plan Year. If the Employer's Plan is a money
purchase plan or a target benefit plan, whether Nonstandardized or
Standardized, the Plan conditions benefit accrual on employment with the
Employer on the last day of the Plan Year for the Plan Year in which the
Employer terminates the Plan.
(D) Other Requirements. If the Employer's Adoption Agreement includes
options for other requirements affecting the Participant's accrual of
benefits under the Plan, the Advisory Committee will apply this Section
3.06 in accordance with the Employer's Adoption Agreement selections.
(E) Suspension of Accrual Requirements Under Nonstandardized Plan. If
the Employer's Plan is a Nonstandardized Plan, the Employer may elect in
its Adoption Agreement to suspend the accrual requirements elected under
Adoption Agreement Section 3.06 if, for any Plan Year beginning after
December 31, 1989, the Plan fails to satisfy the Participation Test or
the Coverage Test. A Plan satisfies the Participation Test if, on each
day of the Plan Year, the number of Employees who benefit under the Plan
is at least equal to the lesser of 50 or 40% of the total number of
Includible Employees as of such day. A Plan satisfies the Coverage Test
if, on the last day of each quarter of the Plan Year, the number of
Nonhighly Compensated Employees who benefit under the Plan is at least
equal to 70% of the total number of Includible Nonhighly Compensated
Employees as of such day. "Includible" Employees are all Employees other
than: (1) those Employees excluded from participating in the Plan for
the entire Plan Year by reason of the collective bargaining unit
exclusion or the nonresident alien exclusion under Adoption Agreement
Section 1.07 or by reason of the participation requirements of Sections
2.01 and 2.03; and (2) any Employee who incurs a Separation from Service
during the Plan Year and fails to complete at least 501 Hours of Service
for the Plan Year. A "Nonhighly Compensated Employee" is an Employee who
is not a Highly Compensated Employee and who is not a family member
aggregated with a Highly Compensated Employee pursuant to Section 1.09
of the Plan.
For purposes of the Participation Test and the Coverage Test, an
Employee is benefiting under the Plan on a particular date if, under
Adoption Agreement Section 3.04, he is entitled to an allocation for the
Plan Year. Under the Participation Test, when determining whether an
Employee is entitled to an allocation under Adoption Agreement Section
3.04, the Advisory Committee will disregard any allocation required
solely by reason of the top heavy minimum allocation, unless the top
heavy minimum allocation is the only allocation made under the Plan for
the Plan Year.
If this Section 3.06(E) applies for a Plan Year, the Advisory Committee
will suspend the accrual requirements for the Includible Employees who
are Participants, beginning first with the Includible Employee(s)
employed with the Employer on the last day of the Plan Year, then the
Includible Employee(s) who have the latest Separation from Service
during the Plan Year, and continuing to suspend in descending order the
accrual requirements for each Includible Employee who incurred an
earlier Separation from Service, from the latest to the earliest
Separation from Service date, until the Plan satisfies both the
Participation Test and the Coverage Test for the Plan Year. If two or
more Includible Employees have a Separation from Service on the same
day, the Advisory Committee will suspend the accrual requirements for
all such Includible Employees, irrespective of whether the Plan can
satisfy the Participation Test and the Coverage Test by accruing
benefits for fewer than all such Includible Employees. If the Plan
suspends the accrual requirements for an Includible Employee, that
Employee will share in the allocation of Employer contributions and
Participant forfeitures, if any, without regard to the number of Hours
of Service he has earned for the Plan Year and without regard to whether
he is employed by the Employer on the last day of the Plan Year. If the
Employer's Plan includes Employer matching contributions subject to Code
401(m), this suspension of accrual requirements applies separately to
the Code 401(m) portion of the Plan, and the Advisory Committee will
treat an Employee as benefiting under that portion of the Plan if he is
an Eligible Employee for purposes of the Code 401(m) nondiscrimination
test. The Employer may modify the operation of this Section 3.06(E) by
electing appropriate modifications in Section 3.06 of its Adoption
Agreement.
Part 2. Limitations On Allocations: Sections 3.07 through 3.19
[Note: Sections 3.07 through 3.10 apply only to Participants in this
Plan who do not participate, and who have never participated, in another
qualified plan or in a welfare benefit fund (as defined in Code 419(e))
maintained by the Employer.]
3.07 The amount of Annual Additions which the Advisory Committee may
allocate under this Plan on a Participant's behalf for a Limitation Year
may not exceed the Maximum Permissible Amount. If the amount the
Employer otherwise would contribute to the Participant's Account would
cause the Annual Additions for the Limitation Year to exceed the Maximum
Permissible Amount, the Employer will reduce the amount of its
contribution so the Annual Additions for the Limitation Year will equal
the Maximum Permissible Amount. If an allocation of Employer
contributions, pursuant to Section 3.04, would result in an Excess
Amount (other than an Excess Amount resulting from the circumstances
described in Section 3.10) to the Participant's Account, the Advisory
Committee will reallocate the Excess Amount to the remaining
Participants who are eligible for an allocation of Employer
contributions for the Plan Year in which the Limitation Year ends. The
Advisory Committee will make this reallocation on the basis of the
allocation method under the Plan as if the Participant whose Account
otherwise would receive the Excess Amount is not eligible for an
allocation of Employer contributions.
3.08 Prior to the determination of the Participant's actual
Compensation for a Limitation Year, the Advisory Committee may determine
the Maximum Permissible Amount on the basis of the Participant's
estimated annual Compensation for such Limitation Year. The Advisory
Committee must make this determination on a reasonable and uniform
basis for all Participants similarly situated. The Advisory Committee
must reduce any Employer contributions (including any allocation of
forfeitures) based on estimated annual Compensation by any Excess
Amounts carried over from prior years.
3.09 As soon as is administratively feasible after the end of the
Limitation Year, the Advisory Committee will determine the Maximum
Permissible Amount for such Limitation Year on the basis of the
Participant's actual Compensation for such Limitation Year.
3.10 If, pursuant to Section 3.09, or because of the allocation of
forfeitures, there is an Excess Amount with respect to a Participant for
a Limitation Year, the Advisory Committee will dispose of such Excess
Amount as follows:
(a) The Advisory Committee will return any nondeductible voluntary
Employee contributions to the Participant to the extent the return would
reduce the Excess Amount.
(b) If, after the application of paragraph (a), an Excess Amount still
exists, and the Plan covers the Participant at the end of the Limitation
Year, then the Advisory Committee will use the Excess Amount(s) to
reduce future Employer contributions (including any allocation of
forfeitures) under the Plan for the next Limitation Year and for each
succeeding Limitation Year, as is necessary, for the Participant. If the
Employer's Plan is a profit sharing plan, the Participant may elect to
limit his Compensation for allocation purposes to the extent necessary
to reduce his allocation for the Limitation Year to the Maximum
Permissible Amount and eliminate the Excess Amount.
(c) If, after the application of paragraph (a), an Excess Amount still
exists, and the Plan does not cover the Participant at the end of the
Limitation Year, then the Advisory Committee will hold the Excess Amount
unallocated in a suspense account. The Advisory Committee will apply the
suspense account to reduce Employer Contributions (including allocation
of forfeitures) for all remaining Participants in the next Limitation
Year, and in each succeeding Limitation Year if necessary. Neither the
Employer nor any Employee may contribute to the Plan for any Limitation
Year in which the Plan is unable to allocate fully a suspense account
maintained pursuant to this paragraph (c).
(d) The Advisory Committee will not distribute any Excess Amount(s) to
Participants or to former Participants.
[Note: Sections 3.11 through 3.16 apply only to Participants who, in
addition to this Plan, participate in one or more plans (including
Paired Plans), all of which are qualified Master or Prototype defined
contribution plans or welfare benefit funds (as defined in Code 419(e))
maintained by the Employer during the Limitation Year.]
3.11 The amount of Annual Additions which the Advisory Committee may
allocate under this Plan on a Participant's behalf for a Limitation Year
may not exceed the Maximum Permissible Amount, reduced by the sum of any
Annual Additions allocated to the Participant's Accounts for the same
Limitation Year under this Plan and such other defined contribution
plan. If the amount the Employer otherwise would contribute to the
Participant's Account under this Plan would cause the Annual Additions
for the Limitation Year to exceed this limitation, the Employer will
reduce the amount of its contribution so the Annual Additions under all
such plans for the Limitation Year will equal the Maximum Permissible
Amount. If an allocation of Employer contributions, pursuant to Section
3.04, would result in an Excess Amount (other than an Excess Amount
resulting from the circumstances described in Section 3.10) to the
Participant's Account, the Advisory Committee will reallocate the Excess
Amount to the remaining Participants who are eligible for an allocation
of Employer contributions for the Plan Year in which the Limitation Year
ends. The Advisory Committee will make this reallocation on the basis of
the allocation method under the Plan as if the Participant whose Account
otherwise would receive the Excess Amount is not eligible for an
allocation of Employer contributions.
3.12 Prior to the determination of the Participant's actual
Compensation for the Limitation Year, the Advisory Committee may
determine the amounts referred to in 3.11 above on the basis of the
Participant's estimated annual Compensation for such Limitation Year.
The Advisory Committee will make this determination on a reasonable and
uniform basis for all Participants similarly situated. The Advisory
Committee must reduce any Employer contribution (including allocation of
forfeitures) based on estimated annual Compensation by any Excess
Amounts carried over from prior years.
3.13 As soon as is administratively feasible after the end of the
Limitation Year, the Advisory Committee will determine the amounts
referred to in 3.11 on the basis of the Participant's actual
Compensation for such Limitation Year.
3.14 If pursuant to Section 3.13, or because of the allocation of
forfeitures, a Participant's Annual Additions under this Plan and all
such other plans result in an Excess Amount, such Excess Amount will
consist of the Amounts last allocated. The Advisory Committee will
determine the Amounts last allocated by treating the Annual Additions
attributable to a welfare benefit fund as allocated first, irrespective
of the actual allocation date under the welfare benefit fund.
3.15 The Employer must specify in its Adoption Agreement the Excess
Amount attributed to this Plan, if the Advisory Committee allocates an
Excess Amount to a Participant on an allocation date of this Plan which
coincides with an allocation date of another plan.
3.16 The Advisory Committee will dispose of any Excess Amounts
attributed to this Plan as provided in Section 3.10.
[Note: Section 3.17 applies only to Participants who, in addition to
this Plan, participate in one or more qualified plans which are
qualified defined contribution plans other than a Master or Prototype
plan maintained by the Employer during the Limitation Year.]
3.17 SPECIAL ALLOCATION LIMITATION. The amount of Annual Additions
which the Advisory Committee may allocate under this Plan on behalf of
any Participant are limited in accordance with the provisions of Section
3.11 through 3.16, as though the other plan were a Master or Prototype
plan, unless the Employer provides other limitations in an addendum to
the Adoption Agreement, numbered Section 3.17.
3.18 DEFINED BENEFIT PLAN LIMITATION. If the Employer maintains a
defined benefit plan, or has ever maintained a defined benefit plan
which the Employer has terminated, then the sum of the defined benefit
plan fraction and the defined contribution plan fraction for any
Participant for any Limitation Year must not exceed 1.0. The Employer
must provide in Adoption Agreement Section 3.18 the manner in which the
Plan will satisfy this limitation. The Employer also must provide in its
Adoption Agreement Section 3.18 the manner in which the Plan will
satisfy the top heavy requirements of Code 416 after taking into
account the existence (or prior maintenance) of the defined benefit
plan.
3.19 DEFINITIONS - ARTICLE III. For purposes of Article III, the
following terms mean:
(a) "Annual Addition" - The sum of the following amounts allocated on
behalf of a Participant for a Limitation Year, of (i) all Employer
contributions; (ii) all forfeitures; and (iii) all Employee
contributions. Except to the extent provided in Treasury regulations,
Annual Additions include excess contributions described in Code 401(k),
excess aggregate contributions described in Code 401(m) and excess
deferrals described in Code 402(g), irrespective of whether the plan
distributes or forfeits such excess amounts. Annual Additions also
include Excess Amounts reapplied to reduce Employer contributions under
Section 3.10. Amounts allocated after March 31, 1984, to an individual
medical account (as defined in Code 415(l)(2)) included as part of a
defined benefit plan maintained by the Employer are Annual Additions.
Furthermore, Annual Additions include contributions paid or accrued
after December 31, 1985, for taxable years ending after December 31,
1985, attributable to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code 419A(d)(3))
under a welfare benefit fund (as defined in Code 419(e)) maintained by
the Employer.
(b) "Compensation" - For purposes of applying the limitations of Part
2 of this Article III, "Compensation" means Compensation as defined in
Section 1.12, except Compensation does not include elective
contributions, irrespective of whether the Employer has elected to
include these amounts as Compensation under Section 1.12 of its Adoption
Agreement, and any exclusion selected in Section 1.12 of the Adoption
Agreement (other than the exclusion of elective contributions) does not
apply.
(c) "Employer" - The Employer that adopts this Plan and any related
employers described in Section 1.30. Solely for purposes of applying the
limitations of Part 2 of this Article III, the Advisory Committee will
determine related employers described in Section 1.30 by modifying Code
414(b) and (c) in accordance with Code 415(h).
(d) "Excess Amount" - The excess of the Participant's Annual Additions
for the Limitation Year over the Maximum Permissible Amount.
(e) "Limitation Year" - The period selected by the Employer under
Adoption Agreement Section 1.17. All qualified plans of the Employer
must use the same Limitation Year. If the Employer amends the Limitation
Year to a different 12 consecutive month period, the new Limitation Year
must begin on a date within the Limitation Year for which the Employer
makes the amendment, creating a short Limitation Year.
(f) "Master or Prototype Plan" - A plan the form of which is the
subject of a favorable notification letter or a favorable opinion letter
from the Internal Revenue Service.
(g) "Maximum Permissible Amount" - The lesser of (i) $30,000 (or, if
greater, one-fourth of the defined benefit dollar limitation under Code
415(b)(1)(A)), or (ii) 25% of the Participant's Compensation for the
Limitation Year. If there is a short Limitation Year because of a change
in Limitation Year, the Advisory Committee will multiply the $30,000 (or
adjusted) limitation by the following fraction:
Number of months in the short Limitation Year
12
(h) "Defined contribution plan" - A retirement plan which provides for
an individual account for each participant and for benefits based solely
on the amount contributed to the participant's account, and any income,
expenses, gains and losses, and any forfeitures of accounts of other
participants which the plan may allocate to such participant's account.
The Advisory Committee must treat all defined contribution plans
(whether or not terminated) maintained by the Employer as a single plan.
Solely for purposes of the limitations of Part 2 of this Article III,
the Advisory Committee will treat employee contributions made to a
defined benefit plan maintained by the Employer as a separate defined
contribution plan. The Advisory Committee also will treat as a defined
contribution plan an individual medical account (as defined in Code
415(l)(2)) included as part of a defined benefit plan maintained by the
Employer and, for taxable years ending after December 31, 1985, a
welfare benefit fund under Code 419(e) maintained by the Employer to
the extent there are post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code 419A(d)(3)).
(i) "Defined benefit plan" - A retirement plan which does not provide
for individual accounts for Employer contributions. The Advisory
Committee must treat all defined benefit plans (whether or not
terminated) maintained by the Employer as a single plan.
[Note: The definitions in paragraphs (j), (k) and (l) apply only if the
limitation described in Section 3.18 applies to the Employer's Plan.]
(j) "Defined benefit plan fraction" -
Projected annual benefit of the Participant under the defined
benefit plan(s)
The lesser of (i) 125% (subject to the "100% limitation" in
paragraph (l)) of the
dollar limitation in effect under Code 415(b)(1)(A) for the
Limitation Year,
or (ii) 140% of the Participant's average Compensation for his
high three (3) consecutive Years of Service
To determine the denominator of this fraction, the Advisory Committee
will make any adjustment required under Code 415(b) and will determine
a Year of Service, unless otherwise provided in an addendum to Adoption
Agreement Section 3.18, as a Plan Year in which the Employee completed
at least 1,000 Hours of Service. The "projected annual benefit" is the
annual retirement benefit (adjusted to an actuarially equivalent
straight life annuity if the plan expresses such benefit in a form other
than a straight life annuity or qualified joint and survivor annuity) of
the Participant under the terms of the defined benefit plan on the
assumptions he continues employment until his normal retirement age (or
current age, if later) as stated in the defined benefit plan, his
compensation continues at the same rate as in effect in the Limitation
Year under consideration until the date of his normal retirement age and
all other relevant factors used to determine benefits under the defined
benefit plan remain constant as of the current Limitation Year for all
future Limitation Years.
Current Accrued Benefit. If the Participant accrued benefits in one or
more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the dollar limitation used in the denominator
of this fraction will not be less than the Participant's Current Accrued
Benefit. A Participant's Current Accrued Benefit is the sum of the
annual benefits under such defined benefit plans which the Participant
had accrued as of the end of the 1986 Limitation Year (the last
Limitation Year beginning before January 1, 1987), determined without
regard to any change in the terms or conditions of the Plan made after
May 5, 1986, and without regard to any cost of living adjustment
occurring after May 5, 1986. This Current Accrued Benefit rule applies
only if the defined benefit plans individually and in the aggregate
satisfied the requirements of Code 415 as in effect at the end of the
1986 Limitation Year.
(k) "Defined contribution plan fraction" -
The sum, as of the close of the Limitation Year, of the Annual
Additions
to the Participant's Account under the defined
contribution plan(s)
The sum of the lesser of the following amounts determined
for the Limitation Year and for each prior Year of Service with
the Employer:(i) 125%
(subject to the "100% limitation" in paragraph (l)) of the dollar
limitation in effect under Code 415(c)(1)(A) for the Limitation Year
(determined without regard to
the special dollar limitations for employee stock ownership
plans), or
(ii) 35% of the Participant's Compensation for the Limitation Year
For purposes of determining the defined contribution plan fraction, the
Advisory Committee will not recompute Annual Additions in Limitation
Years beginning prior to January 1, 1987, to treat all Employee
contributions as Annual Additions. If the Plan satisfied Code 415 for
Limitation Years beginning prior to January 1, 1987, the Advisory
Committee will redetermine the defined contribution plan fraction and
the defined benefit plan fraction as of the end of the 1986 Limitation
Year, in accordance with this Section 3.19. If the sum of the
redetermined fractions exceeds 1.0, the Advisory Committee will subtract
permanently from the numerator of the defined contribution plan fraction
an amount equal to the product of (1) the excess of the sum of the
fractions over 1.0, times (2) the denominator of the defined
contribution plan fraction. In making the adjustment, the Advisory
Committee must disregard any accrued benefit under the defined benefit
plan which is in excess of the Current Accrued Benefit. This Plan
continues any transitional rules applicable to the determination of the
defined contribution plan fraction under the Employer's Plan as of the
end of the 1986 Limitation Year.
(l) "100% limitation." If the 100% limitation applies, the Advisory
Committee must determine the denominator of the defined benefit plan
fraction and the denominator of the defined contribution plan fraction
by substituting 100% for 125%. If the Employer's Plan is a Standardized
Plan, the 100% limitation applies in all Limitation Years, subject to
any override provisions under Section 3.18 of the Employer's Adoption
Agreement. If the Employer overrides the 100% limitation under a
Standardized Plan, the Employer must specify in its Adoption Agreement
the manner in which the Plan satisfies the extra minimum benefit
requirement of Code 416(h) and the 100% limitation must continue to
apply if the Plan's top heavy ratio exceeds 90%. If the Employer's Plan
is a Nonstandardized Plan, the 100% limitation applies only if: (i) the
Plan's top heavy ratio exceeds 90%; or (ii) the Plan's top heavy ratio
is greater than 60%, and the Employer does not elect in its Adoption
Agreement Section 3.18 to provide extra minimum benefits which satisfy
Code 416(h)(2).
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. This Plan does not permit
Participant nondeductible contributions unless the Employer maintains
its Plan under a Code 401(k) Adoption Agreement. If the Employer does
not maintain its Plan under a Code 401(k) Adoption Agreement and, prior
to the adoption of this Prototype Plan, the Plan accepted Participant
nondeductible contributions for a Plan Year beginning after December 31,
1986, those contributions must satisfy the requirements of Code 401(m).
This Section 4.01 does not prohibit the Plan's acceptance of Participant
nondeductible contributions prior to the first Plan Year commencing
after the Plan Year in which the Employer adopts this Prototype Plan.
4.02 PARTICIPANT DEDUCTIBLE CONTRIBUTIONS. A qualified Plan may not
accept Participant deductible contributions after April 15, 1987. If the
Employer's Plan includes Participant deductible contributions ("DECs")
made prior to April 16, 1987, the Advisory Committee must maintain a
separate accounting for the Participant's Accrued Benefit attributable
to DECs, including DECs which are part of a rollover contribution
described in Section 4.03. The Advisory Committee will treat the
accumulated DECs as part of the Participant's Accrued Benefit for all
purposes of the Plan, except for purposes of determining the top heavy
ratio under Section 1.33. The Advisory Committee may not use DECs to
purchase life insurance on the Participant's behalf.
4.03 PARTICIPANT ROLLOVER CONTRIBUTIONS. Any Participant, with the
Employer's written consent and after filing with the Trustee the form
prescribed by the Advisory Committee, may contribute cash or other
property to the Trust other than as a voluntary contribution if the
contribution is a "rollover contribution" which the Code permits an
employee to transfer either directly or indirectly from one qualified
plan to another qualified plan. Before accepting a rollover
contribution, the Trustee may require an Employee to furnish
satisfactory evidence that the proposed transfer is in fact a "rollover
contribution" which the Code permits an employee to make to a qualified
plan. A rollover contribution is not an Annual Addition under Part 2 of
Article III.
The Trustee will invest the rollover contribution in a segregated
investment Account for the Participant's sole benefit unless the Trustee
(or the Named Fiduciary, in the case of a nondiscretionary Trustee
designation), in its sole discretion, agrees to invest the rollover
contribution as part of the Trust Fund. The Trustee will not have any
investment responsibility with respect to a Participant's segregated
rollover Account. The Participant, however, from time to time, may
direct the Trustee in writing as to the investment of his segregated
rollover Account in property, or property interests, of any kind, real,
personal or mixed; provided however, the Participant may not direct the
Trustee to make loans to his Employer. A Participant's segregated
rollover Account alone will bear any extraordinary expenses resulting
from investments made at the direction of the Participant. As of the
Accounting Date (or other valuation date) for each Plan Year, the
Advisory Committee will allocate and credit the net income (or net loss)
from a Participant's segregated rollover Account and the increase or
decrease in the fair market value of the assets of a segregated rollover
Account solely to that Account. The Trustee is not liable nor
responsible for any loss resulting to any Beneficiary, nor to any
Participant, by reason of any sale or investment made or other action
taken pursuant to and in accordance with the direction of the
Participant. In all other respects, the Trustee will hold, administer
and distribute a rollover contribution in the same manner as any
Employer contribution made to the Trust.
An eligible Employee, prior to satisfying the Plan's eligibility
conditions, may make a rollover contribution to the Trust to the same
extent and in the same manner as a Participant. If an Employee makes a
rollover contribution to the Trust prior to satisfying the Plan's
eligibility conditions, the Advisory Committee and Trustee must treat
the Employee as a Participant for all purposes of the Plan except the
Employee is not a Participant for purposes of sharing in Employer
contributions or Participant forfeitures under the Plan until he
actually becomes a Participant in the Plan. If the Employee has a
Separation from Service prior to becoming a Participant, the Trustee
will distribute his rollover contribution Account to him as if it were
an Employer contribution Account.
4.04 PARTICIPANT CONTRIBUTION - FORFEITABILITY. A Participant's Accrued
Benefit is, at all times, 100% Nonforfeitable to the extent the value of
his Accrued Benefit is derived from his Participant contributions
described in this Article IV.
4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION. A Participant,
by giving prior written notice to the Trustee, may withdraw all or any
part of the value of his Accrued Benefit derived from his Participant
contributions described in this Article IV. A distribution of
Participant contributions must comply with the joint and survivor
requirements described in Article VI, if those requirements apply to the
Participant. A Participant may not exercise his right to withdraw the
value of his Accrued Benefit derived from his Participant contributions
more than once during any Plan Year. The Trustee, in accordance with the
direction of the Advisory Committee, will distribute a Participant's
unwithdrawn Accrued Benefit attributable to his Participant
contributions in accordance with the provisions of Article VI applicable
to the distribution of the Participant's Nonforfeitable Accrued Benefit.
4.06 PARTICIPANT CONTRIBUTION - ACCRUED BENEFIT. The Advisory Committee
must maintain a separate Account(s) in the name of each Participant to
reflect the Participant's Accrued Benefit under the Plan derived from
his Participant contributions. A Participant's Accrued Benefit derived
from his Participant contributions as of any applicable date is the
balance of his separate Participant contribution Account(s).
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT AGE. The Employer must define Normal Retirement
Age in its Adoption Agreement. A Participant's Accrued Benefit derived
from Employer contributions is 100% Nonforfeitable upon and after his
attaining Normal Retirement Age (if employed by the Employer on or after
that date).
5.02 PARTICIPANT DISABILITY OR DEATH. The Employer may elect in its
Adoption Agreement to provide a Participant's Accrued Benefit derived
from Employer contributions will be 100% Nonforfeitable if the
Participant's Separation from Service is a result of his death or his
disability.
5.03 VESTING SCHEDULE. Except as provided in Sections 5.01 and 5.02,
for each Year of Service, a Participant's Nonforfeitable percentage of
his Accrued Benefit derived from Employer contributions equals the
percentage in the vesting schedule completed by the Employer in its
Adoption Agreement.
(A) Election of Special Vesting Formula. If the Trustee makes a
distribution (other than a cash-out distribution described in Section
5.04) to a partially-vested Participant, and the Participant has not
incurred a Forfeiture Break in Service at the relevant time, the
Advisory Committee will establish a separate Account for the
Participant's Accrued Benefit. At any relevant time following the
distribution, the Advisory Committee will determine the Participant's
Nonforfeitable Accrued Benefit derived from Employer contributions
in accordance with the following formula: P(AB + (R x D)) - (R x
D).
To apply this formula, "P" is the Participant's current vesting
percentage at the relevant time, "AB" is the Participant's Employer-
derived Accrued Benefit at the relevant time, "R" is the ratio of "AB"
to the Participant's Employer-derived Accrued Benefit immediately
following the earlier distribution and "D" is the amount of the earlier
distribution. If, under a restated Plan, the Plan has made distribution
to a partially-vested Participant prior to its restated Effective Date
and is unable to apply the cash-out provisions of Section 5.04 to that
prior distribution, this special vesting formula also applies to that
Participant's remaining Account. The Employer, in an addendum to its
Adoption Agreement, numbered Section 5.03, may elect to modify this
formula to read as follows: P(AB + D) - D.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/
RESTORATION OF FORFEITED ACCRUED BENEFIT. If, pursuant to Article VI, a
partially-vested Participant receives a cash-out distribution before he
incurs a Forfeiture Break in Service (as defined in Section 5.08), the
cash-out distribution will result in an immediate forfeiture of the
nonvested portion of the Participant's Accrued Benefit derived from
Employer contributions. See Section 5.09. A partially-vested Participant
is a Participant whose Nonforfeitable Percentage determined under
Section 5.03 is less than 100%. A cash-out distribution is a
distribution of the entire present value of the Participant's
Nonforfeitable Accrued Benefit.
(A) Restoration and Conditions upon Restoration. A partially-vested
Participant who is re-employed by the Employer after receiving a cash-
out distribution of the Nonforfeitable percentage of his Accrued Benefit
may repay the Trustee the amount of the cash-out distribution
attributable to Employer contributions, unless the Participant no longer
has a right to restoration by reason of the conditions of this Section
5.04(A). If a partially-vested Participant makes the cash-out
distribution repayment, the Advisory Committee, subject to the
conditions of this Section 5.04(A), must restore his Accrued Benefit
attributable to Employer contributions to the same dollar amount as the
dollar amount of his Accrued Benefit on the Accounting Date, or other
valuation date, immediately preceding the date of the cash-out
distribution, unadjusted for any gains or losses occurring subsequent to
that Accounting Date, or other valuation date. Restoration of the
Participant's Accrued Benefit includes restoration of all Code
411(d)(6) protected benefits with respect to that restored Accrued
Benefit, in accordance with applicable Treasury regulations. The
Advisory Committee will not restore a re-employed Participant's Accrued
Benefit under this paragraph if:
(1) 5 years have elapsed since the Participant's first re-employment
date with the Employer following the cash-out distribution; or
(2) The Participant incurred a Forfeiture Break in Service (as defined
in Section 5.08). This condition also applies if the Participant makes
repayment within the Plan Year in which he incurs the Forfeiture Break
in Service and that Forfeiture Break in Service would result in a
complete forfeiture of the amount the Advisory Committee otherwise would
restore.
(B) Time and Method of Restoration. If neither of the two conditions
preventing restoration of the Participant's Accrued Benefit applies, the
Advisory Committee will restore the Participant's Accrued Benefit as of
the Plan Year Accounting Date coincident with or immediately following
the repayment. To restore the Participant's Accrued Benefit, the
Advisory Committee, to the extent necessary, will allocate to the
Participant's Account:
(1) First, the amount, if any, of Participant forfeitures the Advisory
Committee would otherwise allocate under Section 3.05;
(2) Second, the amount, if any, of the Trust Fund net income or gain
for the Plan Year; and
(3) Third, the Employer contribution for the Plan Year to the extent
made under a discretionary formula.
In an addendum to its Adoption Agreement numbered 5.04(B), the Employer
may eliminate as a means of restoration any of the amounts described in
clauses (1), (2) and (3) or may change the order of priority of these
amounts. To the extent the amounts described in clauses (1), (2) and (3)
are insufficient to enable the Advisory Committee to make the required
restoration, the Employer must contribute, without regard to any
requirement or condition of Section 3.01, the additional amount
necessary to enable the Advisory Committee to make the required
restoration. If, for a particular Plan Year, the Advisory Committee must
restore the Accrued Benefit of more than one re-employed Participant,
then the Advisory Committee will make the restoration allocations to
each such Participant's Account in the same proportion that a
Participant's restored amount for the Plan Year bears to the restored
amount for the Plan Year of all re-employed Participants. The Advisory
Committee will not take into account any allocation under this Section
5.04 in applying the limitation on allocations under Part 2 of Article
III.
(C) 0% Vested Participant. The Employer must specify in its Adoption
Agreement whether the deemed cash-out rule applies to a 0% vested
Participant. A 0% vested Participant is a Participant whose Accrued
Benefit derived from Employer contributions is entirely forfeitable at
the time of his Separation from Service. If the Participant's Account is
not entitled to an allocation of Employer contributions for the Plan
Year in which he has a Separation from Service, the Advisory Committee
will apply the deemed cash-out rule as if the 0% vested Participant
received a cash-out distribution on the date of the Participant's
Separation from Service. If the Participant's Account is entitled to an
allocation of Employer contributions or Participant forfeitures for the
Plan Year in which he has a Separation from Service, the Advisory
Committee will apply the deemed cash-out rule as if the 0% vested
Participant received a cash-out distribution on the first day of the
first Plan Year beginning after his Separation from Service. For
purposes of applying the restoration provisions of this Section 5.04,
the Advisory Committee will treat the 0% vested Participant as repaying
his cash-out "distribution" on the first date of his re-employment with
the Employer. If the deemed cash-out rule does not apply to the
Employer's Plan, a 0% vested Participant will not incur a forfeiture
until he incurs a Forfeiture Break in Service.
5.05 SEGREGATED ACCOUNT FOR REPAID AMOUNT. Until the Advisory Committee
restores the Participant's Accrued Benefit, as described in Section
5.04, the Trustee will invest the cash-out amount the Participant has
repaid in a segregated Account maintained solely for that Participant.
The Trustee must invest the amount in the Participant's segregated
Account in Federally insured interest bearing savings account(s) or time
deposit(s) (or a combination of both), or in other fixed income
investments. Until commingled with the balance of the Trust Fund on the
date the Advisory Committee restores the Participant's Accrued Benefit,
the Participant's segregated Account remains a part of the Trust, but it
alone shares in any income it earns and it alone bears any expense or
loss it incurs. Unless the repayment qualifies as a rollover
contribution, the Advisory Committee will direct the Trustee to repay to
the Participant as soon as is administratively practicable the full
amount of the Participant's segregated Account if the Advisory Committee
determines either of the conditions of Section 5.04(A) prevents
restoration as of the applicable Accounting Date, notwithstanding the
Participant's repayment.
5.06 YEAR OF SERVICE - VESTING. For purposes of vesting under Section
5.03, Year of Service means any 12-consecutive month period designated
in the Employer's Adoption Agreement during which an Employee completes
not less than the number of Hours of Service (not exceeding 1,000)
specified in the Employer's Adoption Agreement. A Year of Service
includes any Year of Service earned prior to the Effective Date of the
Plan, except as provided in Section 5.08.
5.07 BREAK IN SERVICE - VESTING. For purposes of this Article V, a
Participant incurs a "Break in Service" if during any vesting
computation period he does not complete more than 500 Hours of Service.
If, pursuant to Section 5.06, the Plan does not require more than 500
Hours of Service to receive credit for a Year of Service, a Participant
incurs a Break in Service in a vesting computation period in which he
fails to complete a Year of Service.
5.08 INCLUDED YEARS OF SERVICE - VESTING. For purposes of determining
"Years of Service" under Section 5.06, the Plan takes into account all
Years of Service an Employee completes with the Employer except:
(a) For the sole purpose of determining a Participant's Nonforfeitable
percentage of his Accrued Benefit derived from Employer contributions
which accrued for his benefit prior to a Forfeiture Break in Service,
the Plan disregards any Year of Service after the Participant first
incurs a Forfeiture Break in Service. The Participant incurs a
Forfeiture Break in Service when he incurs 5 consecutive Breaks in
Service.
(b) The Plan disregards any Year of Service excluded under the
Employer's Adoption Agreement.
The Plan does not apply the Break in Service rule under Code
411(a)(6)(B). Therefore, an Employee need not complete a Year of
Service after a Break in Service before the Plan takes into account the
Employee's otherwise includible Years of Service under this Article V.
5.09 FORFEITURE OCCURS. A Participant's forfeiture, if any, of his
Accrued Benefit derived from Employer contributions occurs under the
Plan on the earlier of:
(a) The last day of the vesting computation period in which the
Participant first incurs a Forfeiture Break in Service; or
(b) The date the Participant receives a cash-out distribution.
The Advisory Committee determines the percentage of a Participant's
Accrued Benefit forfeiture, if any, under this Section 5.09 solely by
reference to the vesting schedule of Section 5.03. A Participant does
not forfeit any portion of his Accrued Benefit for any other reason or
cause except as expressly provided by this Section 5.09 or as provided
under Section 9.14.
AGREE/art.5
ARTICLE VI
TIME AND METHOD OF PAYMENT OF BENEFITS
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT. Unless, pursuant to Section
6.03, the Participant or the Beneficiary elects in writing to a
different time or method of payment, the Advisory Committee will direct
the Trustee to commence distribution of a Participant's Nonforfeitable
Accrued Benefit in accordance with this Section 6.01. A Participant must
consent, in writing, to any distribution required under this Section
6.01 if the present value of the Participant's Nonforfeitable Accrued
Benefit, at the time of the distribution to the Participant, exceeds
$3,500 and the Participant has not attained the later of Normal
Retirement Age or age 62. Furthermore, the Participant's spouse also
must consent, in writing, to any distribution, for which Section 6.04
requires the spouse's consent. For all purposes of this Article VI, the
term "annuity starting date" means the first day of the first period for
which the Plan pays an amount as an annuity or in any other form. A
distribution date under this Article VI, unless otherwise specified
within the Plan, is the date or dates the Employer specifies in the
Adoption Agreement, or as soon as administratively practicable following
that distribution date. For purposes of the consent requirements under
this Article VI, if the present value of the Participant's
Nonforfeitable Accrued Benefit, at the time of any distribution, exceeds
$3,500, the Advisory Committee must treat that present value as
exceeding $3,500 for purposes of all subsequent Plan distributions to
the Participant.
(A) Separation from Service For a Reason Other Than Death.
(1) Participant's Nonforfeitable Accrued Benefit Not Exceeding $3,500.
If the Participant's Separation from Service is for any reason other
than death, the Advisory Committee will direct the Trustee to distribute
the Participant's Nonforfeitable Accrued Benefit in a lump sum, on the
distribution date the Employer specifies in the Adoption Agreement, but
in no event later than the 60th day following the close of the Plan Year
in which the Participant attains Normal Retirement Age. If the
Participant has attained Normal Retirement Age at the time of his
Separation from Service, the distribution under this paragraph will
occur no later than the 60th day following the close of the Plan Year in
which the Participant's Separation from Service occurs.
(2) Participant's Nonforfeitable Accrued Benefit Exceeds $3,500. If
the Participant's Separation from Service is for any reason other than
death, the Advisory Committee will direct the Trustee to commence
distribution of the Participant's Nonforfeitable Accrued Benefit in a
form and at the time elected by the Participant, pursuant to Section
6.03. In the absence of an election by the Participant, the Advisory
Committee will direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit in a lump sum (or, if applicable, the
normal annuity form of distribution required under Section 6.04), on the
60th day following the close of the Plan Year in which the latest of the
following events occurs: (a) the Participant attains Normal Retirement
Age; (b) the Participant attains age 62; or (c) the Participant's
Separation from Service.
(3) Disability. If the Participant's Separation from Service is
because of his disability, the Advisory Committee will direct the
Trustee to pay the Participant's Nonforfeitable Accrued Benefit in lump
sum, on the distribution date the Employer specifies in the Adoption
Agreement, subject to the notice and consent requirements of this
Article VI and subject to the applicable mandatory commencement dates
described in Paragraphs (1) and (2).
(4) Hardship. Prior to the time at which the Participant may receive
distribution under Paragraphs (1), (2) or (3), the Participant may
request a distribution from his Nonforfeitable Accrued Benefit in an
amount necessary to satisfy a hardship, if the Employer elects in the
Adoption Agreement to permit hardship distributions. Unless the Employer
elects otherwise in the Adoption Agreement, a hardship distribution must
be on account of any of the following: (a) medical expenses; (b) the
purchase (excluding mortgage payments) of the Participant's principal
residence; (c) post-secondary education tuition, for the next semester
or quarter, for the Participant or for the Participant's spouse,
children or dependents; (d) to prevent the eviction of the Participant
from his principal residence or the foreclosure on the mortgage of the
Participant's principal residence; (e) funeral expenses of the
Participant's family member; or (f) the Participant's disability. A
partially-vested Participant may not receive a hardship distribution
described in this Paragraph (A)(4) prior to incurring a Forfeiture Break
in Service, unless the hardship distribution is a cash-out distribution
(as defined in Article V). The Advisory Committee will direct the
Trustee to make the hardship distribution as soon as administratively
practicable after the Participant makes a valid request for the hardship
distribution.
(B) Required Beginning Date. If any distribution commencement date
described under Paragraph (A) of this Section 6.01, either by Plan
provision or by Participant election (or nonelection), is later than the
Participant's Required Beginning Date, the Advisory Committee instead
must direct the Trustee to make distribution on the Participant's
Required Beginning Date, subject to the transitional election, if
applicable, under Section 6.03(D). A Participant's Required Beginning
Date is the April 1 following the close of the calendar year in which
the Participant attains age 701/2. However, if the Participant, prior to
incurring a Separation from Service, attained age 701/2 by January 1,
1988, and, for the five Plan Year period ending in the calendar year in
which he attained age 701/2 and for all subsequent years, the
Participant was not a more than 5% owner, the Required Beginning Date is
the April 1 following the close of the calendar year in which the
Participant separates from Service or, if earlier, the April 1 following
the close of the calendar year in which the Participant becomes a more
than 5% owner. Furthermore, if a Participant who was not a more than 5%
owner attained age 701/2 during 1988 and did not incur a Separation from
Service prior to January 1, 1989, his Required Beginning Date is April
1, 1990. A mandatory distribution at the Participant's Required
Beginning Date will be in lump sum (or, if applicable, the normal
annuity form of distribution required under Section 6.04) unless the
Participant, pursuant to the provisions of this Article VI, makes a
valid election to receive an alternative form of payment.
(C) Death of the Participant. The Advisory Committee will direct the
Trustee, in accordance with this Section 6.01(C), to distribute to the
Participant's Beneficiary the Participant's Nonforfeitable Accrued
Benefit remaining in the Trust at the time of the Participant's death.
Subject to the requirements of Section 6.04, the Advisory Committee will
determine the death benefit by reducing the Participant's Nonforfeitable
Accrued Benefit by any security interest the Plan has against that
Nonforfeitable Accrued Benefit by reason of an outstanding Participant
loan.
(1) Deceased Participant's Nonforfeitable Accrued Benefit Does Not
Exceed $3,500. The Advisory Committee, subject to the requirements of
Section 6.04, must direct the Trustee to distribute the deceased
Participant's Nonforfeitable Accrued Benefit in a single sum, as soon as
administratively practicable following the Participant's death or, if
later, the date on which the Advisory Committee receives notification of
or otherwise confirms the Participant's death.
(2) Deceased Participant's Nonforfeitable Accrued Benefit Exceeds
$3,500. The Advisory Committee will direct the Trustee to distribute the
deceased Participant's Nonforfeitable Accrued Benefit at the time and in
the form elected by the Participant or, if applicable by the
Beneficiary, as permitted under this Article VI. In the absence of an
election, subject to the requirements of Section 6.04, the Advisory
Committee will direct the Trustee to distribute the Participant's
undistributed Nonforfeitable Accrued Benefit in a lump sum on the first
distribution date following the close of the Plan Year in which the
Participant's death occurs or, if later, the first distribution date
following the date the Advisory Committee receives notification of or
otherwise confirms the Participant's death.
If the death benefit is payable in full to the Participant's surviving
spouse, the surviving spouse, in addition to the distribution options
provided in this Section 6.01(C), may elect distribution at any time or
in any form (other than a joint and survivor annuity) this Article VI
would permit for a Participant.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. Subject to the annuity
distribution requirements, if any, prescribed by Section 6.04, and any
restrictions prescribed by Section 6.03, a Participant or Beneficiary
may elect distribution under one, or any combination, of the following
methods: (a) by payment in a lump sum; or (b) by payment in monthly,
quarterly or annual installments over a fixed reasonable period of time,
not exceeding the life expectancy of the Participant, or the joint life
and last survivor expectancy of the Participant and his Beneficiary. The
Employer may elect in its Adoption Agreement to modify the methods of
payment available under this Section 6.02.
The distribution options permitted under this Section 6.02 are available
only if the present value of the Participant Nonforfeitable Accrued
Benefit, at the time of the distribution to the Participant, exceeds
$3,500. To facilitate installment payments under this Article VI, the
Advisory Committee may direct the Trustee to segregate all or any part
of the Participant's Accrued Benefit in a separate Account. The Trustee
will invest the Participant's segregated Account in Federally insured
interest bearing savings account(s) or time deposit(s) (or a combination
of both), or in other fixed income investments. A segregated Account
remains a part of the Trust, but it alone shares in any income it earns,
and it alone bears any expense or loss it incurs. A Participant or
Beneficiary may elect to receive an installment distribution in the form
of a Nontransferable Annuity Contract. Under an installment
distribution, the Participant or Beneficiary, at any time, may elect to
accelerate the payment of all, or any portion, of the Participant's
unpaid Nonforfeitable Accrued Benefit, subject to the requirements of
Section 6.04.
(A) Minimum Distribution Requirements for Participants. The Advisory
Committee may not direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit, nor may the Participant elect to have
the Trustee distribute his Nonforfeitable Accrued Benefit, under a
method of payment which, as of the Required Beginning Date, does not
satisfy the minimum distribution requirements under Code 401(a)(9) and
the applicable Treasury regulations. The minimum distribution for a
calendar year equals the Participant's Nonforfeitable Accrued Benefit as
of the latest valuation date preceding the beginning of the calendar
year divided by the Participant's life expectancy or, if applicable, the
joint and last survivor expectancy of the Participant and his designated
Beneficiary (as determined under Article VIII, subject to the
requirements of the Code 401(a)(9) regulations). The Advisory Committee
will increase the Participant's Nonforfeitable Accrued Benefit, as
determined on the relevant valuation date, for contributions or
forfeitures allocated after the valuation date and by December 31 of the
valuation calendar year, and will decrease the valuation by
distributions made after the valuation date and by December 31 of the
valuation calendar year. For purposes of this valuation, the Advisory
Committee will treat any portion of the minimum distribution for the
first distribution calendar year made after the close of that year as a
distribution occurring in that first distribution calendar year. In
computing a minimum distribution, the Advisory Committee must use the
unisex life expectancy multiples under Treas. Reg. 1.72-9. The Advisory
Committee, only upon the Participant's written request, will compute the
minimum distribution for a calendar year subsequent to the first
calendar year for which the Plan requires a minimum distribution by
redetermining the applicable life expectancy. However, the Advisory
Committee may not redetermine the joint life and last survivor
expectancy of the Participant and a nonspouse designated Beneficiary in
a manner which takes into account any adjustment to a life expectancy
other than the Participant's life expectancy.
If the Participant's spouse is not his designated Beneficiary, a method
of payment to the Participant (whether by Participant election or by
Advisory Committee direction) may not provide more than incidental
benefits to the Beneficiary. For Plan Years beginning after December 31,
1988, the Plan must satisfy the minimum distribution incidental benefit
("MDIB") requirement in the Treasury regulations issued under Code
401(a)(9) for distributions made on or after the Participant's Required
Beginning Date and before the Participant's death. To satisfy the MDIB
requirement, the Advisory Committee will compute the minimum
distribution required by this Section 6.02(A) by substituting the
applicable MDIB divisor for the applicable life expectancy factor, if
the MDIB divisor is a lesser number. Following the Participant's death,
the Advisory Committee will compute the minimum distribution required by
this Section 6.02(A) solely on the basis of the applicable life
expectancy factor and will disregard the MDIB factor. For Plan Years
beginning prior to January 1, 1989, the Plan satisfies the incidental
benefits requirement if the distributions to the Participant satisfied
the MDIB requirement or if the present value of the retirement benefits
payable solely to the Participant is greater than 50% of the present
value of the total benefits payable to the Participant and his
Beneficiaries. The Advisory Committee must determine whether benefits to
the Beneficiary are incidental as of the date the Trustee is to commence
payment of the retirement benefits to the Participant, or as of any date
the Trustee redetermines the payment period to the Participant.
The minimum distribution for the first distribution calendar year is due
by the Participant's Required Beginning Date. The minimum distribution
for each subsequent distribution calendar year, including the calendar
year in which the Participant's Required Beginning Date occurs, is due
by December 31 of that year. If the Participant receives distribution in
the form of a Nontransferable Annuity Contract, the distribution
satisfies this Section 6.02(A) if the contract complies with the
requirements of Code 401(a)(9) and the applicable Treasury regulations.
(B) Minimum Distribution Requirements for Beneficiaries. The method of
distribution to the Participant's Beneficiary must satisfy Code
401(a)(9) and the applicable Treasury regulations. If the Participant's
death occurs after his Required Beginning Date or, if earlier, the date
the Participant commences an irrevocable annuity pursuant to Section
6.04, the method of payment to the Beneficiary must provide for
completion of payment over a period which does not exceed the payment
period which had commenced for the Participant. If the Participant's
death occurs prior to his Required Beginning Date, and the Participant
had not commenced an irrevocable annuity pursuant to Section 6.04, the
method of payment to the Beneficiary, subject to Section 6.04, must
provide for completion of payment to the Beneficiary over a period not
exceeding: (i) 5 years after the date of the Participant's death; or
(ii) if the Beneficiary is a designated Beneficiary, the designated
Beneficiary's life expectancy. The Advisory Committee may not direct
payment of the Participant's Nonforfeitable Accrued Benefit over a
period described in clause (ii) unless the Trustee will commence payment
to the designated Beneficiary no later than the December 31 following
the close of the calendar year in which the Participant's death occurred
or, if later, and the designated Beneficiary is the Participant's
surviving spouse, December 31 of the calendar year in which the
Participant would have attained age 701/2. If the Trustee will make
distribution in accordance with clause (ii), the minimum distribution
for a calendar year equals the Participant's Nonforfeitable Accrued
Benefit as of the latest valuation date preceding the beginning of the
calendar year divided by the designated Beneficiary's life expectancy.
The Advisory Committee must use the unisex life expectancy multiples
under Treas. Reg. 1.72-9 for purposes of applying this paragraph. The
Advisory Committee, only upon the written request of the Participant or
of the Participant's surviving spouse, will recalculate the life
expectancy of the Participant's surviving spouse not more frequently
than annually, but may not recalculate the life expectancy of a
nonspouse designated Beneficiary after the Trustee commences payment to
the designated Beneficiary. The Advisory Committee will apply this
paragraph by treating any amount paid to the Participant's child, which
becomes payable to the Participant's surviving spouse upon the child's
attaining the age of majority, as paid to the Participant's surviving
spouse. Upon the Beneficiary's written request, the Advisory Committee
must direct the Trustee to accelerate payment of all, or any portion, of
the Participant's unpaid Accrued Benefit, as soon as administratively
practicable following the effective date of that request.
6.03 BENEFIT PAYMENT ELECTIONS. Not earlier than 90 days, but not
later than 30 days, before the Participant's annuity starting date, the
Advisory Committee must provide a benefit notice to a Participant who is
eligible to make an election under this Section 6.03. The benefit notice
must explain the optional forms of benefit in the Plan, including the
material features and relative values of those options, and the
Participant's right to defer distribution until he attains the later of
Normal Retirement Age or age 62.
If a Participant or Beneficiary makes an election prescribed by this
Section 6.03, the Advisory Committee will direct the Trustee to
distribute the Participant's Nonforfeitable Accrued Benefit in
accordance with that election. Any election under this Section 6.03 is
subject to the requirements of Section 6.02 and of Section 6.04. The
Participant or Beneficiary must make an election under this Section 6.03
by filing his election with the Advisory Committee at any time before
the Trustee otherwise would commence to pay a Participant's Accrued
Benefit in accordance with the requirements of Article VI.
(A) Participant Elections After Separation from Service. If the present
value of a Participant's Nonforfeitable Accrued Benefit exceeds $3,500,
he may elect to have the Trustee commence distribution as of any
distribution date permitted under the Employer's Adoption Agreement
Section 6.03. The Participant may reconsider an election at any time
prior to the annuity starting date and elect to commence distribution as
of any other distribution date permitted under the Employer's Adoption
Agreement Section 6.03. If the Participant is partially-vested in his
Accrued Benefit, an election under this Paragraph (A) to distribute
prior to the Participant's incurring a Forfeiture Break in Service (as
defined in Section 5.08), must be in the form of a cash-out distribution
(as defined in Article V). A Participant may not receive a cash-out
distribution if, prior to the time the Trustee actually makes the cash-
out distribution, the Participant returns to employment with the
Employer. Following his attainment of Normal Retirement Age, a
Participant who has separated from Service may elect distribution as of
any distribution date, irrespective of the elections under Adoption
Agreement Section 6.03.
(B) Participant Elections Prior to Separation from Service. The Employer
must specify in its Adoption Agreement the distribution election rights,
if any, a Participant has prior to his Separation from Service. A
Participant must make an election under this Section 6.03(B) on a form
prescribed by the Advisory Committee at any time during the Plan Year
for which his election is to be effective. In his written election, the
Participant must specify the percentage or dollar amount he wishes the
Trustee to distribute to him. The Participant's election relates solely
to the percentage or dollar amount specified in his election form and
his right to elect to receive an amount, if any, for a particular Plan
Year greater than the dollar amount or percentage specified in his
election form terminates on the Accounting Date. The Trustee must make a
distribution to a Participant in accordance with his election under this
Section 6.03(B) within the 90 day period (or as soon as administratively
practicable) after the Participant files his written election with the
Trustee. The Trustee will distribute the balance of the Participant's
Accrued Benefit not distributed pursuant to his election(s) in
accordance with the other distribution provisions of this Plan.
(C) Death Benefit Elections. If the present value of the deceased
Participant's Nonforfeitable Accrued Benefit exceeds $3,500, the
Participant's Beneficiary may elect to have the Trustee distribute the
Participant's Nonforfeitable Accrued Benefit in a form and within a
period permitted under Section 6.02. The Beneficiary's election is
subject to any restrictions designated in writing by the Participant and
not revoked as of his date of death.
(D) Transitional Elections. Notwithstanding the provisions of Sections
6.01 and 6.02, if the Participant (or Beneficiary) signed a written
distribution designation prior to January 1, 1984, the Advisory
Committee must distribute the Participant's Nonforfeitable Accrued
Benefit in accordance with that designation, subject however, to the
survivor requirements, if applicable, of Sections 6.04, 6.05 and 6.06.
This Section 6.03(D) does not apply to a pre-1984 distribution
designation, and the Advisory Committee will not comply with that
designation, if any of the following applies: (1) the method of
distribution would have disqualified the Plan under Code 401(a)(9) as
in effect on December 31, 1983; (2) the Participant did not have an
Accrued Benefit as of December 31, 1983; (3) the distribution
designation does not specify the timing and form of the distribution and
the death Beneficiaries (in order of priority); (4) the substitution of
a Beneficiary modifies the payment period of the distribution; or, (5)
the Participant (or Beneficiary) modifies or revokes the distribution
designation. In the event of a revocation, the Plan must distribute, no
later than December 31 of the calendar year following the year of
revocation, the amount which the Participant would have received under
Section 6.02(A) if the distribution designation had not been in effect
or, if the Beneficiary revokes the distribution designation, the amount
which the Beneficiary would have received under Section 6.02(B) if the
distribution designation had not been in effect. The Advisory Committee
will apply this Section 6.03(D) to rollovers and transfers in accordance
with Part J of the Code 401(a)(9) Treasury regulations.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
(A) Joint and Survivor Annuity. The Advisory Committee must direct
the Trustee to distribute a married or unmarried Participant's
Nonforfeitable Accrued Benefit in the form of a qualified joint and
survivor annuity, unless the Participant makes a valid waiver election
(described in Section 6.05) within the 90 day period ending on the
annuity starting date. If, as of the annuity starting date, the
Participant is married, a qualified joint and survivor annuity is an
immediate annuity which is purchasable with the Participant's
Nonforfeitable Accrued Benefit and which provides a life annuity for the
Participant and a survivor annuity payable for the remaining life of the
Participant's surviving spouse equal to 50% of the amount of the annuity
payable during the life of the Participant. If, as of the annuity
starting date, the Participant is not married, a qualified joint and
survivor annuity is an immediate life annuity for the Participant which
is purchasable with the Participant's Nonforfeitable Accrued Benefit. On
or before the annuity starting date, the Advisory Committee, without
Participant or spousal consent, must direct the Trustee to pay the
Participant's Nonforfeitable Accrued Benefit in a lump sum, in lieu of a
qualified joint and survivor annuity, in accordance with Section 6.01,
if the Participant's Nonforfeitable Accrued Benefit is not greater than
$3,500. This Section 6.04(A) applies only to a Participant who has
completed at least one Hour of Service with the Employer after August
22, 1984.
(B) Preretirement Survivor Annuity. If a married Participant dies prior
to his annuity starting date, the Advisory Committee will direct the
Trustee to distribute a portion of the Participant's Nonforfeitable
Accrued Benefit to the Participant's surviving spouse in the form of a
preretirement survivor annuity, unless the Participant has a valid
waiver election (as described in Section 6.06) in effect, or unless the
Participant and his spouse were not married throughout the one year
period ending on the date of his death. A preretirement survivor annuity
is an annuity which is purchasable with 50% of the Participant's
Nonforfeitable Accrued Benefit (determined as of the date of the
Participant's death) and which is payable for the life of the
Participant's surviving spouse. The value of the preretirement survivor
annuity is attributable to Employer contributions and to Employee
contributions in the same proportion as the Participant's Nonforfeitable
Accrued Benefit is attributable to those contributions. The portion of
the Participant's Nonforfeitable Accrued Benefit not payable under this
paragraph is payable to the Participant's Beneficiary, in accordance
with the other provisions of this Article VI. If the present value of
the preretirement survivor annuity does not exceed $3,500, the Advisory
Committee, on or before the annuity starting date, must direct the
Trustee to make a lump sum distribution to the Participant's surviving
spouse, in lieu of a preretirement survivor annuity. This Section
6.04(B) applies only to a Participant who dies after August 22, 1984,
and either (i) completes at least one Hour of Service with the Employer
after August 22, 1984, or (ii) separated from Service with at least 10
Years of Service (as defined in Section 5.06) and completed at least one
Hour of Service with the Employer in a Plan Year beginning after
December 31, 1975.
(C) Surviving Spouse Elections. If the present value of the
preretirement survivor annuity exceeds $3,500, the Participant's
surviving spouse may elect to have the Trustee commence payment of the
preretirement survivor annuity at any time following the date of the
Participant's death, but not later than the mandatory distribution
periods described in Section 6.02, and may elect any of the forms of
payment described in Section 6.02, in lieu of the preretirement survivor
annuity. In the absence of an election by the surviving spouse, the
Advisory Committee must direct the Trustee to distribute the
preretirement survivor annuity on the first distribution date following
the close of the Plan Year in which the latest of the following events
occurs: (i) the Participant's death; (ii) the date the Advisory
Committee receives notification of or otherwise confirms the
Participant's death; (iii) the date the Participant would have attained
Normal Retirement Age; or (iv) the date the Participant would have
attained age 62.
(D) Special Rules. If the Participant has in effect a valid waiver
election regarding the qualified joint and survivor annuity or the
preretirement survivor annuity, the Advisory Committee must direct the
Trustee to distribute the Participant's Nonforfeitable Accrued Benefit
in accordance with Sections 6.01, 6.02 and 6.03. The Advisory Committee
will reduce the Participant's Nonforfeitable Accrued Benefit by any
security interest (pursuant to any offset rights authorized by Section
10.03[E]) held by the Plan by reason of a Participant loan to determine
the value of the Participant's Nonforfeitable Accrued Benefit
distributable in the form of a qualified joint and survivor annuity or
preretirement survivor annuity, provided any post-August 18, 1985, loan
satisfied the spousal consent requirement described in Section 10.03[E]
of the Plan. For purposes of applying this Article VI, the Advisory
Committee treats a former spouse as the Participant's spouse or
surviving spouse to the extent provided under a qualified domestic
relations order described in Section 6.07. The provisions of this
Section 6.04, and of Sections 6.05 and 6.06, apply separately to the
portion of the Participant's Nonforfeitable Accrued Benefit subject to
the qualified domestic relations order and to the portion of the
Participant's Nonforfeitable Accrued Benefit not subject to that order.
(E) Profit Sharing Plan Election. If this Plan is a profit sharing plan,
the Employer must elect the extent to which the preceding provisions of
Section 6.04 apply. If the Employer elects to apply this Section 6.04
only to a Participant described in this Section 6.04(E), the preceding
provisions of this Section 6.04 apply only to the following
Participants: (1) a Participant as respects whom the Plan is a direct or
indirect transferee from a plan subject to the Code 417 requirements
and the Plan received the transfer after December 31, 1984, unless the
transfer is an elective transfer described in Section 13.06; (2) a
Participant who elects a life annuity distribution (if Section 6.02 or
Section 13.02 of the Plan requires the Plan to provide a life annuity
distribution option); and (3) a Participant whose benefits under a
defined benefit plan maintained by the Employer are offset by benefits
provided under this Plan. If the Employer elects to apply this Section
6.04 to all Participants, the preceding provisions of this Section 6.04
apply to all Participants described in the first two paragraphs of this
Section 6.04, without regard to the limitations of this Section 6.04(E).
Sections 6.05 and 6.06 only apply to Participants to whom the preceding
provisions of this Section 6.04 apply.
6.05 WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY. Not
earlier than 90 days, but not later than 30 days, before the
Participant's annuity starting date, the Advisory Committee must provide
the Participant a written explanation of the terms and conditions of the
qualified joint and survivor annuity, the Participant's right to make,
and the effect of, an election to waive the joint and survivor form of
benefit, the rights of the Participant's spouse regarding the waiver
election and the Participant's right to make, and the effect of, a
revocation of a waiver election. The Plan does not limit the number of
times the Participant may revoke a waiver of the qualified joint and
survivor annuity or make a new waiver during the election period.
A married Participant's waiver election is not valid unless (a) the
Participant's spouse (to whom the survivor annuity is payable under the
qualified joint and survivor annuity), after the Participant has
received the written explanation described in this Section 6.05, has
consented in writing to the waiver election, the spouse's consent
acknowledges the effect of the election, and a notary public or the Plan
Administrator (or his representative) witnesses the spouse's consent,
(b) the spouse consents to the alternate form of payment designated by
the Participant or to any change in that designated form of payment, and
(c) unless the spouse is the Participant's sole primary Beneficiary, the
spouse consents to the Participant's Beneficiary designation or to any
change in the Participant's Beneficiary designation. The spouse's
consent to a waiver of the qualified joint and survivor annuity is
irrevocable, unless the Participant revokes the waiver election. The
spouse may execute a blanket consent to any form of payment designation
or to any Beneficiary designation made by the Participant, if the spouse
acknowledges the right to limit that consent to a specific designation
but, in writing, waives that right. The consent requirements of this
Section 6.05 apply to a former spouse of the Participant, to the extent
required under a qualified domestic relations order described in Section
6.07.
The Advisory Committee will accept as valid a waiver election which does
not satisfy the spousal consent requirements if the Advisory Committee
establishes the Participant does not have a spouse, the Advisory
Committee is not able to locate the Participant's spouse, the
Participant is legally separated or has been abandoned (within the
meaning of State law) and the Participant has a court order to that
effect, or other circumstances exist under which the Secretary of the
Treasury will excuse the consent requirement. If the Participant's
spouse is legally incompetent to give consent, the spouse's legal
guardian (even if the guardian is the Participant) may give consent.
6.06 WAIVER ELECTION - PRERETIREMENT SURVIVOR ANNUITY. The
Advisory Committee must provide a written explanation of the
preretirement survivor annuity to each married Participant, within the
following period which ends last: (1) the period beginning on the first
day of the Plan Year in which the Participant attains age 32 and ending
on the last day of the Plan Year in which the Participant attains age
34; (2) a reasonable period after an Employee becomes a Participant; (3)
a reasonable period after the joint and survivor rules become applicable
to the Participant; or (4) a reasonable period after a fully subsidized
preretirement survivor annuity no longer satisfies the requirements for
a fully subsidized benefit. A reasonable period described in clauses
(2), (3) and (4) is the period beginning one year before and ending one
year after the applicable event. If the Participant separates from
Service before attaining age 35, clauses (1), (2), (3) and (4) do not
apply and the Advisory Committee must provide the written explanation
within the period beginning one year before and ending one year after
the Separation from Service. The written explanation must describe, in a
manner consistent with Treasury regulations, the terms and conditions of
the preretirement survivor annuity comparable to the explanation of the
qualified joint and survivor annuity required under Section 6.05. The
Plan does not limit the number of times the Participant may revoke a
waiver of the preretirement survivor annuity or make a new waiver during
the election period.
A Participant's waiver election of the preretirement survivor annuity is
not valid unless (a) the Participant makes the waiver election no
earlier than the first day of the Plan Year in which he attains age 35
and (b) the Participant's spouse (to whom the preretirement survivor
annuity is payable) satisfies the consent requirements described in
Section 6.05, except the spouse need not consent to the form of benefit
payable to the designated Beneficiary. The spouse's consent to the
waiver of the preretirement survivor annuity is irrevocable, unless the
Participant revokes the waiver election. Irrespective of the time of
election requirement described in clause (a), if the Participant
separates from Service prior to the first day of the Plan Year in which
he attains age 35, the Advisory Committee will accept a waiver election
as respects the Participant's Accrued Benefit attributable to his
Service prior to his Separation from Service. Furthermore, if a
Participant who has not separated from Service makes a valid waiver
election, except for the timing requirement of clause (a), the Advisory
Committee will accept that election as valid, but only until the first
day of the Plan Year in which the Participant attains age 35. A waiver
election described in this paragraph is not valid unless made after the
Participant has received the written explanation described in this
Section 6.06.
6.07 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing contained
in this Plan prevents the Trustee, in accordance with the direction of
the Advisory Committee, from complying with the provisions of a
qualified domestic relations order (as defined in Code 414(p)). This
Plan specifically permits distribution to an alternate payee under a
qualified domestic relations order at any time, irrespective of whether
the Participant has attained his earliest retirement age (as defined
under Code 414(p)) under the Plan. A distribution to an alternate payee
prior to the Participant's attainment of earliest retirement age is
available only if: (1) the order specifies distribution at that time or
permits an agreement between the Plan and the alternate payee to
authorize an earlier distribution; and (2) if the present value of the
alternate payee's benefits under the Plan exceeds $3,500, and the order
requires, the alternate payee consents to any distribution occurring
prior to the Participant's attainment of earliest retirement age. The
Employer, in an addendum to its Adoption Agreement numbered 6.07, may
elect to limit distribution to an alternate payee only when the
Participant has attained his earliest retirement age under the Plan.
Nothing in this Section 6.07 gives a Participant a right to receive
distribution at a time otherwise not permitted under the Plan nor does
it permit the alternate payee to receive a form of payment not otherwise
permitted under the Plan.
The Advisory Committee must establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the Advisory Committee promptly will notify
the Participant and any alternate payee named in the order, in writing,
of the receipt of the order and the Plan's procedures for determining
the qualified status of the order. Within a reasonable period of time
after receiving the domestic relations order, the Advisory Committee
must determine the qualified status of the order and must notify the
Participant and each alternate payee, in writing, of its determination.
The Advisory Committee must provide notice under this paragraph by
mailing to the individual's address specified in the domestic relations
order, or in a manner consistent with Department of Labor regulations.
If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during the period the Advisory Committee is making its
determination of the qualified status of the domestic relations order,
the Advisory Committee must make a separate accounting of the amounts
payable. If the Advisory Committee determines the order is a qualified
domestic relations order within 18 months of the date amounts first are
payable following receipt of the order, the Advisory Committee will
direct the Trustee to distribute the payable amounts in accordance with
the order. If the Advisory Committee does not make its determination of
the qualified status of the order within the 18-month determination
period, the Advisory Committee will direct the Trustee to distribute the
payable amounts in the manner the Plan would distribute if the order did
not exist and will apply the order prospectively if the Advisory
Committee later determines the order is a qualified domestic relations
order.
To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, the Advisory Committee may direct
the Trustee to invest any partitioned amount in a segregated subaccount
or separate account and to invest the account in Federally insured,
interest-bearing savings account(s) or time deposit(s) (or a combination
of both), or in other fixed income investments. A segregated subaccount
remains a part of the Trust, but it alone shares in any income it earns,
and it alone bears any expense or loss it incurs. The Trustee will make
any payments or distributions required under this Section 6.07 by
separate benefit checks or other separate distribution to the alternate
payee(s).
AGREE/art.6
ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 INFORMATION TO COMMITTEE. The Employer must supply current
information to the Advisory Committee as to the name, date of birth,
date of employment, annual compensation, leaves of absence, Years of
Service and date of termination of employment of each Employee who is,
or who will be eligible to become, a Participant under the Plan,
together with any other information which the Advisory Committee
considers necessary. The Employer's records as to the current
information the Employer furnishes to the Advisory Committee are
conclusive as to all persons.
7.02 NO LIABILITY. The Employer assumes no obligation or responsibility
to any of its Employees, Participants or Beneficiaries for any act of,
or failure to act, on the part of its Advisory Committee (unless the
Employer is the Advisory Committee), the Trustee, the Custodian, if any,
or the Plan Administrator (unless the Employer is the Plan
Administrator).
7.03 INDEMNITY OF CERTAIN FIDUCIARIES. The Employer indemnifies and
saves harmless the Plan Administrator and the members of the Advisory
Committee, and each of them, from and against any and all loss resulting
from liability to which the Plan Administrator and the Advisory
Committee, or the members of the Advisory Committee, may be subjected by
reason of any act or conduct (except willful misconduct or gross
negligence) in their official capacities in the administration of this
Trust or Plan or both, including all expenses reasonably incurred in
their defense, in case the Employer fails to provide such defense. The
indemnification provisions of this Section 7.03 do not relieve the Plan
Administrator or any Advisory Committee member from any liability he may
have under ERISA for breach of a fiduciary duty. Furthermore, the Plan
Administrator and the Advisory Committee members and the Employer may
execute a letter agreement further delineating the indemnification
agreement of this Section 7.03, provided the letter agreement must be
consistent with and does not violate ERISA. The indemnification
provisions of this Section 7.03 extend to the Trustee (or to a
Custodian, if any) solely to the extent provided by a letter agreement
executed by the Trustee (or Custodian) and the Employer.
7.04 EMPLOYER DIRECTION OF INVESTMENT. The Employer has the right to
direct the Trustee with respect to the investment and re-investment of
assets comprising the Trust Fund only if the Trustee consents in writing
to permit such direction. If the Trustee consents to Employer direction
of investment, the Trustee and the Employer must execute a letter
agreement as a part of this Plan containing such conditions, limitations
and other provisions they deem appropriate before the Trustee will
follow any Employer direction as respects the investment or re-
investment of any part of the Trust Fund.
7.05 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves the
right to amend the vesting schedule at any time, the Advisory Committee
will not apply the amended vesting schedule to reduce the Nonforfeitable
percentage of any Participant's Accrued Benefit derived from Employer
contributions (determined as of the later of the date the Employer
adopts the amendment, or the date the amendment becomes effective) to a
percentage less than the Nonforfeitable percentage computed under the
Plan without regard to the amendment. An amended vesting schedule will
apply to a Participant only if the Participant receives credit for at
least one Hour of Service after the new schedule becomes effective.
If the Employer makes a permissible amendment to the vesting schedule,
each Participant having at least 3 Years of Service with the Employer
may elect to have the percentage of his Nonforfeitable Accrued Benefit
computed under the Plan without regard to the amendment. For Plan Years
beginning prior to January 1, 1989, the election described in the
preceding sentence applies only to Participants having at least 5 Years
of Service with the Employer. The Participant must file his election
with the Advisory Committee within 60 days of the latest of (a) the
Employer's adoption of the amendment; (b) the effective date of the
amendment; or (c) his receipt of a copy of the amendment. The Advisory
Committee, as soon as practicable, must forward a true copy of any
amendment to the vesting schedule to each affected Participant, together
with an explanation of the effect of the amendment, the appropriate form
upon which the Participant may make an election to remain under the
vesting schedule provided under the Plan prior to the amendment and
notice of the time within which the Participant must make an election to
remain under the prior vesting schedule. The election described in this
Section 7.05 does not apply to a Participant if the amended vesting
schedule provides for vesting at least as rapid at all times as the
vesting schedule in effect prior to the amendment. For purposes of this
Section 7.05, an amendment to the vesting schedule includes any Plan
amendment which directly or indirectly affects the computation of the
Nonforfeitable percentage of an Employee's rights to his Employer
derived Accrued Benefit. Furthermore, the Advisory Committee must treat
any shift in the vesting schedule, due to a change in the Plan's top
heavy status, as an amendment to the vesting schedule for purposes of
this Section 7.05.
AGREE/art.7
ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 BENEFICIARY DESIGNATION. Any Participant may from time to time
designate, in writing, any person or persons, contingently or
successively, to whom the Trustee will pay his Nonforfeitable Accrued
Benefit (including any life insurance proceeds payable to the
Participant's Account) in the event of his death and the Participant may
designate the form and method of payment. The Advisory Committee will
prescribe the form for the written designation of Beneficiary and, upon
the Participant's filing the form with the Advisory Committee, the form
effectively revokes all designations filed prior to that date by the
same Participant.
(A) Coordination with survivor requirements. If the joint and survivor
requirements of Article VI apply to the Participant, this Section 8.01
does not impose any special spousal consent requirements on the
Participant's Beneficiary designation. However, in the absence of
spousal consent (as required by Article VI) to the Participant's
Beneficiary designation: (1) any waiver of the joint and survivor
annuity or of the preretirement survivor annuity is not valid; and (2)
if the Participant dies prior to his annuity starting date, the
Participant's Beneficiary designation will apply only to the portion of
the death benefit which is not payable as a preretirement survivor
annuity. Regarding clause (2), if the Participant's surviving spouse is
a primary Beneficiary under the Participant's Beneficiary designation,
the Trustee will satisfy the spouse's interest in the Participant's
death benefit first from the portion which is payable as a preretirement
survivor annuity.
(B) Profit sharing plan exception. If the Plan is a profit sharing
plan, the Beneficiary designation of a married Exempt Participant is not
valid unless the Participant's spouse consents (in a manner described in
Section 6.05) to the Beneficiary designation. An "Exempt Participant" is
a Participant who is not subject to the joint and survivor requirements
of Article VI. The spousal consent requirement in this paragraph does
not apply if the Exempt Participant and his spouse are not married
throughout the one year period ending on the date of the Participant's
death, or if the Participant's spouse is the Participant's sole primary
Beneficiary.
8.02 NO BENEFICIARY DESIGNATION/DEATH OF BENEFICIARY. If a Participant
fails to name a Beneficiary in accordance with Section 8.01, or if the
Beneficiary named by a Participant predeceases him, then the Trustee
will pay the Participant's Nonforfeitable Accrued Benefit in accordance
with Section 6.02 in the following order of priority, unless the
Employer specifies a different order of priority in an addendum to its
Adoption Agreement, to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including adopted children,
in equal shares;
(c) The Participant's surviving parents, in equal shares; or
(d) The Participant's estate.
If the Beneficiary does not predecease the Participant, but dies prior
to distribution of the Participant's entire Nonforfeitable Accrued
Benefit, the Trustee will pay the remaining Nonforfeitable Accrued
Benefit to the Beneficiary's estate unless the Participant's Beneficiary
designation provides otherwise or unless the Employer provides otherwise
in its Adoption Agreement. If the Plan is a profit sharing plan, and the
Plan includes Exempt Participants, the Employer may not specify a
different order of priority in the Adoption Agreement unless the
Participant's surviving spouse will be first in the different order of
priority. The Advisory Committee will direct the Trustee as to the
method and to whom the Trustee will make payment under this Section
8.02.
8.03 PERSONAL DATA TO COMMITTEE. Each Participant and each Beneficiary
of a deceased Participant must furnish to the Advisory Committee such
evidence, data or information as the Advisory Committee considers
necessary or desirable for the purpose of administering the Plan. The
provisions of this Plan are effective for the benefit of each
Participant upon the condition precedent that each Participant will
furnish promptly full, true and complete evidence, data and information
when requested by the Advisory Committee, provided the Advisory
Committee advises each Participant of the effect of his failure to
comply with its request.
8.04 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary of
a deceased Participant must file with the Advisory Committee from time
to time, in writing, his post office address and any change of post
office address. Any communication, statement or notice addressed to a
Participant, or Beneficiary, at his last post office address filed with
the Advisory Committee, or as shown on the records of the Employer,
binds the Participant, or Beneficiary, for all purposes of this Plan.
8.05 ASSIGNMENT OR ALIENATION. Subject to Code 414(p) relating to
qualified domestic relations orders, neither a Participant nor a
Beneficiary may anticipate, assign or alienate (either at law or in
equity) any benefit provided under the Plan, and the Trustee will not
recognize any such anticipation, assignment or alienation. Furthermore,
a benefit under the Plan is not subject to attachment, garnishment,
levy, execution or other legal or equitable process.
8.06 NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the
time prescribed by ERISA and the applicable regulations, must furnish
all Participants and Beneficiaries a summary description of any material
amendment to the Plan or notice of discontinuance of the Plan and all
other information required by ERISA to be furnished without charge.
8.07 LITIGATION AGAINST THE TRUST. A court of competent jurisdiction
may authorize any appropriate equitable relief to redress violations of
ERISA or to enforce any provisions of ERISA or the terms of the Plan. A
fiduciary may receive reimbursement of expenses properly and actually
incurred in the performance of his duties with the Plan.
8.08 INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan description, latest annual
report, any bargaining agreement, this Plan and Trust, contract or any
other instrument under which the Plan was established or is operated.
The Plan Administrator will maintain all of the items listed in this
Section 8.08 in his office, or in such other place or places as he may
designate from time to time in order to comply with the regulations
issued under ERISA, for examination during reasonable business hours.
Upon the written request of a Participant or Beneficiary the Plan
Administrator must furnish him with a copy of any item listed in this
Section 8.08. The Plan Administrator may make a reasonable charge to the
requesting person for the copy so furnished.
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. A Participant or a
Beneficiary ("Claimant") may file with the Advisory Committee a written
claim for benefits, if the Participant or Beneficiary determines the
distribution procedures of the Plan have not provided him his proper
Nonforfeitable Accrued Benefit. The Advisory Committee must render a
decision on the claim within 60 days of the Claimant's written claim for
benefits. The Plan Administrator must provide adequate notice in writing
to the Claimant whose claim for benefits under the Plan the Advisory
Committee has denied. The Plan Administrator's notice to the Claimant
must set forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provisions on which the
Advisory Committee based its denial;
(c) A description of any additional material and information needed
for the Claimant to perfect his claim and an explanation of why the
material or information is needed; and
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Advisory Committee within 75
days after receipt of the Plan Administrator's notice of denial of
benefits. The Plan Administrator's notice must further advise the
Claimant that his failure to appeal the action to the Advisory Committee
in writing within the 75-day period will render the Advisory Committee's
determination final, binding and conclusive.
If the Claimant should appeal to the Advisory Committee, he, or his duly
authorized representative, may submit, in writing, whatever issues and
comments he, or his duly authorized representative, feels are pertinent.
The Claimant, or his duly authorized representative, may review
pertinent Plan documents. The Advisory Committee will re-examine all
facts related to the appeal and make a final determination as to whether
the denial of benefits is justified under the circumstances. The
Advisory Committee must advise the Claimant of its decision within 60
days of the Claimant's written request for review, unless special
circumstances (such as a hearing) would make the rendering of a decision
within the 60-day limit unfeasible, but in no event may the Advisory
Committee render a decision respecting a denial for a claim for benefits
later than 120 days after its receipt of a request for review.
The Plan Administrator's notice of denial of benefits must identify the
name of each member of the Advisory Committee and the name and address
of the Advisory Committee member to whom the Claimant may forward his
appeal.
8.10 PARTICIPANT DIRECTION OF INVESTMENT. A Participant has the right
to direct the Trustee with respect to the investment or re-investment of
the assets comprising the Participant's individual Account only if the
Trustee consents in writing to permit such direction. If the Trustee
consents to Participant direction of investment, the Trustee will accept
direction from each Participant on a written election form (or other
written agreement), as a part of this Plan, containing such conditions,
limitations and other provisions the parties deem appropriate. The
Trustee or, with the Trustee's consent, the Advisory Committee, may
establish written procedures, incorporated specifically as part of this
Plan, relating to Participant direction of investment under this Section
8.10. The Trustee will maintain a segregated investment Account to the
extent a Participant's Account is subject to Participant self-direction.
The Trustee is not liable for any loss, nor is the Trustee liable for
any breach, resulting from a Participant's direction of the investment
of any part of his directed Account.
The Advisory Committee, to the extent provided in a written loan policy
adopted under Section 9.04, will treat a loan made to a Participant as a
Participant direction of investment under this Section 8.10. To the
extent of the loan outstanding at any time, the borrowing Participant's
Account alone shares in any interest paid on the loan, and it alone
bears any expense or loss it incurs in connection with the loan. The
Trustee may retain any principal or interest paid on the borrowing
Participant's loan in an interest bearing segregated Account on behalf
of the borrowing Participant until the Trustee (or the Named Fiduciary,
in the case of a nondiscretionary Trustee) deems it appropriate to add
the amount paid to the Participant's separate Account under the Plan.
If the Trustee consents to Participant direction of investment of his
Account, the Plan treats any post-December 31, 1981, investment by a
Participant's directed Account in collectibles (as defined by Code
408(m)) as a deemed distribution to the Participant for Federal income
tax purposes.
AGREE/art.8
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS
9.01 MEMBERS' COMPENSATION, EXPENSES. The Employer must appoint an
Advisory Committee to administer the Plan, the members of which may or
may not be Participants in the Plan, or which may be the Plan
Administrator acting alone. In the absence of an Advisory Committee
appointment, the Plan Administrator assumes the powers, duties and
responsibilities of the Advisory Committee. The members of the Advisory
Committee will serve without compensation for services as such, but the
Employer will pay all expenses of the Advisory Committee, except to the
extent the Trust properly pays for such expenses, pursuant to Article X.
9.02 TERM. Each member of the Advisory Committee serves until the
appointment of his successor.
9.03 POWERS. In case of a vacancy in the membership of the Advisory
Committee, the remaining members of the Advisory Committee may exercise
any and all of the powers, authority, duties and discretion conferred
upon the Advisory Committee pending the filling of the vacancy.
9.04 GENERAL. The Advisory Committee has the following powers and
duties:
(a) To select a Secretary, who need not be a member of the Advisory
Committee;
(b) To determine the rights of eligibility of an Employee to
participate in the Plan, the value of a Participant's Accrued Benefit
and the Nonforfeitable percentage of each Participant's Accrued Benefit;
(c) To adopt rules of procedure and regulations necessary for the
proper and efficient administration of the Plan provided the rules are
not inconsistent with the terms of this Agreement;
(d) To construe and enforce the terms of the Plan and the rules and
regulations it adopts, including interpretation of the Plan documents
and documents related to the Plan's operation;
(e) To direct the Trustee as respects the crediting and distribution
of the Trust;
(f) To review and render decisions respecting a claim for (or denial
of a claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the Employer may
require for tax or other purposes;
(h) To engage the service of agents whom it may deem advisable to
assist it with the performance of its duties;
(i) To engage the services of an Investment Manager or Managers (as
defined in ERISA 3(38)), each of whom will have full power and
authority to manage, acquire or dispose (or direct the Trustee with
respect to acquisition or disposition) of any Plan asset under its
control;
(j) To establish, in its sole discretion, a nondiscriminatory policy
(see Section 9.04(A)) which the Trustee must observe in making loans, if
any, to Participants and Beneficiaries; and
(k) To establish and maintain a funding standard account and to make
credits and charges to the account to the extent required by and in
accordance with the provisions of the Code.
The Advisory Committee must exercise all of its powers, duties and
discretion under the Plan in a uniform and nondiscriminatory manner.
(A) Loan Policy. If the Advisory Committee adopts a loan policy,
pursuant to paragraph (j), the loan policy must be a written document
and must include: (1) the identity of the person or positions authorized
to administer the participant loan program; (2) a procedure for applying
for the loan; (3) the criteria for approving or denying a loan; (4) the
limitations, if any, on the types and amounts of loans available; (5)
the procedure for determining a reasonable rate of interest; (6) the
types of collateral which may secure the loan; and (7) the events
constituting default and the steps the Plan will take to preserve plan
assets in the event of default. This Section 9.04 specifically
incorporates a written loan policy as part of the Employer's Plan.
9.05 FUNDING POLICY. The Advisory Committee will review, not less often
than annually, all pertinent Employee information and Plan data in
order to establish the funding policy of the Plan and to determine the
appropriate methods of carrying out the Plan's objectives. The Advisory
Committee must communicate periodically, as it deems appropriate, to the
Trustee and to any Plan Investment Manager the Plan's short-term and
long-term financial needs so investment policy can be coordinated with
Plan financial requirements.
9.06 MANNER OF ACTION. The decision of a majority of the members
appointed and qualified controls.
9.07 AUTHORIZED REPRESENTATIVE. The Advisory Committee may
authorize any one of its members, or its Secretary, to sign on its
behalf any notices, directions, applications, certificates, consents,
approvals, waivers, letters or other documents. The Advisory Committee
must evidence this authority by an instrument signed by all members and
filed with the Trustee.
9.08 INTERESTED MEMBER. No member of the Advisory Committee may
decide or determine any matter concerning the distribution, nature or
method of settlement of his own benefits under the Plan, except in
exercising an election available to that member in his capacity as a
Participant, unless the Plan Administrator is acting alone in the
capacity of the Advisory Committee.
9.09 INDIVIDUAL ACCOUNTS. The Advisory Committee will maintain, or
direct the Trustee to maintain, a separate Account, or multiple
Accounts, in the name of each Participant to reflect the Participant's
Accrued Benefit under the Plan. If a Participant re-enters the Plan
subsequent to his having a Forfeiture Break in Service, the Advisory
Committee, or the Trustee, must maintain a separate Account for the
Participant's pre-Forfeiture Break in Service Accrued Benefit and a
separate Account for his post-Forfeiture Break in Service Accrued
Benefit, unless the Participant's entire Accrued Benefit under the Plan
is 100% Nonforfeitable.
The Advisory Committee will make its allocations, or request the Trustee
to make its allocations, to the Accounts of the Participants in
accordance with the provisions of Section 9.11. The Advisory Committee
may direct the Trustee to maintain a temporary segregated investment
Account in the name of a Participant to prevent a distortion of income,
gain or loss allocations under Section 9.11. The Advisory Committee must
maintain records of its activities.
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
Participant's Accrued Benefit consists of that proportion of the net
worth (at fair market value) of the Employer's Trust Fund which the net
credit balance in his Account (exclusive of the cash value of incidental
benefit insurance contracts) bears to the total net credit balance in
the Accounts (exclusive of the cash value of the incidental benefit
insurance contracts) of all Participants plus the cash surrender value
of any incidental benefit insurance contracts held by the Trustee on the
Participant's life.
For purposes of a distribution under the Plan, the value of a
Participant's Accrued Benefit is its value as of the valuation date
immediately preceding the date of the distribution. Any distribution
(other than a distribution from a segregated Account) made to a
Participant (or to his Beneficiary) more than 90 days after the most
recent valuation date may include interest on the amount of the
distribution as an expense of the Trust Fund. The interest, if any,
accrues from such valuation date to the date of the distribution at the
rate established in the Employer's Adoption Agreement.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. A
"valuation date" under this Plan is each Accounting Date and each
interim valuation date determined under Section 10.14. As of each
valuation date the Advisory Committee must adjust Accounts to reflect
net income, gain or loss since the last valuation date. The valuation
period is the period beginning the day after the last valuation date and
ending on the current valuation date.
(A) Trust Fund Accounts. The allocation provisions of this paragraph
apply to all Participant Accounts other than segregated investment
Accounts. The Advisory Committee first will adjust the Participant
Accounts, as those Accounts stood at the beginning of the current
valuation period, by reducing the Accounts for any forfeitures arising
under Section 5.09 or under Section 9.14, for amounts charged during the
valuation period to the Accounts in accordance with Section 9.13
(relating to distributions) and Section 11.01 (relating to insurance
premiums), and for the cash value of incidental benefit insurance
contracts. The Advisory Committee then, subject to the restoration
allocation requirements of Section 5.04 or of Section 9.14, will
allocate the net income, gain or loss pro rata to the adjusted
Participant Accounts. The allocable net income, gain or loss is the net
income (or net loss), including the increase or decrease in the fair
market value of assets, since the last valuation date.
(B) Segregated investment Accounts. A segregated investment Account
receives all income it earns and bears all expense or loss it incurs.
The Advisory Committee will adopt uniform and nondiscriminatory
procedures for determining income or loss of a segregated investment
Account in a manner which reasonably reflects investment directions
relating to pooled investments and investment directions occurring
during a valuation period. As of the valuation date, the Advisory
Committee must reduce a segregated Account for any forfeiture arising
under Section 5.09 after the Advisory Committee has made all other
allocations, changes or adjustments to the Account for the Plan Year.
(C) Additional rules. An Excess Amount or suspense account described
in Part 2 of Article III does not share in the allocation of net income,
gain or loss described in this Section 9.11. If the Employer maintains
its Plan under a Code 401(k) Adoption Agreement, the Employer may
specify in its Adoption Agreement alternate valuation provisions
authorized by that Adoption Agreement. This Section 9.11 applies solely
to the allocation of net income, gain or loss of the Trust. The Advisory
Committee will allocate the Employer contributions and Participant
forfeitures, if any, in accordance with Article III.
9.12 INDIVIDUAL STATEMENT. As soon as practicable after the Accounting
Date of each Plan Year, but within the time prescribed by ERISA and the
regulations under ERISA, the Plan Administrator will deliver to each
Participant (and to each Beneficiary) a statement reflecting the
condition of his Accrued Benefit in the Trust as of that date and such
other information ERISA requires be furnished the Participant or
Beneficiary. No Participant, except a member of the Advisory Committee,
has the right to inspect the records reflecting the Account of any other
Participant.
9.13 ACCOUNT CHARGED. The Advisory Committee will charge a
Participant's Account for all distributions made from that Account to
the Participant, to his Beneficiary or to an alternate payee. The
Advisory Committee also will charge a Participant's Account for any
administrative expenses incurred by the Plan directly related to that
Account.
9.14 UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require
either the Trustee or the Advisory Committee to search for, or to
ascertain the whereabouts of, any Participant or Beneficiary. At the
time the Participant's or Beneficiary's benefit becomes distributable
under Article VI, the Advisory Committee, by certified or registered
mail addressed to his last known address of record with the Advisory
Committee or the Employer, must notify any Participant, or Beneficiary,
that he is entitled to a distribution under this Plan. The notice must
quote the provisions of this Section 9.14 and otherwise must comply with
the notice requirements of Article VI. If the Participant, or
Beneficiary, fails to claim his distributive share or make his
whereabouts known in writing to the Advisory Committee within 6 months
from the date of mailing of the notice, the Advisory Committee will
treat the Participant's or Beneficiary's unclaimed payable Accrued
Benefit as forfeited and will reallocate the unclaimed payable Accrued
Benefit in accordance with Section 3.05. A forfeiture under this
paragraph will occur at the end of the notice period or, if later, the
earliest date applicable Treasury regulations would permit the
forfeiture. Pending forfeiture, the Advisory Committee, following the
expiration of the notice period, may direct the Trustee to segregate the
Nonforfeitable Accrued Benefit in a segregated Account and to invest
that segregated Account in Federally insured interest bearing savings
accounts or time deposits (or in a combination of both), or in other
fixed income investments.
If a Participant or Beneficiary who has incurred a forfeiture of his
Accrued Benefit under the provisions of the first paragraph of this
Section 9.14 makes a claim, at any time, for his forfeited Accrued
Benefit, the Advisory Committee must restore the Participant's or
Beneficiary's forfeited Accrued Benefit to the same dollar amount as the
dollar amount of the Accrued Benefit forfeited, unadjusted for any gains
or losses occurring subsequent to the date of the forfeiture. The
Advisory Committee will make the restoration during the Plan Year in
which the Participant or Beneficiary makes the claim, first from the
amount, if any, of Participant forfeitures the Advisory Committee
otherwise would allocate for the Plan Year, then from the amount, if
any, of the Trust Fund net income or gain for the Plan Year and then
from the amount, or additional amount, the Employer contributes to
enable the Advisory Committee to make the required restoration. The
Advisory Committee must direct the Trustee to distribute the
Participant's or Beneficiary's restored Accrued Benefit to him not later
than 60 days after the close of the Plan Year in which the Advisory
Committee restores the forfeited Accrued Benefit. The forfeiture
provisions of this Section 9.14 apply solely to the Participant's or to
the Beneficiary's Accrued Benefit derived from Employer contributions.
AGREE/art.9
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.01 ACCEPTANCE. The Trustee accepts the Trust created under the Plan
and agrees to perform the obligations imposed. The Trustee must provide
bond for the faithful performance of its duties under the Trust to the
extent required by ERISA.
10.02 RECEIPT OF CONTRIBUTIONS. The Trustee is accountable to the
Employer for the funds contributed to it by the Employer, but does not
have any duty to see that the contributions received comply with the
provisions of the Plan. The Trustee is not obliged to collect any
contributions from the Employer, nor is obliged to see that funds
deposited with it are deposited according to the provisions of the Plan.
10.03 INVESTMENT POWERS.
[A] Discretionary Trustee Designation. If the Employer, in Adoption
Agreement Section 1.02, designates the Trustee to administer the Trust
as a discretionary Trustee, then the Trustee has full discretion and
authority with regard to the investment of the Trust Fund, except with
respect to a Plan asset under the control or direction of a properly
appointed Investment Manager or with respect to a Plan asset properly
subject to Employer, Participant or Advisory Committee direction of
investment. The Trustee must coordinate its investment policy with Plan
financial needs as communicated to it by the Advisory Committee. The
Trustee is authorized and empowered, but not by way of limitation, with
the following powers, rights and duties:
(a) To invest any part or all of the Trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, put and call
options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures, commercial
paper, U.S. Treasury bills, U.S. Treasury notes and other direct or
indirect obligations of the United States Government or its agencies,
improved or unimproved real estate situated in the United States,
limited partnerships, insurance contracts of any type, mortgages, notes
or other property of any kind, real or personal, to buy or sell options
on common stock on a nationally recognized exchange with or without
holding the underlying common stock, to buy and sell commodities,
commodity options and contracts for the future delivery of commodities,
and to make any other investments the Trustee deems appropriate, as a
prudent man would do under like circumstances with due regard for the
purposes of this Plan. Any investment made or retained by the Trustee in
good faith is proper but must be of a kind constituting a
diversification considered by law suitable for trust investments.
(b) To retain in cash so much of the Trust Fund as it may deem
advisable to satisfy liquidity needs of the Plan and to deposit any cash
held in the Trust Fund in a bank account at reasonable interest.
(c) To invest, if the Trustee is a bank or similar financial
institution supervised by the United States or by a State, in any type
of deposit of the Trustee (or of a bank related to the Trustee within
the meaning of Code 414(b)) at a reasonable rate of interest or in a
common trust fund, as described in Code 584, or in a collective
investment fund, the provisions of which govern the investment of such
assets and which the Plan incorporates by this reference, which the
Trustee (or its affiliate, as defined in Code 1504) maintains
exclusively for the collective investment of money contributed by the
bank (or the affiliate) in its capacity as trustee and which conforms to
the rules of the Comptroller of the Currency.
(d) To manage, sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure, lease for
any term even though commencing in the future or extending beyond the
term of the Trust, and otherwise deal with all property, real or
personal, in such manner, for such considerations and on such terms and
conditions as the Trustee decides.
(e) To credit and distribute the Trust as directed by the Advisory
Committee. The Trustee is not obliged to inquire as to whether any payee
or distributee is entitled to any payment or whether the distribution is
proper or within the terms of the Plan, or as to the manner of making
any payment or distribution. The Trustee is accountable only to the
Advisory Committee for any payment or distribution made by it in good
faith on the order or direction of the Advisory Committee.
(f) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge.
(g) To compromise, contest, arbitrate or abandon claims and demands,
in its discretion.
(h) To have with respect to the Trust all of the rights of an
individual owner, including the power to give proxies, to participate in
any voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights.
(i) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize interests
in oil, gas and other minerals; and to enter into operating agreements
and to execute division and transfer orders.
(j) To hold any securities or other property in the name of the
Trustee or its nominee, with depositories or agent depositories or in
another form as it may deem best, with or without disclosing the trust
relationship.
(k) To perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management, investment and
distribution of the Trust.
(l) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment or
delivery of the funds or property until final adjudication is made by a
court of competent jurisdiction.
(m) To file all tax returns required of the Trustee.
(n) To furnish to the Employer, the Plan Administrator and the
Advisory Committee an annual statement of account showing the condition
of the Trust Fund and all investments, receipts, disbursements and other
transactions effected by the Trustee during the Plan Year covered by the
statement and also stating the assets of the Trust held at the end of
the Plan Year, which accounts are conclusive on all persons, including
the Employer, the Plan Administrator and the Advisory Committee, except
as to any act or transaction concerning which the Employer, the Plan
Administrator or the Advisory Committee files with the Trustee written
exceptions or objections within 90 days after the receipt of the
accounts or for which ERISA authorizes a longer period within which to
object.
(o) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the Trustee
is not obliged or required to do so unless indemnified to its
satisfaction.
[B] Nondiscretionary Trustee Designation/Appointment of Custodian. If
the Employer, in its Adoption Agreement Section 1.02, designates the
Trustee to administer the Trust as a nondiscretionary Trustee, then the
Trustee will not have any discretion or authority with regard to the
investment of the Trust Fund, but must act solely as a directed trustee
of the funds contributed to it. A nondiscretionary Trustee, as directed
trustee of the funds held by it under the Employer's Plan, is authorized
and empowered, by way of limitation, with the following powers, rights
and duties, each of which the nondiscretionary Trustee exercises solely
as directed trustee in accordance with the written direction of the
Named Fiduciary (except to the extent a Plan asset is subject to the
control and management of a properly appointed Investment Manager or
subject to Advisory Committee or Participant direction of investment):
(a) To invest any part or all of the Trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, put and call
options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures, commercial
paper, U.S. Treasury bills, U.S. Treasury notes and other direct or
indirect obligations of the United States Government or its agencies,
improved or unimproved real estate situated in the United States,
limited partnerships, insurance contracts of any type, mortgages, notes
or other property of any kind, real or personal, to buy or sell options
on common stock on a nationally recognized options exchange with or
without holding the underlying common stock, to buy and sell
commodities, commodity options and contracts for the future delivery of
commodities, and to make any other investments the Named Fiduciary deems
appropriate.
(b) To retain in cash so much of the Trust Fund as the Named Fiduciary
may direct in writing to satisfy liquidity needs of the Plan and to
deposit any cash held in the Trust Fund in a bank account at reasonable
interest, including, specific authority to invest in any type of deposit
of the Trustee (or of a bank related to the Trustee within the meaning
of Code 414(b)) at a reasonable rate of interest.
(c) To sell, contract to sell, grant options to purchase, convey,
exchange, transfer, abandon, improve, repair, insure, lease for any term
even though commencing in the future or extending beyond the term of the
Trust, and otherwise deal with all property, real or personal, in such
manner, for such considerations and on such terms and conditions as the
Named Fiduciary directs in writing.
(d) To credit and distribute the Trust as directed by the Advisory
Committee. The Trustee is not obliged to inquire as to whether any payee
or distributee is entitled to any payment or whether the distribution is
proper or within the terms of the Plan, or as to the manner of making
any payment or distribution. The Trustee is accountable only to the
Advisory Committee for any payment or distribution made by it in good
faith on the order or direction of the Advisory Committee.
(e) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge.
(f) To have with respect to the Trust all of the rights of an
individual owner, including the power to give proxies, to participate in
any voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights, provided the
exercise of any such powers is in accordance with and at the written
direction of the Named Fiduciary.
(g) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize interests
in oil, gas and other minerals; and to enter into operating agreements
and to execute division and transfer orders, provided the exercise of
any such powers is in accordance with and at the written direction of
the Named Fiduciary.
(h) To hold any securities or other property in the name of the
nondiscretionary Trustee or its nominee, with depositories or agent
depositories or in another form as the Named Fiduciary may deem best,
with or without disclosing the custodial relationship.
(i) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment or
delivery of the funds or property until a court of competent
jurisdiction makes final adjudication.
(j) To file all tax returns required of the Trustee.
(k) To furnish to the Named Fiduciary, the Employer, the Plan
Administrator and the Advisory Committee an annual statement of account
showing the condition of the Trust Fund and all investments, receipts,
disbursements and other transactions effected by the nondiscretionary
Trustee during the Plan Year covered by the statement and also stating
the assets of the Trust held at the end of the Plan Year, which accounts
are conclusive on all persons, including the Named Fiduciary, the
Employer, the Plan Administrator and the Advisory Committee, except as
to any act or transaction concerning which the Named Fiduciary, the
Employer, the Plan Administrator or the Advisory Committee files with
the nondiscretionary Trustee written exceptions or objections within 90
days after the receipt of the accounts or for which ERISA authorizes a
longer period within which to object.
(l) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the Trustee
is not obliged or required to do so unless indemnified to its
satisfaction.
Appointment of Custodian. The Employer may appoint a Custodian under the
Plan, the acceptance by the Custodian indicated on the execution page of
the Employer's Adoption Agreement. If the Employer appoints a Custodian,
the Employer's Plan must have a discretionary Trustee, as described in
Section 10.03[A]. A Custodian has the same powers, rights and duties as
a nondiscretionary Trustee, as described in this Section 10.03[B]. The
Custodian accepts the terms of the Plan and Trust by executing the
Employer's Adoption Agreement. Any reference in the Plan to a Trustee
also is a reference to a Custodian where the context of the Plan
dictates. A limitation of the Trustee's liability by Plan provision also
acts as a limitation of the Custodian's liability. Any action taken by
the Custodian at the discretionary Trustee's direction satisfies any
provision in the Plan referring to the Trustee's taking that action.
Modification of Powers/Limited Responsibility. The Employer and the
Custodian or nondiscretionary Trustee, by letter agreement, may limit
the powers of the Custodian or nondiscretionary Trustee to any
combination of powers listed within this Section 10.03[B]. If there is a
Custodian or a nondiscretionary Trustee under the Employer's Plan, then
the Employer, in adopting this Plan acknowledges the Custodian or
nondiscretionary Trustee has no discretion with respect to the
investment or re-investment of the Trust Fund and that the Custodian or
nondiscretionary Trustee is acting solely as custodian or as directed
trustee with respect to the assets comprising the Trust Fund.
[C] Limitation of Powers of Certain Custodians. If a Custodian is a
bank which, under its governing state law, does not possess trust
powers, then paragraphs (a), (c), (e), (f), (g) of Section 10.03[B],
Section 10.16 and Article XI do not apply to that bank and that bank
only has the power and authority to exercise the remaining powers,
rights and duties under Section 10.03[B].
[D] Named Fiduciary/Limitation of Liability of Nondiscretionary
Trustee or Custodian. Under a nondiscretionary Trustee designation, the
Named Fiduciary under the Employer's Plan has the sole responsibility
for the management and control of the Employer's Trust Fund, except with
respect to a Plan asset under the control or direction of a properly
appointed Investment Manager or with respect to a Plan asset properly
subject to Participant or Advisory Committee direction of investment. If
the Employer appoints a Custodian, the Named Fiduciary is the
discretionary Trustee. Under a nondiscretionary Trustee designation,
unless the Employer designates in writing another person or persons to
serve as Named Fiduciary, the Named Fiduciary under the Plan is the
president of a corporate Employer, the managing partner of a partnership
Employer or the sole proprietor, as appropriate. The Named Fiduciary
will exercise its management and control of the Trust Fund through its
written direction to the nondiscretionary Trustee or to the Custodian,
whichever applies to the Employer's Plan.
The nondiscretionary Trustee or Custodian has no duty to review or to
make recommendations regarding investments made at the written direction
of the Named Fiduciary. The nondiscretionary Trustee or Custodian must
retain any investment obtained at the written direction of the Named
Fiduciary until further directed in writing by the Named Fiduciary to
dispose of such investment. The nondiscretionary Trustee or Custodian is
not liable in any manner or for any reason for making, retaining or
disposing of any investment pursuant to any written direction described
in this paragraph. Furthermore, the Employer agrees to indemnify and to
hold the nondiscretionary Trustee or Custodian harmless from any
damages, costs or expenses, including reasonable counsel fees, which the
nondiscretionary Trustee or Custodian may incur as a result of any claim
asserted against the nondiscretionary Trustee, the Custodian or the
Trust arising out of the nondiscretionary Trustee's or Custodian's
compliance with any written direction described in this paragraph.
[E] Participant Loans. This Section 10.03[E] specifically authorizes the
Trustee to make loans on a nondiscriminatory basis to a Participant or
to a Beneficiary in accordance with the loan policy established by the
Advisory Committee, provided: (1) the loan policy satisfies the
requirements of Section 9.04; (2) loans are available to all
Participants and Beneficiaries on a reasonably equivalent basis and are
not available in a greater amount for Highly Compensated Employees than
for other Employees; (3) any loan is adequately secured and bears a
reasonable rate of interest; (4) the loan provides for repayment within
a specified time; (5) the default provisions of the note prohibit offset
of the Participant's Nonforfeitable Accrued Benefit prior to the time
the Trustee otherwise would distribute the Participant's Nonforfeitable
Accrued Benefit; (6) the amount of the loan does not exceed (at the time
the Plan extends the loan) the present value of the Participant's
Nonforfeitable Accrued Benefit; and (7) the loan otherwise conforms to
the exemption provided by Code 4975(d)(1). If the joint and survivor
requirements of Article VI apply to the Participant, the Participant may
not pledge any portion of his Accrued Benefit as security for a loan
made after August 18, 1985, unless, within the 90 day period ending on
the date the pledge becomes effective, the Participant's spouse, if any,
consents (in a manner described in Section 6.05 other than the
requirement relating to the consent of a subsequent spouse) to the
security or, by separate consent, to an increase in the amount of
security. If the Employer is an unincorporated trade or business, a
Participant who is an Owner-Employee may not receive a loan from the
Plan, unless he has obtained a prohibited transaction exemption from the
Department of Labor. If the Employer is an "S Corporation," a
Participant who is a shareholder-employee (an employee or an officer)
who, at any time during the Employer's taxable year, owns more than 5%,
either directly or by attribution under Code 318(a)(1), of the
Employer's outstanding stock may not receive a loan from the Plan,
unless he has obtained a prohibited transaction exemption from the
Department of Labor. If the Employer is not an unincorporated trade or
business nor an "S Corporation," this Section 10.03[E] does not impose
any restrictions on the class of Participants eligible for a loan from
the Plan.
[F] Investment in qualifying Employer securities and qualifying Employer
real property. The investment options in this Section 10.03[F] include
the ability to invest in qualifying Employer securities or qualifying
Employer real property, as defined in and as limited by ERISA. If the
Employer's Plan is a Nonstandardized profit sharing plan, it may elect
in its Adoption Agreement to permit the aggregate investments in
qualifying Employer securities and in qualifying Employer real property
to exceed 10% of the value of Plan assets.
10.04 RECORDS AND STATEMENTS. The records of the Trustee pertaining to
the Plan must be open to the inspection of the Plan Administrator, the
Advisory Committee and the Employer at all reasonable times and may be
audited from time to time by any person or persons as the Employer, Plan
Administrator or Advisory Committee may specify in writing. The Trustee
must furnish the Plan Administrator or Advisory Committee with whatever
information relating to the Trust Fund the Plan Administrator or
Advisory Committee considers necessary.
10.05 FEES AND EXPENSES FROM FUND. A Trustee or Custodian will receive
reasonable annual compensation as may be agreed upon from time to time
between the Employer and the Trustee or Custodian. No person who is
receiving full pay from the Employer may receive compensation for
services as Trustee or as Custodian. The Trustee will pay from the Trust
Fund all fees and expenses reasonably incurred by the Plan, to the
extent such fees and expenses are for the ordinary and necessary
administration and operation of the Plan, unless the Employer pays such
fees and expenses. Any fee or expense paid, directly or indirectly, by
the Employer is not an Employer contribution to the Plan, provided the
fee or expense relates to the ordinary and necessary administration of
the Fund.
10.06 PARTIES TO LITIGATION. Except as otherwise provided by ERISA, no
Participant or Beneficiary is a necessary party or is required to
receive notice of process in any court proceeding involving the Plan,
the Trust Fund or any fiduciary of the Plan. Any final judgment entered
in any proceeding will be conclusive upon the Employer, the Plan
Administrator, the Advisory Committee, the Trustee, Custodian,
Participants and Beneficiaries.
10.07 PROFESSIONAL AGENTS. The Trustee may employ and pay from the Trust
Fund reasonable compensation to agents, attorneys, accountants and other
persons to advise the Trustee as in its opinion may be necessary. The
Trustee may delegate to any agent, attorney, accountant or other person
selected by it any non-Trustee power or duty vested in it by the Plan,
and the Trustee may act or refrain from acting on the advice or opinion
of any agent, attorney, accountant or other person so selected.
10.08 DISTRIBUTION OF CASH OR PROPERTY. The Trustee may make
distribution under the Plan in cash or property, or partly in each, at
its fair market value as determined by the Trustee. For purposes of a
distribution to a Participant or to a Participant's designated
Beneficiary or surviving spouse, "property" includes a Nontransferable
Annuity Contract, provided the contract satisfies the requirements of
this Plan.
10.09 DISTRIBUTION DIRECTIONS. If no one claims a payment or
distribution made from the Trust, the Trustee must promptly notify the
Advisory Committee and then dispose of the payment in accordance with
the subsequent direction of the Advisory Committee.
10.10 THIRD PARTY/MULTIPLE TRUSTEES. No person dealing with the Trustee
is obligated to see to the proper application of any money paid or
property delivered to the Trustee, or to inquire whether the Trustee has
acted pursuant to any of the terms of the Plan. Each person dealing with
the Trustee may act upon any notice, request or representation in
writing by the Trustee, or by the Trustee's duly authorized agent, and
is not liable to any person in so acting. The certificate of the Trustee
that it is acting in accordance with the Plan will be conclusive in
favor of any person relying on the certificate. If more than two persons
act as Trustee, a decision of the majority of such persons controls with
respect to any decision regarding the administration or investment of
the Trust Fund or of any portion of the Trust Fund with respect to which
such persons act as Trustee. However, the signature of only one Trustee
is necessary to effect any transaction on behalf of the Trust.
10.11 RESIGNATION. The Trustee or Custodian may resign its position at
any time by giving 30 days' written notice in advance to the Employer
and to the Advisory Committee. If the Employer fails to appoint a
successor Trustee within 60 days of its receipt of the Trustee's written
notice of resignation, the Trustee will treat the Employer as having
appointed itself as Trustee and as having filed its acceptance of
appointment with the former Trustee. The Employer, in its sole
discretion, may replace a Custodian. If the Employer does not replace a
Custodian, the discretionary Trustee will assume possession of Plan
assets held by the former Custodian.
10.12 REMOVAL. The Employer, by giving 30 days' written notice in
advance to the Trustee, may remove any Trustee or Custodian. In the
event of the resignation or removal of a Trustee, the Employer must
appoint a successor Trustee if it intends to continue the Plan. If two
or more persons hold the position of Trustee, in the event of the
removal of one such person, during any period the selection of a
replacement is pending, or during any period such person is unable to
serve for any reason, the remaining person or persons will act as the
Trustee.
10.13 INTERIM DUTIES AND SUCCESSOR TRUSTEE. Each successor Trustee
succeeds to the title to the Trust vested in his predecessor by
accepting in writing his appointment as successor Trustee and by filing
the acceptance with the former Trustee and the Advisory Committee
without the signing or filing of any further statement. The resigning or
removed Trustee, upon receipt of acceptance in writing of the Trust by
the successor Trustee, must execute all documents and do all acts
necessary to vest the title of record in any successor Trustee. Each
successor Trustee has and enjoys all of the powers, both discretionary
and ministerial, conferred under this Agreement upon his predecessor. A
successor Trustee is not personally liable for any act or failure to act
of any predecessor Trustee, except as required under ERISA. With the
approval of the Employer and the Advisory Committee, a successor
Trustee, with respect to the Plan, may accept the account rendered and
the property delivered to it by a predecessor Trustee without incurring
any liability or responsibility for so doing.
10.14 VALUATION OF TRUST. The Trustee must value the Trust Fund as of
each Accounting Date to determine the fair market value of each
Participant's Accrued Benefit in the Trust. The Trustee also must value
the Trust Fund on such other valuation dates as directed in writing by
the Advisory Committee or as required by the Employer's Adoption
Agreement.
10.15 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER, ANCILLARY TRUSTEE
OR INDEPENDENT FIDUCIARY APPOINTED. The Trustee is not liable for the
acts or omissions of any Investment Manager the Advisory Committee may
appoint, nor is the Trustee under any obligation to invest or otherwise
manage any asset of the Plan which is subject to the management of a
properly appointed Investment Manager. The Advisory Committee, the
Trustee and any properly appointed Investment Manager may execute a
letter agreement as a part of this Plan delineating the duties,
responsibilities and liabilities of the Investment Manager with respect
to any part of the Trust Fund under the control of the Investment
Manager.
The limitation on liability described in this Section 10.15 also applies
to the acts or omissions of any ancillary trustee or independent
fiduciary properly appointed under Section 10.17 of the Plan. However,
if a discretionary Trustee, pursuant to the delegation described in
Section 10.17 of the Plan, appoints an ancillary trustee, the
discretionary Trustee is responsible for the periodic review of the
ancillary trustee's actions and must exercise its delegated authority in
accordance with the terms of the Plan and in a manner consistent with
ERISA. The Employer, the discretionary Trustee and an ancillary trustee
may execute a letter agreement as a part of this Plan delineating any
indemnification agreement between the parties.
10.16 INVESTMENT IN GROUP TRUST FUND. The Employer, by adopting this
Plan, specifically authorizes the Trustee to invest all or any portion
of the assets comprising the Trust Fund in any group trust fund which at
the time of the investment provides for the pooling of the assets of
plans qualified under Code 401(a). This authorization applies solely to
a group trust fund exempt from taxation under Code 501(a) and the trust
agreement of which satisfies the requirements of Revenue Ruling 81-100.
The provisions of the group trust fund agreement, as amended from time
to time, are by this reference incorporated within this Plan and Trust.
The provisions of the group trust fund will govern any investment of
Plan assets in that fund. The Employer must specify in an attachment to
its adoption agreement the group trust fund(s) to which this
authorization applies. If the Trustee is acting as a nondiscretionary
Trustee, the investment in the group trust fund is available only in
accordance with a proper direction, by the Named Fiduciary, in
accordance with Section 10.03[B]. Pursuant to paragraph (c) of Section
10.03[A] of the Plan, a Trustee has the authority to invest in certain
common trust funds and collective investment funds without the need for
the authorizing addendum described in this Section 10.16.
Furthermore, at the Employer's direction, the Trustee, for collective
investment purposes, may combine into one trust fund the Trust created
under this Plan with the Trust created under any other qualified
retirement plan the Employer maintains. However, the Trustee must
maintain separate records of account for the assets of each Trust in
order to reflect properly each Participant's Accrued Benefit under the
plan(s) in which he is a Participant.
10.17 APPOINTMENT OF ANCILLARY TRUSTEE OR INDEPENDENT FIDUCIARY. The
Employer, in writing, may appoint any person in any State to act as
ancillary trustee with respect to a designated portion of the Trust
Fund. An ancillary trustee must acknowledge in writing its acceptance of
the terms and conditions of its appointment as ancillary trustee and its
fiduciary status under ERISA. The ancillary trustee has the rights,
powers, duties and discretion as the Employer may delegate, subject to
any limitations or directions specified in the instrument evidencing
appointment of the ancillary trustee and to the terms of the Plan or of
ERISA. The investment powers delegated to the ancillary trustee may
include any investment powers available under Section 10.03 of the Plan
including the right to invest any portion of the assets of the Trust
Fund in a common trust fund, as described in Code 584, or in any
collective investment fund, the provisions of which govern the
investment of such assets and which the Plan incorporates by this
reference, but only if the ancillary trustee is a bank or similar
financial institution supervised by the United States or by a State and
the ancillary trustee (or its affiliate, as defined in Code 1504)
maintains the common trust fund or collective investment fund
exclusively for the collective investment of money contributed by the
ancillary trustee (or its affiliate) in a trustee capacity and which
conforms to the rules of the Comptroller of the Currency. The Employer
also may appoint as an ancillary trustee, the trustee of any group trust
fund designated for investment pursuant to the provisions of Section
10.16 of the Plan.
The ancillary trustee may resign its position at any time by providing
at least 30 days' advance written notice to the Employer, unless the
Employer waives this notice requirement. The Employer, in writing, may
remove an ancillary trustee at any time. In the event of resignation or
removal, the Employer may appoint another ancillary trustee, return the
assets to the control and management of the Trustee or receive such
assets in the capacity of ancillary trustee. The Employer may delegate
its responsibilities under this Section 10.17 to a discretionary Trustee
under the Plan, but not to a nondiscretionary Trustee or to a Custodian,
subject to the acceptance by the discretionary Trustee of that
delegation.
If the U.S. Department of Labor ("the Department") requires engagement
of an independent fiduciary to have control or management of all or a
portion of the Trust Fund, the Employer will appoint such independent
fiduciary, as directed by the Department. The independent fiduciary will
have the duties, responsibilities and powers prescribed by the
Department and will exercise those duties, responsibilities and powers
in accordance with the terms, restrictions and conditions established by
the Department and, to the extent not inconsistent with ERISA, the terms
of the Plan. The independent fiduciary must accept its appointment in
writing and must acknowledge its status as a fiduciary of the Plan.
AGREE/art.10
ARTICLE XI
PROVISIONS RELATING TO INSURANCE AND INSURANCE COMPANY
11.01 INSURANCE BENEFIT. The Employer may elect to provide incidental
life insurance benefits for insurable Participants who consent to life
insurance benefits by signing the appropriate insurance company
application form. The Trustee will not purchase any incidental life
insurance benefit for any Participant prior to an allocation to the
Participant's Account. At an insured Participant's written direction,
the Trustee will use all or any portion of the Participant's
nondeductible voluntary contributions, if any, to pay insurance premiums
covering the Participant's life. This Section 11.01 also authorizes the
purchase of life insurance, for the benefit of the Participant, on the
life of a family member of the Participant or on any person in whom the
Participant has an insurable interest. However, if the policy is on the
joint lives of the Participant and another person, the Trustee may not
maintain that policy if that other person predeceases the Participant.
The Employer will direct the Trustee as to the insurance company and
insurance agent through which the Trustee is to purchase the insurance
contracts, the amount of the coverage and the applicable dividend plan.
Each application for a policy, and the policies themselves, must
designate the Trustee as sole owner, with the right reserved to the
Trustee to exercise any right or option contained in the policies,
subject to the terms and provisions of this Agreement. The Trustee must
be the named beneficiary for the Account of the insured Participant.
Proceeds of insurance contracts paid to the Participant's Account under
this Article XI are subject to the distribution requirements of Article
V and of Article VI. The Trustee will not retain any such proceeds for
the benefit of the Trust.
The Trustee will charge the premiums on any incidental benefit insurance
contract covering the life of a Participant against the Account of that
Participant. The Trustee will hold all incidental benefit insurance
contracts issued under the Plan as assets of the Trust created under the
Plan.
(A) Incidental insurance benefits. The aggregate of life insurance
premiums paid for the benefit of a Participant, at all times, may not
exceed the following percentages of the aggregate of the Employer's
contributions allocated to any Participant's Account: (i) 49% in the
case of the purchase of ordinary life insurance contracts; or (ii) 25%
in the case of the purchase of term life insurance or universal life
insurance contracts. If the Trustee purchases a combination of ordinary
life insurance contract(s) and term life insurance or universal life
insurance contract(s), then the sum of one-half of the premiums paid for
the ordinary life insurance contract(s) and the premiums paid for the
term life insurance or universal life insurance contract(s) may not
exceed 25% of the Employer contributions allocated to any Participant's
Account.
(B) Exception for certain profit sharing plans. If the Employer's Plan
is a profit sharing plan, the incidental insurance benefits requirement
does not apply to the Plan if the Plan purchases life insurance benefits
only from Employer contributions accumulated in the Participant's
Account for at least two years (measured from the allocation date).
11.02 LIMITATION ON LIFE INSURANCE PROTECTION. The Trustee will not
continue any life insurance protection for any Participant beyond his
annuity starting date (as defined in Article VI). If the Trustee holds
any incidental benefit insurance contract(s) for the benefit of a
Participant when he terminates his employment (other than by reason of
death), the Trustee must proceed as follows:
(a) If the entire cash value of the contract(s) is vested in the
terminating Participant, or if the contract(s) will have no cash value
at the end of the policy year in which termination of employment occurs,
the Trustee will transfer the contract(s) to the Participant endorsed so
as to vest in the transferee all right, title and interest to the
contract(s), free and clear of the Trust; subject however, to
restrictions as to surrender or payment of benefits as the issuing
insurance company may permit and as the Advisory Committee directs;
(b) If only part of the cash value of the contract(s) is vested in the
terminating Participant, the Trustee, to the extent the Participant's
interest in the cash value of the contract(s) is not vested, may adjust
the Participant's interest in the value of his Account attributable to
Trust assets other than incidental benefit insurance contracts and
proceed as in (a), or the Trustee must effect a loan from the issuing
insurance company on the sole security of the contract(s) for an amount
equal to the difference between the cash value of the contract(s) at the
end of the policy year in which termination of employment occurs and the
amount of the cash value that is vested in the terminating Participant,
and the Trustee must transfer the contract(s) endorsed so as to vest in
the transferee all right, title and interest to the contract(s), free
and clear of the Trust; subject however, to the restrictions as to
surrender or payment of benefits as the issuing insurance company may
permit and the Advisory Committee directs;
(c) If no part of the cash value of the contract(s) is vested in the
terminating Participant, the Trustee must surrender the contract(s) for
cash proceeds as may be available.
In accordance with the written direction of the Advisory Committee, the
Trustee will make any transfer of contract(s) under this Section 11.02
on the Participant's annuity starting date (or as soon as
administratively practicable after that date). The Trustee may not
transfer any contract under this Section 11.02 which contains a method
of payment not specifically authorized by Article VI or which fails to
comply with the joint and survivor annuity requirements, if applicable,
of Article VI. In this regard, the Trustee either must convert such a
contract to cash and distribute the cash instead of the contract, or
before making the transfer, require the issuing company to delete the
unauthorized method of payment option from the contract.
11.03 DEFINITIONS. For purposes of this Article XI:
(a) "Policy" means an ordinary life insurance contract or a term life
insurance contract issued by an insurer on the life of a Participant.
(b) "Issuing insurance company" is any life insurance company which
has issued a policy upon application by the Trustee under the terms of
this Agreement.
(c) "Contract" or "Contracts" means a policy of insurance. In the
event of any conflict between the provisions of this Plan and the terms
of any contract or policy of insurance issued in accordance with this
Article XI, the provisions of the Plan control.
(d) "Insurable Participant" means a Participant to whom an insurance
company, upon an application being submitted in accordance with the
Plan, will issue insurance coverage, either as a standard risk or as a
risk in an extra mortality classification.
11.04 DIVIDEND PLAN. The dividend plan is premium reduction unless the
Advisory Committee directs the Trustee to the contrary. The Trustee must
use all dividends for a contract to purchase insurance benefits or
additional insurance benefits for the Participant on whose life the
insurance company has issued the contract. Furthermore, the Trustee must
arrange, where possible, for all policies issued on the lives of
Participants under the Plan to have the same premium due date and all
ordinary life insurance contracts to contain guaranteed cash values with
as uniform basic options as are possible to obtain. The term "dividends"
includes policy dividends, refunds of premiums and other credits.
11.05 INSURANCE COMPANY NOT A PARTY TO AGREEMENT. No insurance company,
solely in its capacity as an issuing insurance company, is a party to
this Agreement nor is the company responsible for its validity.
11.06 INSURANCE COMPANY NOT RESPONSIBLE FOR TRUSTEE'S ACTIONS. No
insurance company, solely in its capacity as an issuing insurance
company, need examine the terms of this Agreement nor is responsible for
any action taken by the Trustee.
11.07 INSURANCE COMPANY RELIANCE ON TRUSTEE'S SIGNATURE. For the purpose
of making application to an insurance company and in the exercise of any
right or option contained in any policy, the insurance company may rely
upon the signature of the Trustee and is saved harmless and completely
discharged in acting at the direction and authorization of the Trustee.
11.08 ACQUITTANCE. An insurance company is discharged from all liability
for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee, and is not obliged to see to the distribution
or further application of any moneys it so pays.
11.09 DUTIES OF INSURANCE COMPANY. Each insurance company must keep
such records, make such identification of contracts, funds and accounts
within funds, and supply such information as may be necessary for the
proper administration of the Plan under which it is carrying insurance
benefits.
Note: The provisions of this Article XI are not applicable, and the Plan
may not invest in insurance contracts, if a Custodian signatory to the
Adoption Agreement is a bank which has not acquired trust powers from
its governing state banking authority.
AGREE/art.11
ARTICLE XII
MISCELLANEOUS
12.01 EVIDENCE. Anyone required to give evidence under the terms of the
Plan may do so by certificate, affidavit, document or other information
which the person to act in reliance may consider pertinent, reliable and
genuine, and to have been signed, made or presented by the proper party
or parties. The Advisory Committee and the Trustee are fully protected
in acting and relying upon any evidence described under the immediately
preceding sentence.
12.02 NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the Trustee nor the
Advisory Committee has any obligation or responsibility with respect to
any action required by the Plan to be taken by the Employer, any
Participant or eligible Employee, or for the failure of any of the above
persons to act or make any payment or contribution, or to otherwise
provide any benefit contemplated under this Plan. Furthermore, the Plan
does not require the Trustee or the Advisory Committee to collect any
contribution required under the Plan, or to determine the correctness of
the amount of any Employer contribution. Neither the Trustee nor the
Advisory Committee need inquire into or be responsible for any action or
failure to act on the part of the others, or on the part of any other
person who has any responsibility regarding the management,
administration or operation of the Plan, whether by the express terms of
the Plan or by a separate agreement authorized by the Plan or by the
applicable provisions of ERISA. Any action required of a corporate
Employer must be by its Board of Directors or its designate.
12.03 FIDUCIARIES NOT INSURERS. The Trustee, the Advisory Committee, the
Plan Administrator and the Employer in no way guarantee the Trust Fund
from loss or depreciation. The Employer does not guarantee the payment
of any money which may be or becomes due to any person from the Trust
Fund. The liability of the Advisory Committee and the Trustee to make
any payment from the Trust Fund at any time and all times is limited to
the then available assets of the Trust.
12.04 WAIVER OF NOTICE. Any person entitled to notice under the Plan may
waive the notice, unless the Code or Treasury regulations prescribe the
notice or ERISA specifically or impliedly prohibits such a waiver.
12.05 SUCCESSORS. The Plan is binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal
representatives, upon the Employer, its successors and assigns, and upon
the Trustee, the Advisory Committee, the Plan Administrator and their
successors.
12.06 WORD USAGE. Words used in the masculine also apply to the feminine
where applicable, and wherever the context of the Employer's Plan
dictates, the plural includes the singular and the singular includes the
plural.
12.07 STATE LAW. The law of the state of the Employer's principal place
of business (unless otherwise designated in an addendum to the
Employer's Adoption Agreement) will determine all questions arising with
respect to the provisions of this Agreement except to the extent
superseded by Federal law.
12.08 EMPLOYER'S RIGHT TO PARTICIPATE. If the Employer's Plan fails to
qualify or to maintain qualification or if the Employer makes any
amendment or modification to a provision of this Plan (other than a
proper completion of an elective provision under the Adoption Agreement
or the attachment of an addendum authorized by the Plan or by the
Adoption Agreement), the Employer may no longer participate under this
Prototype Plan. Furthermore, if the Employer no longer is a client of
the Regional Prototype Sponsor, pursuant to Section 13.03 of the Plan,
will result in the discontinuance of the Employer's participation in
this Prototype Plan unless it resumes its client relationship with the
Regional Prototype Sponsor. If the Employer is not entitled to
participate under this Prototype Plan, the Employer's Plan is an
individually-designed plan and the reliance procedures specified in the
applicable Adoption Agreement no longer will apply.
12.09 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan, or with
respect to the establishment of the Trust, or any modification or
amendment to the Plan or Trust, or in the creation of any Account, or
the payment of any benefit, gives any Employee, Employee-Participant or
any Beneficiary any right to continue employment, any legal or equitable
right against the Employer, or Employee of the Employer, or against the
Trustee, or its agents or employees, or against the Plan Administrator,
except as expressly provided by the Plan, the Trust, ERISA or by a
separate agreement.
AGREE/art.12
ARTICLE XIII
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
13.01 EXCLUSIVE BENEFIT. Except as provided under Article III, the
Employer has no beneficial interest in any asset of the Trust and no
part of any asset in the Trust may ever revert to or be repaid to an
Employer, either directly or indirectly; nor, prior to the satisfaction
of all liabilities with respect to the Participants and their
Beneficiaries under the Plan, may any part of the corpus or income of
the Trust Fund, or any asset of the Trust, be (at any time) used for, or
diverted to, purposes other than the exclusive benefit of the
Participants or their Beneficiaries. However, if the Commissioner of
Internal Revenue, upon the Employer's request for initial approval of
this Plan, determines the Trust created under the Plan is not a
qualified trust exempt from Federal income tax, then (and only then) the
Trustee, upon written notice from the Employer, will return the
Employer's contributions (and increment attributable to the
contributions) to the Employer. The Trustee must make the return of the
Employer contribution under this Section 13.01 within one year of a
final disposition of the Employer's request for initial approval of the
Plan. The Employer's Plan and Trust will terminate upon the Trustee's
return of the Employer's contributions.
13.02 AMENDMENT BY EMPLOYER. The Employer has the right at any time
and from time to time:
(a) To amend the elective provisions of the Adoption Agreement in any
manner it deems necessary or advisable in order to qualify (or maintain
qualification of) this Plan and the Trust created under it under the
provisions of Code 401(a);
(b) To amend the Plan to allow the Plan to operate under a waiver of
the minimum funding requirement; and
(c) To amend this Agreement in any other manner.
No amendment may authorize or permit any of the Trust Fund (other than
the part which is required to pay taxes and administration expenses) to
be used for or diverted to purposes other than for the exclusive benefit
of the Participants or their Beneficiaries or estates. No amendment may
cause or permit any portion of the Trust Fund to revert to or become a
property of the Employer. The Employer also may not make any amendment
which affects the rights, duties or responsibilities of the Trustee, the
Plan Administrator or the Advisory Committee without the written consent
of the affected Trustee, the Plan Administrator or the affected member
of the Advisory Committee. The Employer must make all amendments in
writing. Each amendment must state the date to which it is either
retroactively or prospectively effective. See Section 12.08 for the
effect of certain amendments adopted by the Employer.
(A) Code 411(d)(6) protected benefits. An amendment (including the
adoption of this Plan as a restatement of an existing plan) may not
decrease a Participant's Accrued Benefit, except to the extent permitted
under Code 412(c)(8), and may not reduce or eliminate Code 411(d)(6)
protected benefits determined immediately prior to the adoption date
(or, if later, the effective date) of the amendment. An amendment
reduces or eliminates Code 411(d)(6) protected benefits if the
amendment has the effect of either (1) eliminating or reducing an early
retirement benefit or a retirement-type subsidy (as defined in Treasury
regulations), or (2) except as provided by Treasury regulations,
eliminating an optional form of benefit. The Advisory Committee must
disregard an amendment to the extent application of the amendment would
fail to satisfy this paragraph. If the Advisory Committee must disregard
an amendment because the amendment would violate clause (1) or clause
(2), the Advisory Committee must maintain a schedule of the early
retirement option or other optional forms of benefit the Plan must
continue for the affected Participants.
13.03 AMENDMENT BY REGIONAL PROTOTYPE PLAN SPONSOR. The Regional
Prototype Plan Sponsor, without the Employer's consent, may amend the
Plan and Trust, from time to time, in order to conform the Plan and
Trust to any requirement for qualification of the Plan and Trust under
the Internal Revenue Code. The Regional Prototype Plan Sponsor may not
amend the Plan in any manner which would modify any election made by the
Employer under the Plan without the Employer's written consent.
Furthermore, the Regional Prototype Plan Sponsor may not amend the Plan
in any manner which would violate the proscription of Section 13.02. A
Trustee does not have the power to amend the Plan or Trust.
13.04 DISCONTINUANCE. The Employer has the right, at any time, to
suspend or discontinue its contributions under the Plan, and to
terminate, at any time, this Plan and the Trust created under this
Agreement. The Plan will terminate upon the first to occur of the
following:
(a) The date terminated by action of the Employer;
(b) The dissolution or merger of the Employer, unless the successor
makes provision to continue the Plan, in which event the successor must
substitute itself as the Employer under this Plan. Any termination of
the Plan resulting from this paragraph (b) is not effective until
compliance with any applicable notice requirements under ERISA.
13.05 FULL VESTING ON TERMINATION. Upon either full or partial
termination of the Plan, or, if applicable, upon complete discontinuance
of profit sharing plan contributions to the Plan, an affected
Participant's right to his Accrued Benefit is 100% Nonforfeitable,
irrespective of the Nonforfeitable percentage which otherwise would
apply under Article V.
13.06 MERGER/DIRECT TRANSFER. The Trustee may not consent to, or be a
party to, any merger or consolidation with another plan, or to a
transfer of assets or liabilities to another plan, unless immediately
after the merger, consolidation or transfer, the surviving Plan provides
each Participant a benefit equal to or greater than the benefit each
Participant would have received had the Plan terminated immediately
before the merger or consolidation or transfer. The Trustee possesses
the specific authority to enter into merger agreements or direct
transfer of assets agreements with the trustees of other retirement
plans described in Code 401(a), including an elective transfer, and to
accept the direct transfer of plan assets, or to transfer plan assets,
as a party to any such agreement.
The Trustee may accept a direct transfer of plan assets on behalf of an
Employee prior to the date the Employee satisfies the Plan's eligibility
conditions. If the Trustee accepts such a direct transfer of plan
assets, the Advisory Committee and Trustee must treat the Employee as a
Participant for all purposes of the Plan except the Employee is not a
Participant for purposes of sharing in Employer contributions or
Participant forfeitures under the Plan until he actually becomes a
Participant in the Plan.
(A) Elective transfers. The Trustee, after August 9, 1988, may not
consent to, or be a party to a merger, consolidation or transfer of
assets with a defined benefit plan, except with respect to an elective
transfer, or unless the transferred benefits are in the form of paid-up
individual annuity contracts guaranteeing the payment of the transferred
benefits in accordance with the terms of the transferor plan and in a
manner consistent with the Code and with ERISA. The Trustee will hold,
administer and distribute the transferred assets as a part of the Trust
Fund and the Trustee must maintain a separate Employer contribution
Account for the benefit of the Employee on whose behalf the Trustee
accepted the transfer in order to reflect the value of the transferred
assets. Unless a transfer of assets to this Plan is an elective
transfer, the Plan will preserve all Code 411(d)(6) protected benefits
with respect to those transferred assets, in the manner described in
Section 13.02. A transfer is an elective transfer if: (1) the transfer
satisfies the first paragraph of this Section 13.06; (2) the transfer is
voluntary, under a fully informed election by the Participant; (3) the
Participant has an alternative that retains his Code 411(d)(6)
protected benefits (including an option to leave his benefit in the
transferor plan, if that plan is not terminating); (4) the transfer
satisfies the applicable spousal consent requirements of the Code; (5)
the transferor plan satisfies the joint and survivor notice requirements
of the Code, if the Participant's transferred benefit is subject to
those requirements; (6) the Participant has a right to immediate
distribution from the transferor plan, in lieu of the elective transfer;
(7) the transferred benefit is at least the greater of the single sum
distribution provided by the transferor plan for which the Participant
is eligible or the present value of the Participant's accrued benefit
under the transferor plan payable at that plan's normal retirement age;
(8) the Participant has a 100% Nonforfeitable interest in the
transferred benefit; and (9) the transfer otherwise satisfies applicable
Treasury regulations. An elective transfer may occur between qualified
plans of any type. Any direct transfer of assets from a defined benefit
plan after August 9, 1988, which does not satisfy the requirements of
this paragraph will render the Employer's Plan individually-designed.
See Section 12.08.
(B) Distribution restrictions under Code 401(k). If the Plan receives
a direct transfer (by merger or otherwise) of elective contributions (or
amounts treated as elective contributions) under a Plan with a Code
401(k) arrangement, the distribution restrictions of Code 401(k)(2)
and (10) continue to apply to those transferred elective contributions.
13.07 TERMINATION.
(A) Procedure. Upon termination of the Plan, the distribution
provisions of Article VI remain operative, with the following
exceptions:
(1) if the present value of the Participant's Nonforfeitable Accrued
Benefit does not exceed $3,500, the Advisory Committee will direct the
Trustee to distribute the Participant's Nonforfeitable Accrued Benefit
to him in lump sum as soon as administratively practicable after the
Plan terminates; and
(2) if the present value of the Participant's Nonforfeitable Accrued
Benefit exceeds $3,500, the Participant or the Beneficiary, in addition
to the distribution events permitted under Article VI, may elect to have
the Trustee commence distribution of his Nonforfeitable Accrued Benefit
as soon as administratively practicable after the Plan terminates.
To liquidate the Trust, the Advisory Committee will purchase a deferred
annuity contract for each Participant which protects the Participant's
distribution rights under the Plan, if the Participant's Nonforfeitable
Accrued Benefit exceeds $3,500 and the Participant does not elect an
immediate distribution pursuant to Paragraph (2).
If the Employer's Plan is a profit sharing plan, in lieu of the
preceding provisions of this Section 13.07 and the distribution
provisions of Article VI, the Advisory Committee will direct the Trustee
to distribute each Participant's Nonforfeitable Accrued Benefit, in lump
sum, as soon as administratively practicable after the termination of
the Plan, irrespective of the present value of the Participant's
Nonforfeitable Accrued Benefit and whether the Participant consents to
that distribution. This paragraph does not apply if: (1) the Plan
provides an annuity option; or (2) as of the period between the Plan
termination date and the final distribution of assets, the Employer
maintains any other defined contribution plan (other than an ESOP). The
Employer, in an addendum to its Adoption Agreement numbered 13.07, may
elect not to have this paragraph apply.
The Trust will continue until the Trustee in accordance with the
direction of the Advisory Committee has distributed all of the benefits
under the Plan. On each valuation date, the Advisory Committee will
credit any part of a Participant's Accrued Benefit retained in the Trust
with its proportionate share of the Trust's income, expenses, gains and
losses, both realized and unrealized. Upon termination of the Plan, the
amount, if any, in a suspense account under Article III will revert to
the Employer, subject to the conditions of the Treasury regulations
permitting such a reversion. A resolution or amendment to freeze all
future benefit accrual but otherwise to continue maintenance of this
Plan, is not a termination for purposes of this Section 13.07.
(B) Distribution restrictions under Code 401(k). If the Employer's
Plan includes a Code 401(k) arrangement or if transferred assets
described in Section 13.06 are subject to the distribution restrictions
of Code 401(k)(2) and (10), the special distribution provisions of
this Section 13.07 are subject to the restrictions of this paragraph.
The portion of the Participant's Nonforfeitable Accrued Benefit
attributable to elective contributions (or to amounts treated under the
Code 401(k) arrangement as elective contributions) is not distributable
on account of Plan termination, as described in this Section 13.07,
unless: (a) the Participant otherwise is entitled under the Plan to a
distribution of that portion of his Nonforfeitable Accrued Benefit; or
(b) the Plan termination occurs without the establishment of a successor
plan. A successor plan under clause (b) is a defined contribution plan
(other than an ESOP) maintained by the Employer (or by a related
employer) at the time of the termination of the Plan or within the
period ending twelve months after the final distribution of assets. A
distribution made after March 31, 1988, pursuant to clause (b), must be
part of a lump sum distribution to the Participant of his Nonforfeitable
Accrued Benefit.
*
AGREE/art.13
ARTICLE XIV
CODE 401(k) AND CODE 401(m) ARRANGEMENTS
14.01 APPLICATION. This Article XIV applies to an Employer's Plan only
if the Employer is maintaining its Plan under a Code 401(k) Adoption
Agreement.
14.02 CODE 401(k) ARRANGEMENT. The Employer will elect in Section 3.01
of its Adoption Agreement the terms of the Code 401(k) arrangement, if
any, under the Plan. If the Employer's Plan is a Standardized Plan, the
Code 401(k) arrangement must be a salary reduction arrangement. If the
Employer's Plan is a Nonstandardized Plan, the Code 401(k) arrangement
may be a salary reduction arrangement or a cash or deferred arrangement.
(A) Salary Reduction Arrangement. If the Employer elects a salary
reduction arrangement, any Employee eligible to participate in the Plan
may file a salary reduction agreement with the Advisory Committee. The
salary reduction agreement may not be effective earlier than the
following date which occurs last: (i) the Employee's Plan Entry Date
(or, in the case of a reemployed Employee, his reparticipation date
under Article II); (ii) the execution date of the Employee's salary
reduction agreement; (iii) the date the Employer adopts the Code 401(k)
arrangement by executing the Adoption Agreement; or (iv) the effective
date of the Code 401(k) arrangement, as specified in the Employer's
Adoption Agreement. Regarding clause (i), an Employee subject to the
Break in Service rule of Section 2.03(B) of the Plan may not enter into
a salary reduction agreement until the Employee has completed a
sufficient number of Hours of Service to receive credit for a Year of
Service (as defined in Section 2.02) following his reemployment
commencement date. A salary reduction agreement must specify the amount
of Compensation (as defined in Section 1.12) or percentage of
Compensation the Employee wishes to defer. The salary reduction
agreement will apply only to Compensation which becomes currently
available to the Employee after the effective date of the salary
reduction agreement. The Employer will apply a reduction election to all
Compensation (and to increases in such Compensation) unless the Employee
specifies in his salary reduction agreement to limit the election to
certain Compensation. The Employer will specify in Adoption Agreement
Section 3.01 the rules and restrictions applicable to the Employees
salary reduction agreements.
(B) Cash or deferred arrangement. If the Employer elects a cash or
deferred arrangement, a Participant may elect to make a cash election
against his proportionate share of the Employer's Cash or Deferred
Contribution, in accordance with the Employer's elections in Adoption
Agreement Section 3.01. A Participant's proportionate share of the
Employer's Cash or Deferred Contribution is the percentage of the total
Cash or Deferred Contribution which bears the same ratio that the
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year. For purposes of
determining each Participant's proportionate share of the Cash or
Deferred Contribution, a Participant's Compensation is his Compensation
as determined under Section 1.12 of the Plan (as modified by Section
3.06 for allocation purposes), excluding any effect the proportionate
share may have on the Participant's Compensation for the Plan Year. The
Advisory Committee will determine the proportionate share prior to the
Employer's actual contribution to the Trust, to provide the Participants
the opportunity to file cash elections. The Employer will pay directly
to the Participant the portion of his proportionate share the
Participant has elected to receive in cash.
(C) Election not to participate. A Participant's or Employee's
election not to participate, pursuant to Section 2.06, includes his
right to enter into a salary reduction agreement or to share in the
allocation of a Cash or Deferred Contribution, unless the Participant or
Employee limits the effect of the election to the non-401(k) portions of
the Plan.
14.03 DEFINITIONS. For purposes of this Article XIV:
(a) "Highly Compensated Employee" means an Eligible Employee who
satisfies the definition in Section 1.09 of the Plan. Family members
aggregated as a single Employee under Section 1.09 constitute a single
Highly Compensated Employee, whether a particular family member is a
Highly Compensated Employee or a Nonhighly Compensated Employee without
the application of family aggregation.
(b) "Nonhighly Compensated Employee" means an Eligible Employee who is
not a Highly Compensated Employee and who is not a family member treated
as a Highly Compensated Employee.
(c) "Eligible Employee" means, for purposes of the ADP test described
in Section 14.08, an Employee who is eligible to enter into a salary
reduction agreement for the Plan Year, irrespective of whether he
actually enters into such an agreement, and a Participant who is
eligible for an allocation of the Employer's Cash or Deferred
Contribution for the Plan Year. For purposes of the ACP test described
in Section 14.09, an "Eligible Employee" means a Participant who is
eligible to receive an allocation of matching contributions (or would be
eligible if he made the type of contributions necessary to receive an
allocation of matching contributions) and a Participant who is eligible
to make nondeductible contributions, irrespective of whether he actually
makes nondeductible contributions. An Employee continues to be an
Eligible Employee during a period the Plan suspends the Employee's right
to make elective deferrals or nondeductible contributions following a
hardship distribution.
(d) "Highly Compensated Group" means the group of Eligible Employees
who are Highly Compensated Employees for the Plan Year.
(e) "Nonhighly Compensated Group" means the group of Eligible
Employees who are Nonhighly Compensated Employees for the Plan Year.
(f) "Compensation" means, except as specifically provided in this
Article XIV, Compensation as defined for nondiscrimination purposes in
Section 1.12(B) of the Plan. To compute an Employee's ADP or ACP, the
Advisory Committee may limit Compensation taken into account to
Compensation received only for the portion of the Plan Year in which the
Employee was an Eligible Employee and only for the portion of the Plan
Year in which the Plan or the Code 401(k) arrangement was in effect.
(g) "Deferral contributions" are Salary Reduction Contributions and
Cash or Deferred Contributions the Employer contributes to the Trust on
behalf of an Eligible Employee, irrespective of whether, in the case of
Cash or Deferred Contributions, the contribution is at the election of
the Employee. For Salary Reduction Contributions, the terms "deferral
contributions" and "elective deferrals" have the same meaning.
(h) "Elective deferrals" are all Salary Reduction Contributions and
that portion of any Cash or Deferred Contribution which the Employer
contributes to the Trust at the election of an Eligible Employee. Any
portion of a Cash or Deferred Contribution contributed to the Trust
because of the Employee's failure to make a cash election is an elective
deferral. However, any portion of a Cash or Deferred Contribution over
which the Employee does not have a cash election is not an elective
deferral. Elective deferrals do not include amounts which have become
currently available to the Employee prior to the election nor amounts
designated as nondeductible contributions at the time of deferral or
contribution.
(i) "Matching contributions" are contributions made by the Employer on
account of elective deferrals under a Code 401(k) arrangement or on
account of employee contributions. Matching contributions also include
Participant forfeitures allocated on account of such elective deferrals
or employee contributions.
(j) "Nonelective contributions" are contributions made by the Employer
which are not subject to a deferral election by an Employee and which
are not matching contributions.
(k) "Qualified matching contributions" are matching contributions
which are 100% Nonforfeitable at all times and which are subject to the
distribution restrictions described in paragraph (m). Matching
contributions are not 100% Nonforfeitable at all times if the Employee
has a 100% Nonforfeitable interest because of his Years of Service taken
into account under a vesting schedule. Any matching contributions
allocated to a Participant's Qualified Matching Contributions Account
under the Plan automatically satisfy the definition of qualified
matching contributions.
(l) "Qualified nonelective contributions" are nonelective
contributions which are 100% Nonforfeitable at all times and which are
subject to the distribution restrictions described in paragraph (m).
Nonelective contributions are not 100% Nonforfeitable at all times if
the Employee has a 100% Nonforfeitable interest because of his Years of
Service taken into account under a vesting schedule. Any nonelective
contributions allocated to a Participant's Qualified Nonelective
Contributions Account under the Plan automatically satisfy the
definition of qualified nonelective contributions.
(m) "Distribution restrictions" means the Employee may not receive a
distribution of the specified contributions (nor earnings on those
contributions) except in the event of (1) the Participant's death,
disability, termination of employment or attainment of age 591/2, (2)
financial hardship satisfying the requirements of Code 401(k) and the
applicable Treasury regulations, (3) a plan termination, without
establishment of a successor defined contribution plan (other than an
ESOP), (4) a sale of substantially all of the assets (within the meaning
of Code 409(d)(2)) used in a trade or business, but only to an employee
who continues employment with the corporation acquiring those assets, or
(5) a sale by a corporation of its interest in a subsidiary (within the
meaning of Code 409(d)(3)), but only to an employee who continues
employment with the subsidiary. For Plan Years beginning after December
31, 1988, a distribution on account of financial hardship, as described
in clause (2), may not include earnings on elective deferrals credited
as of a date later than December 31, 1988, and may not include qualified
matching contributions and qualified nonelective contributions, nor any
earnings on such contributions, credited after December 31, 1988. A plan
does not violate the distribution restrictions if, instead of the
December 31, 1988, date in the preceding sentence the plan specifies a
date not later than the end of the last Plan Year ending before July 1,
1989. A distribution described in clauses (3), (4) or (5), if made after
March 31, 1988, must be a lump sum distribution, as required under Code
401(k)(10).
(n) "Employee contributions" are contributions made by a Participant
on an after-tax basis, whether voluntary or mandatory, and designated,
at the time of contribution, as an employee (or nondeductible)
contribution. Elective deferrals and deferral contributions are not
employee contributions. Participant nondeductible contributions, made
pursuant to Section 4.01 of the Plan, are employee contributions.
14.04 MATCHING CONTRIBUTIONS/EMPLOYEE CONTRIBUTIONS. The Employer may
elect in Adoption Agreement Section 3.01 to provide matching
contributions. The Employer also may elect in Adoption Agreement Section
4.01 to permit or to require a Participant to make nondeductible
contributions.
(A) Mandatory contributions. Any Participant nondeductible
contributions eligible for matching contributions are mandatory
contributions. The Advisory Committee will maintain a separate
accounting, pursuant to Section 4.06 of the Plan, to reflect the
Participant's Accrued Benefit derived from his mandatory contributions.
The Employer, under Adoption Agreement Section 4.05, may prescribe
special distribution restrictions which will apply to the Mandatory
Contributions Account prior to the Participant's Separation from
Service. Following his Separation from Service, the general distribution
provisions of Article VI apply to the distribution of the Participant's
Mandatory Contributions Account.
14.05 TIME OF PAYMENT OF CONTRIBUTIONS. The Employer must make Salary
Reduction Contributions to the Trust within an administratively
reasonable period of time after withholding the corresponding
Compensation from the Participant. Furthermore, the Employer must make
Salary Reduction Contributions, Cash or Deferred Contributions, Employer
matching contributions (including qualified Employer matching
contributions) and qualified Employer nonelective contributions no later
than the time prescribed by the Code or by applicable Treasury
regulations. Salary Reduction Contributions and Cash or Deferred
Contributions are Employer contributions for all purposes under this
Plan, except to the extent the Code or Treasury regulations prohibit the
use of these contributions to satisfy the qualification requirements of
the Code.
14.06 SPECIAL ALLOCATION PROVISIONS - DEFERRAL CONTRIBUTIONS, MATCHING
CONTRIBUTIONS AND QUALIFIED NONELECTIVE CONTRIBUTIONS. To make
allocations under the Plan, the Advisory Committee must establish a
Deferral Contributions Account, a Qualified Matching Contributions
Account, a Regular Matching Contributions Account, a Qualified
Nonelective Contributions Account and an Employer Contributions Account
for each Participant.
(A) Deferral contributions. The Advisory Committee will allocate to
each Participant's Deferral Contributions Account the amount of Deferral
Contributions the Employer makes to the Trust on behalf of the
Participant. The Advisory Committee will make this allocation as of the
last day of each Plan Year unless, in Adoption Agreement Section 3.04,
the Employer elects more frequent allocation dates for salary reduction
contributions.
(B) Matching contributions. The Employer must specify in its Adoption
Agreement whether the Advisory Committee will allocate matching
contributions to the Qualified Matching Contributions Account or to the
Regular Matching Contributions Account of each Participant. The Advisory
Committee will make this allocation as of the last day of each Plan Year
unless, in Adoption Agreement Section 3.04, the Employer elects more
frequent allocation dates for matching contributions.
(1) To the extent the Employer makes matching contributions under a
fixed matching contribution formula, the Advisory Committee will
allocate the matching contribution to the Account of the Participant on
whose behalf the Employer makes that contribution. A fixed matching
contribution formula is a formula under which the Employer contributes a
certain percentage or dollar amount on behalf of a Participant based on
that Participant's deferral contributions or nondeductible contributions
eligible for a match, as specified in Section 3.01 of the Employer's
Adoption Agreement. The Employer may contribute on a Participant's
behalf under a specific matching contribution formula only if the
Participant satisfies the accrual requirements for matching
contributions specified in Section 3.06 of the Employer's Adoption
Agreement and only to the extent the matching contribution does not
exceed the Participant's annual additions limitation in Part 2 of
Article III.
(2) To the extent the Employer makes matching contributions under a
discretionary formula, the Advisory Committee will allocate the
discretionary matching contributions to the Account of each Participant
who satisfies the accrual requirements for matching contributions
specified in Section 3.06 of the Employer's Adoption Agreement. The
allocation of discretionary matching contributions to a Participant's
Account is in the same proportion that each Participant's eligible
contributions bear to the total eligible contributions of all
Participants. If the discretionary formula is a tiered formula, the
Advisory Committee will make this allocation separately with respect to
each tier of eligible contributions, allocating in such manner the
amount of the matching contributions made with respect to that tier.
"Eligible contributions" are the Participant's deferral contributions or
nondeductible contributions eligible for an allocation of matching
contributions, as specified in Section 3.01 of the Employer's Adoption
Agreement.
If the matching contribution formula applies both to deferral
contributions and to Participant nondeductible contributions, the
matching contributions apply first to deferral contributions.
Furthermore, the matching contribution formula does not apply to
deferral contributions that are excess deferrals under Section 14.07.
For this purpose: (a) excess deferrals relate first to deferral
contributions for the Plan Year not otherwise eligible for a matching
contribution; and (2) if the Plan Year is not a calendar year, the
excess deferrals for a Plan Year are the last elective deferrals made
for a calendar year. Under a Standardized Plan, an Employee forfeits any
matching contribution attributable to an excess contribution or to an
excess aggregate contribution, unless distributed pursuant to Sections
14.08 or 14.09. Under a Nonstandardized Plan, this forfeiture rule
applies only if specified in Adoption Agreement Section 3.06. The
provisions of Section 3.05 govern the treatment of any forfeiture
described in this paragraph, and the Advisory Committee will compute a
Participant's ACP under 14.09 by disregarding the forfeiture.
(C) Qualified nonelective contributions. If the Employer, at the time
of contribution, designates a contribution to be a qualified nonelective
contribution for the Plan Year, the Advisory Committee will allocate
that qualified nonelective contribution to the Qualified Nonelective
Contributions Account of each Participant eligible for an allocation of
that designated contribution, as specified in Section 3.04 of the
Employer's Adoption Agreement. The Advisory Committee will make the
allocation to each eligible Participant's Account in the same ratio that
the Participant's Compensation for the Plan Year bears to the total
Compensation of all eligible Participants for the Plan Year. The
Advisory Committee will determine a Participant's Compensation in
accordance with the general definition of Compensation under Section
1.12 of the Plan, as modified by the Employer in Sections 1.12 and 3.06
of its Adoption Agreement.
(D) Nonelective contributions. To the extent the Employer makes
nonelective contributions for the Plan Year which, at the time of
contribution, it does not designate as qualified nonelective
contributions, the Advisory Committee will allocate those contributions
in accordance with the elections under Section 3.04 of the Employer's
Adoption Agreement. For purposes of the special nondiscrimination tests
described in Sections 14.08 and 14.09, the Advisory Committee may treat
nonelective contributions allocated under this paragraph as qualified
nonelective contributions, if the contributions otherwise satisfy the
definition of qualified nonelective contributions.
14.07 ANNUAL ELECTIVE DEFERRAL LIMITATION.
(A) Annual Elective Deferral Limitation. An Employee's elective
deferrals for a calendar year beginning after December 31, 1986, may not
exceed the 402(g) limitation. The 402(g) limitation is the greater of
$7,000 or the adjusted amount determined by the Secretary of the
Treasury. If, pursuant to a salary reduction agreement or pursuant to a
cash or deferral election, the Employer determines the Employee's
elective deferrals to the Plan for a calendar year would exceed the
402(g) limitation, the Employer will suspend the Employee's salary
reduction agreement, if any, until the following January 1 and pay in
cash the portion of a cash or deferral election which would result in
the Employee's elective deferrals for the calendar year exceeding the
402(g) limitation. If the Advisory Committee determines an Employee's
elective deferrals already contributed to the Plan for a calendar year
exceed the 402(g) limitation, the Advisory Committee will distribute the
amount in excess of the 402(g) limitation (the "excess deferral"), as
adjusted for allocable income, no later than April 15 of the following
calendar year. If the Advisory Committee distributes the excess deferral
by the appropriate April 15, it may make the distribution irrespective
of any other provision under this Plan or under the Code. The Advisory
Committee will reduce the amount of excess deferrals for a calendar year
distributable to the Employee by the amount of excess contributions (as
determined in Section 14.08), if any, previously distributed to the
Employee for the Plan Year beginning in that calendar year.
If an Employee participates in another plan under which he makes
elective deferrals pursuant to a Code 401(k) arrangement, elective
deferrals under a Simplified Employee Pension, or salary reduction
contributions to a tax-sheltered annuity, irrespective of whether the
Employer maintains the other plan, he may provide the Advisory Committee
a written claim for excess deferrals made for a calendar year. The
Employee must submit the claim no later than the March 1 following the
close of the particular calendar year and the claim must specify the
amount of the Employee's elective deferrals under this Plan which are
excess deferrals. If the Advisory Committee receives a timely claim, it
will distribute the excess deferral (as adjusted for allocable income)
the Employee has assigned to this Plan, in accordance with the
distribution procedure described in the immediately preceding paragraph.
(B) Allocable income. For purposes of making a distribution of excess
deferrals pursuant to this Section 14.07, allocable income means net
income or net loss allocable to the excess deferrals for the calendar
year in which the Employee made the excess deferral, determined in a
manner which is uniform, nondiscriminatory and reasonably reflective of
the manner used by the Plan to allocate income to Participants'
Accounts.
14.08 ACTUAL DEFERRAL PERCENTAGE ("ADP") TEST. For each Plan Year, the
Advisory Committee must determine whether the Plan's Code 401(k)
arrangement satisfies either of the following ADP tests:
(i) The average ADP for the Highly Compensated Group does not exceed
1.25 times the average ADP of the Nonhighly Compensated Group; or
(ii) The average ADP for the Highly Compensated Group does not exceed
the average ADP for the Nonhighly Compensated Group by more than two
percentage points (or the lesser percentage permitted by the multiple
use limitation in Section 14.10) and the average ADP for the Highly
Compensated Group is not more than twice the average ADP for the
Nonhighly Compensated Group.
(A) Calculation of ADP. The average ADP for a group is the average of
the separate ADPs calculated for each Eligible Employee who is a member
of that group. An Eligible Employee's ADP for a Plan Year is the ratio
of the Eligible Employee's deferral contributions for the Plan Year to
the Employee's Compensation for the Plan Year. For aggregated family
members treated as a single Highly Compensated Employee, the ADP of the
family unit is the ADP determined by combining the deferral
contributions and Compensation of all aggregated family members. A
Nonhighly Compensated Employee's ADP does not include elective deferrals
made to this Plan or to any other Plan maintained by the Employer, to
the extent such elective deferrals exceed the 402(g) limitation
described in Section 14.07(A).
The Advisory Committee, in a manner consistent with Treasury
regulations, may determine the ADPs of the Eligible Employees by taking
into account qualified nonelective contributions or qualified matching
contributions, or both, made to this Plan or to any other qualified Plan
maintained by the Employer. The Advisory Committee may not include
qualified nonelective contributions in the ADP test unless the
allocation of nonelective contributions is nondiscriminatory when the
Advisory Committee takes into account all nonelective contributions
(including the qualified nonelective contributions) and also when the
Advisory Committee takes into account only the nonelective contributions
not used in either the ADP test described in this Section 14.08 or the
ACP test described in Section 14.09. For Plan Years beginning after
December 31, 1989, the Advisory Committee may not include in the ADP
test any qualified nonelective contributions or qualified matching
contributions under another qualified plan unless that plan has the same
plan year as this Plan. The Advisory Committee must maintain records to
demonstrate compliance with the ADP test, including the extent to which
the Plan used qualified nonelective contributions or qualified matching
contributions to satisfy the test.
For Plan Years beginning prior to January 1, 1992, the Advisory
Committee may elect to apply a separate ADP test to each component group
under the Plan. Each component group separately must satisfy the
commonality requirement of the Code 401(k) regulations and the minimum
coverage requirements of Code 410(b). A component group consists of all
the allocations and other benefits, rights and features provided that
group of Employees. An Employee may not be part of more than one
component group. The correction rules described in this Section 14.08
apply separately to each component group.
(B) Special aggregation rule for Highly Compensated Employees. To
determine the ADP of any Highly Compensated Employee, the deferral
contributions taken into account must include any elective deferrals
made by the Highly Compensated Employee under any other Code 401(k)
arrangement maintained by the Employer, unless the elective deferrals
are to an ESOP. If the plans containing the Code 401(k) arrangements
have different plan years, the Advisory Committee will determine the
combined deferral contributions on the basis of the plan years ending in
the same calendar year.
(C) Aggregation of certain Code 401(k) arrangements. If the Employer
treats two plans as a unit for coverage or nondiscrimination purposes,
the Employer must combine the Code 401(k) arrangements under such plans
to determine whether either plan satisfies the ADP test. This
aggregation rule applies to the ADP determination for all Eligible
Employees, irrespective of whether an Eligible Employee is a Highly
Compensated Employee or a Nonhighly Compensated Employee. For Plan Years
beginning after December 31, 1989, an aggregation of Code 401(k)
arrangements under this paragraph does not apply to plans which have
different plan years and, for Plan Years beginning after December 31,
1988, the Advisory Committee may not aggregate an ESOP (or the ESOP
portion of a plan) with a non-ESOP plan (or non-ESOP portion of a plan).
(D) Characterization of excess contributions. If, pursuant to this
Section 14.08, the Advisory Committee has elected to include qualified
matching contributions in the average ADP, the Advisory Committee will
treat excess contributions as attributable proportionately to deferral
contributions and to qualified matching contributions allocated on the
basis of those deferral contributions. If the total amount of a Highly
Compensated Employee's excess contributions for the Plan Year exceeds
his deferral contributions or qualified matching contributions for the
Plan Year, the Advisory Committee will treat the remaining portion of
his excess contributions as attributable to qualified nonelective
contributions. The Advisory Committee will reduce the amount of excess
contributions for a Plan Year distributable to a Highly Compensated
Employee by the amount of excess deferrals (as determined in Section
14.07), if any, previously distributed to that Employee for the
Employee's taxable year ending in that Plan Year.
(E) Distribution of excess contributions. If the Advisory Committee
determines the Plan fails to satisfy the ADP test for a Plan Year, it
must distribute the excess contributions, as adjusted for allocable
income, during the next Plan Year. However, the Employer will incur an
excise tax equal to 10% of the amount of excess contributions for a Plan
Year not distributed to the appropriate Highly Compensated Employees
during the first 21/2 months of that next Plan Year. The excess
contributions are the amount of deferral contributions made by the
Highly Compensated Employees which causes the Plan to fail to satisfy
the ADP test. The Advisory Committee will distribute to each Highly
Compensated Employee his respective share of the excess contributions.
The Advisory Committee will determine the respective shares of excess
contributions by starting with the Highly Compensated Employee(s) who
has the greatest ADP, reducing his ADP (but not below the next highest
ADP), then, if necessary, reducing the ADP of the Highly Compensated
Employee(s) at the next highest ADP level (including the ADP of the
Highly Compensated Employee(s) whose ADP the Advisory Committee already
has reduced), and continuing in this manner until the average ADP for
the Highly Compensated Group satisfies the ADP test. If the Highly
Compensated Employee is part of an aggregated family group, the Advisory
Committee, in accordance with the applicable Treasury regulations, will
determine each aggregated family member's allocable share of the excess
contributions assigned to the family unit.
(F) Allocable income. To determine the amount of the corrective
distribution required under this Section 14.08, the Advisory Committee
must calculate the allocable income for the Plan Year in which the
excess contributions arose. "Allocable income" means net income or net
loss. To calculate allocable income for the Plan Year, the Advisory
Committee will use a uniform and nondiscriminatory method which
reasonably reflects the manner used by the Plan to allocate income to
Participants' Accounts.
14.09 NONDISCRIMINATION RULES FOR EMPLOYER MATCHING
CONTRIBUTIONS/PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. For Plan Years
beginning after December 31, 1986, the Advisory Committee must determine
whether the annual Employer matching contributions (other than qualified
matching contributions used in the ADP under Section 14.08), if any, and
the Employee contributions, if any, satisfy either of the following
average contribution percentage ("ACP") tests:
(i) The ACP for the Highly Compensated Group does not exceed 1.25
times the ACP of the Nonhighly Compensated Group; or
(ii) The ACP for the Highly Compensated Group does not exceed the ACP
for the Nonhighly Compensated Group by more than two percentage points
(or the lesser percentage permitted by the multiple use limitation in
Section 14.10) and the ACP for the Highly Compensated Group is not more
than twice the ACP for the Nonhighly Compensated Group.
(A) Calculation of ACP. The average contribution percentage for a
group is the average of the separate contribution percentages calculated
for each Eligible Employee who is a member of that group. An Eligible
Employee's contribution percentage for a Plan Year is the ratio of the
Eligible Employee's aggregate contributions for the Plan Year to the
Employee's Compensation for the Plan Year. "Aggregate contributions" are
Employer matching contributions (other than qualified matching
contributions used in the ADP test under Section 14.08) and employee
contributions (as defined in Section 14.03). For aggregated family
members treated as a single Highly Compensated Employee, the
contribution percentage of the family unit is the contribution
percentage determined by combining the aggregate contributions and
Compensation of all aggregated family members.
The Advisory Committee, in a manner consistent with Treasury
regulations, may determine the contribution percentages of the Eligible
Employees by taking into account qualified nonelective contributions
(other than qualified nonelective contributions used in the ADP test
under Section 14.08) or elective deferrals, or both, made to this Plan
or to any other qualified Plan maintained by the Employer. The Advisory
Committee may not include qualified nonelective contributions in the ACP
test unless the allocation of nonelective contributions is
nondiscriminatory when the Advisory Committee takes into account all
nonelective contributions (including the qualified nonelective
contributions) and also when the Advisory Committee takes into account
only the nonelective contributions not used in either the ADP test
described in Section 14.08 or the ACP test described in this Section
14.09. The Advisory Committee may not include elective deferrals in the
ACP test, unless the Plan which includes the elective deferrals
satisfies the ADP test both with and without the elective deferrals
included in this ACP test. For Plan Years beginning after December 31,
1989, the Advisory Committee may not include in the ACP test any
qualified nonelective contributions or elective deferrals under another
qualified plan unless that plan has the same plan year as this Plan. The
Advisory Committee must maintain records to demonstrate compliance with
the ACP test, including the extent to which the Plan used qualified
nonelective contributions or elective deferrals to satisfy the test. For
Plan Years beginning prior to January 1, 1992, the component group
testing rule permitted under Section 14.08(A) also applies to the ACP
test under this Section 14.09.
(B) Special aggregation rule for Highly Compensated Employees. To
determine the contribution percentage of any Highly Compensated
Employee, the aggregate contributions taken into account must include
any matching contributions (other than qualified matching contributions
used in the ADP test) and any Employee contributions made on his behalf
to any other plan maintained by the Employer, unless the other plan is
an ESOP. If the plans have different plan years, the Advisory Committee
will determine the combined aggregate contributions on the basis of the
plan years ending in the same calendar year.
(C) Aggregation of certain plans. If the Employer treats two plans as
a unit for coverage or nondiscrimination purposes, the Employer must
combine the plans to determine whether either plan satisfies the ACP
test. This aggregation rule applies to the contribution percentage
determination for all Eligible Employees, irrespective of whether an
Eligible Employee is a Highly Compensated Employee or a Nonhighly
Compensated Employee. For Plan Years beginning after December 31, 1989,
an aggregation of plans under this paragraph does not apply to plans
which have different plan years and, for Plan Years beginning after
December 31, 1988, the Advisory Committee may not aggregate an ESOP (or
the ESOP portion of a plan) with a non-ESOP plan (or non-ESOP portion of
a plan).
(D) Distribution of excess aggregate contributions. The Advisory
Committee will determine excess aggregate contributions after
determining excess deferrals under Section 14.07 and excess
contributions under Section 14.08. If the Advisory Committee determines
the Plan fails to satisfy the ACP test for a Plan Year, it must
distribute the excess aggregate contributions, as adjusted for allocable
income, during the next Plan Year. However, the Employer will incur an
excise tax equal to 10% of the amount of excess aggregate contributions
for a Plan Year not distributed to the appropriate Highly Compensated
Employees during the first 21/2 months of that next Plan Year. The
excess aggregate contributions are the amount of aggregate contributions
allocated on behalf of the Highly Compensated Employees which causes the
Plan to fail to satisfy the ACP test. The Advisory Committee will
distribute to each Highly Compensated Employee his respective share of
the excess aggregate contributions. The Advisory Committee will
determine the respective shares of excess aggregate contributions by
starting with the Highly Compensated Employee(s) who has the greatest
contribution percentage, reducing his contribution percentage (but not
below the next highest contribution percentage), then, if necessary,
reducing the contribution percentage of the Highly Compensated
Employee(s) at the next highest contribution percentage level (including
the contribution percentage of the Highly Compensated Employee(s) whose
contribution percentage the Advisory Committee already has reduced), and
continuing in this manner until the ACP for the Highly Compensated Group
satisfies the ACP test. If the Highly Compensated Employee is part of an
aggregated family group, the Advisory Committee, in accordance with the
applicable Treasury regulations, will determine each aggregated family
member's allocable share of the excess aggregate contributions assigned
to the family unit.
(E) Allocable income. To determine the amount of the corrective
distribution required under this Section 14.09, the Advisory Committee
must calculate the allocable income for the Plan Year in which the
excess aggregate contributions arose. "Allocable income" means net
income or net loss. The Advisory Committee will determine allocable
income in the same manner as described in Section 14.08(F) for excess
contributions.
(F) Characterization of excess aggregate contributions. The Advisory
Committee will treat a Highly Compensated Employee's allocable share of
excess aggregate contributions in the following priority: (1) first as
attributable to his Employee contributions which are voluntary
contributions, if any; (2) then as matching contributions allocable with
respect to excess contributions determined under the ADP test described
in Section 14.08; (3) then on a pro rata basis to matching contributions
and to the deferral contributions relating to those matching
contributions which the Advisory Committee has included in the ACP test;
(4) then on a pro rata basis to Employee contributions which are
mandatory contributions, if any, and to the matching contributions
allocated on the basis of those mandatory contributions; and (5) last to
qualified nonelective contributions used in the ACP test. To the extent
the Highly Compensated Employee's excess aggregate contributions are
attributable to matching contributions, and he is not 100% vested in his
Accrued Benefit attributable to matching contributions, the Advisory
Committee will distribute only the vested portion and forfeit the
nonvested portion. The vested portion of the Highly Compensated
Employee's excess aggregate contributions attributable to Employer
matching contributions is the total amount of such excess aggregate
contributions (as adjusted for allocable income) multiplied by his
vested percentage (determined as of the last day of the Plan Year for
which the Employer made the matching contribution). The Employer will
specify in Adoption Agreement Section 3.05 the manner in which the Plan
will allocate forfeited excess aggregate contributions.
14.10 MULTIPLE USE LIMITATION. For Plan Years beginning after December
31, 1988, if at least one Highly Compensated Employee is includible in
the ADP test under Section 14.08 and in the ACP test under Section
14.09, the sum of the Highly Compensated Group's ADP and ACP may not
exceed the multiple use limitation.
The multiple use limitation is the sum of (i) and (ii):
(i) 125% of the greater of: (a) the ADP of the Nonhighly Compensated
Group under the Code 401(k) arrangement; or (b) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or within
the Plan Year of the Code 401(k) arrangement.
(ii) 2% plus the lesser of (i)(a) or (i)(b), but no more than twice the
lesser of (i)(a) or (i)(b).
The Advisory Committee, in lieu of determining the multiple use
limitation as the sum of (i) and (ii), may elect to determine the
multiple use limitation as the sum of (iii) and (iv):
(iii) 125% of the lesser of: (a) the ADP of the Nonhighly Compensated
Group under the Code 401(k) arrangement; or (b) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or within
the Plan Year of the Code 401(k) arrangement.
(iv) 2% plus the greater of (iii)(a) or (iii)(b), but no more than
twice the greater of (iii)(a) or (iii)(b).
The Advisory Committee will determine whether the Plan satisfies the
multiple use limitation after applying the ADP test under Section 14.08
and the ACP test under Section 14.09 and after making any corrective
distributions required by those Sections. If, after applying this
Section 14.10, the Advisory Committee determines the Plan has failed to
satisfy the multiple use limitation, the Advisory Committee will correct
the failure by treating the excess amount as excess contributions under
Section 14.08 or as excess aggregate contributions under Section 14.09,
as it determines in its sole discretion. This Section 14.10 does not
apply unless, prior to application of the multiple use limitation, the
ADP and the ACP of the Highly Compensated Group each exceeds 125% of the
respective percentages for the Nonhighly Compensated Group.
14.11 DISTRIBUTION RESTRICTIONS. The Employer must elect in Section 6.03
the Adoption Agreement the distribution events permitted under the Plan.
The distribution events applicable to the Participant's Deferral
Contributions Account, Qualified Nonelective Contributions Account and
Qualified Matching Contributions Account must satisfy the distribution
restrictions described in paragraph (m) of Section 14.03.
(A) Hardship distributions from Deferral Contributions Account. The
Employer must elect in Adoption Agreement Section 6.03 whether a
Participant may receive hardship distributions from his Deferral
Contributions Account prior to the Participant's Separation from
Service. Hardship distributions from the Deferral Contributions Account
must satisfy the requirements of this Section 14.11. A hardship
distribution option may not apply to the Participant's Qualified
Nonelective Contributions Account or Qualified Matching Contributions
Account, except as provided in paragraph (3).
(1) Definition of hardship. A hardship distribution under this Section
14.11 must be on account of one or more of the following immediate and
heavy financial needs: (1) medical care described in Code 213(d)
incurred by the Participant, by the Participant's spouse, or by any of
the Participant's dependents, or necessary to obtain such medical care;
(2) the purchase (excluding mortgage payments) of a principal residence
for the Participant; (3) the payment of post-secondary education tuition
and related educational fees, for the next 12-month period, for the
Participant, for the Participant's spouse, or for any of the
Participant's dependents (as defined in Code 152); (4) to prevent the
eviction of the Participant from his principal residence or the
foreclosure on the mortgage of the Participant's principal residence; or
(5) any need prescribed by the Revenue Service in a revenue ruling,
notice or other document of general applicability which satisfies the
safe harbor definition of hardship.
(2) Restrictions. The following restrictions apply to a Participant
who receives a hardship distribution: (a) the Participant may not make
elective deferrals or employee contributions to the Plan for the 12-
month period following the date of his hardship distribution; (b) the
distribution is not in excess of the amount of the immediate and heavy
financial need (including any amounts necessary to pay any federal,
state or local income taxes or penalties reasonably anticipated to
result from the distribution); (c) the Participant must have obtained
all distributions, other than hardship distributions, and all nontaxable
loans (determined at the time of the loan) currently available under
this Plan and all other qualified plans maintained by the Employer; and
(d) the Participant agrees to limit elective deferrals under this Plan
and under any other qualified Plan maintained by the Employer, for the
Participant's taxable year immediately following the taxable year of the
hardship distribution, to the 402(g) limitation (as described in Section
14.07), reduced by the amount of the Participant's elective deferrals
made in the taxable year of the hardship distribution. The suspension of
elective deferrals and employee contributions described in clause (a)
also must apply to all other qualified plans and to all nonqualified
plans of deferred compensation maintained by the Employer, other than
any mandatory employee contribution portion of a defined benefit plan,
including stock option, stock purchase and other similar plans, but not
including health or welfare benefit plans (other than the cash or
deferred arrangement portion of a cafeteria plan).
(3) Earnings. For Plan Years beginning after December 31, 1988, a
hardship distribution under this Section 14.11 may not include earnings
on an Employee's elective deferrals credited after December 31, 1988.
Qualified matching contributions and qualified nonelective
contributions, and any earnings on such contributions, credited as of
December 31, 1988, are subject to the hardship withdrawal only if the
Employer specifies in an addendum to this Section 14.11. The addendum
may modify the December 31, 1988, date for purposes of determining
credited amounts provided the date is not later than the end of the last
Plan Year ending before July 1, 1989.
(B) Distributions after Separation from Service. Following the
Participant's Separation from Service, the distribution events
applicable to the Participant apply equally to all of the Participant's
Accounts, except as elected in Section 6.03 of the Employer's Adoption
Agreement.
(C) Correction of Annual Additions Limitation. If, as a result of a
reasonable error in determining the amount of elective deferrals an
Employee may make without violating the limitations of Part 2 of Article
III, an Excess Amount results, the Advisory Committee will return the
Excess Amount (as adjusted for allocable income) attributable to the
elective deferrals. The Advisory Committee will make this distribution
before taking any corrective steps pursuant to Section 3.10 or to
Section 3.16. The Advisory Committee will disregard any elective
deferrals returned under this Section 14.11(C) for purposes of Sections
14.07, 14.08 and 14.09.
14.12 SPECIAL ALLOCATION RULES. If the Code 401(k) arrangement
provides for salary reduction contributions, if the Plan accepts
Employee contributions, pursuant to Adoption Agreement Section 4.01, or
if the Plan allocates matching contributions as of any date other than
the last day of the Plan Year, the Employer must elect in Adoption
Agreement 9.11 whether any special allocation provisions will apply
under Section 9.11 of the Plan. For purposes of the elections:
(a) A "segregated Account" direction means the Advisory Committee will
establish a segregated Account for the applicable contributions made on
the Participant's behalf during the Plan Year. The Trustee must invest
the segregated Account in Federally insured interest bearing savings
account(s) or time deposits, or a combination of both, or in any other
fixed income investments, unless otherwise specified in the Employer's
Adoption Agreement. As of the last day of each Plan Year (or, if
earlier, an allocation date coinciding with a valuation date described
in Section 9.11), the Advisory Committee will reallocate the segregated
Account to the Participant's appropriate Account, in accordance with
Section 3.04 or Section 4.06, whichever applies to the contributions.
(b) A "weighted average allocation" method will treat a weighted
portion of the applicable contributions as if includible in the
Participant's Account as of the beginning of the valuation period. The
weighted portion is a fraction, the numerator of which is the number of
months in the valuation period, excluding each month in the valuation
period which begins prior to the contribution date of the applicable
contributions, and the denominator of which is the number of months in
the valuation period. The Employer may elect in its Adoption Agreement
to substitute a weighting period other than months for purposes of this
weighted average allocation.
* * * * * * * * * * * * * * *
AGREE/art14.new
ARTICLE A
APPENDIX TO BASIC PLAN DOCUMENT
This Article is necessary to comply with the Unemployment Compensation
Amendments Act of 1992 and is an integral part of the basic plan
document. Section 12.08 applies to any modification or amendment of this
Article.
A-1. APPLICATIONS. This Article applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's election under this
Article, a distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
A-2. DEFINITIONS.
(a) "Eligible rollover distribution." An eligible rollover
distribution is any distribution of all or any portion of the balance to
the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a series
of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or
the joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is
required under Code 401(a)(9); and the portion of any distribution that
is not includible in gross income (determined without regard to the
exclusion of net unrealized appreciation with respect to employer
securities).
(b) "Eligible retirement plan." An eligible retirement plan is an
individual retirement account described in Code 408(a), an individual
retirement annuity described in Code 408(b), an annuity plan described
in Code 403(a), or a qualified trust described in Code 401(a), that
accepts the distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving spouse,
an eligible retirement plan is an individual retirement account or
individual retirement annuity.
(c) "Distributee." A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving
spouse and the employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations order,
as defined in Code 414(p), are distributees with regard to the interest
of the spouse or former spouse.
(d) "Direct rollover." A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
AGREE/article.a
ARTICLE B
APPENDIX TO BASIC PLAN DOCUMENT
This Article is necessary to comply with the Omnibus Budget
Reconciliation Act of 1993 (OBRA '93) and is an integral part of the
basic plan document. Section 12.08 applies to any modification or
amendment of this Article.
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, for
plan years beginning on or after January 1, 1994, the annual
compensation of each employee taken into account under the plan shall
not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with Section 401(a)(17)(B)
of the Internal Revenue Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months, over
which compensation is determined (determination period) beginning in
such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in
this plan to the limitation under Section 401(a)(17) of the Code shall
mean the OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into account
in determining an employee's benefits accruing in the current plan year,
the compensation for that prior determination period is subject to the
OBRA '93 annual compensation limit in effect for that prior
determination period. For this purpose, for determination periods
beginning before the first day of the first plan year beginning on or
after January 1, 1994, the OBRA '93 annual compensation limit is
$150,000.
AGREE/article.b
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123
PURCHASE AGREEMENT (this "Agreement") is made and entered effective the
24th day of March, 1997 by and between Jerry Richmond, Brooks Barwick,
Mark Calcutt and Doug Apperson and (each hereafter a "Seller" and
collectively the "Sellers") and Steel Technologies Inc., a Kentucky
corporation (the "Buyer").
PRELIMINARY STATEMENTS
Sellers desire to sell, and Buyer desires to purchase, all and not less
than all of the issued and outstanding shares of common stock (the
"Common Stock") of Atlantic Coil Processing, Inc., a North Carolina
corporation (the "Company"), for the consideration and on the terms set
forth in this Agreement.
The Company is engaged in the business of steel processing and providing
steel processing services (the "Business").
The parties, intending to be legally bound, agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
SECTION 1.1 Sale of Stock. Subject to the terms and conditions of this
Agreement, at the Closing, Sellers will sell and transfer the Common
Stock to Buyer, and Buyer will purchase the Common Stock from Sellers.
SECTION 1.2 Purchase Price. The purchase price (the "Purchase Price")
for the Common Stock shall be $7,250,000.
SECTION 1.3 Payment of Purchase Price. The Purchase Price shall be paid
as follows:
(a) the aggregate amount of $3,625,000 delivered at Closing by bank
cashier's or certified check payable to the order of (or by wire
transfer to accounts specified by) Richmond, Barwick, Calcutt and
Apperson, respectively: $1,956,250 to Richmond; $556,250 to Barwick;
$556,250 to Calcutt; and $556,250 to Apperson.
(b) the aggregate amount of $3,625,000 delivered at Closing by Buyer's
promissory note in the form of Exhibit A (the "Promissory Note") payable
to the agent for Richmond, Barwick, Calcutt and Apperson named therein.
(c) Buyer, as a method of payment for the Promissory Note has the
option of making payments on the due dates in the form of cash or common
stock of Steel Technologies Inc. at its discretion. Specifically, Buyer
reserves the right to exercise its option for payment to the Sellers in
either form of cash or stock equivalent. Buyer covenants and agrees
that it will give Sellers reasonable advance notice of its intention to
make any payment of the Promissory Note in common stock and will deliver
such common stock to the respective Sellers as directed by Sellers. The
Sellers acknowledge and agree that all shares, if any, of Steel
Technologies common stock issued as payment (or partial payment) for the
Promissory Note will not, on the date of delivery thereof, have been
registered under the Securities Act of 1993, as amended (the "Securities
Act"), or any state securities laws, and will constitute "restricted
securities" within the meaning of Rule 144 under the Act. The Sellers
further acknowledge and agree that each certificate evidencing such
shares shall bear a legend referring to the restrictions on resale
imposed by the applicable federal securities laws.
(i) Buyer covenants and agrees that it will file, immediately
following each delivery, if any, of shares of common stock in payment
for the Promissory Note, and use its best efforts to obtain the prompt
effectiveness of, a registration statement under the Securities Act to
register for public resale all of such shares, so that such shares may
be offered and sold by or for the account of the respective Sellers,
from time to time as market conditions permit, on the Nasdaq Stock
Market or otherwise, at prices and on terms then prevailing or in
negotiated transactions. Buyer will give Sellers Notice and opinion of
counsel when and that the shares may be traded. Buyer will maintain the
effectiveness of such registration statements, if any, until such time
as the Steel Technologies common stock may be sold by the Sellers
pursuant to the terms and conditions of Rule 144 under the Securities
Act.
(ii) If during the time Buyer is required to maintain the effectiveness
of a registration statement under this Section, Buyer shall be engaged
in a transaction with respect to which disclosure would be required in
such registration statement, but for which financial or other
information necessary for such required disclosure is not then available
to Buyer, or with respect to which Buyer's Board of Directors shall have
determined that disclosure at such time could have an adverse effect on
the Buyer or its business or prospects, then Buyer shall be entitled to
notify the Sellers that no sales may be made pursuant to the
registration statement for up to 90 days.
(iii) Buyer shall pay all expenses incurred by it in complying with this
Section, including without limitation, all registration and filing fees,
printing expenses, and fees and disbursements of counsel and independent
public accountants for Buyer.
(iv) Buyer unconditionally guarantees to Sellers the return upon sale
of all or part of any shares delivered pursuant to this Section and
traded with a "discount" broker and in accordance with this Section
within three (3) business days of Sellers receipt of the notice(s)
required by 1.3(c)(i) above of a net amount equal to the value of the
shares at delivery (being the value of the shares on the NASDAQ stock
marker on the trading day before the stock is delivered to Sellers).
Sellers shall provide Buyer with all appropriate documentation of
trade(s) to support any request for Buyer to satisfy its guarantee
obligations under this Section. Buyer shall pay Sellers any funds due
under this Section within ten (10) days of receipt of notice and
supporting documentation from Sellers.
(v) Notwithstanding any provision to the contrary, if, by May 30
immediately following any delivery of the shares, Buyer has not obtained
registration allowing the shares to be traded or has not provided
Sellers with the notice and opinion required by 1.3(c)(i), the Buyer
shall, within ten (10) days, pay Sellers in available funds (and as
provided in the Promissory Note) an amount equal to the value of the
shares at delivery plus interest on such amount at 7% per annum through
the date of payment.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Sellers, jointly
and severally, unless specifically noted, represent and warrant to the
Buyer as follows:
SECTION 2.1 Ownership of Stock. Each Seller individually represents and
warrants as to himself that, conditioned upon the consummation of the
transactions contemplated hereunder, he owns the shares of Common Stock
listed opposite his name on Schedule 2.1 hereto, free and clear of all
pledges, security interests, liens, charges, encumbrances, equities,
claims, options or limitations of every kind ("Claims"), and that the
delivery to the Buyer at Closing of the Common Stock owned by such
Seller pursuant to the provisions of this Agreement will transfer to the
Buyer valid title thereto, free and clear of all Claims.
SECTION 2.2 Authority Relative to this Agreement. Each Seller
individually represents and warrants as to himself and, conditioned upon
the consummation of the transactions contemplated hereunder, (a) that
such Seller has full legal power, capacity and authority to execute,
deliver and perform this Agreement, and, to the extent applicable to
such Seller, the Exhibits and Schedules hereto and the other documents
and instruments contemplated hereby (collectively, this Agreement, the
Exhibits and Schedules hereto, and the other documents and instruments
contemplated hereby shall constitute the "Documents") and to consummate
the transactions contemplated hereby and thereby, and (b) that, to the
extent applicable to such Seller and when duly and validly executed and
delivered by all parties, the Documents will be enforceable against such
Seller in accordance with their terms, subject to bankruptcy,
reorganization, insolvency and other similar laws affecting the
enforcement of creditors' rights in general.
SECTION 2.3 Foreign Person. Each Seller individually represents and
warrants as to himself that he is not a foreign person as that term is
defined in Section 1445(f)(3) of the Code and applicable regulations.
SECTION 2.4 Organization, Qualification and Corporate Power. The
Company is a corporation duly organized and validly existing under the
laws of the State of North Carolina. The Company is not qualified to do
business as a foreign corporation in any other state. The nature of the
Business does not require Company to be qualified in any other
jurisdiction where the failure to be so qualified would have a material
adverse effect on the business or properties of the Company. Sellers
have made available to the Buyer complete and correct copies of the
Articles of Incorporation and Bylaws of the Company as currently in
effect. The Company has the corporate power and authority to own,
lease, operate and hold its properties and to carry on its business as
now conducted.
SECTION 2.5 Capitalization. The Company has authorized capital
consisting of 100,000 shares of common stock, with a par value of one
dollar ($1) per share, of which 100,000 shares are issued and
outstanding and no shares are held as treasury stock. All of the
outstanding shares of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. None of the outstanding
shares of the Company have been issued in violation of any preemptive
right. There are, conditioned upon the consummation of the transactions
contemplated hereunder, no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other
agreements of any character providing for the purchase, issuance or sale
of any shares of capital stock of the Company, other than as
contemplated by this Agreement.
SECTION 2.6 Subsidiaries and Investments. The Company has no
subsidiaries and does not own, directly or indirectly, any capital stock
or other equity or ownership or proprietary interest in any other
corporation, partnership, association, trust, joint venture or other
entity.
SECTION 2.7 Books and Records. The minute books of the Company, which
have been made available to the Buyer and its representatives, contain
alone, or in conjunction with other corporate books and records which
have been made available to Buyer, records accurate in all material
respects of all meetings of and corporate actions or written consents by
the shareholders and Board of Directors of the Company. The Company does
not have any of its records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Company and/or its
attorneys, accountants and professional advisors.
SECTION 2.8 Financial Statements. Sellers have previously furnished to
the Buyer, and attached hereto as Schedule 2.8 are the Company's
Financial Statements for Years Ended December 31, 1995 and 1994 with
Independent Auditor's Report and Financial Statements for Years Ended
December 31, 1996 and 1995 with Independent Auditor's Report
(collectively the "Financial Statements"). The Financial Statements
have been prepared in accordance with generally accepted accounting
principles consistently applied and were prepared from the books and
records of the Company. Such books and records are complete and correct
in all material respects, accurately reflect all material transactions
of the Business and have been made available to the Buyer for
examination. Since the Balance Sheet Date, except as permitted under
this Agreement and except for changes in the ordinary course of business
consistent with past practice (i) there has been no materially adverse
change in the assets, liabilities or financial conditions of the Company
from that reflected in the 1996 Financial Statement; and (ii) none of
the business, prospects, financial condition, operations or property of
the Company have been materially adversely affected by any occurrence or
development, individually or in the aggregate, whether or not insured
against. The Sellers have made available to Buyer all material facts
relating to the preparation of the Financial Statements.
SECTION 2.9 Labor and Employee Relations. The Company is not a party to
or bound by any collective bargaining agreement with any labor
organization, group or association covering any of its employees, and,
to the knowledge of Sellers, there is not any current attempt to
organize the Company's employees by any Person, unit or group seeking to
act as their bargaining agent. Except as set forth on Schedule 2.9, to
the knowledge of Sellers, (i) there are no pending or threatened charges
(by employees, their representatives or governmental authorities) of
unfair labor practices or of employment discrimination or of any other
wrongful action with respect to any aspect of employment of any person
employed or formerly employed by the Company; (ii) no union
representation election relating to employees of the Company has been
scheduled by any governmental agency or authority, no organizational
effort is being made with respect to any of such employees, and there is
no investigation of the Company's employment policies or practices by
any governmental agency or authority pending or threatened; and (iii)
the Company is not currently involved in labor negotiations with any
unit or group seeking to become the bargaining unit for any employees of
the Company. The Company has not experienced any work stoppages, and,
to the knowledge of Sellers, no work stoppage is planned.
SECTION 2.10 Real Property. The Company owns no real property.
SECTION 2.11 Powers of Attorney; Absence of Limitations on
Competition; Guarantees.
Except as set forth in Schedule 2.11, (i) no power of attorney or
similar authorization given by the Company presently is in effect or
outstanding; (ii) no contract or agreement to which the Company is a
party or is bound or to which the Company's properties or assets is
subject limits the freedom of the Company to compete in any line of
business or with any Person; and (iii) the Company is not a party to or
bound by any guarantee of any debt or obligation of any other Person.
SECTION 2.12 Significant Customers. Set forth on Schedule 2.12 is
a true and correct list of the Company's ten largest customers for the
most recent 12-month period ending December 31, 1996, together with the
amount of services attributable to such customers expressed in dollars
and as a percentage of Company's total sales and services for such
period. None of the customers identified on Schedule 2.12 has
terminated, materially reduced or, to the knowledge of Sellers,
threatened to terminate or materially reduce its request for services of
the Company during the period covered by such schedule. All contracts
with customers identified on Schedule 2.12 are profitable contracts.
SECTION 2.13 Governmental Approvals. Except as to applicability of
the Hart, Scott Rodino Act (the determination of the applicability of
which is the responsibility of Buyer ) and except as set forth on
Schedule 2.13, no registration or filing with, or consent or approval of
or other action by, any Federal, state or other governmental agency or
instrumentality is or will be necessary for the valid execution,
delivery and performance by Sellers of this Agreement.
SECTION 2.14 Validity, Etc. Except as to applicability of the
Hart, Scott Rodino Act (the determination of the applicability of which
is the responsibility of Buyer ) and except as set forth on Schedule
2.14, neither the execution and delivery of this Agreement or the other
Documents, the consummation of the transactions contemplated hereby or
thereby, nor the performance of this Agreement or the other Documents in
compliance with the terms and conditions hereof and thereof by the
Sellers will (i) violate, conflict with or result in any breach of any
trust agreement, Articles of Incorporation, bylaw, judgment, decree,
order, statute or regulation applicable to the Company, (ii) violate,
conflict with or result in a breach, default or termination or give rise
to any right of termination, cancellation or acceleration of the
maturity of any payment date of any of the obligations of the Company or
increase or otherwise materially affect the obligations of the Company
under any law, rule, regulation or any judgment, decree, order,
governmental permit, license or order or any of the terms, conditions or
provisions of any mortgage, indenture, note, license, agreement or other
instrument or obligation related to the Company's ability to consummate
and perform the transactions contemplated hereby or thereby, except for
such defaults (or rights of termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained in writing
and provided to the Buyer or will be obtained in writing and provided to
Buyer at or prior to Closing or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Company.
SECTION 2.15 Absence of Adverse Change; Conduct of Business.
During the period from the Balance Sheet Date to and including the date
of this Agreement, except as set forth on Schedule 2.15, or except as
permitted and contemplated under this Agreement, the Company has not (i)
except for previously existing bank lines of credit borrowed or agreed
to borrow any material amount of funds or incurred any liability or
obligation of any nature (whether accrued, absolute, contingent or
otherwise), (ii) guaranteed or agreed to guarantee any obligations of
others, (iii) canceled any indebtedness owing to it or any claims that
it might have possessed, waived any material rights of substantial value
or except as to sale of goods in the ordinary course of business, sold,
leased, encumbered, transferred or otherwise disposed of, or agreed to
sell, lease, encumber, or otherwise dispose of its assets or permitted
any of its assets to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, (iv)
made any capital expenditure over $10,000 or commitment therefor, (v)
declared or paid any dividend (other than the 17.5% pre-tax profit
shareholder bonus for the quarter ending 4/1/97) or made any
distribution on any shares of its capital stock, or redeemed, purchased
or otherwise acquired any shares of its capital stock or any option,
warrant or other right to purchase or acquire any such shares, (vi)
except for previously existing bank lines of credit increased its
indebtedness for borrowed money, or made any loan to any Person, (vii)
written off as uncollectible any notes or accounts receivable, except
write-offs in the ordinary course of business, (viii) made any material
change in any method of accounting or auditing practice, (ix) otherwise
conducted its business or entered into any transaction, except in the
usual and ordinary manner, or (x) agreed, whether or not in writing, to
do any of the foregoing.
SECTION 2.16 Certain Practices. Each Seller individually
represents and warrants as to himself; each Seller individually
represents and warrants, to his knowledge, as to the other Sellers; and
the Sellers represent, jointly and severally, to the knowledge of
Sellers as to the directors, officers and employees of the Company other
than Sellers that, that neither such Seller, the other Sellers nor the
Company's directors, officers or employees other than Sellers have,
directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating
to political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; established or
maintained any unlawful or unrecorded fund of corporate monies or other
assets; made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment; or made any bribe, kickback, or other payment of
a similar or comparable nature, whether lawful or not, to any person or
entity, private or public, regardless of form, whether in money or
business, to obtain special concessions, or to pay for favorable
treatment for business secured or for special concessions already
obtained.
SECTION 2.17 Compliance with Law; Licenses and Permits. Except as
set forth on Schedule 2.17, the Company has, since January 1, 1993,
complied in all material respects with all laws, ordinances, legal
requirements, rules, regulations and orders applicable to it, its
operations, properties, assets, products and services. There are no
facts or circumstances which may result in institution of any
discrimination action, suit, claim or legal or administrative proceeding
or investigation against the Company based upon race, color, religion,
gender, disability or national origin. Except as set forth on Schedule
2.17, there is no existing law, rule, regulation or order, nor, to
Seller's knowledge, any proposed law, rule, regulation or order, whether
Federal, state or local, directly applicable to it which would prohibit
or materially restrict the Buyer from, or otherwise materially adversely
affect the Buyer in, conducting the Business in the manner heretofore
conducted by the Company in any jurisdiction in which the Business is
now conducted. The Company possesses all franchises, permits, licenses,
certificates and consents required from any governmental or regulatory
authority in order for the Company to carry on its business as currently
conducted and to own and operate its properties and assets as now owned
and operated where the failure to possess any such franchise, permit,
license, certificate or consent would have an adverse affect on the
business or properties of the Company. All of such licenses and permits
are set forth on Schedule 2.17.
SECTION 2.18 Employee Benefits.
(a) Set forth on Schedule 2.18 is a list of all pension, profit sharing,
retirement, deferred compensation, stock purchase, stock option,
incentive, bonus, vacation, severance, disability, hospitalization,
medical insurance, life insurance, fringe benefit, welfare and other
employee benefit plans, programs or arrangements pursuant to which the
Company or its ERISA Affiliates provides (directly or indirectly,
individually or jointly through others) benefits or compensation to or
on behalf of employees or former employees of the Company or its ERISA
Affiliates, whether formal or informal, whether or not written
("Employee Plan"). The Sellers have furnished a copy of each Employee
Plan and a copy of any related materials. The Company will maintain the
benefits listed on Schedule 2.18 in full force and effect through the
Effective Date and maintain such benefits so as to allow Buyer at
Buyer's option, to continue such benefits beyond the Effective Date.
Except as set forth on Schedule 2.18, the Buyer shall not have any
obligation or liability of any kind or nature for any compensation or
benefits of any kind or nature to the employees or consultants of the
Company for services rendered prior to the Effective Date.
(b) Each Employee Plan covering any present or former employee of the
Company which is subject to the continuation health coverage
requirements of Section 4980B of the Code or Section 601 of ERISA or any
applicable state law has complied with all such requirements for
continuation coverage.
(c) There are no actions, suits or claims pending (other than routine
claims for benefits) or to the knowledge of Sellers threatened against
or with respect to any Employee Plan or the assets of any Employee Plan.
(d) Each Employee Plan (and the related trust or funding vehicle, if
any) has been administered and maintained in accordance with its terms
and with applicable law. Except as set forth on Schedule 2.18(d), each
Employee Plan which is intended to be qualified under Section 401 of the
Code and each amendment to such plan is subject to a favorable
determination letter from the Internal Revenue Service and each such
plan has at all times been maintained, by its terms and in operation, in
accordance with Section 401 of the Code. The assets of each Employee
Plan which is not funded through the general assets of the Company are
at least equal to the liabilities under such Employee Plan, and all
assets of each Employee Plan are shown on the books and records of such
Employee Plan at fair market value. No Employee Plan has unfunded
liabilities that are not accurately and fully reflected on the Company's
Financial Statement.
(e) Neither the Company nor any of its ERISA Affiliates is or has been
a participant in, or is or has been obligated to maintain or to make
contributions to, a multi-employer plan (within the meaning of ERISA
Section 3(37) and ERISA Section 4001(a)(3)) or an Employee Plan which is
subject to Title IV of ERISA. Neither the Company nor any ERISA
Affiliate has sponsored, contributed to or been obligated under Title I
or IV of ERISA to contribute to a "defined benefit plan" (as defined in
ERISA Section 3(35)). Except as set forth on Schedule 2.18(e), the
Company is not obligated to provide post-retirement medical benefits or
any other unfunded post-retirement welfare benefits to or on behalf of
any persons whatsoever (except the benefits pursuant to the continuation
health coverage requirements under Section 4980B of the Code, ERISA
Section 601, or applicable state law).
(f) Neither the Company nor its ERISA Affiliates is subject to and, to
the knowledge of Sellers, no facts exist which could subject the Company
or any of its ERISA Affiliates to, any liability whatsoever which is
directly or indirectly related to any Employee Plan, including, but not
limited to, liability for benefit payments or related claims, any
liability for any tax or related penalty under the Code, or liability
for any damages or penalties arising under Title I or Title IV of ERISA.
No reportable event under Section 4043 of ERISA has occurred.
(g) Termination of or withdrawal from any Employee Plan immediately
after the Closing would not subject the Buyer to any liability, tax or
penalty whatsoever.
(h) The execution or performance of the transactions contemplated by
this Agreement will not create, accelerate or increase any obligations
under the Employee Plans, including any obligation to make any payment
which would not be deductible as an excess golden parachute payment
under Section 280G of the Code.
(i) All contributions to or under each Employee Plan and all expenses
of each Employee Plan are fully deductible for income tax purposes for
the taxable year for which such contributions are made or such expenses
are paid. All contributions to or under each Employee Plan have been
made when due under the terms of such Employee Plan in accordance with
applicable law.
(j) Neither the Company nor its ERISA Affiliates have entered into any
contract, agreement or arrangement (whether oral or written) under which
the Company or its ERISA Affiliates have assumed any liability relating
to their clients' retirement plans, nor have the Company and/or its
ERISA Affiliates made any verbal representations that the use of any
employees of the Company or its ERISA Affiliates would have no adverse
consequence on such client retirement plans.
(k) For purposes of this Section 2.18, the term "ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended, and the
term "ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Company is treated as a single
employer under Section 414(b), (c), (m), (o) or (t) of the Code.
SECTION 2.19 Fixed Assets. Schedule 2.19 contains a list of all of
Company's fixed assets, which list is true and complete as to all fixed
assets valued over $5,000 (and, to the extent such list contains items
valued under $5,000, no representation or warranty is made) whether
owned or leased, as of the date reflected in Schedule 2.19. Except as
shown on Schedule 2.19 the Company has good title to all of its fixed
assets, free and clear of all claims, liens, mortgages, charges and
encumbrances. All of the Company's fixed assets, whether owned or
leased, are reasonably adequate and usable for the purposes for which
they are currently used and, ordinary wear and tear excepted, are in
good operating condition and repair and have been properly maintained.
SECTION 2.20 Insurance. The Company is, and will be through the
Effective Date, insured with insurers in respect of its properties,
assets and businesses as set forth on the attached Schedule 2.20.
Schedule 2.20 lists the insurance coverage carried by the Company, which
insurance will remain in full force and effect with respect to all
events occurring prior to the Effective Date. Except as set forth on
Schedule 2.20, the Company (i) has not failed to give any notice or
present any claim under any such policy or binder in due and timely
fashion, (ii) has not received notice of cancellation or non-renewal of
any such policy or binder, (iii) has not received notice of any
threatened or proposed cancellation or non-renewal of any such policy or
binder, and (iv) has not received notice of any insurance premiums which
will be materially increased in the future. There are no outstanding
claims under any such policy as to which the insurer has disclaimed
liability.
SECTION 2.21 Accounts Receivable.
(a) The accounts receivable of the Company shown on the 1996 Financial
Statement or as shall be shown on the Closing Balance Sheet
(collectively the "Accounts Receivable") represent or will represent
genuine accounts arising from sales actually made or services actually
performed in the ordinary course of business. Unless paid prior to the
Effective Date, the Accounts Receivable are or will be as of the
Effective Date fully collectable and not subject to counterclaim or set-
off (except to the extent that collectablity thereof may be subject to
or affected by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws relating to or affecting the
rights of credits generally) within 120 days of the Effective Date
without resort to litigation in an aggregate amount not less than the
aggregate amount at which they are carried on the Closing Balance Sheet,
net of aggregate reserves therefore and net of credits not reflected on
the Closing Balance Sheet, if any, for returns or adjustments thereafter
arising in the ordinary course of business and consistent with past
practice.
(b) Buyer shall cause Company to use all commercially reasonable
efforts consistent with Company's past practices to collect the Accounts
Receivable (which shall not be deemed to require instituting litigation
or using a collection agency). After the Effective Date, the Company
shall be creating new accounts receivable with customers of Company
("New Receivables"). Collections of receivables after the Effective
Date shall be credited first to the Accounts Receivable and then to the
New Receivables in the order that the receivables from such customer
were created unless a customer, to Buyer and Company's knowledge, acting
in good faith, expressly disputes a prior receivable, unless a payment
expressly identifies a specific invoice or unless it is apparent from
the circumstances that the payment is being made against a particular
invoice or invoices.
(c) In the event Buyer asserts an indemnification claim with respect
to a breach of Seller's representations and warranties as to Accounts
Receivable and such claim is agreed to by Sellers or otherwise approved
under the procedures set forth in this Agreement, then Buyer shall cause
Company to assign such receivable to Sellers when and in such amounts
actually paid to Buyer by Sellers or offset from the Deferred Purchase
Price for any indemnification claim under the Documents. In the event
an indemnification claim is asserted with respect to the Accounts
Receivable and such claim is not immediately paid by Sellers (whether
because of the "indemnity basket" or otherwise), then Buyer shall
continue to use all commercially reasonable efforts to collect the
subject Accounts Receivable and any amounts so collected shall be
credited to the prior claim or otherwise accounted for as circumstances
then require and as the parties agree.
SECTION 2.22 Outstanding Contracts. Schedule 2.22 sets forth as of
the date hereof a reasonable summary description of all contracts,
agreements, commitments, licenses and franchises, which involve
obligations or commitments by the Company of $10,000 or more and are not
cancelable by the Company without penalty within 30 days and not
otherwise scheduled in a more specific schedule of this Agreement
(collectively "Contracts"), whether written or oral, relating to the
Company. Sellers have delivered or made available to the Buyer true,
correct and complete copies of all of the Contracts specified on
Schedule 2.22 which are in writing, and such schedule sets forth a
reasonable summary description of all Contracts which are not in
writing. All of the Contracts are in full force and effect and
enforceable in accordance with their terms, except to the extent that
the enforceability thereof may be subject to or affected by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other laws relating to or affecting the rights of
creditors generally. Except as set forth on Schedule 2.22 as of the
date hereof, the Company and, to the knowledge of Sellers, each other
party thereto has materially performed all the obligations required to
be performed by it, has received no notice of default and is not in
default (with due notice or lapse of time or both) under any of the
Contracts. The Company has no present expectation or intention of not
fully performing all its obligations under each of the Contracts, and
Sellers have no knowledge of any breach or anticipated breach by the
other party to any of the Contracts to which the Company is a party.
Except as set forth on Schedule 2.22, none of the Contracts has been
terminated; no notice has been given by any party thereto of any alleged
default by any party thereunder; and Sellers have received no notice of
any intention or right of any party to declare another party to any of
the Contracts to be in default and, to the knowledge of Sellers, no
party intends to declare another party to the Contracts in default.
Except as set forth on Schedule 2.22, there exists no actual or, to the
knowledge of Sellers, threatened termination or cancellation or material
limitation of the business relationship of the Company by any party to
any of the Contracts.
SECTION 2.23 Outstanding Leases. Schedule 2.23 sets forth a
description of each agreement by which the Company leases each parcel of
real property (the "Leased Parcels") used in connection with the
Business (collectively, the "Leases"). Sellers have delivered or made
available to the Buyer true, correct and complete copies of all of the
Leases specified on Schedule 2.23. All rents due under the Leases have
been paid. All of the Leases are in full force and effect and
enforceable in accordance with their terms, except to the extent that
the enforceability thereof may be subject to or affected by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other laws relating to or affecting the rights of
creditors generally. Except as set forth on Schedule 2.23, the Company
and to the knowledge of Sellers, each other party thereto has performed
all the material obligations required to be performed by it, has
received no notice of default and is not in default (with due notice or
lapse of time or both) under any of the Leases.
SECTION 2.24 Intellectual Properties. Schedule 2.24 contains an
accurate and complete list of all domestic and foreign letters patent,
patents, patent applications, patent licenses, software licenses and
know-how licenses, trade names, trademarks, copyrights, unpatented
inventions, service marks, trademark registrations and applications,
service mark registrations and applications and copyright registrations
and applications, trade secrets or other confidential proprietary
information owned or used by the Company in the operation of the
Business (collectively the "Intellectual Property"). Except as set
forth on Schedule 2.24 and except for commercial software licensed for
use on personal computers, the Company owns the entire right, title and
interest in and to the Intellectual Property, trade secrets and
technology used in the operation of its business and each item
constituting part of the Intellectual Property and trade secrets and
technology which is owned by the Company has been, to the extent
indicated in Schedule 2.24, duly registered with, filed in or issued by,
as the case may be, the United States Patent and Trademark office or
such other government entities, domestic or foreign as are indicated in
Schedule 2.24 and such registrations, filings and issuances remain in
full force and effect. There have been and are no pending or, to the
knowledge of Sellers, threatened proceedings or litigation or other
adverse claims with respect to the Intellectual Property. Except as
otherwise set forth in Schedule 2.24, there is, to the knowledge of
Sellers, no reasonable basis upon which a claim may be asserted against
the Company for infringement of any domestic or foreign letters patent,
patents, patent applications, patent licenses and know-how licenses,
trade names, trademark registrations and applications, common law
trademarks, service marks, service mark registrations or applications
copyrights, copyright registrations or applications, trade secrets or
other confidential proprietary information. To the knowledge of
Sellers, no Person is infringing the Intellectual Property.
SECTION 2.25 Proprietary Information of Third Parties. Except as
disclosed on Schedule 2.25, no third party has claimed or, to the
knowledge of Sellers, has reason to claim that any Person employed by or
consulting with the Company ("Related Person") has (i) violated or may
be violating any of the terms or conditions of such person's employment,
non-competition or non-disclosure agreement with such third party, (ii)
disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party,
or (iii) interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees. No
third party has requested information from the Company which reasonably
suggests that such a claim might be contemplated. Except as disclosed
on Schedule 2.25, to the knowledge of Sellers, no Related Person has
employed or proposes to employ any trade secret or any information or
documentation proprietary to any former employer and, no Related Person
has violated any confidential relationship which such person may have
had with any third party in connection with the development, or sale of
any service of the Company.
SECTION 2.26 Transactions With Affiliates. Except as set forth on
Schedule 2.26, to the knowledge of Sellers, no director, officer or
shareholder of the Company, or member of the family of any such person,
or any corporation, partnership, trust or other entity in which any such
person, or any member of the family of any such person, has a beneficial
interest greater than 5% or is an officer, director, trustee, partner or
holder of any equity interest greater than 5%, is a party to any
transaction with the Company, including any contract, agreement or other
arrangement providing for the employment of, furnishing of services by,
rental of real or personal property from or otherwise requiring payments
or involving other obligations to any such person or firm.
SECTION 2.27 Absence of Undisclosed Liabilities.
(a) Except as and to the extent of the amounts specifically reflected
or reserved against in the 1996 Financial Statement, or except as set
forth on Schedule 2.27, the Company has no liabilities or obligations of
any nature whatsoever due or to become due, accrued, absolute,
contingent or otherwise of the type required to be reflected in
financial statements in accordance with GAAP, except for liabilities and
obligations incurred since the date thereof in the ordinary course of
business and consistent with past practice and liabilities and
obligations permitted and contemplated under this Agreement. To the
knowledge of Sellers and subject to the exceptions set forth in the
prior sentence, there is no reasonable basis for the assertion against
the Company of any liability or obligation of the type required to be
reflected in Financial Statements in accordance with GAAP, not fully
reflected or reserved against in the Financial Statements.
(b) The Company is not bound by any agreement, or, subject to any
charter or other corporate restriction or any legal requirement which
has a material adverse effect on the business of the Company.
SECTION 2.28 Taxes. Except as set forth on Schedule 2.28, all
federal, state, local and foreign tax returns and tax reports required
to be filed by the Company on or before the date hereof have been timely
filed with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed and all amounts
shown as owing thereon have been paid or accrued in the financial
records of the Company. All taxes (including, without limitation,
income, accumulated earnings, property, sales, use, franchise, value
added, fuel, employees' income withholding and social security taxes)
which have become due or payable or are required to be collected by the
Company or are otherwise attributable to any periods ending on or before
the Effective Date and all interest and penalties thereon, whether
disputed or not, have been paid or will be paid in full or adequately
reflected on the Closing Balance Sheet or the Company's books and
records in accordance with generally accepted accounting principles on,
or prior to or as of the Effective Date. Except as set forth on
Schedule 2.28, all deposits required by law to be made by the Company
with respect to employees' withholding taxes have been duly made, and as
of the Effective Date all such deposits due will have been made in
accordance with past practices. The Company has delivered to the Buyer
true and complete copies of all of Company's state and federal income
tax returns for the fiscal periods ended December 31, 1994 and 1995 and
all reports and results of income tax audits, if any, related thereto.
Except as set forth on Schedule 2.28, no examination of any tax return
of the Company is currently in progress. There are no outstanding
agreements or waivers extending the statutory period of limitations
applicable to any such tax return.
SECTION 2.29 Litigation. Except as set forth on Schedule 2.29,
there is no (i) action, suit, claim, proceeding or investigation pending
or, to the knowledge of Sellers, threatened against the Company (whether
or not such Company is a party or prospective party thereto), at law or
in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding
pending against the Company or (iii) governmental inquiry pending or, to
the knowledge of Sellers, threatened against the Company. The Company
has not received any opinion or memorandum or legal advice from legal
counsel to the effect that it is exposed, from a legal standpoint, to
any liability or disadvantage which may be material to the business,
financial condition, operations or property of the Company. There are
no outstanding orders, writs, judgments, injunctions or decrees served
upon the Company by any court, governmental agency or arbitration
tribunal against the Company. To the knowledge of Sellers, there are no
facts or circumstances which may result in institution of any action,
suit, claim or legal, administrative or arbitration proceeding or
investigation against the Company or the transactions contemplated
hereby. The Company is not in default with respect to any order, writ,
injunction or decree known to and applicable to it or served upon it
from any court or of any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign. Except as disclosed on Schedule 2.29, there is no
action or suit by the Company pending or threatened against others.
SECTION 2.30 Environmental Matters.
(a) Compliance. The Company and all Leased Parcels are in compliance
with all applicable laws, rules, regulations, orders, ordinances,
judgments and decrees of all governmental authorities with respect to
all environmental statutes, rules and regulations the absence of
compliance with respect to which would have an adverse affect on
Company. Except as set forth on Schedule 2.30, the Company has not
received notice of, nor do Sellers have knowledge of, any past, present
or future events, conditions, circumstances, activities, practices,
incidents or actions of the Company or the Company's predecessors,
either collectively, individually or severally, which may interfere with
or prevent continued compliance with, or which may give rise to any
common law or legal liability or otherwise form the basis of any claim,
action, suit, proceeding, hearing, or investigation, based on or related
to the disposal, storage, handling, manufacture, processing,
distribution, use, treatment or transport, or the emission, discharge,
release or threatened release into the environment, of any Substance.
As used in this Section 2.30, the term "Substance" or "Substances" shall
mean any pollutant, contaminant, hazardous substance, hazardous
material, hazardous waste or toxic waste, as defined in any presently
enacted federal, state or local statute or any regulation that has been
promulgated pursuant thereto. No part of any of the Leased Parcels has
been listed or proposed for listing on the National Priorities List
established by the United States Environmental Protection Agency, or any
other corresponding list by any state or local authorities.
(b) Environmental Substance Liability. Except as set forth on
Schedule 2.30, no event has occurred or condition exists or operating
practice has been or is being employed that could give rise to liability
on the part of the Company, either at the present time or in the future,
for any losses, liabilities, damages (whether consequential or
otherwise), settlements, penalties, interest, including any such
liability on account of the right of any governmental or private entity
or person, and including closure expenses, costs of assessment,
containment, removal, or response (other than monitoring or
transportation or disposal of materials required to be transported or
disposed of in the ordinary course of business consistent with past
practice) arising under any rule or federal, state, or local statute, or
any regulation that has been promulgated pursuant thereto, or common law
(as all of the same presently exist and are presently construed) as a
result of or in connection with the following (collectively the
"Hazardous Activities"):
(A) the handling, storage, use, transportation or disposal of any
Substances in or near or from the Leased Parcels;
(B) the handling, storage, use, transportation or disposal of any
Substances by the Company or its predecessors which Substances were a
product, by-product or otherwise resulted from the operations conducted
by or on behalf of the Company or its predecessors;
(C) any intentional or unintentional emission, discharge or release of
any Substances in or near or from facilities into or upon the air,
surface water, ground water or land or any disposal, handling,
manufacturing, processing, distribution, use, treatment, or transport of
such Substances in or near or from facilities by or on behalf of the
Company or its predecessors; or
(D) the presence of any toxic or hazardous building materials
(including but not limited to friable asbestos or similar substances) in
any facilities of the Company, including but not limited to the
inclusion of such materials in the exterior and interior walls, floors,
ceilings, tile, insulation or any other portion of building structures.
(c) Environmental Permits. The Company has obtained and holds all
registrations, permits, licenses, and approvals issued by or on behalf
of any federal, state or local governmental body or agency if any
("Environmental Permits") that are required in connection with the
operation by the Company of the Leased Parcels, the discharge or
emission of Substances by the Company from the Leased Parcels or the
generation, treatment, storage, transportation, or disposal of any such
Substances by the Company. Such Environmental Permits, which are
described on Schedule 2.30, are currently effective and reasonably
sufficient for the operation of the Leased Parcels and the business of
the Company as currently conducted and intended by the Company to be
conducted. The Company is in compliance with all terms and conditions
of the Environmental Permits, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in those
laws or provisions or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated
or approved thereunder and applicable to the Company the absence of
compliance therewith would have an adverse effect on the Company.
(d) Deliveries. Seller has delivered to Buyer true and complete
copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by Seller pertaining to Substances or
Hazardous Activities in, on, or under the Leases Parcels or concerning
compliance by Seller or any other Person for whose conduct they are or
may be held responsible under environmental statutes, rules and
regulations.
SECTION 2.31 Broker's or Finder's Fees. Except as set forth on
Schedule 2.31, no agent, broker, person or firm acting on behalf of
Sellers or the Company is, or will be, entitled to any commission or
broker's or finder's fees from the Sellers or the Company, or from any
person controlling, controlled by or under common control with the
Sellers or the Company, in connection with any of the transactions
contemplated herein.
SECTION 2.32 Inventories. All of the Company's inventory reflected
on the 1996 Financial Statement or thereafter acquired prior to the date
hereof (and not subsequently sold in the ordinary course of business)
consists of items of a quality and quantity saleable in the ordinary
course of the Company's Business (excepting customary waste, scrap and
returns consistent with past practices) as quality goods at prices
having a value at least equal to the amount reflected on the 1996
Financial Statement, except as to obsolete and below standard quality
inventory, the value of which has been written down on the 1996
Financial Statement and on the Company's books of account to realizable
market value. All items of inventory are valued on the 1996 Financial
Statement at the lower of cost or estimated realizable market value, in
accordance with generally accepted accounting principles. The
inventories and supplies for the Business are at reasonably adequate
levels for the continuation of the Business in the ordinary course.
SECTION 2.33 Disclosure. All Documents delivered or to be
delivered by or on behalf of the Sellers in connection with this
Agreement and the transactions contemplated hereby are true, complete
and correct. Neither this Agreement, nor any of the other Documents
contains any untrue statement of a material fact or omits a material
fact necessary to make the statements made by Sellers herein or therein,
in light of the circumstances in which made, not misleading. There is
no fact known to the Sellers which has specific application to the
Company and materially and adversely affects the business or financial
condition of the Company or its properties or assets, which has not been
set forth in the Documents.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
As an inducement to the Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, the Buyer represents
and warrants to the Sellers as follows:
SECTION 3.1 Organization. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Kentucky and is duly qualified to transact business as a
foreign corporation in each jurisdiction in which the failure to so
qualify would have a material adverse impact on the Buyer's ability to
purchase the Common Stock pursuant to the Documents and perform its
obligations under the Documents.
SECTION 3.2 Corporate Power and Authority. The Buyer has the absolute
and unrestricted right and authority to execute, deliver and perform the
Documents. The execution, delivery and performance of the Documents
contemplated hereby and the consummation and performance of the
transactions contemplated hereby and thereby have been duly authorized
and approved by all necessary corporate action of the Buyer. Upon the
Buyer's execution and delivery of the Documents, the Documents will
constitute the legal, valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with their terms, subject to
bankruptcy, reorganization, insolvency and other similar laws affecting
the enforcement of creditor's rights in general.
SECTION 3.3 No Conflict. Neither the execution and delivery by the
Buyer the Documents, the consummation by the Buyer of the transactions
contemplated hereby or thereby, nor the performance by the Buyer of the
Documents in compliance with the terms and conditions hereof and thereof
will not (i) violate, conflict with or result in any breach of any trust
agreement, articles of incorporation, bylaw, judgment, decree, order,
statute or regulation applicable to the Buyer, (ii) violate, conflict
with or result in a breach of or default (or give rise to any right of
termination, cancellation or acceleration) under any law, rule or
regulation or any judgment, decree, order, governmental permit, license
or order or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, agreement or other instrument to which the
Buyer is a party, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer.
SECTION 3.4 Acquisition of Stock for Investment. The Buyer is acquiring
the shares of Common Stock for investment and not with a view toward, or
for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling such shares of Common
Stock. The Buyer agrees that such shares of Common Stock may not be
sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the Securities Act of 1933, as
amended, except pursuant to an exemption from registration available
under such Act. Buyer will not sell, offer to sell or solicit offers to
buy any of the shares of Common Stock in violation of the Securities Act
of 1933 or the securities law of any state. Buyer understands that the
shares of Common Stock have not been registered under federal or any
state's securities laws.
SECTION 3.5 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Buyer is, or will be, entitled to any commission
or broker's or finder's fees from the Buyer, or from any person
controlling, controlled by or under common control with the Buyer, in
connection with any of the transactions contemplated herein.
SECTION 3.6 Governmental Approvals. No registration or filing with, or
consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the
valid execution, delivery and performance by Buyer of this Agreement.
SECTION 3.7 Financial Statements. Buyer has delivered to Sellers true
and complete copies of Buyer's consolidated financial statement for
years ended September 30, 1996 with independent auditor's report. Such
Financial Statements have been prepared in accordance with generally
accepted accounting principles consistently applied and were prepared
from the books and records of Buyer. Such books and records are
complete and correct in all material respects, accurately reflect all
material transactions of Buyer, and have been made available to the
Sellers for examination. Since September 30, 1996, (i) there has been
no material change in the assets, liabilities or financial condition of
Buyer from that reflected in such Financial Statement except for changes
in the ordinary course of business consistent with past practice and
which have not been materially adverse, and (ii) none of the business,
financial conditions, operations or property of Buyer has been
materially adversely affected by any occurrence, individually or in the
aggregate, whether or not insured against.
SECTION 3.8 Buyer's Public Documents. Buyer has delivered to the
Sellers true and complete copies of (i) Buyer's annual report on form
10-K for the year ended September 30, 1996; (ii) Buyer's quarterly
report on form 10-Q for the quarter ended December 31, 1996; (iii)
Buyer's 1996 annual report to shareholders; (iv) Buyer's definitive
proxy statement relating to its 1997 annual shareholders meeting; and
(v) all other filings made by Buyer with the Securities and Exchange
Commissions ("SEC") between February 18, 1997 and the date hereof
(collectively, the SEC Documents).
SECTION 3.9 Absence of the Undisclosed Liabilities.
(a) Except as set forth in the Financial Statements referenced in
Section 3.7 or the SEC Documents, Buyer has no liabilities or
obligations of any nature whatsoever due or to become due, accrued,
absolute, contingent or otherwise of the type required to be reflected
in financial statements in accordance with GAAP, except for liabilities
and obligations incurred since the date thereof in the ordinary course
of business and consistent with past practice and liabilities and
obligations permitted and contemplated under this Agreement which may
have a material adverse effect on the performance by Buyer under the
Documents. To the knowledge of Buyer and subject to the exceptions set
forth in the prior sentence, there is no reasonable basis for the
assertion against Buyer of any liability or obligation of the type
required to be reflected in financial statements in accordance with GAAP
not fully reflected or reserved against in the referenced Financial
Statements or the SEC Documents which may have a material adverse effect
on the performance by Buyer under the Documents..
(b) Buyer is not bound by any agreement, or subject to any charter or
corporate restriction or any legal requirement applicable to it, which
has a material adverse effect on the business of Buyer or which may have
a material adverse effect on the performance by Buyer under the
Documents..
SECTION 3.10 Litigation. There is not (i) action, suit, claim,
proceeding or investigation pending or, to the knowledge or Buyer,
threatened against Buyer (whether or not Buyer is a party or prospective
party thereto), at law or in equity, or before or by any Federal, State,
Municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, (ii) arbitration
proceeding pending against Buyer or (iii) governmental inquiry pending
or, to the knowledge of Buyer, threatened against Buyer which may have a
material adverse effect on the performance by Buyer of its obligations
under the Documents. Buyer has not received any opinion or memorandum
or legal advice from legal counsel to the effect that it is exposed,
from a legal standpoint, to any liability or disadvantage which may be
material to the business, financial condition, operations or property of
Buyer or performance by Buyer of its obligations under the Documents.
To the knowledge of Buyer, there are no facts or circumstances which may
result in institution of any action, suit, claim or legal,
administrative or arbitration proceeding or investigation against, Buyer
or the transactions contemplated hereby which would materially affect
the valid execution, delivery and performance by Buyer of the Documents.
SECTION 3.11 Disclosure. All Documents delivered or to be delivered by
or on behalf of the Buyer in connection with this Agreement and the
transactions contemplated hereby are true, complete and correct in every
material respect. Neither this Agreement, nor any of the other
Documents contains any untrue statement of a material fact or omits a
material fact necessary to make the statements made by Buyer herein or
therein, in light of the circumstances in which made, not misleading.
There is no fact known to the Buyer which has specific application to
Buyer and may have a material adverse affect on the Buyer's ability to
perform its obligations under the Documents, which has not been set
forth in the Documents.
ARTICLE 4.
COVENANTS AND AGREEMENTS
SECTION 4.1 Cooperation. Each of the parties hereto shall use their
best efforts in good faith to perform and fulfill all conditions and
obligations to be fulfilled or performed by it hereunder to the end that
the transactions contemplated hereby will be fully and timely
consummated.
SECTION 4.2 Best Efforts. Sellers and Buyer shall each use their best
efforts to procure upon reasonable terms and conditions all consents and
approvals, completion of all filings, all registrations and
certificates, and satisfaction of all other requirements prescribed by
law which are necessary for the consummation of the transactions
contemplated by this Agreement and the Buyer's ownership and operation
of the Company's Business after the Effective Date. Prior to the
Closing Date, the Sellers will use their best efforts to preserve
Company's relationships with its employees, customers and others having
business relationships with the Company.
SECTION 4.3 Tax Returns. The Company shall cause to be prepared and
timely filed, at its sole expense, all of Company's required tax returns
for all periods ending on or prior to the Effective Date.
SECTION 4.4 Investigations. Sellers shall give Buyer and its employees,
accountants, attorneys and other authorized representatives full access
during all reasonable times to all the premises, properties, books and
records, and furnish Buyer with such financial and operating data,
analyses and other information of any kind respecting Company's business
and properties as Buyer shall from time to time request. Any
investigation shall be conducted in a manner which does not unreasonably
interfere with business operations.
SECTION 4.5 Conduct of Business in the Ordinary Course. Sellers shall
cause the Company to conduct its business only in the ordinary course
from the date thereof through Closing. By way of amplification and not
limitation, except as otherwise provided herein, Sellers shall cause the
Company, without the prior written consent of Buyer, not to do any of
the following except as permitted and contemplated by this Agreement:
(i) borrow or agree to borrow any material amount of funds or incur any
liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise), or guarantee or agree to guarantee any
obligations of others, (ii) cancel any indebtedness owing to it or any
claims that it might possess, waive any material rights of substantial
value or sell, lease, encumber, transfer or otherwise dispose of, or
agree to sell, lease, encumber, or otherwise dispose of its assets or
permit any of its assets to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, (iii)
make any capital expenditure or commitment therefor, (iv) declare or pay
any dividend or make any distribution on any shares of its capital stock
(except as to the 17.5 % per-tax profit bonus for the quarter ending
4/1/97) or redeem, purchase or otherwise acquire any shares of its
capital stock or any option, warrant or other right to purchase or
acquire any such shares, (v) increase its indebtedness for borrowed
money or make any loan to any Person, (vi) write off as uncollectible
any notes or accounts receivable, except write-offs in the ordinary
course of business charged to applicable reserves, (vii) make any
material change in any method of accounting or auditing practice, (viii)
otherwise conduct its business or enter into any transaction, except in
the usual and ordinary manner, or (ix) agree, whether or not in writing,
to do any of the foregoing.
SECTION 4.6 Preservation of Business. Sellers shall cause the Company
to use its best efforts to preserve the possession and control of all of
its assets and Business, to preserve the goodwill of its customers and
others with whom it has business relations, and to do nothing to impair
its ability to keep and preserve its Business as it exists on the date
of this Agreement.
SECTION 4.7 Seller's Notification of Material Changes and Litigation.
Sellers shall provide Buyer with prompt written notice, accompanied by a
reasonably detailed description and analysis, (a) of any material
adverse, or to the knowledge of Sellers, potentially material adverse
change in the condition, earnings or business of Company, (b) of any
event or condition of any character (whether actual or, to the knowledge
of Sellers, threatened) pertaining to the financial condition, business
or, to the knowledge of Sellers, assets of Company that has materially
and adversely affected, or has a substantial possibility of materially
and adversely affecting any of such financial condition, business or
assets, or causing any of such business to be carried on materially less
profitably than prior to the date of this Agreement, and (c) of all
claims, regulatory proceedings and litigation (whether actual or, to the
knowledge of Sellers, threatened and whether or not material) against or
involving Company or (where such actual or threatened claims, regulatory
proceedings or litigation arise in connection with actions taken or
alleged to be taken by any officer, employer or director of Company in
any capacity as an officer, employee or director of Company). Such
adverse or potentially adverse material changes or such claims,
proceedings or litigation shall include, without limitation, any adverse
or potentially adverse material change in or any litigation arising in
connection with any item or matter reported on any schedule, exhibit or
document delivered by Sellers to Buyer in connection with this
Agreement.
SECTION 4.8 Buyer's Notification of Material Changes and Litigation.
Buyer shall provide Sellers with prompt written notice, accompanied by
a reasonably detailed description and analysis, (a) of any material
adverse, or to the knowledge of Buyer, potentially material adverse
change in the condition, earnings or business of Company, (b) of any
event or condition of any character (whether actual or, to the knowledge
of Buyer, threatened) pertaining to the financial condition, business or
assets of Buyer, and (c) of all claims, regulatory proceedings and
litigation (whether actual or, to the knowledge of Buyer, threatened)
against or involving Buyer or (where such actual or threatened claims,
regulatory proceedings or litigation arise in connection with actions
taken or alleged to be taken by any officer, employer or director of
Buyer in any capacity as an officer, employee or director of Buyer), all
in the case that such event has a substantial possibility of materially
and adversely affecting the ability of Buyer to perform its obligations
under the Documents.
SECTION 4.9 Release of any Shareholder Liability for Company Debt.
Schedule 4.9 lists any endorsements, guarantees, or other liability of
any of the Sellers or, as applicable, their wives for debts and
obligations of the Company. From and after the date hereof and
notwithstanding any waiver by Sellers of the condition to Closing
relating to this covenant, the Buyer shall exercise its best efforts to
cause the release of the Sellers and, as applicable, their wives from
any endorsement, guarantee, or other liability (including, without
limitation release of collateral) for the debts and obligations of the
Company and Buyer will be substituted as endorser or guarantor of any
such liability or obligation if and as necessary to achieve such
release. All such releases shall be effective on or prior to Closing.
SECTION 4.10 Access to Information. Until the final maturity date of
the Promissory Notes, Buyer shall furnish the Sellers with copies of all
reports, proxy statements and other communications distributed to its
security holders generally, as well as copies of all other documents
filed with the SEC and copies of all Financial Statements. Buyer agrees
to create an operating committee to meet every 3 months consisting of
Jerry Richmond, the President of the Company, and other persons
designated by the President of the Company. The President of the
Company will designate the date and location of the meetings. The
membership of Jerry Richmond on the committee will be for a minimum of
two years and all reasonable expenses of Mr. Richmond associated with
attendance at the meeting will be reimbursed by the Company.
ARTICLE 5.
CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to make deliveries to the Sellers pursuant
to Section 1.3 hereof and to consummate the other transactions
contemplated hereby is subject to the satisfaction, on or before the
Closing Date, of the following conditions each of which may be waived by
the Buyer in its sole discretion:
SECTION 5.1 Intra-Company Debt. All indebtedness of the Company and
Sellers to the other and all indebtedness of other directors, officers
and employees of the Company to the Company shall have been repaid in
full and the Sellers shall have delivered to the Buyer a certificate,
dated the Closing Date, to such effect.
SECTION 5.2 Representations, Warranties and Covenants. The
representations and warranties of Sellers herein contained shall be true
in all respects as stated herein, both when made and with the same
effect as though made again as of the Closing Date except to the extent
of changes permitted by the terms of this Agreement or where
specifically applicable to the date as to which made. Sellers shall
have performed all obligations and complied with all covenants required
by this Agreement to be performed or complied with by Sellers prior to
the Closing Date. In addition, Sellers shall have delivered to Buyer
their certificate dated as of the Closing Date, to the effect that,
except as disclosed in the certificate, they do not know of any breach
of any representation or warranty made by Sellers in this Agreement or
any failure to perform any covenant made by the Seller of Sellers where
made jointly and severally herein.
SECTION 5.3 Consents. Except as set forth on Schedule 5.3, all
requisite governmental approvals and consents of third parties
identified on such schedule or otherwise identified by the Sellers as
required to be received to prevent any material license, permit or
agreement relating to the Business from terminating prior to its
scheduled termination, as a result of the consummation of the
transactions contemplated hereby, shall have been obtained.
SECTION 5.4 Employment Agreement. Brooks Barwick, Doug Apperson and
Mark Calcutt shall each have entered into separate Employment Agreements
with the Company and Buyer in substantially the form attached hereto as
Exhibit B(1) (the "Employment Agreements").
SECTION 5.4.1 Employment Agreement. Jerry Richmond has entered into an
Employment Agreement with the Company and Buyer in substantially the
form attached hereto as Exhibit B(2)(the "Employment Agreements").
SECTION 5.5 Noncompetition Agreement. Brooks Barwick, Doug Apperson,
and Mark Calcutt shall each have entered into separate Noncompetition
Agreements with Buyer in substantially the form attached hereto as
Exhibit C(1) (the "Noncompetition Agreements").
SECTION 5.5.1 Noncompetition Agreement. Jerry Richmond has entered
into a Noncompetition Agreement with Buyer in substantially the form
attached hereto as Exhibit C(2) (the "Noncompetition Agreements").
SECTION 5.5.2 Lease and Contract Termination. Atlantic Properties and
Atlantic Coil Processing, Inc. have terminated the Lease and Contract
entered into on the 20th day of December, 1996.
SECTION 5.5.3 Operating Lease. Atlantic Properties have entered into
an Operating Lease with Company and Buyer in substantially the form
attached hereto as Exhibit D (the "Operating Lease").
SECTION 5.6 No Actions, Suits or Proceedings. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person,
corporation, governmental agency or other entity shall be pending or, to
the knowledge of the Sellers, threatened, before any court or
governmental body (i) to restrain, prohibit, restrict or delay, or to
obtain damages or a discovery order in respect of this Agreement or the
consummation of the transactions contemplated hereby, or (ii) which has
had or may have a materially adverse effect on the condition, financial
or otherwise, or prospects of the Company. No order, decree or judgment
of any court or governmental body shall have been issued restraining,
prohibiting, restricting or delaying, the consummation of the
transactions contemplated by this Agreement. No insolvency proceeding
of any character including without limitation, bankruptcy, receivership,
reorganization, dissolution or arrangement with creditors, voluntary or
involuntary, affecting the Company shall be pending, and the Company
shall not have taken any action in contemplation of, or which would
constitute the basis for, the institution of any such proceedings and
the Sellers shall have delivered to the Buyer a certificate, dated the
Closing Date, to such effect.
SECTION 5.7 Opinion of Counsel to the Seller. The Buyer shall have
received from William M. Black, Jr., counsel to Sellers ("Counsel to
Sellers"), an opinion, dated as of the Closing Date, in form and
substance reasonably satisfactory to Buyer, and to the following effect:
(a) The Company is a corporation duly organized and validly existing
under the laws of the State of North Carolina. The Company is not
qualified to do business as a foreign corporation in any other state.
To the knowledge of Counsel to Sellers, the nature of the Company's
business does not require Company to be licensed or qualified in any
other jurisdiction where the failure to be so qualified would have a
material adverse affect on the business or properties of the Company.
The Company has the corporate power and authority to own, lease, operate
and hold its properties and to carry on its business as now conducted;
(b) To the knowledge of Counsel to Sellers, (i) each Seller has full
legal power, capacity and authority to execute and deliver the Documents
and to consummate the transactions contemplated thereby; and (ii) the
Documents have been duly and validly executed and delivered by each
Seller and constitute the legal, valid and binding obligation of each
such Seller, enforceable against such Seller in accordance with their
terms subject to bankruptcy, reorganization, insolvency and other
similar laws affecting the enforcement of creditor's rights in general
and to general principals of equity (regardless of whether considered in
a proceeding in equity or an action at law);
(c) The Company has authorized capital consisting of 100,000 shares of
common stock, with a par value of one dollar ($1) per share, of which
100,000 shares are issued and outstanding and no shares are held as
treasury stock. All of the outstanding shares of the Company have been
duly authorized and validly issued and are fully paid and nonassessable.
None of the outstanding shares of the Company have been issued in
violation of any preemptive right. To the knowledge of Counsel to
Sellers, there are no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other
agreements of any character providing for the purchase, issuance or sale
of any shares of capital stock of the Company, other than as
contemplated by this Agreement;
(d) To the knowledge of Counsel to Sellers, the Company has no
subsidiaries and does not own, directly or indirectly, any capital stock
or other equity or ownership or proprietary interest in any other
corporation, partnership, association, trust, joint venture or other
entity;
(e) Except for the possible application of the Hart, Scott Rodino Act,
as to which no opinion will be expressed, no registration or filing
with, or consent or approval of or other action by, any Federal, state
or other governmental agency or instrumentality is or will be necessary
for the valid execution, delivery and performance by Sellers of this
Agreement;
(f) To the knowledge of Counsel to Sellers, except as disclosed on the
Schedules hereto, there is no (i) action, suit, claim, proceeding or
investigation pending or threatened against or affecting the Company
(whether or not such Company is a party or prospective party thereto),
at law or in equity, or before or by any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding
pending relating to the Company or (iii) governmental inquiry pending or
threatened against or involving the Company, and there is no basis for
any of the foregoing. To the knowledge of Counsel to Sellers, the
Company has not received any opinion or memorandum or legal advice from
legal counsel to the effect that it is exposed, from a legal standpoint,
to any liability or disadvantage which may be material to the business,
prospects, financial condition, operations, property or affairs of the
Company. To the knowledge of Counsel to Sellers, there are no
outstanding orders, writs, judgments, injunctions or decrees served upon
the Company by any court, governmental agency or arbitration tribunal
against the Company. To the knowledge of Counsel to Sellers, there are
no facts or circumstances which may result in institution of any action,
suit, claim or legal, administrative or arbitration proceeding or
investigation against, involving or affecting the Company or the
transactions contemplated hereby. To the knowledge of Counsel to
Sellers, except as disclosed on the Schedules hereto, the Company is not
in default with respect to any order, writ, injunction or decree known
to or served upon it from any court or of any Federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. To the knowledge of Counsel to
Sellers, except as disclosed on the Schedules hereto, there is no action
or suit by the Company pending or threatened against others;
(g) The Employment Agreements have been duly executed and delivered
by, and constitute the legal, valid and binding obligation of each
Employee thereunder, enforceable against him in accordance with its
terms subject to bankruptcy, reorganization, insolvency and other
similar laws affecting the enforcement of creditor's rights in general
and to general principals of equity (regardless of whether considered in
a proceeding in equity or an action at law);
(h) The Noncompetition Agreements have been duly executed and
delivered by, and constitute the legal, valid and binding obligation of
each Seller thereunder, enforceable against him in accordance with its
terms subject to bankruptcy, reorganization, insolvency and other
similar laws affecting the enforcement of creditor's rights in general
and to general principals of equity (regardless of whether considered in
a proceeding in equity or an action at law); and
(i) The Lease and Contract Termination and the Operating Lease have
been duly executed and delivered by, and constitute the legal valid and
binding obligation of Atlantic Properties, enforceable in accordance
with its terms, subject to bankruptcy, reorganization, insolvency and
other similar laws affecting the enforcement of creditor's rights in
general and to general principals of equity (regardless of whether
considered in a proceeding in equity or an action at law); and
(j) The execution and delivery of the Documents, the consummation of
the transactions contemplated hereby and thereby, and the performance of
the Documents in compliance with the terms and conditions hereof and
thereof by the Sellers will not, to the knowledge of Counsel to Sellers,
(i) violate, conflict with or result in any breach of any trust
agreement, articles of incorporation, bylaw, judgment, decree, order,
statute or regulation applicable to the Company, (ii) violate, conflict
with or result in a breach, default or termination or give rise to any
right of termination, cancellation or acceleration of the maturity of
any payment date of any of the obligations of the Company or increase or
otherwise affect the obligations of the Company under any law, rule,
regulation or any judgment, decree, order, governmental permit, license
or order or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, agreement or other instrument or obligation
related to the Company or to the Seller's ability to consummate the
transactions contemplated hereby or thereby, except for such defaults
(or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained in writing and provided
to the Buyer, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company.
SECTION 5.8 Investigation Satisfactory. The Buyer shall be satisfied
in all respects with the results of its investigation of the properties,
customers, prospects and affairs of the Sellers and the Company.
SECTION 5.9 Closing Documents. The Sellers shall have delivered all
of the resolutions, certificates, documents and instruments required by
this Agreement.
SECTION 5.10 Approval of the Buyer and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be
delivered by, or at the behest or direction of, the Sellers hereunder or
incident to their performance hereunder, and all other related matters,
shall be reasonably satisfactory as to form and substance to the Buyer
and its counsel.
SECTION 5.11 Release of Claims. The Claims set forth on Schedule 2.1
shall have been released in full to Buyer's satisfaction.
ARTICLE 6.
CONDITIONS TO THE SELLERS' OBLIGATIONS
The obligation of the Sellers to transfer the Common Stock to the Buyer
and to consummate the other transactions contemplated hereby is subject
to the satisfaction, on or before the Closing Date, of the following
conditions, each of which may be waived by the Sellers in their sole
discretion:
SECTION 6.1 Representations, Warranties and Covenants. The
representations and warranties of Buyer herein contained shall be true
in all respects as stated herein, both when made and with the same
effect as though made again as of the Closing Date except to the extent
of changes permitted by the terms of this Agreement or except for
breaches of representations and warranties which would not have a
material adverse effect on the Buyer's ability to pay its obligations
under this Agreement. Buyer shall have performed all obligations and
complied with all covenants required by this Agreement to be performed
or complied with by Buyer prior to the Closing Date. In addition, Buyer
shall have delivered to Sellers its certificate dated as of the Closing
Date and signed by one of its officers, to the effect that, except as
disclosed in the certificate, he does not know of any breach of any
representation or warranty made by Buyer in this Agreement, or of any
failure to perform any covenant made by Buyer herein or to satisfy any
condition to Buyer's obligations to effect the transactions contemplated
by this Agreement which would have a material adverse effect on the
Buyer's ability to pay its obligations under this Agreement.
SECTION 6.2 No Actions, Suits or Proceedings. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person,
corporation, governmental agency or other entity shall be pending or, to
the knowledge of the parties to this Agreement, threatened, before any
court or governmental body to restrain, prohibit, restrict or delay, or
to obtain damages or a discovery order in respect of this Agreement or
the consummation of the transactions contemplated hereby. No order,
decree or judgment of any court or governmental body shall have been
issued restraining, prohibiting, restricting or delaying, the
consummation of the transactions contemplated by this Agreement. No
insolvency proceeding of any character including without limitation,
bankruptcy, receivership, reorganization, dissolution or arrangement
with creditors, voluntary or involuntary, affecting the Buyer shall be
pending, and the Buyer shall not have taken any action in contemplation
of, or which would constitute the basis for, the institution of any such
proceedings and Buyer shall have delivered to Sellers a certificate,
dated Closing Date, to such effect.
SECTION 6.3 Closing Payments. Buyer shall have delivered the closing
payments required by Section 1.3(a).
SECTION 6.4 Promissory Note. Buyer shall have duly executed and
delivered the Promissory Note in the form set forth in Exhibit A.
SECTION 6.5 Employment Agreements. The Company and Buyer shall have
entered into the Employment Agreements with Brooks Barwick, Doug
Apperson and Mark Calcutt in the form set forth in Exhibit B(1).
SECTION 6.6 Employment Agreements. Company and Buyer shall have
entered into the Employment Agreement with Jerry Richmond in the form
attached hereto as Exhibit B(2).
SECTION 6.7 Noncompetition Agreements. Buyer shall have entered into the
Noncompetition Agreement with Brooks Barwick, Doug Apperson and Mark
Calcutt in substantially the form attached hereto as Exhibit C(1).
SECTION 6.8 Noncompetition Agreements. Buyer shall have entered into
the Noncompetition Agreement with Jerry Richmond in substantially the
form attached hereto as Exhibit C(2).
SECTION 6.9 Operating Lease. The Company and Buyer shall have entered
into the Operating Lease with Atlantic Properties in substantially the
form attached hereto as Exhibit D.
SECTION 6.10 Release of Sellers from Guarantee of Company Debt. Buyer
shall have obtained the release of Sellers from guarantee of Company
debt as required by Section 4.9.
SECTION 6.11 Opinion of Counsel to Buyer. The Sellers shall have
received from John Baumann, counsel to Buyer, an opinion dated as of the
Closing Date, in form and substance reasonably satisfactory to Sellers,
and to the following effect:
(a) The Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Kentucky and is duly
qualified to transact business as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material
adverse impact on the Buyer's ability to pay its obligations under this
Agreement;
(b) The Buyer has the corporate power and authority to execute,
deliver and perform the Agreement and the other Documents. The
execution, delivery and performance of the Agreement and the other
Documents and the consummation of the transactions contemplated hereby
and thereby have been duly and validly executed and delivered by Buyer
and constitute the legal, valid and binding obligations of Buyer
enforceable against Buyer in accordance with their terms subject to
bankruptcy, reorganization, insolvency and other similar laws affecting
the enforcement of creditor's rights in general and to general
principals of equity (regardless of whether considered in a proceeding
in equity or an action at law); and
(c) The execution and delivery of the Agreement and the other
Documents, the consummation of the transactions contemplated hereby and
thereby, and the performance of the Agreement and such other agreements
in compliance with the terms and conditions hereof and thereof by the
Buyer will not (i) violate, conflict with or result in any breach of any
trust agreement, articles of incorporation, bylaw, judgment, decree,
order, statute or regulation applicable to the Buyer, (ii) violate,
conflict with or result in a breach of or default (or give rise to any
right of termination, cancellation or acceleration) under any law, rule
or regulation or any judgment, decree, order, governmental permit,
license or order or any of the terms, conditions or provisions of any
mortgage, indenture, note, license, agreement or other instrument to
which the Buyer is a party, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer.
(d) No registration or filing with, or consent or approval or other
action by, any Federal, State or other governmental agency or
instrumentally is or will be necessary for the valid execution, delivery
and performance by Buyer of the Documents.
SECTION 6.12 Closing Documents. The Buyer shall have delivered all of
the resolutions, certificates, documents and instruments required by
this Agreement.
SECTION 6.13 Approval of the Sellers and Their Counsel. All actions,
proceedings, consents, instruments and documents required to be
delivered by, or at the behest or direction of, the Buyer hereunder or
incident to its performance hereunder, and all other related matters,
shall be reasonably satisfactory as to form and substance to the Sellers
and their counsel.
ARTICLE 7
THE CLOSING AND CERTAIN CLOSING DELIVERIES
SECTION 7.1 Time and Place of Closing. Upon the terms and subject to
the satisfaction or waiver of the conditions contained in this
Agreement, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of William M.
Black, Jr., on April 1, 1997 or on such other date and time as may be
mutually agreed upon by the parties prior to April 1, 1997 (the "Closing
Date"). The transactions contemplated by this Agreement shall be
effective as of the commencement of business (the "Effective Time") on
April 1, 1997 (the "Effective Date").
SECTION 7.2 Deliveries by the Sellers. At the Closing, the Sellers will
deliver or cause the Company to deliver to the Buyer the following:
(a) Stock certificates representing all of the issued and outstanding
shares of Common Stock owned by the Sellers duly endorsed in blank or
duly executed instruments of transfer and any other documents that are
necessary to transfer to the Buyer good and title to all issued and
outstanding shares of Common Stock;
(b) The stock books, stock ledgers, minute books, and other corporate
records of the Company;
(c) Resignations dated the Closing Date of all of the directors and
officers of the Company as designated by the Buyer;
(d) All required consents of third parties to the sale conveyance,
transfer, assignment and delivery of the Common Stock of the Company
hereunder;
(e) A certificate of the Secretary of the Company certifying as of the
Closing Date (i) a true, correct, and complete copy of the Articles of
Incorporation of the Company and all amendments thereto as in effect on
the Closing Date; (ii) a true, correct, and complete copy of the bylaws
of the Company and all amendments thereto as in effect on the Closing
Date; and (iii) Certificate of Existence from the North Carolina
Secretary of State;
(f) The certificate of the Sellers required by Sections 5.2 and 5.6;
(g) The affidavit of each Seller certifying as to his non-foreign
status in accordance with Section 1445(b)(2) of the Code;
(h) The Employment Agreements required by Section 5.4 and 5.4.1 above;
(i) The Noncompetition Agreements required by Section 5.5 and 5.5.1
above;
(j) The Lease and Contract Termination required by Section 5.5.2
above;
(k) The Operating Lease required by Section 5.5.3 above;
(l) The Opinion of Sellers' Counsel required by Section 5.7 above;
(m) A Release from each Seller which releases the Company from any and
all claims, known or unknown, contingent or direct, which he may have
against the Company as of the Closing Date, other than claims arising
under this Agreement and the other Documents and the transactions
contemplated hereby;
(n) A certificate to the effect that the Lease and Contract entered
into the 20th day of December 1996 between Atlantic Properties, a North
Carolina partnership, and Atlantic Coil Processing, Inc., a North
Carolina Corporation, has been terminated by mutual agreement effective
4/1/97.
(o) All other documents, instruments and writings required to be
delivered by the Sellers at or prior to the Closing Date pursuant to
this Agreement or the other Documents or otherwise required in
connection herewith.
SECTION 7.3 Deliveries by the Buyer. At the Closing, the Buyer will
deliver the following to or for the account of Sellers:
(a) The Closing Payments required by Section 1.3(a) above;
(b) The Promissory Note required by Section 1.3(b);
(c) The Employment Agreements required by Section 5.4 and 5.4.1;
the Noncompetition Agreements required by Section 5.5 and 5.5.1 above;
(e) The Operating Lease required by Section 5.5.3;
(f) The Release of Sellers from guarantee of Company Debt as required
by Section 4.9;
(g) The Opinion of Buyer's Counsel required by Section 5.7 above;
(h) A certificate of an officer of the Buyer certifying as of the
Closing Date (i) a true, correct, and complete copy of the Articles of
Incorporation of the Buyer and all amendments thereto as in effect on
the Closing Date; (ii) a true, correct, and complete copy of the bylaws
of the Buyer and all amendments thereto as in effect on the Closing
Date; (iii) a true, correct, and complete copy of the resolutions
approved and adopted by the Board of Directors of the Buyer authorizing
the transactions contemplated herein; (iv) Certificate of Existence from
the Kentucky Secretary of State; (v) the incumbency of the duly
authorized officers of the Buyer; and (vi) the certifications required
by Sections 6.1 and 6.2;
(i) All other documents, instruments and writings required to be
delivered by the Buyer at or prior to the Closing Date pursuant to this
Agreement or the other Documents or otherwise required in connection
herewith.
ARTICLE 8
TERMINATION
This Agreement may be terminated at any time before the Closing Date:
SECTION 8.1 Date Certain. By Buyer or Sellers, if for any reason the
transactions contemplated by this Agreement have not been consummated by
not later than May 8, 1997.
SECTION 8.2 Mutual Consent. By Buyer and Sellers, if for any reason
consummation of the transactions contemplated by this Agreement is
inadvisable in the opinions of both Buyer and Sellers.
SECTION 8.3 Breaches. Buyer may, in addition to other remedies which
may be available, upon prior written notice, terminate this Agreement in
the event either Seller materially breaches any representation, warranty
or covenant in this Agreement or upon the failure and nonwaiver of any
condition precedent set out in Article 5 unless within ten (10) days
after the written notice from the Buyer, such Seller shall have cured
such breach or failure to the reasonable satisfaction of Buyer. Sellers
may, in addition to other remedies which may be available, upon prior
written notice, terminate this Agreement in the event Buyer materially
breaches any representation, warranty or covenant in this Agreement or
upon the failure and nonwaiver of any condition precedent set out in
Article 6 unless within ten (10) days after the written notice from
Sellers, Buyer shall have cured such breach or failure to the reasonable
satisfaction of Sellers. Additionally, Buyer shall be in default and
breach of this Agreement upon default or breach by Buyer or Company, as
the context permits, under the terms of the Promissory Note dated April
1, 1997 by Buyer as Maker to Sellers; the Employment Agreements dated
effective April 1, 1997 between Company, Buyer and the respective
Sellers; the Noncompetition Agreements dated effective April 1, 1997 by
and between Buyer and the respective Sellers or the Operating Lease
dated effective April 1, 1997 by and between Company, Buyer and the
Landlord named therein (collectively "Closing Documents") and such
default or breach is not cured within the earlier of the cure period
provided therein or, in the absence of a cure period therein, within
thirty (30) days after written notice to Buyer and Company.
ARTICLE 9
SURVIVAL; INDEMNIFICATION AND OFFSET
SECTION 9.1 Survival. All representations and warranties in this
Agreement and the other Documents shall survive the Closing of the
purchase of the Common Stock contemplated hereby for a period of two
years and all such representations and warranties shall expire on the
second anniversary of the Closing Date, except that (a) claims, if any,
asserted in writing prior to such second anniversary identified as a
claim for indemnification pursuant to this Article shall survive until
finally resolved and satisfied in full, and (b) tax or environmental
claims arising from a breach of Sections 2.28 and 2.30, respectively,
shall survive for the full period of the applicable statute of
limitations, and until finally resolved and satisfied in full if
asserted on or prior to the expiration of any such period.
SECTION 9.2 Indemnification by the Sellers. Subject to the terms
herein, the Sellers shall indemnify, defend, and hold the Company and
the Buyer and their successors and assigns (the "Sellers' Indemnitees")
harmless (which indemnification shall be several with regard to
individual representations and warranties and joint and several with
regard to joint and several representations and warranties) from,
against and with respect to any claim, liability, obligation, loss,
damage, assessment, judgment, cost and expense of any kind or character
(the "Damages"), arising out of or attributable to:
(a) Any breach of any representation or warranty of the Sellers
contained in this Agreement;
(b) Any failure by the Sellers to perform or observe, or to have
performed or observed, in full, any agreement to be performed or
observed by any of them under this Agreement;
(c) Any additional tax liability for examinations of any tax returns
of the Company in progress as of the Effective Date.
(d) Any taxes due or assessed against the Company for periods ending
on or prior to the Effective Date.
Provided, however, Seller's Indemnities shall not be entitled to
indemnification hereunder until Damages in total exceed the Basket
Amount and then only to the extent of aggregate damages in excess of
such Basket Amount.
Any obligation of any Seller to indemnify Seller's Indemnitees shall in
no event exceed the amount of the Purchase Price paid to such Seller.
In determining the existence and amount of any indemnification liability
under this Agreement by the Sellers, the amount of any allowable
deductions, credits or other tax benefits, whether allowable in the year
in which such damages incurred or some prior or subsequent year (not
closed by Agreement or by operation of law) resulting from such
liability and/or the amount of any insurance applicable to any such
liability, shall be taken into account or offset against the amount of
such liability (after deducting the costs and expenses involved).
SECTION 9.3 Notice to Sellers, Etc. If any of the matters as to which
the Sellers' Indemnitees are entitled to receive indemnification under
Section 9.2 should entail litigation with or claims asserted by parties
other than the Sellers, the Sellers shall be given prompt notice thereof
and shall have the right, at their expense, to control such claim or
litigation upon prompt notice to Buyer of their election to do so. To
the extent requested by the Sellers, the Buyer, at its expense, shall
cooperate with and assist the Sellers, in connection with such claim or
litigation. Buyer shall have the right to appoint single counsel to
consult with and remain advised by the Sellers in connection with such
claim or litigation. The Sellers shall have final authority to
determine all matters in connection with such claim or litigation;
provided, however, that the Sellers shall not settle any third party
claim without the consent of the Buyer, which shall not be unreasonably
denied or delayed.
SECTION 9.4 Indemnification by the Buyer. The Buyer shall indemnify,
defend, and hold the Sellers and their heirs, executors, and legal
representatives (the "Buyer's Indemnitees") harmless from, against and
with respect to any claim, liability, obligation, loss, damage,
assessment, judgment, cost and expense of any kind or character (the
"Damages"), arising out of or attributable to:
(a) Any breach of any representation or warranty of the Buyer
contained in this Agreement;
(b) Any failure by the Buyer to perform or observe, or to have
performed or observed, in full, any agreement or condition to be
performed or observed by it under any of the Documents;
(c) Seller's and, as applicable Seller's wives', personal guarantees
of Company debt.
(d) The operation of the Business subsequent to the Closing Date.
Provided, however, Buyer's Indemnitees shall not be entitled to
indemnification hereunder until Damages in total exceed $10,000 and then
only to the extent of aggregate damages in excess of $10,000.
SECTION 9.5 Notice to the Buyer, Etc. If any of the matters as to which
the Buyer's Indemnitees are entitled to receive indemnification under
Section 9.4 should entail litigation with or claims asserted by parties
other than the Buyer, the Buyer shall be given prompt notice thereof and
shall have the right, at its expense, to control such claim or
litigation upon prompt notice to Sellers of its election to do so. To
the extent requested by the Buyer, the Sellers, at their expense, shall
cooperate with and assist the Buyer, in connection with such claim or
litigation. Sellers shall have the right to appoint single counsel to
consult with and remain advised by the Buyer in connection with such
claim or litigation. The Buyer shall have final authority to determine
all matters in connection with such claim or litigation; provided,
however, that the Buyer shall not settle any third party claim without
the consent of the Sellers, which shall not be unreasonably denied or
delayed.
SECTION 9.6 Survival of Indemnification. The obligations to indemnify
and hold harmless pursuant to this Article 9 shall survive the Closing
of the purchase of the Common Stock contemplated hereby for a period of
two years, notwithstanding any investigation at any time made by or on
behalf of any party, except that (a) claims, if any, asserted in writing
prior to such second anniversary identified as a claim for
indemnification pursuant to this Article 9 shall survive until finally
resolved and satisfied in full, and (b) tax or environmental claims
arising from a breach of Sections 2.28 and 2.30, respectively, shall
survive for the full period of the applicable statute of limitations,
and until finally resolved and satisfied in full if asserted on or prior
to the expiration of any such period.
SECTION 9.7 Offset and Indemnity "Basket".. Each Seller acknowledges
and agrees that the Buyer shall be entitled to offset any indemnity
claim under Section 9.2 against any payment due to such Seller under
Section 1.3 hereof, at Buyer's sole option, to the extent and under the
following conditions:
(a) As soon as practicable but within thirty (30) days after the
Closing Date, Company shall cause Allen & Woodall, LLP, an independent
accounting firm, to prepare a balance sheet of the Company immediately
prior to the Effective Time (the "Closing Balance Sheet") setting forth
the Net Shareholders' Equity of the Company using accrual accounting and
in conformance with generally accepted accounting principles (the "Net
Shareholders' Equity") to be completed within 30 days of engagement. A
copy of the Closing Balance Sheet shall be promptly furnished to Buyer
and Sellers within 60 days of the Closing Date. For purposes of this
Section , "Net Shareholders' Equity" shall mean the net shareholder
equity at the Closing Date determined in accordance with generally
accepted accounting principles applied on a consistent basis.
(b) Buyer shall have the right to offset up to $500,000 of the
Deferred Purchase Price against claims which may accrue to Buyer under
the terms of this Agreement which, in the aggregate, exceed the amount
equal to (i) $50,000 plus (ii) an amount, if any, up to $100,000 by
which Net Shareholders' Equity exceeds $1,200,000 as of the Closing Date
("Basket Amount"), with Buyer entitled to recover for any such claims
only for and to the extent exceeding such amount.
(c) For indemnity claims which in the cumulative do not exceed Basket
Amount, Buyer shall be required to provide a certification executed by
an officer of the Buyer certifying that (1) the indemnity claim is
valid, (2) the Buyer can substantiate the indemnity claim, and (3) said
substantiation has been provided to the Sellers at least 10 days prior
to the certification.
(d) Upon the occurrence of an indemnity claim being presented which,
after adding it to all prior certified Section 9.7(c) indemnity claims,
would exceed the Basket Amount, in order to have such indemnity claim
offset from the Deferred Purchase Price, Buyer must (A) provide a
certification executed by an officer of the Buyer certifying that (1)
the indemnity claim is valid, (2) the Buyer can substantiate the
indemnity claim, and (3) said substantiation has been provided to the
Sellers under Section 10.7 at least 10 days prior to the certification
and (B) unless the Sellers agree to the indemnity claim in writing,
utilize the Section 10.12 arbitration procedure and obtain a decision in
Buyer's favor from the arbitrator.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 Knowledge of Sellers. Where any representation or
warranty contained in this Agreement is expressly qualified by reference
to the knowledge of Sellers, each Seller confirms that the
representation or warranty is correct to his best knowledge and that he
has made due and diligent inquiry of the Company's President, Vice
President and Treasurer as to the matters that are the subject of such
representations and warranties.
SECTION 10.2 Knowledge of Buyer. Where any representation or
warranty contained in this Agreement is expressly qualified by reference
to the knowledge of Buyer, Buyer confirms that it has made due and
diligent inquiry of its President as to the matters that are the subject
of such representations and warranties.
SECTION 10.3 "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or
agency thereof.
SECTION 10.4 "Balance Sheet Date" Defined. "Balance Sheet Date"
shall mean December 31, 1996.
SECTION 10.5 "1996 Financial Statement" Defined. "1996 Financial
Statement" shall mean the Company's Financial Statement for Years Ended
December 31, 1996 and 1995 with Independent Auditor's Report.
SECTION 10.6 Knowledge of Sellers' Counsel. Where any opinion of
Sellers' counsel contained in this Agreement is stated to be based upon
knowledge, the following definition shall apply: the term "to knowledge
of Seller's counsel" means counsel reasonably believes that opinion,
representation or warranty to be true, has no actual knowledge or notice
that such opinion, representation or warranty is inaccurate or
incomplete, has made inquiry of Sellers as to the accuracy and
completeness of such opinion, representation or warranty and has relied
upon Sellers' assurance of accuracy and completeness of such opinion,
representation or warranty, but has no knowledge of any facts or
circumstances which would render reliance thereon unjustified without
further inquiry.
SECTION 10.7 Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made
by telecopy or facsimile transmission, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to the Buyer:
Brad Ray
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
Fax No: (502) 245-3821
With a copy to:
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY l 40245
Attn: John Baumann
Fax No: (502) 245-0542
If to Sellers:
Mark Calcutt
Doug Apperson
H. Brooks Barwick, III
c/o Atlantic Coil Processing, Inc.
Personal & Confidential
P.O. Box 1683
Clinton, NC 28328
Fax No: (910) 592-7675
Jerry F. Richmond
195 Magnolia Drive
Ormond Beach, FL 31276
With a copy to:
William M. Black, Jr.
7200 Stonehenge Drive, Suite 206
P.O. Box 19866
Raleigh, NC 27619
Fax No: (919) 676-5584
All notices, requests, consents and other communications hereunder shall
be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth
above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, (iii)
if made by telecopy or facsimile transmission, at the time that receipt
thereof has been acknowledged by electronic confirmation or otherwise,
or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is sent. The address of any party
herein may be changed at any time by written notice to the parties.
SECTION 10.7 Entire Agreement. This Agreement and the other
Documents embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede
all prior oral or written agreements and understandings relating to the
subject matter hereof. No statement, representation, warranty, covenant
or agreement of any kind not expressly set forth in the other Documents
shall affect, or be used to interpret, change or restrict, the express
terms and provisions of this Agreement.
SECTION 10.8 Modifications and Amendments. The terms and
provisions of this Agreement may be modified or amended only by written
agreement executed by all parties hereto.
SECTION 10.9 Assignment/Binding Effect. Neither this Agreement,
nor any right hereunder, may be assigned by any of the parties hereto
without the prior written consent of the other parties. This Agreement
shall be binding upon, and inure to the benefit of, the parties hereto
and their respective heirs, personal representatives, successors and
permitted assigns.
SECTION 10.10 Parties in Interest. Nothing in this Agreement,
express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement. Nothing in this Agreement shall be construed to create any
rights or obligations except among the parties hereto, and no person or
entity shall be regarded as a third-party beneficiary of this Agreement.
SECTION 10.11 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance
with and governed by the internal laws of the State of North Carolina
without giving effect to the conflict of law principles thereof.
SECTION 10.12 Arbitration. Any dispute or difference between the
parties hereto arising out of or relating to this Agreement shall be
finally settled by arbitration in accordance with the Commercial Rules
of the American Arbitration Association by a qualified arbitrator. The
Sellers, jointly, and the Buyer shall each choose and pay for an
American Arbitration arbitrator who will thereupon agree upon a
qualified arbitrator to decide the dispute. If either the Sellers or
the Buyer fails to choose an arbitrator within 30 days after notice of
commencement of arbitration or if the two arbitrators fail to choose a
third arbitrator within 30 days after their appointment, the American
Arbitration Association shall, upon the request of any party to the
dispute or difference, appoint the arbitrator or arbitrators to
constitute or complete the panel as the case may be. Arbitration
proceedings hereunder may be initiated by either the Seller, jointly, or
the Buyer making a written request to the American Arbitration
Association, together with any appropriate filing fee, at the office of
the American Arbitration Association in Charlotte, North Carolina. All
arbitration proceedings shall be held in Raleigh, North Carolina. Any
order or determination of the arbitral tribunal shall be final and
binding upon the parties to the arbitration and may be entered in any
court having jurisdiction.
SECTION 10.13 Severability. In the event that any arbitral tribunal
of competent jurisdiction shall finally determine that any provision, or
any portion thereof, contained in this Agreement shall be void or
unenforceable in any respect, then such provision shall be deemed
limited to the extent that such arbitral tribunal determines it
enforceable, and as so limited shall remain in full force and effect.
In the event that such arbitral tribunal shall determine any such
provision, or portion thereof, wholly unenforceable, the remaining
provisions of this Agreement shall nevertheless remain in full force and
effect.
SECTION 10.14 Interpretation. The parties hereto acknowledge and
agree that: (i) the rule of construction to the effect that any
ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement, and (ii) the terms and
provisions of this Agreement shall be construed fairly as to all parties
hereto and not in favor of or against any party, regardless of which
party was generally responsible for the preparation of this Agreement.
SECTION 10.15 Headings and Captions. The headings and captions of
the various subdivisions of this Agreement are for convenience of
reference only and shall in no way modify, or affect, or be considered
in construing or interpreting the meaning or construction of any of the
terms or provisions hereof.
SECTION 10.16 Exhibits and Schedules. All Exhibits and Schedules
attached hereto and/or referenced herein are incorporated herein. All
disclosures on any Schedules are deemed disclosures for purposes of all
Schedules notwithstanding the absence of express reference language or,
at times, the inclusion of express reference language.
SECTION 10.17 Reliance. The parties hereto agree that,
notwithstanding any right of any party to this Agreement to investigate
the affairs of any other party to this Agreement, the party having such
right to investigate shall have the right to rely fully upon the
representations and warranties of the other party expressly contained
herein.
SECTION 10.18 Expenses. Except as otherwise set forth hereinafter,
each party shall pay its own fees and expenses (including the fees of
any attorneys, accountants, appraisers or others engaged by such party)
incurred in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby
are consummated. Notwithstanding the foregoing, Company shall pay up to
$25,000 of Sellers' legal, accounting and professional expenses
attributable to the transactions contemplated hereunder for services
rendered or expenses incurred on or after February 8, 1997; the Sellers
shall be responsible for any amount of such costs and expenses in excess
of $25,000; and, without limitation, the parties hereto acknowledge that
Company's customary audit fees and costs (including those relating to
the 1996 Financial Statements and the Closing Balance Sheet) shall not
be included in the calculation of the referenced $25,000 and shall be
paid by Company.
SECTION 10.19 Gender. All pronouns and any variation thereof shall
be deemed to refer to the masculine, feminine, neuter, singular, or
plural as the identity of the person or entity or the context may
require.
SECTION 10.20 Publicity. Except by the mutual agreement between the
Sellers and Buyer, no party shall issue any press release or otherwise
make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement except as may be required
by law.
SECTION 10.21 Counterparts. This Agreement may be executed in one
or more counterparts, and by different parties hereto on separate
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[Remainder of this page has been intentionally left blank]
IN WITNESS WHEREOF, the Buyer has caused this Agreement to be executed
by its duly authorized officer and each Seller has executed this
Agreement all as of the day and year first above written.
BUYER:
STEEL TECHNOLOGIES INC.
By: ______________________________
Brad Ray
Title: President
SELLERS:
___________________________________
Jerry Richmond
Brooks Barwick, III
___________________________________
Doug Apperson
___________________________________
Mark Calcutt
EXHIBIT A
NONNEGOTIABLE PROMISSORY NOTE
$3,625,000 April 1, 1997
FOR VALUE RECEIVED, Steel Technologies Inc., a Kentucky corporation
("Maker"), hereby promises to pay the total principal sum of Three
Million Six Hundred Twenty-Five Thousand DOLLARS ($3,625,000.00) to
William M. Black, Jr., Attorney at Law 7200 Stonehenge Drive, Suite 206,
Raleigh, North Carolina 27613 (or such other agent and/or such other
place as the legal holders hereof may designate in writing) as agent for
Jerry Richmond, Brooks Barwick, Doug Apperson and Mark Calcutt,
("Payees"). Principal and interest are payable in lawful money of the
United States by wire transfer, certified checks or common stock of
Steel Technologies Inc. (hereinafter "Stock") subject to the below
stated terms and provisions.
Principal of $1,812,500 and all accrued interest, or the equivalent sum
in Stock (subject to the below stated terms and provisions)or any
combination thereof, shall be due and payable on April 1, 1998. The
remaining owed principal of $1,812,500 and all accrued interest, or the
equivalent sum in Stock (subject to the below stated terms and
provisions)or any combination thereof, shall be due and payable in full
on April 1, 1999. The unpaid principal amount of this Note shall bear
interest at 7% per annum (the "Interest Rate").
Stock which may be substituted for all or a portion of any due and
payable principal and accrued interest shall be valued at the closing
price of Steel Technologies Inc. common stock, STTX on the NASDAQ stock
market on the trading day before the Stock is provided to Payees. Maker,
as a method of payment for the Promissory Note has the option of making
payments on the due dates in the form of cash or common stock of Steel
Technologies Inc. at its discretion. Specifically,. Maker reserves the
right to exercise its option for payment to the Payees in either form of
cash or stock equivalent. Maker covenants and agrees that it will give
Payees reasonable advance notice of its intention to make any payment of
the Promissory Note in common stock and will deliver such common stock
to the respective Payees as directed by Payees. The Payees acknowledge
and agree that all shares, if any, of Steel Technologies common stock
issued as payment (or partial payment) for the Promissory Note will not,
on the date of delivery thereof, have been registered under the
Securities Act of 1993, as amended (the "Securities Act"), or any state
securities laws, and will constitute "restricted securities" within the
meaning of Rule 144 under the Act. The Payees further acknowledge and
agree that each certificate evidencing such shares shall bear a legend
referring to the restrictions on resale imposed by the applicable
federal securities laws.
Maker covenants and agrees that it will file, immediately
following each delivery, if any, of shares of common stock in payment
for the Promissory Note, and use its best efforts to obtain the prompt
effectiveness of, a registration statement under the Securities Act to
register for public resale all of such shares, so that such shares may
be offered and sold by or for the account of the respective Payees, from
time to time as market conditions permit, on the Nasdaq Stock Market or
otherwise, at prices and on terms then prevailing or in negotiated
transactions. Maker will give Payees Notice and opinion of counsel when
and that the shares may be traded. Maker will maintain the
effectiveness of such registration statements, if any, until such time
as the Steel Technologies common stock may be sold by the Payees
pursuant to the terms and conditions of Rule 144 under the Securities
Act.
If during the time Maker is required to maintain the effectiveness of a
registration statement under this Section, Maker shall be engaged in a
transaction with respect to which disclosure would be required in such
registration statement, but for which financial or other information
necessary for such required disclosure is not then available to Maker,
or with respect to which Maker's Board of Directors shall have
determined that disclosure at such time could have an adverse effect on
the Maker or its business or prospects, then Maker shall be entitled to
notify the Payees that no sales may be made pursuant to the registration
statement for up to 90 days.
Maker shall pay all expenses incurred by it in complying with the
provisions hereof, including without limitation, all registration and
filing fees, printing expenses, and fees and disbursements of counsel
and independent public accountants for Maker.
Maker unconditionally guarantees to Payees the return upon sale of all
or part of any shares delivered pursuant hereto and traded with a
"discount" broker and in accordance herewith within three (3) business
days of Payees receipt of the notice(s) required above of a net amount
equal to the value of the shares at delivery (being the value of the
shares on the NASDAQ stock marker ion the trading day before the stock
is delivered to Payees). Payees shall provide Maker with all
appropriate documentation of trade(s) to support any request for Maker
to satisfy it guarantee obligations hereunder. Maker shall pay Payees
any funds due hereunder within ten (10) days of receipt of notice and
supporting documentation from Payees.
Notwithstanding any provision to the contrary, if, by May 30 immediately
following any delivery of the shares, Maker has not obtained
registration allowing the shares to be traded or has not provided Payees
with the notice and opinion required hereunder, the Maker shall, within
ten (10) days, pay Payees in available funds an amount equal to the
value of the shares at delivery plus interest on such amount at 7% per
annum through the date of payment.
Time is hereby declared to be of the essence. This Note may be prepaid
in full or in part at any time without penalty or premium. Partial
prepayments shall be applied to installments due in reverse order of
their maturity.
In the event of (a) default in payment of any installment of principal
or interest hereof as the same becomes due and such default is not cured
within ten (10) days from the due date or (b) default or breach by Maker
or Atlantic Coil under the terms of the Stock Purchase Agreement dated
effective as of April 1, 1997 (the "Stock Agreement") by and between
Maker, Payee and others, involving the purchase of all of the
outstanding capital stock of Atlantic Coil Processing, Inc., a North
Carolina corporation ("Atlantic Coil"); the Employment Agreements dated
effective April 1, 1997 between Atlantic Coil, Maker and the respective
Payees; the Non Competition Agreements dated effective April 1, 1997 by
and between Maker and the respective Payees or the Operating Lease
dated effective April 1, 1997 by and between Atlantic Coil, Maker, and
the Landlord named therein (collectively "Closing Documents") and such
default or breach is not cured within the earlier of the cure period
provided therein, or in the absence of a cure period therein then within
thirty (30) days after written notice to Maker, then in either event,
the holders may without further notice, declare the remainder of the
principal sum, together with all interest accrued thereon at once due
and payable. Failure to exercise this option shall not constitute a
waiver of the right to exercise the same at any other time. The unpaid
principal of this Note and any part thereof, accrued interest and all
other sums due under this Note and the Documents shall bear interest at
the rate of nine percent (9%) per annum after default until paid.
All parties to this Note, including Maker waive protests, presentment,
notice of dishonor, and notice of acceleration of maturity and agree to
continue to remain bound for the payment of principal, interest and all
other sums due under this Note and the Closing Documents,
notwithstanding any change or changes by way of release, surrender,
exchange, modification or other accommodation under this Note or the
Closing Documents or by way of any extension or extensions of time for
the payment of principal and interest; and all such parties waive all
and every kind of notice of such change or changes and agree that the
same may be made without notice or consent of any of them.
Upon default the holders of this Note may employ an attorney to enforce
the holders' rights and remedies and the Maker of this Note hereby
agrees to pay to the holder reasonable attorneys fees plus all other
reasonable expenses incurred by the holders in exercising any of the
holders' rights and remedies upon default not exceeding a sum equal to
ten percent (10%) outstanding balance owing on said Note. The rights
and remedies of the holders as provided in this Note and any instrument
securing this Note shall be cumulative and may be pursued singly,
successively, or together or against any other funds, property or
security held by the holders for payment or security, in the sole
discretion of the holders. The failure to exercise any such right or
remedy shall not be a waiver or release of such rights or remedies or
the right to exercise any of them at another time.
This Note is to be governed and construed in accordance with the laws of
the State of North Carolina. All references in this Note to Payees
shall include the holders hereof and this Note shall inure to the
benefit of any holders, their successors and assigns. Anything herein
to the contrary notwithstanding, the obligations of Maker under this
Note and any security documents executed in connection herewith shall be
subject to the limitation that payments of interest shall not be
required to the extent that receipt of any such payment by the Payees
would be contrary to provisions of law applicable to the Payees limiting
the maximum rate of interest that may be charged to or collected by the
Payees. If any provision of this Note shall be held to be prohibited by
or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibitions or invalidity, without
invalidating the remainder of such provision or any remaining provisions
of this Note.
This Note has been delivered pursuant to a Stock Purchase Agreement
dated April 1, 1997 (the "Stock Agreement") by and between Maker, Payees
and others, involving the purchase of all of the outstanding capital
stock of Atlantic Coil Processing, Inc., a North Carolina corporation.
All terms not defined herein have the meanings set forth in the Stock
Agreement.
PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS EXPRESSLY SUBJECT TO
MAKER'S RIGHTS OF OFFSET SET FORTH IN SECTION 9.7 OF THE STOCK
AGREEMENT.
IN TESTIMONY WHEREOF, Steel Technologies Inc., a Kentucky corporation
has caused this instrument to be executed in its corporate name by its
duly authorized officers and its corporate seal to be affixed as of the
day and year first above written.
STEEL TECHNOLOGIES INC.
____________________ By:
(CORPORATE SEAL)
Witness Brad Ray
Title: President
EXHIBIT B(1) PRIVATE
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into April 1,
1997, and effective as of the commencement of business on April 1, 1997
(the "Effective Date") by and between Brooks Barwick/Doug Apperson/Mark
Calcutt ("Employee"), and ATLANTIC COIL PROCESSING, INC., a North
Carolina corporation (hereinafter referred to as the "Company") and
STEEL TECHNOLOGIES INC., a Kentucky corporation, which has joined this
Agreement for the purpose of guaranteeing the obligations of Company as
set forth herein.
PRELIMINARY STATEMENTS
As of the Effective Date, Steel Technologies Inc., a Kentucky
corporation ("Steel Tech"), has acquired all of the outstanding shares
of capital stock of the Company pursuant to a certain Stock Purchase
Agreement (the "Purchase Agreement"), between Steel Tech, Employee and
the other shareholders of the Company.
Prior to the Effective Date, the Employee, in addition to
being a shareholder of the Company, was a director, officer and employee
of the Company and desires to continue to be employed by the Company.
The Company has agreed to employ Employee on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and mutual
promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
Section 1. Employment. Subject to the terms hereof, the Company
hereby agrees to employ Employee, and Employee hereby accepts such
employment. Employee shall serve as a management employee of the
Company during the Term (as defined in Section 2.1) of this Agreement,
subject to the direction of the Boards of Directors of the Company and
Steel Tech. Employee shall devote substantially all of his business
time and best efforts to rendering services on behalf of the Company.
Section 2. Term.
2.1. The term of Employee's employment hereunder shall be from
April 1, 1997 through and including March 31, 2000, (the "Term") unless
terminated prior thereto upon the occurrence of any of the following:
(i) The death or total disability of Employee. As
used herein, "total disability" means any physical or mental condition
rendering the Employee unable, for a total of three (3) months during
any twelve month period, to perform the duties and bear the
responsibilities incident to the position referred to in Section 1
hereof as determined by a physician acceptable to Employee and the
Company; or
(ii) The Company's termination of Employee's
employment hereunder, upon prior written notice to Employee, for "good
cause." For the purposes of this Agreement, "good cause" for
termination of Employee's employment shall exist only if (a) Employee is
convicted of, pleads guilty to, or confesses to any act of fraud,
misappropriation or embezzlement or to any felony, (b) Employee has
engaged in a dishonest, disloyal or insubordinate act against and to the
material damage or prejudice of the Company or in conduct or activities
materially damaging to the property, business or reputation of the
Company, or (c) Employee otherwise fails to comply with the material
terms of this Agreement and fails to cure such noncompliance within
thirty (30) days of receipt from Company of notice of the specific
failure of compliance; or
(iii) By the Employee at any time during the Term without
any event of default; or
(iv) By Employee upon an "event of default". An "event of
default" shall mean (i) the failure by Company to pay Employee any sum
due hereunder within ten (10) days after Employee shall have delivered
to Company written notice that such payment has become due, or (ii) the
failure by Company to observe or perform any other material provision
hereof for thirty (30) days after Employee shall have delivered to
Company written notice of such failure; or (iii) default or breach by
Steel Technologies Inc. ("Steel Tech") or Company, as the context
permits, under the terms of the Stock Purchase Agreement dated effective
as of April 1, 1997 (the "Stock Agreement") by and between Steel Tech,
Employee and others, involving the purchase of all of the outstanding
capital stock of Atlantic Coil Processing, Inc., a North Carolina
corporation; the Promissory Note dated April 1, 1997 by Steel Tech as
Maker to Employee and others; the Employment Agreements dated effective
April 1, 1997 between Company, Steel Tech and the respective Sellers;
the Non Competition Agreements dated effective April 1, 1997 by and
between Steel Tech and the respective Sellers or the Operating Lease
dated effective April 1, 1997 by and between Company, Steel Tech, and
the Landlord named therein (collectively "Closing Documents") and such
default or breach is not cured within the earlier of the cure period
provided therein, or in the absence of a cure period therein, within
thirty (30) days after written notice to Steel Tech and Company.
2.2. If Employee's employment herein is terminated pursuant to
Section 2.1 (i), (ii) or (iii) above prior to the end of the Term,
Employee's salary and bonus shall be prorated for such portion of the
Term as he was employed by the Company. If Employee's employment is
terminated for any reason other than pursuant to Section 2.1 (i), (ii)
or (iii) above, the Company shall pay to Employee his salary, vacation
and other benefits hereunder as if Employee had been employed by the
Company for the entire Term.
The Term may be renewed for an additional year upon the expiration of
the initial Term, by the agreement of the parties.
Section 3. Compensation and Benefits.
3.1. Salary. Employee shall be paid an annual salary of
$100,000. Payment of salary shall be payable in installments at such
times as the Company customarily pays its other employees.
3.2 Other Benefits. Employee shall receive the fringe benefits,
perquisites, and other benefits of employment set forth herein, in the
Company's employee handbook and such other or additional fringe
benefits, prerequisites and other benefits of employment as may be
provided by Company to its management employees from time to time shall
continue during the Term of employment as set forth in Section 2.1
hereof. In the event Employee's employment is terminated early pursuant
to Section 2.1(i), (ii) or (iii) hereof, benefits will likewise
terminate prospectively (subject to applicable law). These benefits may
be adjusted from time to time as determined by the Company's Board of
Directors so long as coverages of a substantially similar nature are
maintained at substantially the same cost to Employee.
3.3 Employee shall be entitled to the same, or substantially the
same health care, 401(k), life insurance, automobile, and club dues as
currently provided to them, with the exception of a bonus compensation
plan. Buyer shall establish a bonus compensation plan specifically for
Employee which will provide for awarding incentives specifically
relating to the future performance of ACP with a guaranteed minimum of
$25,000 per year for this three year period.
Section 4. Guaranty. Steel Tech has joined in the execution of
this Agreement for the purpose of absolutely and unconditionally
guaranteeing the due and punctual performance of all of the obligations
of Company under this Agreement as and when the same become due to be
performed in accordance with the terms and provisions of this Agreement,
including any assignment modification, amendment or extension hereof .
The obligation on the part of Steel Tech is a primary and not a
secondary liability and obligation and Steel Tech will pay or perform
the same immediately upon demand, without any requirement of recourse
first being had against Company or any other person, firm or
corporation.
Section 5. Miscellaneous.
5.1. Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon Employee and his executor,
administrator, heirs, personal representative and assigns, and the
Company and its successors and assigns; provided, however, that Employee
shall not be entitled to assign or delegate any of his rights or
obligations hereunder without the prior written consent of the Company.
5.2. Governing Law. This Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and
governed by and in accordance with, the laws of the State of North
Carolina, without regard to conflicts of laws principles.
5.3. Arbitration. Any dispute or difference between the
parties hereto arising out of or relating to this Agreement shall be
finally settled by arbitration in accordance with the Commercial Rules
of the American Arbitration Association by a one qualified arbitrator
("Designated Arbitrator"). Each party shall choose an arbitrator and
the Designated Arbitrator shall be chosen by the two so chosen. If
either party to the dispute or difference fails to choose an arbitrator
within 30 days after notice of commencement of arbitration or if the two
arbitrators fail to choose the Designated Arbitrator within 30 days
after their appointment, the American Arbitration Association shall,
upon the request of any party to the dispute or difference, administer
the selection of the Designated Arbitrator. Arbitration proceedings
hereunder may be initiated by any party making a written request to the
American Arbitration Association, together with any appropriate filing
fee, at the office of the American Arbitration Association in Charlotte,
North Carolina. All arbitration proceedings shall be held in Raleigh,
North Carolina. Any order or determination of the arbitral tribunal
shall be final and binding upon the parties to the arbitration and may
be entered in any court having jurisdiction.
5.4. Headings. The section and paragraph heading contained
in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
5.5. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made
by telecopy or facsimile transmission, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to the Company Brad Ray
or Steel Tech: Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
With a copy to: John Baumann
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
Fax: 502-245-0542
If to the Employee: H. Brooks Barwick, III
Mark Calcutt
Doug Apperson
307 Industrial Drive
Clinton, NC 28328
With a copy to: William M. Black, Jr.
7200 Stonehenge Drive, Suite 206
P.O. Box 19866
Raleigh, NC 27619
Fax: 919-676-5584
All notices, requests, consents and other communications hereunder shall
be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth
above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, (iii)
if made by telecopy or facsimile transmission, at the time the receipt
thereof has been acknowledged by electronic confirmation or otherwise,
or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is sent.
Any party to this Agreement may change his or its address upon
written notice delivered pursuant to this Section.
4.6 Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the
terms thereof notwithstanding any representations, statements or
agreements to the contrary heretofore made. This Agreement may be
modified only by a written instrument signed by each of the parties
hereto.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company and Steel Tech have each caused
its duly authorized officer to execute this Agreement and the Employee
has executed this Agreement as of the date first above written.
EMPLOYEE:
("Employee")
ATLANTIC COIL PROCESSING INC.
By: ____________________________________
John Baumann
Title: Corporate Counsel
STEEL TECHNOLOGIES INC.
By:______________________________
Title:___________________________
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into April 1,
1997, and effective as of the commencement of business on April 1, 1997
(the "Effective Date") by and between Jerry Richmond ("Employee"), and
ATLANTIC COIL PROCESSING, INC., a North Carolina corporation
(hereinafter referred to as the "Company") and STEEL TECHNOLOGIES INC.,
a Kentucky corporation, which has joined this Agreement for the purpose
of guaranteeing the obligations of Company as set forth herein.
PRELIMINARY STATEMENTS
As of the Effective Date, Steel Technologies Inc., a Kentucky
corporation ("Steel Tech"), has acquired all of the outstanding shares
of capital stock of the Company pursuant to a certain Stock Purchase
Agreement (the "Purchase Agreement"), between Steel Tech, Employee and
the other shareholders of the Company.
Prior to the Effective Date, the Employee, in addition to
being a shareholder of the Company, was a director, and employee of the
Company and desires to continue to be employed by the Company.
The Company has agreed to employ Employee on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and mutual
promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
Section 1. Employment. Subject to the terms hereof, the Company
hereby agrees to employ Employee, and Employee hereby accepts such
employment. Employee shall serve as an employee of the Company during
the Term (as defined in Section 2.1) of this Agreement, subject to the
direction of the Boards of Directors of the Company and Steel Tech.
Notwithstanding the foregoing, employee shall devote only such business
time and efforts to rendering services on behalf of the Company
consistent with his current duties and responsibilities and without
obligation to account for his time except as currently required.
Section 2. Term.
2.1. The term of Employee's employment hereunder shall be from
April 1, 1997 through and including March 31, 1998, (the "Term") unless
terminated prior thereto upon the occurrence of any of the following:
The Company's termination of Employee's employment hereunder, upon prior
written notice to Employee, for "good cause." For the purposes of this
Agreement, "good cause" for termination of Employee's employment shall
exist only if (a) Employee is convicted of, pleads guilty to, or
confesses to any act of fraud against the Company, misappropriation or
embezzlement against the Company or to any felony against the Company,
(b) Employee has engaged in a dishonest or disloyal act against and to
the material damage or prejudice of the Company, or (c) Employee
otherwise fails to comply with the material terms of this Agreement and
fails to cure such noncompliance within thirty (30) days of receipt from
Company of notice of the specific failure of compliance; or
(ii) By the Employee at any time during the Term without
any event of default.
(iii) By Employee upon an "event of default". An "event of
default" shall mean (i) the failure by Company to pay Employee any sum
due hereunder within ten (10) days after Employee shall have delivered
to Company written notice that such payment has become due, or (ii) the
failure by Company to observe or perform any other material provision
hereof for thirty (30) days after Employee shall have delivered to
Company written notice of such failure; or (iii) default or breach by
Steel Technologies Inc. ("Steel Tech") or Company, as the context
permits, under the terms of the Stock Purchase Agreement dated effective
as of April 1, 1997 (the "Stock Agreement") by and between Steel Tech,
Employee and others, involving the purchase of all of the outstanding
capital stock of Atlantic Coil Processing, Inc., a North Carolina
corporation; the Promissory Note dated April 1, 1997 by Steel Tech as
Maker to Employee and others; the Employment Agreements dated effective
April 1, 1997 between Company, Steel Tech and the respective Sellers;
the Non Competition Agreements dated effective April 1, 1997 by and
between Steel Tech and the respective Sellers or the Operating Lease
dated effective April 1, 1997 by and between Company, Steel Tech, and
the Landlord named therein (collectively "Closing Documents") and such
default or breach is not cured within the earlier of the cure period
provided therein, or in the absence of a cure period therein, within
thirty (30) days after written notice to Steel Tech and Company.
2.2. If Employee's employment herein is terminated pursuant to
Section 2.1(i) or (ii) above prior to the end of the Term, Employee's
salary shall be prorated for such portion of the Term as he was employed
by the Company. If Employee's employment is terminated for any reason
other than pursuant to Section 2.1(i) or (ii) above, the Company shall
pay to Employee his salary, vacation and other benefits hereunder as if
Employee had been employed by the Company for the entire Term.
2.3. The Term shall not renew.
Section 3. Compensation and Benefits.
3.1. Salary. Employee shall be paid an annual salary of $125,000.
Payment of salary shall be payable in installments at such times as the
Company customarily pays its other employees.
3.2 Other Benefits. Employee will receive the same, or
substantially the same health care currently provided to him. Upon
separation from employment, Company shall be responsible for and timely
pay Employee's first twelve months of COBRA payments and all related
administrative expenses. Employee shall be entitled to the same or
substantially the same automobile as currently provided to him from
April 1, 1997 until March 1, 1999. In the event Employee's employment
is terminated early pursuant to Section 2.1(i) or (ii) hereof, benefits
will likewise terminate prospectively (subject to applicable law).
These benefits may be adjusted from time to time as determined by the
Company's Board of Directors so long as coverages of a substantially
similar nature are maintained at substantially the same cost to
Employee.
Section 4. Guaranty. Steel Tech has joined in the execution of
this Agreement for the purpose of absolutely and unconditionally
guaranteeing the due and punctual performance of all of the obligations
of Company under this Agreement as and when the same become due to be
performed in accordance with the terms and provisions of this Agreement,
including any assignment modification, amendment or extension hereof .
The obligation on the part of Steel Tech is a primary and not a
secondary liability and obligation and Steel Tech will pay or perform
the same immediately upon demand, without any requirement of recourse
first being had against Company or any other person, firm or
corporation.
Section 5. Miscellaneous.
5.1. Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon Employee and his executor,
administrator, heirs, personal representative and assigns, and the
Company and its successors and assigns; provided, however, that Employee
shall not be entitled to assign or delegate any of his rights or
obligations hereunder without the prior written consent of the Company.
5.2. Governing Law. This Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and
governed by and in accordance with, the laws of the State of North
Carolina, without regard to conflicts of laws principles.
5.3. Arbitration. Any dispute or difference between the
parties hereto arising out of or relating to this Agreement shall be
finally settled by arbitration in accordance with the Commercial Rules
of the American Arbitration Association by a one qualified arbitrator
("Designated Arbitrator"). Each party shall choose an arbitrator and
the Designated Arbitrator shall be chosen by the two so chosen. If
either party to the dispute or difference fails to choose an arbitrator
within 30 days after notice of commencement of arbitration or if the two
arbitrators fail to choose the Designated Arbitrator within 30 days
after their appointment, the American Arbitration Association shall,
upon the request of any party to the dispute or difference, administer
the selection of the Designated Arbitrator. Arbitration proceedings
hereunder may be initiated by any party making a written request to the
American Arbitration Association, together with any appropriate filing
fee, at the office of the American Arbitration Association in Charlotte,
North Carolina. All arbitration proceedings shall be held in Raleigh,
North Carolina. Any order or determination of the arbitral tribunal
shall be final and binding upon the parties to the arbitration and may
be entered in any court having jurisdiction.
5.4. Headings. The section and paragraph heading contained
in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
5.5. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made
by telecopy or facsimile transmission, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to the Company Brad Ray
or Steel Tech: Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
With a copy to: John Baumann
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
Fax: 502-245-0542
If to the Employee: Jerry Richmond
195 Magnolia Dive
P.O. Box 4322
Ormond Beach, FL 32176
With a copy to: William M. Black, Jr.
7200 Stonehenge Drive, Suite 206
P.O. Box 19866
Raleigh, NC 27619
Fax: 919-676-5584
All notices, requests, consents and other communications hereunder shall
be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth
above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, (iii)
if made by telecopy or facsimile transmission, at the time the receipt
thereof has been acknowledged by electronic confirmation or otherwise,
or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is sent.
Any party to this Agreement may change his or its address upon
written notice delivered pursuant to this Section.
4.6 Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the
terms thereof notwithstanding any representations, statements or
agreements to the contrary heretofore made. This Agreement may be
modified only by a written instrument signed by each of the parties
hereto.
EMPLOYEE:
_________________________________________
Jerry F. Richmond
ATLANTIC COIL PROCESSING INC.
By: ___________________________________ John Baumann
Title: Corporate Counsel
STEEL TECHNOLOGIES INC.
By:___________________________________
Title:__________________
EXHIBIT C(1) PRIVATE
NONCOMPETITION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into April 1,
1997 and effective as of the commencement of business on April 1, 1997
(the "Effective Date"), by and between Brooks Barwick/ Doug
Apperson/Mark Calcutt (the "Shareholder"), and Steel Technologies Inc.,
a Kentucky corporation ("Steel Tech").
PRELIMINARY STATEMENTS
As of the Effective Date, Steel Tech has acquired all of the
outstanding shares of capital stock of Atlantic Coil Processing, Inc., a
North Carolina corporation, (the "Company") pursuant to a certain Stock
Purchase Agreement (the "Purchase Agreement"), between Steel Tech, the
Shareholder and the other shareholders of the Company.
Prior to the Effective Date, the Shareholder, in addition to
being a shareholder of the Company was a director, officer and employee
of the Company and desires to enter into this Agreement to further
induce Steel Tech to enter into the Purchase Agreement.
NOW THEREFORE, in consideration of the premises and mutual
promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
Section 1. Confidential Information and Non-Competition
Covenant.
1.1. Confidential Information and Trade Secrets. In consideration
of the rights granted to the Shareholder under the Purchase Agreement,
the Shareholder hereby agrees that he shall hold in confidence all
temporary help lists, customer lists, supplier lists, price lists,
financial information, operating manual and forms, plans, notes,
computer programs, systems and software (including, without limitation,
documentation and related source and object codes), and all other
knowledge or information of a confidential or proprietary nature with
respect to the business of the Company (the "Proprietary Information"),
and the Shareholder will not disclose, publish or make use of such
knowledge or information.
1.2. Non-Competition. The Company is engaged in steel processing
and providing steel processing throughout the geographic area within a
250-mile radius of the office locations set forth on Schedule 1.2 hereto
(such geographic area being hereinafter referred to as the "Territory").
The Shareholder acknowledges that the goodwill of the Company and
marketing and support of services and products of the Company extends
throughout the Territory. If following the expiration of his three
year employment contract, Shareholder is, for any reason, no longer an
employee of Steel Tech or a Related Company, Steel Tech or a Related
Company shall pay to Shareholder $50,000 a year for the two years
immediately following separation from employment or if, following the
expiration of a fourth year of employment with Steel Tech or a Related
Company, Shareholder is for any reason no longer an employee of Steel
Tech or a Related Company, Steel Tech or a Related Company shall pay to
Shareholder $50,000 a year for the year immediately following their
separation from employment; and in consideration of the payment(s)
required above and expressly conditioned upon such payment, the
Shareholder hereby agrees that for the respective two or one year
periods specified above and, as applicable (the "Noncompete Period"),
the Shareholder shall not (without the prior written consent of the
Company), in any manner, directly or indirectly,
(i) engage in, have any equity or profit interest in, make
any loan to or for the benefit of, guaranty the repayment of any funds
by, or render services of any executive, advertising, marketing, sales,
administrative, supervisory, engineering, computer program or system
development, maintenance or consulting nature to any business conducting
operations in the Territory which are competitive with the business
activities being directly engaged in by the Company as of the date of
this Agreement; or
(ii) solicit to employ, on his own behalf or on behalf of
any other person, firm or corporation, any person who was employed by
the Company or a Related Company as of the Effective Date hereof and who
has not thereafter ceased to be employed by the Company or a Related
Company for a period of at least one year.
As used in this Section 1, the term "Related Company" shall mean
Steel Tech, any subsidiary of Steel Tech or any other corporation
(including Atlantic Coil Processing, Inc.), twenty percent of whose
stock is owned by Steel Tech, and any other corporation owning at least
20 percent of the capital stock of Steel Tech, any subsidiary thereof,
and any successor to any of them.
Notwithstanding anything contained herein to the contrary, the
Shareholder shall not be prohibited from owning, directly or indirectly,
up to 5% of the outstanding equity interest of any company, which is in
competition with Steel Tech and the stock of which is publicly traded.
1.3. Severability. If a judicial determination is made that any
of the provisions of this Section 1 constitutes an unreasonable or
otherwise unenforceable restriction against the Shareholder, the
provisions of this Section 1 shall be rendered void only to the extent
that such judicial determination finds such provisions to be
unreasonable or otherwise unenforceable. In this regard, the parties
hereto hereby agree that any judicial authority construing this
Agreement shall be empowered to sever any portion of the Territory or
any prohibited business activity from the coverage of this Section 1,
and to reduce the duration of the Noncompete Period and to apply the
provisions of this Section 1 to the remaining portion of the Territory
or the remaining business activities not to be severed by such judicial
authority and to the duration of the Noncompete Period as reduced by
judicial determination.
1.4. Injunctive Relief. The Shareholder hereby agrees that any
breach or threatened breach by the Shareholder of Sections 1.1 or 1.2 of
this Agreement will irreparably injure the Company and that any remedy
at law for any breach or threatened breach by the Shareholder of the
provisions contained in Sections 1.1 and 1.2 hereof shall be inadequate,
and that the Company shall be entitled to injunctive relief in addition
to any other remedy it might have under this Agreement or at law or in
equity. The Shareholder further agrees that the grant of such
injunctive relief and the enforcement of the terms of this Agreement
shall not deprive him of his ability to earn a living.
1.5 Cross Default. Steel Tech shall be in default and breach
of this Agreement upon default or breach by Steel Tech or Company, as
the context permits, under the terms of the Stock Purchase Agreement
dated effective as of April 1, 1997 (the "Stock Agreement") by and
between Steel Tech, Shareholder and others, involving the purchase of
all of the outstanding capital stock of Atlantic Coil Processing, Inc.,
a North Carolina corporation; the Promissory Note dated April 1, 1997 by
Steel Tech as Maker to Shareholders and others; the Employment
Agreements dated effective April 1, 1997 between Company, Steel Tech and
the respective Sellers; the Non Competition Agreements dated effective
April 1, 1997 by and between Steel Tech and the respective Sellers or
the Operating Lease dated effective April 1, 1997 by and between
Company, Steel Tech, and the Landlord named therein (collectively
"Closing Documents") and such default or breach is not cured within the
earlier of the cure period provided therein, or in the absence of a cure
period provided therein, within thirty (30) days after written notice to
Steel Tech and Company.
Section 2. Miscellaneous.
2.1. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the Shareholder and his executor,
administrator, heirs, personal representative and assigns, and the
Company and its successors and assigns. The Company is a third party
beneficiary of this Agreement.
2.2. Governing Law. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed and governed by
and in accordance with, the laws of the State of North Carolina, without
regard to conflicts of laws principles.
2.3. Headings. The section and paragraph heading contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
2.4. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made
by telecopy or facsimile transmission, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to Steel Tech or Company:
Brad Ray
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
With a copy to:
John Baumann
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
Fax: 502-245-0542
If to the Shareholder:
H. Brooks Barwick, III
Mark Calcutt
Doug Apperson
307 Industrial Drive
Clinton, NC 28328
With a Copy to:
William M. Black, Jr.
7200 Stonehenge Drive, Suite 206
P.O. Box 19866
Raleigh, NC 27619
Fax: 919-676-5584
All notices, requests, consents and other communications hereunder shall
be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth
above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, (iii)
if made by telecopy or facsimile transmission, at the time the receipt
thereof has been acknowledged by electronic confirmation or otherwise,
or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is sent.
Any party to this Agreement may change his or its address upon
written notice delivered pursuant to this Section.
2.5. Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the
terms thereof notwithstanding any representations, statements or
agreements to the contrary heretofore made. This Agreement may be
modified only by a written instrument signed by each of the parties
hereto.
IN WITNESS WHEREOF, Steel Tech has caused its duly authorized
officer to execute this Agreement and the Shareholder has executed this
Agreement as of the date first above written.
SHAREHOLDER:
________________________________
("Shareholder")
STEEL TECHNOLOGIES INC.
By: _______________________________
Title:
EXHIBIT C(2)
NONCOMPETITION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into April 1,
1997 and effective as of the commencement of business on April 1, 1997
(the "Effective Date"), by and between Jerry Richmond (the
"Shareholder"), and Steel Technologies Inc., a Kentucky corporation
("Steel Tech").
PRELIMINARY STATEMENTS
As of the Effective Date, Steel Tech has acquired all of the
outstanding shares of capital stock of Atlantic Coil Processing, Inc., a
North Carolina corporation, (the "Company") pursuant to a certain Stock
Purchase Agreement (the "Purchase Agreement"), between Steel Tech, the
Shareholder and the other shareholders of the Company.
Prior to the Effective Date, the Shareholder, in addition to
being a shareholder of the Company was a director, officer and employee
of the Company and desires to enter into this Agreement to further
induce Steel Tech to enter into the Purchase Agreement.
NOW THEREFORE, in consideration of the premises and mutual
promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
Section 1. Confidential Information and Non-Competition
Covenant.
1.1. Confidential Information and Trade Secrets. In
consideration of the rights granted to the Shareholder under the
Purchase Agreement, the Shareholder hereby agrees that he shall hold in
confidence all temporary help lists, customer lists, supplier lists,
price lists, financial information, operating manual and forms, plans,
notes, computer programs, systems and software (including, without
limitation, documentation and related source and object codes), and all
other knowledge or information of a confidential or proprietary nature
with respect to the business of the Company (the "Proprietary
Information"), and the Shareholder will not disclose, publish or make
use of such knowledge or information.
1.2. Non-Competition. The Company is engaged in providing
steel processing throughout the geographic area within a 250-mile radius
of the office locations set forth on Schedule 1.2 hereto (such
geographic area being hereinafter referred to as the "Territory"). The
Shareholder acknowledges that the goodwill of the Company and marketing
and support of services and products of the Company extends throughout
the Territory. In consideration of the rights granted to the
Shareholder under the Purchase Agreement, the Shareholder hereby agrees
that for the period commencing on April 1, 1997 and extending for two
years from such date (the "Noncompete Period"), the Shareholder shall
not (without the prior written consent of the Company), in any manner,
directly or indirectly,
(i) engage in, have any equity or profit interest in, make
any loan to or for the benefit of, guaranty the repayment of any funds
by, or render services of any executive, advertising, marketing, sales,
administrative, supervisory, engineering, computer program or system
development, maintenance or consulting nature to any business conducting
operations in the Territory which are competitive with the business
activities being directly engaged in by the Company as of the date of
this Agreement; or
(ii) solicit to employ, on his own behalf or on
behalf of any other person, firm or corporation, any person who was
employed by the Company or a Related Company as of the Effective Date
hereof and who has not thereafter ceased to be employed by the Company
or a Related Company for a period of at least one year.
As used in this Section 1, the term "Related Company" shall mean
Steel Tech, any subsidiary of Steel Tech or any other corporation
(including Atlantic Coil Processing, Inc.), twenty percent of whose
stock is owned by Steel Tech, and any other corporation owning at least
20 percent of the capital stock of Steel Tech, any subsidiary thereof,
and any successor to any of them.
Notwithstanding anything contained herein to the contrary, the
Shareholder shall not be prohibited from owning, directly or indirectly,
up to 5% of the outstanding equity interest of any company, which is in
competition with Steel Tech and the stock of which is publicly traded.
The parties agree and acknowledge that Shareholder is an owner and
is otherwise actively involved in Forma-Fab Metals, Inc. with its
principal office in Mebane, North Carolina and which carries on the
business of a sheet metal job shop and the parties further agree and
acknowledge that, notwithstanding anything herein to the contrary,
Shareholder's ownership, service as a director, officer and/or employee
and other activities for and on behalf of Forma-Fab Metals, Inc. or its
successors are not prohibited by this Agreement, Forma-Fab Metals, Inc.
being expressly excepted from the application of this Agreement.
1.3. Severability. If a judicial determination is made that
any of the provisions of this Section 1 constitutes an unreasonable or
otherwise unenforceable restriction against the Shareholder, the
provisions of this Section 1 shall be rendered void only to the extent
that such judicial determination finds such provisions to be
unreasonable or otherwise unenforceable. In this regard, the parties
hereto hereby agree that any judicial authority construing this
Agreement shall be empowered to sever any portion of the Territory or
any prohibited business activity from the coverage of this Section 1,
and to reduce the duration of the Noncompete Period and to apply the
provisions of this Section 1 to the remaining portion of the Territory
or the remaining business activities not to be severed by such judicial
authority and to the duration of the Noncompete Period as reduced by
judicial determination.
1.4. Injunctive Relief. The Shareholder hereby agrees that
any breach or threatened breach by the Shareholder of Sections 1.1 or
1.2 of this Agreement will irreparably injure the Company and that any
remedy at law for any breach or threatened breach by the Shareholder of
the provisions contained in Sections 1.1 and 1.2 hereof shall be
inadequate, and that the Company shall be entitled to injunctive relief
in addition to any other remedy it might have under this Agreement or at
law or in equity. The Shareholder further agrees that the grant of
such injunctive relief and the enforcement of the terms of this
Agreement shall not deprive him of his ability to earn a living.
1.5 Cross Default. Steel Tech shall be in default and breach
of this Agreement upon default or breach by Steel Tech or Company, as
the context permits, under the terms of the Stock Purchase Agreement
dated effective as of April 1, 1997 (the "Stock Agreement") by and
between Steel Tech, Shareholder and others, involving the purchase of
all of the outstanding capital stock of Atlantic Coil Processing, Inc.,
a North Carolina corporation; the Promissory Note dated April 1, 1997 by
Steel Tech as Maker to Shareholders and others; the Employment
Agreements dated effective April 1, 1997 between Company, Steel Tech and
the respective Sellers; the Non Competition Agreements dated effective
April 1, 1997 by and between Steel Tech and the respective Sellers or
the Operating Lease dated effective April 1, 1997 by and between
Company, Steel Tech, and the Landlord named therein (collectively
"Closing Documents") and such default or breach is not cured within the
earlier of the cure period provided therein, or in the absence of a cure
period provided therein, within thirty (30) days after written notice to
Steel Tech and Company.
Section 2. Miscellaneous.
2.1. Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the Shareholder and his executor,
administrator, heirs, personal representative and assigns, and the
Company and its successors and assigns. The Company is a third party
beneficiary of this Agreement.
2.2. Governing Law. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed and governed by
and in accordance with, the laws of the State of North Carolina, without
regard to conflicts of laws principles.
2.3. Headings. The section and paragraph heading contained
in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
2.4. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made
by telecopy or facsimile transmission, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to Steel Tech or Company:
Brad Ray
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
With a copy to:
John Baumann
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
Fax: 502-245-0542
If to the Shareholder:
Jerry Richmond
195 Magnolia Drive
PO Box 4322
Ormond Beach, FL 31276
With a copy to:
William M. Black, Jr.
7200 Stonehenge Drive, Suite 206
P.O. Box 19866
Raleigh, NC 27619
Fax: 919-676-5584
All notices, requests, consents and other communications hereunder shall
be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth
above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, (iii)
if made by telecopy or facsimile transmission, at the time the receipt
thereof has been acknowledged by electronic confirmation or otherwise,
or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is sent.
Any party to this Agreement may change his or its address upon
written notice delivered pursuant to this Section.
2.5 Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the
terms thereof notwithstanding any representations, statements or
agreements to the contrary heretofore made. This Agreement may be
modified only by a written instrument signed by each of the parties
hereto.
[Signature page follows]
IN WITNESS WHEREOF, Steel Tech has caused its duly authorized
officer to execute this Agreement and the Shareholder has executed this
Agreement as of the date first above written.
SHAREHOLDER:
_______________________________________
Jerry F. Richmond
STEEL TECHNOLOGIES INC.
By:
Title: ____________________________________
EXHIBIT D
OPERATING LEASE
THIS OPERATING LEASE ("Lease") is entered effective April 1, 1997,
between Atlantic Properties, a North Carolina general partnership
("Landlord") and Atlantic Coil Processing, Inc., a North Carolina
corporation ("Tenant"). Steel Technologies, Inc., a Kentucky
corporation has joined in the execution of this Lease for the purpose of
guaranteeing the obligations of Tenant.
W I T N E S S E T H:
In consideration of the mutual covenants hereinafter contained, and each
act performed hereunder by the parties, Landlord and Tenant agree as
follows:
ARTICLE 1
EXHIBITS ATTACHED AND MEMORANDUM OF LEASE
Section 1.01. Exhibits. The following exhibits are attached to and
made a part of this Lease:
(1) Exhibit A. Legal Description of the Demised Premises.
(2) Exhibit B. Specimen Memorandum of Lease.
Section 1.02. Memorandum of Lease. Landlord and Tenant agree not to
place this Lease of record, but to execute, acknowledge and record a
memorandum of lease containing the names of Landlord and Tenant, the
specific legal description of the Demised Premises, the Term, and the
purchase option. Such memorandum of lease shall be substantially in the
form of Exhibit B attached hereto and by reference made a part hereof.
Landlord shall have the memorandum of lease recorded and supply the
recorded copy to Tenant. Upon the expiration of the Term or the earlier
termination of the Lease, in either case without Tenant's exercise of
its purchase option, Tenant agrees to execute and deliver to Landlord
for filing such cancellation of Memorandum of Lease as Landlord may
reasonably request.
ARTICLE 2
DEMISED PREMISES
Section 2.01. Demised Premises. Landlord hereby lets and demises to
Tenant, and Tenant hereby leases from Landlord the premises described in
Exhibit A attached hereto and by reference made a part hereof, such
premises and the improvements thereon being hereafter referred to as the
"Demised Premises."
ARTICLE 3
TERM
Section 3.01. Term. The "Term" of this Lease shall be for a period of
six (6) years beginning on April 1, 1997 and ending on March 31, 2003.
ARTICLE 4
RENT
Section 4.01. Rental. Tenant shall pay to Landlord throughout the
Demised Term rental in the annual amount of $480,000 paid in equal
monthly installments in advance on or before the first day of each
calendar month during the Term of the Lease. All rent payable by Tenant
shall be without previous demand, setoff or deduction. All rent shall
be paid to Landlord at the address to which notices to Landlord are
given as set forth in the paragraph entitled "Notices" hereunder. In
addition to such remedies as may be provided under the default
provisions of this Lease or otherwise, herein, at law or in equity,
Landlord shall be entitled to a late charge of two percent (2%) of the
amount of the monthly rent if not received within 3 days of when due,
and a charge of two percent (2%) of the monthly rent for any check
given by Tenant not paid when first presented by Landlord.
Section 4.02 Additional Rent. Tenant shall pay Landlord as
"Additional Rent", as the same shall become due, taxes and insurance for
the Demised Premises and all other amounts, liabilities and obligations
which Tenant assumes or agrees to pay or discharge pursuant to this
Lease, together with all fines, penalties, interest and costs which may
be added for non-payment or late payment thereof.
ARTICLE 5
TAXES
Section 5.01. Real Estate Taxes.
(A) As "Additional Rent", Tenant shall directly pay and discharge as
they become due, all taxes (including, without limitation, all real and
personal property taxes and sales and use taxes), assessments (including
assessments for benefits from public works or improvements, whether or
not to be completed within the Term), levies, fees, water and sewer
rents and charges, an all other governmental charges which are, at any
time during the Term, imposed or levied upon or assessed against the
Demised Premises or any part thereof or which arise in respect of the
operation, possession, occupancy or use thereof. Tenant agrees to
furnish to Landlord, within thirty (30) days after written demand
therefore, proof of the payment of all such taxes, assessments, levies,
fees and similar charges.
(B) Tenant shall have the right at its own expense to challenge any
tax or assessment; such challenge will not, however, relieve Tenant's
obligation to pay such taxes promptly when due. If such challenge
results in a reduction of taxes or assessments, Tenant shall be entitled
to a refund of such reduction.
(C) If this Lease expires or terminates before a tax or assessment
bill is rendered for the year in which such expiration or termination
occurs, Tenant shall pay to Landlord on January 1 of such year of
expiration or termination the proportionate amount of the anticipated
tax for the entire calendar year. The said proportional amount shall be
computed as a fraction the numerator of which shall be the number of
months of the lease Term within the last calendar year and denominator
of which shall be twelve (12).
ARTICLE 6
USE OF DEMISED PREMISES
Section 6.01. Use. The Demised Premises may be used by Tenant for any
lawful purpose. Tenant shall not use the Demised Premises in any manner
that would constitute waste, nuisance, unreasonable annoyance to owners
or occupants of adjacent properties or in any manner in material
violation of any law, regulation, rule or ordinance of any public or
private authority or any covenant, term or condition of any presently
existing document which is recorded in the land records of the county
and state in which the Demised Premises are located and which affect the
Demised Premises or the use thereof nor in any manner which might
invalidate insurance carried by either Landlord or Tenant.
ARTICLE 7
TENANT'S ACCEPTANCE
Upon its occupancy of the Demised Premises, Tenant represents to
Landlord that Tenant has examined and inspected the same, finds the
Demised Premises to be substantially as represented by Landlord and
reasonably satisfactory for Tenant's intended use and evidences Tenant's
acceptance of the Demised Premises.
ARTICLE 8
UTILITY AND OTHER SERVICES
Section 8.01. Payment by Tenant. Payment for all water, gas, light,
heat, telephone, electricity, power, other utility and communication
services, waste disposal services and all other services rendered or
used upon or in connection with the Demised Premises shall be made by
Tenant. The parties acknowledge Landlord will not provide any services
to the Demised Premises.
ARTICLE 9
MAINTENANCE/ REPAIR
Section 9.01. Tenant's Obligation. Tenant shall, at its sole expense,
keep and maintain in good condition and repair and make all repair and
replacements, structural and nonstructural, to the interior and
exterior of the Demised Premises. Tenant shall comply with the
directions of proper public officers as to the maintenance of the
Demised Premises and shall comply with all health and police regulations
applicable to or affecting the Demised Premises. Nothing in this
provision defining the duty of maintenance and repair hall be construed
as limiting any right given elsewhere in this Lease to alter, modify,
demolish, remove or replace any improvement.
ARTICLE 10
CONSTRUCTION
Section 10.01. Construction by Tenant. With the written consent of
Landlord and upon submission of plans, specifications and other
documentary submittals appropriate to the scope of work proposed by
Tenant, at any time and from time to time during the Term, Tenant may,
but is not obligated to, construct or otherwise make new improvements on
any part or all of the Demised Premises and to demolish, remove,
replace, alter, relocate, reconstruct, or add to any existing
improvements in whole or in part, and to modify or change the contour or
grade, or both, of the land, provided Tenant is not then in default
under any condition or provision of this Lease and provided further that
such new improvements or other construction activities are completed in
a good and workmanlike manner, in compliance with all local code, law
and regulation and in a lien-free condition. All such buildings and
improvements constructed by Tenant shall be Landlord's property and
shall remain Landlord's property upon the termination of this Lease.
Tenant shall furnish evidence to Landlord that all claims for labor and
materials furnished for such remodeling, alteration or addition have
been paid or provided for. Should Tenant fail to pay for such labor or
materials or should any lien be filed against the Demised Premises and
Tenant fail to secure the discharge of the lien within 30 days (whether
by bond or otherwise) Landlord may pay such amount and add the cost
thereof to the Additional Rent provided for herein.
ARTICLE 11
ALTERATIONS
Section 11.01. Alterations by Tenant. Tenant shall have the right, at
its sole expense, to make interior alterations to the Demised Premises
of a non-structural nature without Landlord's consent provided Tenant
performs the alterations in a good and workman like manner, in
compliance with applicable laws, ordinances, orders, rules, regulations
and requirements and in a lien-free condition. Tenant shall furnish
evidence to Landlord that all claims for labor and materials furnished
for such alterations have been paid or provided for. Should Tenant fail
to pay for such labor or materials or should any lien be filed against
the Demised Premises and Tenant failed to secure the discharge of the
lien within 30 days (whether by bond or otherwise), Landlord may pay
such amount and add the costs thereof to the Additional Rent provided
for herein.
Section 11.02 Tenant's Trade Fixtures. Tenant may, at its sole
expense, install, assemble or place upon the Demised Premises any
machinery, fixtures, furnishings and equipment used or useful in
Tenant's business, and in each case upon compliance with Section 11.01.
Such machinery, fixtures, furnishings and equipment shall be and remain
the property of Tenant. Tenant may remove the same from the Demised
Premises at any time during the Term hereof or upon termination of the
Lease and surrender of the Demised Premises provided, however, that
Tenant shall promptly repair any damage to the Demised Premises
resulting from such removal. Landlord shall execute and shall use its
best efforts to cause any mortgagee of Landlord to execute such waivers
as Tenant may reasonably request as to liens and/or security interest
against such trade fixtures, equipment and other personal property of
Tenant.
ARTICLE 12
LIENS
Tenant will not, directly or indirectly, create or permit to be created
or to remain, and will discharge, within 30 dats, by bond or otherwise
at Tenant's sole expense, any lien, encumbrance or other charge with
respect to the Demised Premises or any part thereof or Tenant's interest
therein. Nothing contained in this Lease shall be construed as
constituting the consent or request of Landlord, expressed or implied to
or for the performance of any labor or services or the furnishing of any
materials for any construction, alteration, addition, repair, or
demolition of or to the Demised Premises or any part thereof by any
contractor, subcontractor, laborer, materialman or vendor. Notice is
hereby given that Landlord will not be liable for any labor, services or
materials furnished or to be furnished to or through Tenant and that no
mechanics, materialmen or other liens for any such labor, services or
materials shall attach to or affect the interest of Landlord in and to
the Demised Premises.
ARTICLE 13
INDEMNIFICATION
Tenant agrees to pay, and to protect, indemnify and save Landlord
harmless from and against any and all liabilities, losses, damages,
costs, expenses (including reasonable attorney's fees and expenses)
causes of action, suits, claims, demands or judgments of any nature
whatsoever rising from (i) any injury to, or the death of, any person,
or any damage to property on the Demised Premises or upon adjoining
sidewalks, streets, or ways, or in any manner growing out of or
connected with the use , non use, condition or occupancy of the Demised
Premises or any part thereof, or resulting from the condition thereof or
of adjoining sidewalks, streets, or ways; (ii) violation by Tenant of
any restriction, statute, law, ordinance, or regulation in each case
affecting the Demised Premises or any part thereof, or the ownership,
occupancy or use thereof, or (iii) any negligence or tortuous act on the
part of Tenant or any of its agents, contractors, licensees or invitees.
In case any action, suit or proceeding is brought against Landlord by
reason of any occurrence herein described, Tenant will, at its own
expense, defend such action, suit, or proceeding with counsel reasonably
acceptable to Landlord.
ARTICLE 14
INSURANCE
Section 14.01. Fire and Extended Coverage.
(A) Throughout the Term, Tenant will maintain, at its sole expense,
insurance on the Demised Premises of the following character:
(i) Insurance against loss or damage by fire, lightning, wind-storms,
hail, explosion, aircraft, smoke damage, vehicle damage, and other risks
from time to time included under extended coverage policies and such
other risks as are or shall customarily be insured against with respect
to property that is similar to the Demised Premises, but, in any event,
in amounts not less than the full insurable value of the Demised
Premises. The term "full insurable value," as used herein, means actual
replacement value.
(ii) General public liability insurance against claims for bodily
injury, death, or property damage occurring on, in, or about the Demised
Premises and the adjoining streets, sidewalks, and passageways, such
insurance to afford protection to Landlord of not less than Two Million
Dollars ($2,000,000.00) per occurrence. All such insurance may be
maintained under general contractual liability policies, which policies
shall cover the obligations of Tenant under the indemnification
provisions hereof.
(iii) Such other insurance on the Demised Premises in such amounts
and against such other insurable hazards which at the time are commonly
obtained in the case of property similar to the Demised Premises.
(B) The insurance referred to in this Section shall be written by
companies of recognized financial standing which are authorized to do an
insurance business in the state in which the Demised Premises are
located, and such insurance shall name as the insured parties thereunder
Landlord and Tenant, as their interests may appear. Landlord shall not
be required to prosecute any claim against, or to contest any settlement
proposed by, any insurer, provided that Tenant may, at its expense,
prosecute any such claim or contest any such settlement. In such event,
Tenant may bring such prosecution or contest in the name of Landlord,
Tenant, or both, and Landlord will join therein at Tenant's written
request upon the receipt by Landlord of an indemnity from Tenant against
all costs, liabilities, and expenses, including reasonable attorneys'
fees, in connection with such prosecution or contest.
(C) At the request of Landlord, every insurance policy referred
to in clauses (i) through (iii) of this Section shall bear a first
mortgagee endorsement in favor of the Landlord's lender. Every such
policy shall contain, to the extent obtainable, an agreement by the
insurer that it will not cancel such policy except after 30 days' prior
written notice to Landlord and Landlord's lender, and that any loss
otherwise payable thereunder shall be payable notwithstanding any act or
negligence of Landlord or Tenant which might, absent such agreement,
result in a forfeiture of all or a part of such insurance payment and
notwithstanding (i) the occupancy or use of the Demised Premises for
purposes more hazardous than permitted by the terms of such policy, or
(ii) any change in title or ownership of the Demised Premises, including
foreclosure or other action or proceeding taken by a secured lender.
(D) Upon Landlord's request therefore, Tenant shall promptly deliver
to Landlord sufficient proof of the insurance required to be carried by
Tenant hereunder. If Tenant fails to effect, maintain, or renew any
insurance provided for in this Section or pay the premium therefor or
deliver to Landlord any such proof of insurance, then, and in any of
said events, Landlord, at its option, but without obligation so to do,
may, upon ten (10) days' notice to Tenant, procure such insurance. Any
reasonable sums expended by Landlord to procure such insurance shall be
Additional Rent hereunder and shall be repaid by Tenant within ten (10)
days following the date on which such expenditure shall be made by
Landlord.
ARTICLE 15
CASUALTY
If, during the term hereof, the Demised Premises or any part thereof
shall be damaged or destroyed by fire or other casualty, and if the
estimated cost of rebuilding, replacing, and repairing the same shall
exceed the amount of insurance proceeds payable pursuant to this
paragraph Tenant shall promptly notify Landlord thereof; and (whether or
not such estimated cost shall exceed said amount) Tenant shall, with
reasonable promptness and diligence, rebuild, replace, and repair any
damage or destruction to the Demised Premises, at its expense, in
conformity with this paragraph , in such manner as to restore the same
to an economic unit having a fair market value not less than the fair
market value of the Demised Premises immediately prior to such damage or
destruction.
ARTICLE 16
DEFAULT AND REMEDIES
Section 16.01. Default.
(a) Any of the following occurrences or acts shall constitute an event
of default under this Lease:
(i) Any failure of Tenant to pay any Rent or Addition Rent due
hereunder or to perform any other of the terms or conditions of this
Lease to be observed or performed by Tenant;
(ii) If Tenant or any guarantor of this Lease shall become bankrupt or
insolvent or file any debtor proceedings to take or have taken against
Tenant in any court pursuant to any statute either of the United States
or of any state a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or
a portion of Tenant's or any such guarantor's property, or if Tenant or
any such guarantor makes an assignment for the benefit of creditors or
petitions or enters into an arrangement, or composition for the benefit
of creditors; or
(iii) The Demised Premises shall have been abandoned;
(iv) default or breach by Steel Technologies Inc. or Tenant, as the
context permits, under the terms of the Stock Purchase Agreement dated
effective as of April 1, 1997 (the "Stock Agreement") by and between
Steel Technologies Inc. and the Sellers named therein, involving the
purchase of all of the outstanding capital stock of Atlantic Coil
Processing, Inc., a North Carolina corporation; the Promissory Note
dated April 1, 1997 by Steel Technologies Inc. as Maker to the Payees
named therein; the Employment Agreements dated effective April 1, 1997
between Company, Steel Technologies Inc. and the respective Employees
named therein; the Non Competition Agreements dated effective April 1,
1997 by and between Steel Technologies Inc. and the respective
Shareholders named therein or this Operating Lease dated effective April
1, 1997 by and between Company, Steel Technologies Inc., and the
Landlord named herein (collectively "Closing Documents").
(v) PROVIDED, HOWEVER, Tenant shall not be in default hereunder until
the earlier of the cure period, if any, specified in the closing
documents or, in the absence of such cure period therein, until thirty
(30) days after Landlord shall have delivered to Tenant and Steel
Technologies Inc. written notice of any such event of default and Tenant
shall fail to cure such default within the applicable cure period and
provided further that, if any default referred to in this Lease (but
excluding defaults under the other Closing Documents) can not be
reasonably be cured within such thirty (30) day period, Tenant shall not
be in default if Tenant commences to cure the failure within such thirty
(30) day period and thereafter diligently pursues the cure to
completion.
(b) If an event of default shall have happened and be continuing,
Landlord shall have the right, at its election, then, or at any time
thereafter while such event of default shall continue, to give Tenant
written notice of Landlord's intention to terminate the term of this
Lease on a date specified in such notice. Upon the giving of such
notice, the Term hereof and the estate hereby granted shall expire and
terminate on such date as fully and completely and with the same effect
as if such date were the date herein before fixed for the expiration of
the Term hereof, and all rights of Tenant hereunder shall expire and
terminate and Tenant shall surrender possession and vacate the Demised
Premises but Tenant shall remain liable as hereinafter provided.
(c) If an event of default shall have happened and be continuing,
Landlord shall have the immediate right, whether or not the Term hereof
shall have been terminated pursuant to this paragraph , to re-enter and
repossess the Demised Premises with or without process of law, and
remove all persons and property therefrom, without any liability to
Tenant arising therefrom and store the same in a public warehouse at the
cost and for the account of Tenant. No such re-entry or taking of
possession of the Demised Premises by Landlord shall be construed as an
election on Landlord's part to terminate the Term hereof, unless a
written notice of such intention be given to Tenant pursuant to this
paragraph, or unless the termination hereof be decreed by a court of
competent jurisdiction.
(d) At any time or from time to time after the repossession of the
Demised Premises or any part thereof pursuant to this paragraph, whether
or not the Term hereof shall have been terminated pursuant to this
paragraph), Landlord may relet the Demised Premises for such term or
terms (which may be greater than the Term of this Lease) and on such
conditions and for such uses as Landlord reasonably deems advisable.
(e) No expiration or termination of the Term hereof pursuant to this
paragraph, by operation of law or otherwise, and no repossession of the
Demised Premises or any part thereof pursuant to this paragraph or
otherwise, and no reletting of the Demised Premises or any part thereof
pursuant to this paragraph, shall relieve Tenant of its liabilities and
obligations hereunder, all of which shall survive such expiration,
termination, repossession, or reletting.
(f) In the event of any expiration or termination of this Lease or
repossession of the Demised Premises by reason of the occurrence of an
event of default, Tenant will pay to Landlord the Rent, Additional Rent
and other sums required to be paid by Tenant to and including the date
of such expiration, termination, or repossession; and, thereafter,
Tenant shall, until the end of what would have been the Term hereof in
the absence of such expiration, termination, or repossession, and
whether or not the Demised Premises shall have been relet, be liable to
Landlord for, and shall pay to Landlord, as liquidated and agreed
current damages: (i) the Rent, Additional Rent and other sums which
would be payable hereunder by Tenant in the absence of such expiration,
termination, or repossession, less (ii) the proceeds, if any, of any
reletting pursuant to this paragraph, after deducting from such proceeds
all of Landlord's expenses in connection with such reletting (including,
without limitation, reasonable attorneys' fees). Tenant will pay such
current damages on the days on which the Rent would have been payable
hereunder in the absence of such expiration, termination, or
repossession, and Landlord shall be entitled to recover the same from
Tenant on each such day.
(g) The words "enter," "re-enter," or "re-entry," as used in this
paragraph, are not restricted to their technical meaning.
Section 16.02 Additional Rights of Landlord. No right or remedy
herein conferred upon or reserved to Landlord is intended to be
exclusive of any other right or remedy, and each and every right and
remedy shall be cumulative and in addition to any other right or remedy
given hereunder or now or hereafter existing at law or in equity or by
statute. The failure of Landlord to insist at any time upon the strict
performance of any covenant or agreement, or to exercise any option,
right, power, or remedy contained herein shall not be construed as a
waiver or a relinquishment thereof for the future. A receipt by
Landlord of any Rent or any other sum payable hereunder with knowledge
of the breach of any covenant or agreement contained herein shall not be
deemed a waiver of such breach, and no waiver by Landlord of any
provision hereof shall be deemed to have been made unless expressed in
writing and signed by Landlord. In addition to other remedies provided
herein, Landlord shall be entitled, to the extent permitted by law, to
injunctive relief in case of the violation, or attempted or threatened
violation, of any of the covenants, agreements, conditions, or
provisions of this Lease, or to a decree compelling performance of any
of the covenants, agreements, conditions, or provisions of this Lease,
or to any other remedy allowed to Landlord at law or in equity.
Section 16.03. Default in Performance of Landlord's Covenants. In the
event Landlord shall be in default on any of its covenants contained
herein and such default continues for thirty (30) days after Tenant's
service of written notice to Landlord pursuant to the notice section
hereof of the existence of such default and Landlord is not diligently
pursuing the cure of such default at the end of said thirty (30) day
period, Tenant may perform any covenant of Landlord as to which Landlord
is in default, and Tenant shall have the right to deduct from the rental
provided for herein its costs and expenses paid out and expended.
ARTICLE 17
GUARANTEE
Section 17.01 Guaranty. As an inducement to Landlord to execute
this Lease, Steel Technologies does hereby absolutely and
unconditionally guarantee the full performance and observance of all of
the covenants, conditions and agreements provided to be performed and
observed by Tenant hereunder, including, without limitation, the prompt
payment of the Rent and Additional Rent and any and all other amounts
provided in the Lease to be paid by Tenant. Steel Technologies Inc.
hereby waives notice of non payment, non performance or non observance
and all other notices and all proof or demands. Further, Steel
Technologies Inc. expressly agrees and acknowledges that its obligations
hereunder shall in no way be terminated, effected or impaired by reason
of the granting by Landlord of any indulgences to Tenant or by reason of
the assertion against Tenant of any of the rights or remedies reserved
to Landlord pursuant to the provisions of this Lease, or by the relief
of the Tenant from any of Tenant's obligations under the Lease by
operation of law or otherwise, the undersigned hereby waiving all
suretyship defenses. The undersigned further covenants and agrees that
this guarantee obligation shall remain and continue in full force and
effect and to any renewal, modification or extension of the Lease,
whether or not Steel Technologies Inc. shall have received any notice of
or consented to such renewal, modification or extension. Steel
Technologies Inc. Further agrees that its liability hereunder shall be
primary, and that in any right of action which shall accrue to Landlord
under the Lease, Landlord may, at its option, proceed against Steel
Technologies Inc. and Tenant, jointly or severally, and may proceed
against Steel Technologies Inc. without having commenced any action
against or having obtained any judgment against Tenant.
ARTICLE 18
PURCHASE OPTION
Section 18.01 Purchase Option Amount Tenant has the option, but not
the obligation, to purchase from Landlord the Demised Premises and all
improvements including without limit 11, 12, 16 during the Term of the
lease according to the following schedule: no option during the first
lease year, no option during the second lease year, no option during the
third lease year, $2,400,000 during the fourth lease year, $2,300,000
during the fifth lease year and $3,000,000 during the sixth lease year.
Section 18.02 Payment of Purchase Option Amount In the event that
Tenant exercises its option to purchase from Landlord the Demised
Premises by written notice within the option period: (a) the required
payment shall be delivered to the Landlord by certified check, wire
transfer, or other means of immediately available funds; and (b) the
conveyance shall be by General Warranty Deed free and clear of all liens
and encumbrances, and (c) Closing shall be held within sixty (60) days
of notice of exercise or such other period of time as the parties may
agree.
ARTICLE 19
ENVIRONMENTAL MATTERS
(LANDLORD)
Section 19.01. Environmental Laws and Hazardous Substances. For
purposes herein, the term "Environmental Law(s) shall mean any federal,
state or local statute, law, ordinance, code, rule, regulation, order or
decree regulating, relating to, or imposing liability or standards of
conduct concerning any Hazardous Substance, as now or at any time
hereinafter in effect. For purposes herein, the term "Hazardous
Substance(s)" shall have the meaning ascribed in any Environmental Law
to any hazardous, toxic or dangerous waste, substance, pollutant or
material.
Section 19.02. Compliance with Environmental Laws. Landlord certifies
that (i) Landlord will not violate, in connection with the use,
ownership, maintenance or operation of the Demised Premises, any
Environmental Law; (ii) Landlord, its agents, employees, and independent
contractors will not receive, handle, use, store, treat, transport and
dispose of any Hazardous Substances on Demised Premises.
Section 19.03. Absence of Hazardous Substances. Landlord certifies,
based upon reasonable investigation, that neither Landlord nor any other
person with Landlord's knowledge and/or control, including any previous
owners or Landlords of the Demised Premises, has ever caused or
permitted any Hazardous Substance to be placed, held, located or
disposed of on, under or at the Demised Premises or any part thereof and
neither the Demised Premises nor any part thereof has ever been used by
Landlord or by any other person as a dump site or storage site, whether
permanent or temporary, for any Hazardous Substance.
Section 19.04. Absence of Litigation. Landlord certifies, with respect
to the Demised Premises, that it is not a party to any litigation or
administrative proceeding, nor so far as is known by Landlord is any
litigation or administrative proceeding threatened against it, which in
either case asserts or alleges that (i) Landlord or any other person
violated any Environmental Law, (ii) Landlord or any other person is
required to clean up or take other response action due to the release or
threatened release or transportation of any Hazardous Substance, or
(iii) Landlord or any other person is required to pay all or a portion
of the cost of any past, present or future cleanup or other response
action which arises out of or is related to the release or threatened
release or transportation of any Hazardous Substance.
Section 19.05. Tanks. There are not now, nor to Landlord's knowledge
after reasonable investigation have there ever been, tanks or other
facilities on, under, or at the Demised Premises which contained
materials which, if known to be present in soils or groundwater, would
require cleanup or other response action. If there are no such tanks or
other facilities, Landlord represents after reasonable investigation
that nothing contained therein has ever been spilled, leaked or released
into the environment, soil or groundwater and that such tanks or other
facilities are in compliance with all Environmental Laws.
Section 19.06. Notices or Other Information. If Landlord acquires any
knowledge of or receives any notice or other information regarding (i)
the happening of any event involving any Hazardous Substance or (ii) any
noncompliance with regard to any environmental, health or safety matter
affecting the Demised Premises, Landlord shall immediately notify Tenant
orally and in writing and provide Tenant with copies of any written
notice or information.
Section 19.07. Right of Mitigation. Tenant shall have the right but
not the obligation and without limitation of Tenant's rights under this
Lease to take such actions as it deems necessary or advisable to clean
up or otherwise deal with any Hazardous Substance or following receipt
of any notice or information which, in the sole opinion of Tenant, could
result in action against Landlord or Tenant.
Section 19.08. Indemnification. Landlord hereby agrees to indemnify
Tenant and Steel Tech and hold Tenant and Steel Tech harmless from and
against any and all losses, liabilities, including strict liability,
damages, injuries, expenses, including reasonable attorneys' fees,
claims for damage to the environment, claims for fines or civil
penalties, costs of any settlement or judgment and claims of any and
every kind whatsoever paid, incurred or suffered by, or asserted
against, Tenant or Steel Tech by any person or entity or governmental
agency for, with respect to, or as a direct or indirect result of, the
presence on or under the Demised Premises of, or the release or
threatened release or transportation of, any Hazardous Substance or
arising under any Environmental Law, regardless of whether or not caused
by or within the control of Landlord and associated with Atlantic Coil
Processing, Inc. and Landlord operation of the properties prior to the
Lease Term.
Section 19.09. Agreement to Update. Landlord certifies that Landlord
shall advise Tenant in writing as soon as Landlord becomes aware of any
condition or circumstance which makes the environmental warranties,
representations or certifications contained in this Section incomplete
or inaccurate.
ARTICLE 20
ENVIRONMENTAL MATTERS
(TENANT)
Section 20.01. Environmental Laws and Hazardous Substances. For
purposes herein, the term "Environmental Law(s) shall mean any federal,
state or local statute, law, ordinance, code, rule, regulation, order or
decree regulating, relating to, or imposing liability or standards of
conduct concerning any Hazardous Substance, as now or at any time
hereinafter in effect. For purposes herein, the term "Hazardous
Substance(s)" shall have the meaning ascribed in any Environmental Law
to any hazardous, toxic or dangerous waste, substance, pollutant or
material.
Section 20.02. Compliance with Environmental Laws. Tenant certifies
that (i) Tenant will not violate, in connection with the use,
maintenance or operation of the Demised Premises, any Environmental Law;
(ii) Tenant, its agents, employees, and independent contractors will not
receive, handle, use, store, treat, transport and dispose of any
Hazardous Substances on Demised Premises.
Section 20.03. Notices or Other Information. If Tenant acquires any
knowledge of or receives any notice or other information regarding (i)
the happening of any event involving any Hazardous Substance or (ii) any
noncompliance with regard to any environmental, health or safety matter
affecting the Demised Premises, Tenant shall immediately notify landlord
orally and in writing and provide Landlord with copies of any written
notice or information.
Section 20.04. Right of Mitigation. Landlord shall have the right
but not the obligation and without limitation of Landlord's rights under
this Lease to take such actions as it deems necessary or advisable to
clean up or otherwise deal with any Hazardous Substance or following
receipt of any notice or information which, in the sole opinion of
Landlord, could result in action against Tenant or Landlord.
Section 20.05. Indemnification. Tenant hereby agrees to indemnify
Landlord and hold Landlord harmless from and against any and all losses,
liabilities, including strict liability, damages, injuries, expenses,
including reasonable attorneys' fees, claims for damage to the
environment, claims for fines or civil penalties, costs of any
settlement or judgment and claims of any and every kind whatsoever paid,
incurred or suffered by, or asserted against, Landlord by any person or
entity or governmental agency for, with respect to, or as a direct or
indirect result of, the presence on or under the Demised Premises of, or
the release or threatened release or transportation of, any Hazardous
Substance or arising under any Environmental Law, regardless of whether
or not caused by or within the control of Tenant and associated with
Tenant's operation of the properties during the Lease Term.
ARTICLE 21
CONDEMNATION, ASSIGNMENT, SUBLEASE OR LICENSE
Section 21.01. The Taking. If the Demised Premises, or any part
thereof, should be taken or condemned for public or quasipublic use
under any statute or by the right of eminent domain, or in lieu thereof,
if the Demised Premises are sold to a public body under threat or
proposal of condemnation, or if the grade of any street or highway
adjoining or abutting the Demised Premises is changed or access to such
street or highway is limited by governmental decree or order so as to
limit free ingress and egress to and from the Demised Premises or
otherwise to affect materially and adversely the use of the Demised
Premises, then Tenant, at its option, may terminate this Lease (except
for purposes of pursuing its claims for damages as provided herein) and
cease to pay rent as of the date possession is taken, and any award or
settlement for damages or sale proceeds shall be distributed to the
parties in proportion to the value of their respective interests in the
Demised Premises. In such taking, condemnation, change of grade,
limitation of access or like proceeding, the parties thereto shall
represent their own interests and shall present and prosecute their own
claims for damages and neither party shall be liable to the other for
any recovery obtained.
Section 21.02. Tenant's Option. In the event Tenant does not exercise
its option to terminate as aforesaid, Tenant shall be entitled to a
reduction of rental payments in proportion to the amount by which the
gross area of the Demised Premises is reduced by such taking or loss and
such reduction shall be retroactive to the date when Tenant was deprived
of the full and complete use of all the Demised Premises.
Section 21.03. More Than One Taking. If more than one taking or
condemnation occurs during the Demised Term, the rights of the parties,
as provided in this Article, shall be determined as if all such takings
or condemnations had all occurred at the time of the last taking, and
the effect of all such takings or condemnations shall be considered
cumulatively.
Section 21.04. Assignment, Sublease or License. Tenant may assign or
sublease the Demised Premises, or any right or privilege connected
therewith, or allow any other person to occupy the premises or any part
thereof without first obtaining the written consent of Landlord,
provided, however, that such assignment or sublease shall not affect
Tenant's or Steel Tech'sliability hereunder.
ARTICLE 22
ESTOPPEL CERTIFICATE
Section 22.01 Tenant Estoppel Certificate. Within thirty (30) days
after written request from Landlord, Tenant shall execute, acknowledge,
and deliver to Landlord an estoppel certificate certifying: (a) that
this Lease is unmodified and in full effect (or, if there have been
modifications, that this Lease is in full effect as modified, and
setting forth such modifications); (b) the dates to which the Rent and
other sums payable hereunder have been paid; (c) either stating that to
the knowledge of the signer of such certificate, no default exists
hereunder, or specifying each such default of which the signer may have
knowledge; and (d) such other matters as may reasonably be requested by
the other party, its lender, assignee or purchaser. Any such estoppel
certificate may be relied upon by any such lender, purchaser or assignee
for estoppel purposes only.
ARTICLE 23
TRANSFER OF LANDLORD'S INTEREST
Section 23.01 Transfer of Landlord's Interest. In the event of
the sale, assignment or transfer by Landlord of its interest in the
Leased Premises or in this Lease (other than a collateral assignment to
secure a debt of Landlord) to an unrelated third party, Landlord shall
thereupon be released or discharged from all of its covenants and
obligations hereunder, except such obligations as shall have occurred
prior to any such sale, assignment or transfer upon the written
assumption of this Lease by such successor in interest; and Tenant
agrees to look solely to such successor in interest of Landlord for
performance of such obligations Landlord shall thereby be discharged of
any further obligations relating thereto. Landlord's assignment of the
Lease, or of any or all of its rights herein, shall in no matter affect
Tenant's obligations hereunder. Tenant shall thereafter attorn and look
to such assignee, as Landlord, provided Tenant has first received
written notice of such assignment of Landlord's interest.
ARTICLE 24
SUBORDINATION
Section 24.01. Subordination. Tenant agrees that this Lease shall,
at all times, be subject and subordinate to the lien of any mortgagee
(which terms shall include all security instruments) that may be placed
on the Demised Premises by Landlord and Tenant agrees, upon demand,
without cost, to execute any instrument that may be required to
effectuate such subordination and will attorn to such mortgagee,
provided however, such mortgagee agrees that, so long as Tenant shall
not be in default under the terms of this Lease, said Lease shall not be
terminated prior to the end of the Term nor shall any of Tenant's rights
and obligations under this Lease be disturbed by any steps or
proceedings taken by any mortgagee, lessor or other holder of a right of
record effecting the real property in the exercise of any of its rights
under the instrument wherein the right is authorized.
ARTICLE 25
SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES
Section 25.01 Surrender of Premises; Removal of Trade Fixtures.
(a) Tenant will deliver up the Demised Premises at the end of the term
or any holdover period in good order and condition.
(b) If no default or event of default hereunder has happened and is
continuing, Tenant may, at any time during the term hereof, remove from
the Demised Premises any trade fixtures, furnishings, machinery, or
equipment belonging to Tenant or third parties, provided that Tenant
shall promptly repair any damage to the Demised Premises caused by such
removal.
ARTICLE 26
HOLDING OVER
Section 26.01 Holding Over. In the event that Tenant remains in
possession of the Demised Premises after the expiration or earlier
termination of the term hereof, Tenant shall occupy the Demised Premises
under a month to month tenancy subject to all of the conditions of this
Lease insofar as the same are consistent with such tenancy, except that
Tenant shall pay 125% of the Rent, plus any other sums payable
hereunder.
ARTICLE 27
TENANT RIGHT TO TERMINATE
Section 27.01. Tenant Right to Terminate. Tenant shall have the right
to terminate this Lease at any time within thirty (30) days of the date
hereof by delivery of a written termination statement to Landlord,
should Tenant be unable to obtain all governmental permits and/or
approvals necessary for the operation of its business on the Demised
Premises. In the event of such termination, neither Landlord nor Tenant
shall have further responsibility to the other.
ARTICLE 28
MISCELLANEOUS
Section 28.01. Covenant of Title. Landlord covenants, represents and
warrants that it has full right and power to execute and perform its
obligations under this Lease and to grant the estate demised herein and
that Tenant, on payment of the rent herein reserved and performance of
the covenants and agreements herein contained, shall peaceably and
quietly have, hold and enjoy the Demised Premises during the Term
without molestation or hindrance by any person, and, if at any time
during the Term, the title of Landlord shall fail or it shall be
discovered that its title does not enable Landlord to grant the term
hereby demised, Tenant shall have the option at Landlord's expense to
correct or contest such defect or action, or to annul and void this
Lease with full reservation of its rights to damages, if any, against
Landlord.
Section 28.02. Compliance with Law. Upon receipt of notice from any
duly constituted public authorities, Tenant shall comply with their
lawful requirements and save Landlord harmless from penalties, fines,
costs or damages resulting from Tenant's occupancy and use of the
Demised Premises, provided such penalties, fines, costs or damages
result from an act or omission of Tenant. Landlord warrants to Tenant
that the Demised Premises are in full compliance with all laws and
regulations of governmental authorities at the inception of the Lease
and will hold Tenant harmless for any violation not caused by Tenant and
will proceed with reasonable diligence at its cost to correct any
violation not caused by Tenant as provided above.
Section 28.03. Relationship of Parties. Nothing herein contained shall
be deemed or construed by the parties hereto, nor by any third party, as
creating the relationship of principal and agent, or of partnership, or
of joint venture, between the parties hereto, if being agreed that
neither the method of computation of rents nor any other provisions
named herein, nor any acts of the parties herein, shall be deemed to
create any relationship between the parties hereto other than the
relationship of Landlord and Tenant.
Section 28.04. Environmental Studies. Tenant has caused appropriate
environmental studies to be performed on the Demised Premises so as to
determine the current environmental status of the properties.
Section 28.05. Waiver. No waiver of any condition or covenant of this
Lease by either party shall be deemed to imply or constitute a further
waiver of the same or any other condition or covenant of this Lease.
Section 28.06. Successors. This Lease shall inure to the benefit of
and be binding upon the parties hereto, their respective heirs, personal
representatives, successors and assigns.
Section 28.07. Entirety, Severability and Law. This Lease shall
constitute the entire agreement between the parties and shall not be
modified in any manner except by written instrument executed by the
parties. The invalidity or unperformability of any provision hereof
shall not affect or impair any other provision hereof. Each term and
provision hereof shall be performed and enforced to the fullest extent
permitted by and in accordance with North Carolina law.
Section 28.08 Force Majeure. Landlord and Tenant shall
be excused for the period of any delay in performance of any obligations
hereunder when prevented from doing so by the wrongful or negligent acts
or omissions of the other party or by causes beyond either party's
reasonable control.
Section 28.09. Entire Agreement. This Lease Agreement shall be
considered to be the only agreement between the parties hereto
pertaining to the Demised Premises. All negotiations and oral
agreements acceptable to both parties are included herein.
Section 28.10. Law of North Carolina. This Lease shall be governed by
the laws of the State of North Carolina.
Section 28.11. Notices. All notices, requests, consents, and other
communications shall be in writing and shall be addressed to the
receiving party's address by first-class mail, return receipt requested
and by facsimile.
If to Landlord: :
Jerry Richmond
Managing Partner
195 Magnolia Drive
Ormond Beach, FL 31276
With a copy to :
William M. Black, Jr.
7200 Stonehenge Drive,Suite 206
PO Box 19866
Raleigh, NC 27619
Fax No: 919-676-5584
If to Tenant:
Brad Ray
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY 40245
Fax No: (502) 245-3821
With a copy to:
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, KY l 40245
Attn: John Baumann
Fax No: (502) 245-0542
To indicate their understanding of and consent and agreement to the
foregoing terms, the parties have executed this Lease on the date first
above written.
LANDLORD:
By: _______________________________
Title: ____________________________
TENANT:
By: _______________________________
Title: ____________________________
STEEL TECHNOLOGIES INC.
By:________________________________
Title:_______________________________
