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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File
No. 1-9820
BIRMINGHAM STEEL CORPORATION
DELAWARE 13-3213634
(State of Incorporation) (I.R.S. Employer
Identification No.)
1000 Urban Center Parkway, Suite 300
Birmingham, Alabama 35242
(205) 970-1200
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days Yes X No .
----- -----
Indicate the number of shares outstanding of each
of the issuer's classes of common stock, as of the
latest practicable date: 28,599,532 Shares of Common
Stock, Par Value $.01 Outstanding at February 9, 1996
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<PAGE>
BIRMINGHAM STEEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
ASSETS December 31, 1995 June 30, 1995
(Unaudited) (Audited)
------------------ -----------------
Current Assets:
Cash and cash equivalents $ 52,566 $ 4,311
Accounts receivable, net of
allowance for doubtful accounts
of $1,742 at December 31, 1995;
$1,368 at June 30, 1995 98,878 110,883
Inventories 215,115 173,053
Prepaid expenses 1,917 1,154
Other 10,296 13,595
------- -------
Total current assets 378,772 302,996
Property, plant and equipment
(including property and equip-
ment, net, held for disposition
of $18,677 and $27,655 at
December 31, 1995 and June 30,
1995, respectively):
Land and buildings 120,205 117,835
Machinery and equipment 381,444 350,275
Construction in progress 101,860 53,932
------- -------
603,509 522,042
Less accumulated depreciation (120,835) (110,385)
------- -------
Net property, plant and equipment 482,674 411,657
Excess of cost over net
assets acquired 31,386 32,338
Other assets 27,529 9,813
------- -------
Total assets $ 920,361 $ 756,804
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ - $ 8,020
Accounts payable 60,667 63,082
Accrued operating expenses 4,029 4,137
Accrued payroll expenses 6,295 8,791
Income taxes payable 796 583
Other accrued liabilities 16,717 11,482
------- -------
Total current liabilities 88,504 96,095
Deferred income taxes 54,983 53,265
Deferred compensation 5,428 5,225
Long-term debt less current portion 307,500 142,500
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01;
authorized 5,000,000 shares - -
Common stock, par value $.01;
authorized 75,000,000 shares;
29,626,525 and 29,594,286 shares
issued at December 31, 1995 and
June 30, 1995, respectively 296 296
Additional paid-in capital 330,942 330,490
Treasury stock, 1,082,545 and
1,098,356 shares issued
at December 31, 1995 and
June 30, 1995, respectively,
at cost (21,399) (21,909)
Unearned compensation (2,402) (2,537)
Retained earnings 156,509 153,379
------- -------
Total stockholders' equity 463,946 459,719
------- -------
Total liabilities and stockholders'
equity $ 920,361 $ 756,804
=========== =========
See accompanying notes.
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BIRMINGHAM STEEL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA; UNAUDITED)
Three months Six months
ended December 31, ended December 31,
------------------------- ------------------------
1995 1994 1995 1994
----------- ---------- ---------- ----------
Net Sales $197,398 $203,238 $404,650 $423,839
Cost of sales:
Other than depreciation
and amortization 173,641 163,267 347,746 343,589
Depreciation and
amortization 8,272 7,996 16,302 15,981
-------- -------- -------- --------
Gross profit 15,485 31,975 40,602 64,269
Provision for loss on
disposition of property,
plant and equipment 2,055 599 2,055 1,325
Selling, general and
administrative 10,334 9,283 20,716 18,452
Interest 3,093 2,174 5,364 4,530
-------- -------- -------- --------
3 19,919 12,467 39,962
Other income, net 1,271 1,134 2,634 1,864
Income before income taxes 1,274 21,053 15,101 41,826
Provision for income taxes 618 8,684 6,267 17,252
-------- -------- -------- --------
Net Income $ 656 $ 12,369 $ 8,834 $ 24,574
======== ======== ======== ========
Weighted average shares
outstanding 28,538 29,450 28,529 29,427
======== ======== ======== ========
Earnings per share $ 0.02 $ 0.42 $ 0.31 $ 0.84
Dividends declared per
share $ 0.10 $ 0.10 $ 0.20 $ 0.20
======== ======== ======== ========
See accompanying notes.
BIRMINGHAM STEEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Six months ended
December 31,
----------------------------
1995 1994
(unaudited) (unaudited)
----------- -----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $ 8,834 $ 24,574
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 16,302 16,089
Provision for doubtful
accounts receivable 383 622
Deferred income taxes 1,641 3,707
Provision for loss on
disposition of
property, plant and
equipment 2,055 1,325
Other 1,458 1,359
Changes in operating assets
and liabilities, net
of effects from business
acquisition:
Accounts receivable 11,622 16,882
Inventories (42,062) (24,573)
Prepaid expenses (763) 67
Other current assets 3,299 719
Accounts payable (2,163) (1,607)
Income taxes payable 213 (1,510)
Other accrued liabilities 2,708 611
Deferred compensation 203 368
--------- ---------
Net cash provided by
operating activities 3,730 38,633
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to property,
plant and equipment (76,879) (31,354)
Payments for business
acquisitions (11,250) (10,652)
Proceeds from disposal
of property, plant
and equipment 86 5
Investment in scrap
subsidiary (7,499) -
Additions to other
non-current assets (14,649) (1,416)
Reductions in other
non-current assets 3,921 255
-------- ---------
Net cash used in
investing activities (106,270) (43,162)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net short-term borrowings
and repayments (8,020) -
Proceeds from issuance of
long-term debt 165,000 -
Proceeds from issuance of
common stock 59 180
Purchase of treasury
stock (540) -
Cash dividends paid (5,704) (5,886)
--------- ---------
Net cash provided by
(used in)
financing
activities 150,795 (5,706)
--------- ---------
Net increase (decrease)
in cash and cash
equivalents 48,255 (10,235)
Cash and cash equivalents
at:
Beginning of period 4,311 28,916
-------- ---------
End of period $ 52,566 $ 18,681
========= =========
Supplemental cash flow
disclosures:
Cash paid during the
period for:
Interest (net of
amounts
capitalized) $ 4,404 $ 4,414
Income taxes $ 4,069 $ 15,056
See accompanying notes.
BIRMINGHAM STEEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
1. Significant Accounting Policies
Principles of consolidation
The consolidated financial statements include the
accounts of Birmingham Steel Corporation (the Company)
and its subsidiaries, all of which are wholly owned. In
the opinion of management, all adjustments considered
necessary for a fair presentation have been included.
All significant intercompany accounts and transactions
have been eliminated. The Company operates in one
industry segment, production of steel and steel
products.
Inventories
Inventories are stated at the lower of cost or market
value. The cost of steel inventories is determined
using the first-in, first-out method.
Earnings per share
Earnings per share are computed using the weighted
average number of outstanding common shares and dilutive
equivalents (if any).
Recent Accounting Pronouncement
In March 1995, the Financial Accounting Standards
Board issued Statement No. 121 that requires long-lived
assets used in operations, including goodwill, to be
written down to their fair value when impairment
indicators are present and the undiscounted cash flows
estimated to be generated by those assets are less than
the assets' carrying amount. Statement No. 121 also
addresses the accounting for long-lived assets that are
expected to be disposed of in future periods. The
Company will adopt Statement No. 121 in the first
quarter of fiscal 1997 and, based on current
circumstances, does not believe the effect of adoption
will be material.
2. Business Acquisitions
On December 31, 1994, the Company purchased Port
Everglades Steel Corporation (PESCO), a steel
distribution company headquartered in Fort Lauderdale,
Florida for $11,400,000 in cash and assumption of
liabilities of $3,100,000. The purchase price has been
allocated to the assets and liabilities of PESCO based
upon their estimated fair values. Pro forma results for
the six months ended December 31, 1994 would not be
materially different from the amounts reported in the
Company's consolidated income statement if the
acquisition had occurred as of the beginning of fiscal
1995.
On August 8, 1995, the Company purchased the steel
manufacturing equipment and other assets from Western
Steel Limited, a subsidiary of IPSCO Inc. located in
Calgary, Alberta, Canada for a purchase price of
approximately $10,500,000. On December 13, 1995,
Birmingham Recycling Investment Company, LLC, a wholly
owned subsidiary of the Company, completed a related
transaction when it purchased the stock of Richmond
Steel Recycling Limited, a scrap processing facility and
subsidiary of Western Steel Limited, located in
Richmond, British Columbia, Canada. The Company has
signed a letter of intent to enter into a joint venture
with Simsmetal Ltd. (SIMS) whereby SIMS would manage the
operations of the Richmond facility.
3. Business Disposition
On March 12, 1995, the Company sold its mine roof
bolt business unit for $21,500,000, less costs
approximating $1,758,000. In connection with the sale,
the Company entered into a five-year supply agreement to
provide purchaser the majority of its steel
requirements.
4. Inventories
Inventories were valued as summarized in the
following table (in thousands):
December 31 June 30
1995 1995
----------- ---------
At lower of cost or market:
Raw materials and mill
supplies $ 49,901 $ 45,074
Work-in-progress 83,258 51,516
Finished goods 81,956 76,463
-------- --------
$215,115 $173,053
======== ========
5. Borrowing Arrangements
Under line of credit arrangements for short-term
borrowings with four banks, the Company may borrow up to
$185,000,000 with interest at market rates mutually
agreed upon by the Company and the banks. One of these
lines of credit supports a bankers'acceptance and
commercial paper program. The full line of credit was
available under these facilities at December 31, 1995.
On September 1, 1995, American Steel & Wire
Corporation (ASW), a wholly-owned subsidiary of the
Company, issued $15,000,000 in Solid Waste Disposal
Revenue Bonds under the authority of the Ohio Water
Development Authority. The bonds have a term of thirty
years at a variable market interest rate. The proceeds
of the bonds will be used to construct a waste water
treatment facility at the Company's new bar mill project
located in Cleveland, Ohio.
On September 29, 1995, the Company completed a
$150,000,000 private placement of senior notes. The
notes are unsecured and primarily consist of maturities
ranging from seven to ten years and a weighted average
interest rate of 7.05 percent. The proceeds of the debt
issue, which were drawn down on December 15, 1995,will
be utilized primarily to fund the current requirements
of the Company's multi-year capital expenditure program.
6. Commitments
In April, 1995, the Company entered into a ten-year
agreement with Electronic Data Systems Corporation
(EDS), an information management and consulting firm.
Under the agreement, EDS will provide information system
management, systems development and consulting services
to the Company. Future minimum payments for systems
management services are $6,300,000 per year.
7. Contingencies
Environmental
The Company is subject to federal, state and local
environmental laws and regulations concerning, among
other matters, waste water effluents, air emissions and
furnace dust disposal.
The Company has been advised by the Virginia
Department of Waste Management of certain conditions
involving the disposal of hazardous materials at the
Company's Norfolk, Virginia property which existed prior
to the Company's acquisition of the facility. The
Company has also been notified by the department of
Toxic Substances Control of the Environmental Protection
Agency of the State of California of certain
environmental conditions regarding its property in
Emeryville, California. The Company is performing
environmental assessments of these sites and developing
work plans for remediation of the properties for
approval by the applicable regulatory agencies.
As part of its ongoing environmental compliance and
monitoring programs, the Company is voluntarily
developing work plans for environmental conditions
involving certain of its operating facilities and other
properties which are held for sale. Based upon the
Company's study of the known conditions and its prior
experience in investigating and correcting environmental
conditions, the Company estimates that the potential
costs of these site restoration and remediation efforts
may range from $3,050,000 to $4,650,000. Approximately
$1,306,000 of these costs is recorded in accrued
liabilities at December 31, 1995. The remaining costs
principally consist of site restoration and
environmental exit costs to ready the idle facilities
for sale, and have been considered in determining
whether the carrying amounts of the properties exceed
their net realizable values. These expenditures are
expected to be made in the next one to two years, if the
necessary regulatory agency approvals of the Company's
work plans are obtained. Though the Company believes it
has adequately provided for the cost of all known
environmental conditions, the applicable regulatory
agencies could insist upon different and more costly
remediative measures than those the Company believes are
adequate or required by existing law. Otherwise, the
Company believes that it is currently in compliance with
all known material and applicable environmental
regulations.
Legal Proceedings
The Company is involved in litigation relating to
claims arising out of its operations in the normal
course of business. Such claims are generally covered
by various forms of insurance. In the opinion of
management, any uninsured or unindemnified liability
resulting from existing litigation would not have a
material effect on the Company's business, its financial
position, liquidity or results of operations.
8. Disposition of Idle Facilities
In Fiscal 1995, the Company entered into an agreement
to sell the real property at its idle facility in
Ballard, Washington. In December, 1995, the Company
incurred a write-off of $2,055,000 related to the
equipment at the Ballard facility after termination of
the sales contract on the equipment. In August, 1995,
the Company completed the exchange of the idle Kent,
Washington facility and other property at the Seattle,
Washington steel-making facility with the Port of
Seattle for property owned by the Port which will be
used in the Company's Seattle operations.
9. Other Unusual Charges
During the second quarter, the Company incurred
charges for other unusual items in the amount of
$2,745,000 related to severance expenses for
reorganization at both the corporate and plant levels
and adjustments for local and state tax audits.
10. Subsequent Events
On January 16, 1996, the Board of Directors of the
Company adopted a Share Purchase Rights Plan (the plan)
designed to discourage takeovers that involve abusive
takeover tactics or do not provide fair value to
shareholders. A detailed description of the plan was
filed on form 8-K on January 23, 1996.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the second quarter of fiscal 1996, the Company
reported earnings of $656,000, compared with $12,369,000
in the second period of fiscal 1995. Earnings per share
for the quarter were $.02, down from $.42 reported last
year. Second quarter earnings reflected pre-tax charges
for unusual items of approximately $4,800,000 or $.10
per share after tax. Second quarter steel shipments were
557,000 tons, compared with 541,000 tons shipped a year
ago. Net sales for the second quarter were
$197,398,000, down 3 percent from $203,238,000 for the
same period last year.
For the six months ended December 31, 1995 the Company
reported earnings of $8,834,000, compared with
$24,574,000 for the same period last year. Earnings per
share for the period were $.31, down from $.84 reported
last year. Steel shipments for the six month period
were 1,131,000 tons, a 3 percent decline from 1,161,000
tons for the same period of 1995. Net sales were
$404,650,000 for the first six months compared with
$423,839,000 in the same period a year ago.
Net Sales
Second quarter rebar/merchant shipments increased 10
percent from the same period last year to 429,000 tons.
Shipment of lower margin semi-finished steel billets
account for 6 percent of total rebar/merchant shipments
in the second quarter and 3 percent for the same period
a year ago. Average selling prices declined to $295 per
ton, a 7 percent drop from the immediately preceding
quarter and a 5 percent decline as compared to the same
period last year. Net sales for the second quarter
declined approximately 3 percent from the prior year,
primarily due to the reduction in selling prices. Steel
demand remained steady through the second quarter,
though overall steel shipment levels declined slightly
from the first quarter level due to the typical winter
slowdown in construction activity. The near term outlook
for steel selling prices indicates that pricing is
expected to remain near second quarter levels.
Second quarter shipments of the Company's rod & wire
products fell 15 percent from the prior year to 128,000
tons primarily due to reduced demand in the automotive
sectors. Average rod selling prices increased slightly
from the same period last year and are expected to
remain flat in the near term.
Cost of Sales
As a percentage of net sales, cost of sales (other than
depreciation and amortization) rose to 88.0% compared
with 80.3% in the second quarter last year. The
increase resulted from lower rebar/merchant average
selling prices, a rise in the cost of FIFO inventories
charged to cost of sales during the quarter due to
planned production curtailments at the Company's
rebar/merchant facilities and an increase in the cost of
purchased billets at the Company's Rod and Wire
facilities.
For the six months ended December 31, 1995, cost of
sales as a percentage of sales increased to 85.9%
compared with 81.1% in the second quarter last year
primarily due to the reasons stated above.
During the second quarter, rebar/merchant conversion
costs rose to $126 per ton, a 6 percent increase from
the immediately preceding quarter and an increase of 9
percent from the second quarter last year. Increased
conversion costs resulted primarily from planned
production curtailments referred to above which were
initiated to reduce surplus inventory levels at the
Company's facilities. Elevated cost of sales are
expected to continue through the third quarter as
further production curtailments result in higher cost
inventories.
The Company's second quarter scrap raw material cost of
$137 per ton was essentially unchanged from the first
quarter and prior year period although scrap market
pricing began to rise late in the second quarter.
Indications from the scrap market are that further
increases in scrap costs may occur over the next
quarter.
Raw material billet cost at the Company's American Steel
and Wire subsidiary (ASW) was $347 per ton in the second
quarter, up $26 per ton from $321 a year ago. The
Company is proceeding with its announced plan to
construct a high quality steel melting facility in
Memphis, Tennessee at a capital cost of approximately
$200 million. Tentative start-up of the facility is
scheduled for the fourth quarter of fiscal 1997.
Unusual Items
During the quarter, the provision for loss on
disposition of property, plant and equipment amounted to
$2,055,000 resulting from a write-off of equipment at
the Company's idled Ballard, Washington facility. The
second quarter write-off was prompted by the termination
of a sales contract on the equipment and the Company's
conclusion that a replacement buyer could not be found
at a comparable price. Other charges for unusual items
amounted to approximately $2,745,000 related to
severance expenses for reorganization at both the
corporate and plant levels and adjustments for local and
state tax audits, the majority of which were charged to
cost of sales and selling, general and administrative
expenses.
Selling, General and Administrative Expenses ("SG&A")
SG&A increased to $10,334,000 from $9,283,000 reported
in the second quarter last year primarily due to
expenses associated with the Company's contract with
Electronic Data Systems (EDS) which was consummated in
the fourth quarter of fiscal 1995. As a percentage of net
sales, second quarter SG&A were 5.2 percent, compared
with 4.6 percent last year.
For the six months ended December 31, 1995, SG&A
increased to $20,716,000 from $18,452,000 reported in
the same period last year also due to costs associated
with EDS as stated above. As a percentage of net sales,
year-to-date SG&A were 5.1 percent, compared with 4.4
percent last year.
Interest Expense
Interest expense increased to $3,093,000 in the second
quarter compared with $2,174,000 reported last year,
primarily due to increased debt levels on the Company's
short-term lines of credit in the first quarter and the
funding in mid-December of the Company's $150 million
private placement bearing an average interest rate of
7.05 percent. Interest expense is expected to continue to
rise for the remainder of the fiscal year as the full
impact of increased debt levels are realized. However,
as expenditures are made on the Company's major
expansion projects, increasing amounts of interest will
be capitalized, thereby offsetting the income statement
impact.
In the second quarter, the Company capitalized
approximately $1,349,000 in interest related to
construction projects, compared with approximately
$476,000 in the same period last year.
For the six months ended December 31, 1995, interest
expense increased to $5,364,000, compared with
$4,530,000 in the prior year essentially due to the
reasons stated above. For the six month period, the
Company capitalized approximately $2,272,000 in interest
related to construction projects, compared with
approximately $772,000 in the same period last year.
Income Taxes
Effective income tax rates for the six months ended
fiscal 1996 and fiscal 1995 were 41.5% and 41.2%,
respectively.
Liquidity and Capital Resources
Operating Activities:
For the first six months of fiscal 1996, cash provided
by operating activities fell to $3.7 million, compared
with $38.6 million reported last year. The reduction in
cash flow was essentially due to a decrease in net
income combined with a substantial increase in inventory
levels at all of the Company's production facilities.
The growth in current year inventory levels was
primarily the result of increased finished goods
production coupled with flat shipment levels and the
inclusion of certain inventories at the Company's
rod/wire facilities previously held as inventory on
consignment.
Investing Activities:
Net cash used in investing activities was $106.3
million, compared with $43.2 million last year. Capital
spending increased significantly during fiscal 1996, as
the Company proceeds with the primary elements of its
multi-year capital development program. Current major
projects include the melt shop furnace at the Seattle
mill which was completed in the first quarter and the
$112 million bar mill at the Company's ASW subsidiary
scheduled for start-up in the fourth quarter. In the
second quarter, the Company completed the purchase of
certain idled steel making equipment and other assets of
Western Steel Limited located in Calgary, Alberta,
Canada and the stock of Richmond Steel Recycling Limited
(a subsidiary of Western Steel Limited) located in
Richmond, British Columbia, Canada (see Note 2 to
Consolidated Financial Statements).
Financing Activities:
Net cash provided by financing activities was $150.8
million in the first six months, compared with net cash
used in financing activities of $5.7 million last year.
During the period the Company completed a $15 million,
30 year tax-free bond financing at ASW and issued $150
million senior debt notes, using a portion of the
proceeds to pay down the short-term lines of credit.
Also, the Company purchased approximately 33,000 shares
of its stock in the open market during the first six
months of the year.
Working Capital:
Working capital at the end of the second quarter
increased to $290.3 million, compared with $206.9
million at the end of fiscal 1995. The increase in
working capital was essentially due to the excess of
proceeds from long-term debt received during the first
six months of fiscal 1996 over the net cash used in
investing activities for the acquisition of long-term
assets.
Other Comments
On January 16, 1996, the Company declared a regular
quarterly cash dividend of $.10 (ten cents) per share
which will be paid February 9, 1996 to shareholders of
record on January 29, 1996.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in litigation relating to claims
arising out of its operations in the normal course of
business. Such claims against the Company are generally
covered by insurance. It is the opinion of management
that any uninsured or unindemnified liability resulting
from existing litigation would not have a material
adverse effect on the Company's business or financial
position. There can be no assurance that insurance,
including product liability insurance, will be
available in the future at reasonable rates.
By letter dated October 20, 1992, the Department of
Toxic Substances Control of the Environmental Protection
Agency of the State of California ("DTSC") submitted to
Barbary Coast Steel Corporation ("BCSC"), a wholly owned
subsidiary of the Company, for its review and comment a
proposed Consent Order relating to BCSC's closed steel
facility at Emeryville, California. BCSC and DTSC
executed the terms of a Consent Order on March 22, 1993
and, pursuant to that Consent Order, BCSC has completed
an environmental assessment of the site and has nearly
completed the remediation of the property. DTSC has
approved the work plan. The Company believes that the
net realizable values of the property less the
remediation costs will exceed the carrying amount for
the property.
On March 26, 1993, an action entitled IMACC
Corporation v. Warburton. et al. was filed in
the U.S. District Court for the Northern
District of California, Case No. C93-1114-VRW
against Barbary Coast Steel Corporation
("BCSC"), a wholly owned subsidiary of the
Company. This lawsuit was brought by IMACC
Corporation ("IMACC"), the parent of Myers
Container Corporation, the lessee of property
immediately adjacent to the Company's Barbary
Coast property in Emeryville, California.
IMACC has sued BCSC, Judson Steel Corporation
(from whom BCSC purchased the property) and
several of the individual owners of the
property leased by IMACC, under the
Comprehensive Environmental Response,
Compensation and Liability Act of 1980
("CERCLA"), 42 U.5.C. SS 9601 -9675 and
various state law causes of action, alleging
that the Defendants contributed to
environmental contamination on the IMACC
property. IMACC subsequently amended its
complaint several times, including the
addition of a citizens' suit claim under RCRA,
42 U.S.C. SS 6972.
BCSC has interposed numerous affirmative
defenses to IMACC's claims, and additionally
has counterclaimed against IMACC alleging that
IMACC has contaminated the BCSC property, and
cross-claimed against Judson Steel Corporation
and its corporate parent, alleging that they
must indemnify BCSC for any monies due to
IMACC. Other parties in the case have brought
additional counterclaims and cross-claims
against each other, BCSC, and third parties,
including Kaiser Steel Resources. The parties
have exchanged voluminous documents and lists
of potential witnesses pursuant to the Court's
Case Management Program.
IMACC has alleged current and prospective
damages, excluding attorneys' fees, of between
$1,000,000 and $4,700,000. BCSC and several
co-defendants successfully moved for dismissal
of IMACC's RCRA claims, effectively
eliminating liability for IMACC's attorneys
fees. IMACC has indicated that it intends to
request reconsideration of this ruling.
Based upon the results of laboratory analysis
of soil samples taken from the property, BCSC
believes that IMACC's contention that BCSC is
responsible for the contamination of the
property in question is without merit. The
Company believes that there is little, if any,
factual basis for IMACC's claims; the Company
further believes that most, if not all, of any
liability imposed upon it may be recovered
from other parties to the litigation through
its claims of indemnity. Trial is presently
set for October 7, 1996.
Item 4. Submission of Matters to a Vote of
Security Holders
The Annual Meeting of Shareholders of the
Company was held on October 17, 1995, at which
the following matters were brought before and
voted upon by the shareholders:
1. The election of the following to the Board
of Directors, each to serve until the next
Annual Meeting of Stockholders:
Voted Withheld
Director For Authority
James A. Todd, Jr. 23,016,774 48,018
E. Mandell de Windt 23,028,214 36,578
C. Stephen Clegg 23,024,734 40,058
George A. Stinson 23,026,314 38,478
Thomas N. Tyrrell 23,013,061 51,731
E. Bradley Jones 23,021,694 43,098
Harry Holiday, Jr. 23,029,292 35,500
Reginald H. Jones 23,027,549 37,243
Paul H. Ekberg 23,017,174 47,618
William J. Cabaniss, Jr. 23,025,389 39,403
T. Evans Wyckoff 23,028,284 36,508
2. Proposal to approve the 1995 Stock Accumulation Plan.
Voted for: 18,907,699
Voted against: 4,078,196
Abstained: 77,792
3. Proposal to ratify the selection of Ernst & Young LLP as the
independent auditors for the fiscal year ended June 30, 1996.
Voted for: 22,996,544
Voted against: 46,046
Abstained: 22,199
Item 5. Other Information
On January 5, 1996, James A. Todd, Jr. retired
from the position of Chairman of the Board and
Chief Executive Officer of the Company. The
Board of Directors elected Robert A. Garvey to
succeed Mr. Todd effective immediately. Mr.
Todd will remain with the Company as a
consultant for a minimum of six months and
will continue to serve as a Director on the
Board.
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are required to be
filed with this report:
4.1 Birmingham Steel Corporation
$150,000,000 Senior Note Purchase
Agreement dated December 15, 1995
between the Registrant and the following
group of investors:
- Connecticut General Life Insurance
Company
- Life Insurance Company of North America
- CIGNA Property and Casualty Insurance
Company
- Principal Mutual Life Insurance Company
- Nationwide Life Insurance Company
- Employers Life Insurance Company of
Wausau
- The Northwestern Mutual Life Insurance
Company
- The Equitable Life Assurance Society of
the United States
- Sun Life Assurance Company of Canada
(U.S.)
- Sun Life Assurance Company of Canada
- Sun Life Insurance and Annuity Company
of New York
- The Minnesota Mutual Life Insurance
Company
- Mutual Trust Life Insurance Company
- The Reliable Life Insurance Company
- Federated Mutual Insurance Company
- Federated Life Insurance Company
- Minnesota Fire and Casualty Company
- National Travelers Life Company
- First National Life Insurance Company of
America
- Guarantee Reserve Life Insurance Company
- First Colony Life Insurance Company
- American United Life Insurance Company
- The State Life Insurance Company
- Ameritas Life Insurance Company
4.2 Shareholder Rights Plan of the Registrant
(incorporated by reference from Current
Report on Form 8-K filed January 23, 1996.)
10.1 Employment Agreement, dated January 5,
1996 between Birmingham Steel
Corporation and Robert A. Garvey.
No reports on Form 8-K are required to be filed with this report.
EXHIBITS
4.1 BIRMINGHAM STEEL CORPORATION
NOTE PURCHASE AGREEMENT
Dated as of September 15, 1995
$76,000,000 6.96% Series A Senior Notes due December
15, 2002
$14,000,000 7.07% Series B Senior Notes due December
15, 2005
$60,000,000 7.17% Series C Senior Notes due December
15, 2005
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . 1
1.1 Issuance of Notes. . . . . . . . . . . . . . . . . . . . . . 1
1.2 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Purchase for Investment. . . . . . . . . . . . . . . . . . . 4
1.4 Failure To Deliver, Failure of Conditions,
Cancellation Fee. . . . . . . . . . . . . . . . . . . . . 5
1.5 Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. WARRANTIES AND REPRESENTATIONS . . . . . . . . . . . . . . . . . 6
2.1 Nature of Business.. . . . . . . . . . . . . . . . . . . . . 6
2.2 Financial Statements; Debt; Material Adverse
Change. . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Subsidiaries and Affiliates. . . . . . . . . . . . . . . . . 7
2.4 Pending Litigation.. . . . . . . . . . . . . . . . . . . . . 7
2.5 Title to Properties. . . . . . . . . . . . . . . . . . . . . 8
2.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . 9
2.8 Corporate Organization and Authority.. . . . . . . . . . . . 9
2.9 Restrictions on Company and Subsidiaries.. . . . . . . . . . 9
2.10 Compliance with Law.. . . . . . . . . . . . . . . . . . . . 10
2.11 ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.12 Certain Laws. . . . . . . . . . . . . . . . . . . . . . . . 12
2.13 Environmental Compliance. . . . . . . . . . . . . . . . . . 12
2.14 Sale is Legal and Authorized; Obligations are
Enforceable.. . . . . . . . . . . . . . . . . . . . . . 13
2.15 Governmental Consent. . . . . . . . . . . . . . . . . . . . 13
2.16 Private Offering. . . . . . . . . . . . . . . . . . . . . . 13
2.17 No Defaults.. . . . . . . . . . . . . . . . . . . . . . . . 14
2.18 Use of Proceeds.. . . . . . . . . . . . . . . . . . . . . . 14
3. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . 15
3.2 Warranties and Representations True; No
Prohibited Action.. . . . . . . . . . . . . . . . . . . . 15
3.3 Officers' Certificates.. . . . . . . . . . . . . . . . . . . 15
3.4 Legality.. . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.5 Private Placement Numbers. . . . . . . . . . . . . . . . . . 16
3.6 Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Other Purchasers.. . . . . . . . . . . . . . . . . . . . . . 16
3.8 Compliance with this Agreement.. . . . . . . . . . . . . . . 16
3.9 Proceedings Satisfactory.. . . . . . . . . . . . . . . . . . 16
4. HOLDERS' SPECIAL RIGHTS. . . . . . . . . . . . . . . . . . . . . 17
4.1 Direct Payment.. . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Delivery Expenses. . . . . . . . . . . . . . . . . . . . . . 17
4.3 Issuance Taxes.. . . . . . . . . . . . . . . . . . . . . . . 17
5. PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Required Scheduled Prepayments.. . . . . . . . . . . . . . . 17
5.2 Other Prepayments. . . . . . . . . . . . . . . . . . . . . . 18
5.3 Notice of Optional Prepayment. . . . . . . . . . . . . . . . 19
5.4 Partial Prepayment Pro Rata. . . . . . . . . . . . . . . . . 20
5.5 Notation of Notes on Prepayment. . . . . . . . . . . . . . . 20
5.6 No Other Optional Prepayments. . . . . . . . . . . . . . . . 20
6. RIGHT TO PUT . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 Interest Coverage Event. . . . . . . . . . . . . . . . . . . 20
6.2 Interest Coverage Event Prepayment Procedure . . . . . . . . 21
6.3 Offer to Prepay upon Change in Control . . . . . . . . . . . 21
6.4 Effect of Prepayments. . . . . . . . . . . . . . . . . . . . 23
7. REGISTRATION; SUBSTITUTION OF NOTES. . . . . . . . . . . . . . . 23
7.1 Registration of Notes. . . . . . . . . . . . . . . . . . . . 23
7.2 Exchange of Notes. . . . . . . . . . . . . . . . . . . . . . 23
7.3 Replacement of Notes.. . . . . . . . . . . . . . . . . . . . 23
8. COMPANY BUSINESS COVENANTS . . . . . . . . . . . . . . . . . . . 24
8.1 Payment of Taxes and Claims. . . . . . . . . . . . . . . . . 24
8.2 Maintenance of Properties and Corporate
Existence.. . . . . . . . . . . . . . . . . . . . . . . . 24
8.3 Payment of Notes and Maintenance of Office.. . . . . . . . . 25
8.4 Maintenance of Consolidated Tangible Net
Worth.. . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.5 Current Debt.. . . . . . . . . . . . . . . . . . . . . . . . 26
8.6 Funded Debt. . . . . . . . . . . . . . . . . . . . . . . . . 26
8.7 Interest Coverage. . . . . . . . . . . . . . . . . . . . . . 27
8.8 Investments. . . . . . . . . . . . . . . . . . . . . . . . . 27
8.9 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.10 Mergers; Consolidations; Transfers of
Property; Disposal of Shares of a Restricted
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . 29
8.11 ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.12 Line of Business. . . . . . . . . . . . . . . . . . . . . . 33
8.13 Transactions with Affiliates. . . . . . . . . . . . . . . . 33
8.14 Private Offering. . . . . . . . . . . . . . . . . . . . . . 33
8.15 Designation of Subsidiaries.. . . . . . . . . . . . . . . . 33
9. INFORMATION AS TO COMPANY. . . . . . . . . . . . . . . . . . . . 35
9.1 Financial and Business Information.. . . . . . . . . . . . . 35
9.2 Officers' Certificates.. . . . . . . . . . . . . . . . . . . 38
9.3 Accountants' Certificates. . . . . . . . . . . . . . . . . . 39
9.4 Inspection.. . . . . . . . . . . . . . . . . . . . . . . . . 39
10. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 39
10.1 Nature of Events. . . . . . . . . . . . . . . . . . . . . . 39
10.2 Default Remedies. . . . . . . . . . . . . . . . . . . . . . 41
10.3 Annulment of Acceleration of Notes. . . . . . . . . . . . . 42
11. INTERPRETATION OF THIS AGREEMENT . . . . . . . . . . . . . . . . 43
11.1 Terms Defined.. . . . . . . . . . . . . . . . . . . . . . . 43
11.2 GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
11.3 Directly or Indirectly. . . . . . . . . . . . . . . . . . . 59
11.4 Section Headings and Table of Contents and
Construction. . . . . . . . . . . . . . . . . . . . . . 60
11.5 Governing Law.. . . . . . . . . . . . . . . . . . . . . . . 60
12. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 60
12.1 Communications. . . . . . . . . . . . . . . . . . . . . . . 60
12.2 Reproduction of Documents.. . . . . . . . . . . . . . . . . 61
12.3 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.4 Successors and Assigns. . . . . . . . . . . . . . . . . . . 62
12.5 Amendment and Waiver. . . . . . . . . . . . . . . . . . . . 62
12.6 Payments, When Received.. . . . . . . . . . . . . . . . . . 64
12.7 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 64
12.8 Duplicate Originals, Execution in
Counterpart.. . . . . . . . . . . . . . . . . . . . . . 64
Annex 1 -- Information as to Purchasers
Annex 2 -- Payment Instructions at Closing
Annex 3 -- Information as to Company
Exhibit A1 -- Form of 6.96% Series A Senior Note due
December 15, 2002
Exhibit A2 -- Form of 7.07% Series B Senior Note due
December 15, 2005
Exhibit A3 -- Form of 7.17% Series C Senior Note due
December 15, 2005
Exhibit B1 -- Form of Company Counsel's Closing
Opinion
Exhibit B2 -- Form of Alabama Counsel's Closing
Opinion
Exhibit B3 -- Form of Special Counsel's Closing
Opinion
Exhibit C -- Form of Officers' Certificate
Exhibit D -- Form of Secretary's Certificate
Ladies and Gentlemen:
BIRMINGHAM STEEL CORPORATION, a Delaware corporation
(together with its successors and assigns, the
"Company"), hereby agrees with you as follows:
I. PURCHASE AND SALE OF NOTES
A. Issuance of Notes.
(a) Series A Notes. The Company will authorize
the issuance of Seventy-Six Million Dollars
($76,000,000) in aggregate principal amount of its
6.96% Series A Senior Notes due December 15, 2002
(the "Series A Notes," such term to include each
Series A Note delivered from time to time in
accordance with any of the Note Purchase Agreements).
Each Series A Note will:
a. bear interest (computed on the basis of a 360-
day year of twelve 30-day months) on the unpaid
principal balance thereof from the date of such
Series A Note at the rate of six and ninety-six
one-hundredths percent (6.96%) per annum, payable
semi-annually on the fifteenth (15th) day of each
June and December in each year, commencing on the
payment date next succeeding the date of such
Series A Note, until the principal amount thereof
shall be due and payable; and
b. bear interest, payable on demand, on any
overdue principal (including any overdue prepayment
of principal) and Make-Whole Amount, if any, and
(to the extent permitted by applicable law) on any
overdue installment of interest, at a rate equal to
the lesser of
(1) the highest rate allowed by applicable law,
and
(2) eight and ninety-six one-hundredths percent
(8.96%) per annum;
c. mature on December 15, 2002; and
d. be in the form of the Series A Note set out in
Exhibit A1 hereto.
(b) Series B Notes. The Company will authorize
the issuance of Fourteen Million Dollars
($14,000,000) in aggregate principal amount of its
7.07% Series B Senior Notes due December 15, 2005
(the "Series B Notes," such term to include each
Series B Note delivered from time to time in
accordance with any of the Note Purchase Agreements).
Each Series B Note will:
(i) bear interest (computed on the basis of a
360-day year of twelve 30-day months) on the unpaid
principal balance thereof from the date of such
Series B Note at the rate of seven and seven one-
hundredths percent (7.07%) per annum, payable semi-
annually on the fifteenth (15th) day of each June
and December in each year, commencing on the
payment date next succeeding the date of such
Series B Note, until the principal amount thereof
shall be due and payable; and
(ii) bear interest, payable on demand, on any
overdue principal (including any overdue prepayment
of principal) and Make-Whole Amount, if any, and
(to the extent permitted by applicable law) on any
overdue installment of interest, at a rate equal to
the lesser of
(1) the highest rate allowed by applicable law,
and
(2) nine and seven one-hundredths percent
(9.07%) per annum;
(iii) mature on December 15, 2005; and
(iv) be in the form of the Series B Note set out
in Exhibit A2 hereto.
(c) Series C Notes. The Company will authorize
the issuance of Sixty Million Dollars ($60,000,000)
in aggregate principal amount of its 7.17% Series C
Senior Notes due December 15, 2005 (the "Series C
Notes," such term to include each Series C Note
delivered from time to time in accordance with any of
the Note Purchase Agreements). Each Series C Note
will:
(i) bear interest (computed on the basis of a
360-day year of twelve 30-day months) on the unpaid
principal balance thereof from the date of such
Series C Note at the rate of seven and seventeen
one-hundredths percent (7.17%) per annum, payable
semi-annually on the fifteenth (15th) day of each
June and December in each year, commencing on the
payment date next succeeding the date of such
Series C Note, until the principal amount thereof
shall be due and payable; and
(ii) bear interest, payable on demand, on any
overdue principal (including any overdue prepayment
of principal) and Make-Whole Amount, if any, and
(to the extent permitted by applicable law) on any
overdue installment of interest, at a rate equal to
the lesser of
(3) the highest rate allowed by applicable law,
and
(4) nine and seventeen one-hundredths percent
(9.17%) per annum;
(iii) mature on December 15, 2005; and
(iv) be in the form of the Series C Note set out
in Exhibit A3 hereto.
(d) Notes. The term "Note" as used herein shall
include each Series A Note, Series B Note and Series
C Note delivered pursuant to this Agreement and each
Note delivered in substitution or exchange for any
such Note pursuant to Section 7.2 or Section 7.3
hereof.
B. The Closing.
1. Purchase and Sale of Notes. The Company hereby
agrees to sell to you and you hereby agree to
purchase from the Company, in accordance with the
provisions hereof, the aggregate principal amount of
each Series of Notes set forth below your name on
Annex 1 hereto (in the amount or amounts and of the
Series set forth therein) at one hundred percent
(100%) of the principal amount thereof.
2. The Closing. The closing (the "Closing") of
the Company's sale of Notes will occur on December
15, 1995 or such earlier Business Day (the date of
the Closing herein referred to as the "Closing Date")
specified in a written notice delivered by the
Company to each of the Purchasers not less than ten
(10) days prior to such specified date. The Closing
will be held at 10:00 a.m., local time, at the office
of The Equitable Life Assurance Society of the United
States, 787 Seventh Avenue, New York, New York 10019.
At the Closing, the Company will deliver to you one
or more Notes (as set forth below your name on Annex
1 hereto), in the Series and denominations indicated
on Annex 1 hereto, in the aggregate principal amount
of your purchase, dated the Closing Date and payable
to you or payable as indicated on Annex 1 hereto,
against payment by federal funds wire transfer in
immediately available funds of the purchase price
thereof, as directed by the Company on Annex 2
hereto.
3. Other Purchasers. Contemporaneously with the
execution and delivery hereof, the Company is
entering into a separate Note Purchase Agreement
identical (except for the name and signature of the
purchaser) hereto (this Agreement and such other
separate Note Purchase Agreements being herein
sometimes referred to collectively as the "Note
Purchase Agreements") with each other purchaser
(collectively, the "Other Purchasers") listed on
Annex 1 hereto, providing for the sale to each Other
Purchaser of Notes in the Series and aggregate
principal amount set forth below its name on such
Annex. The sales of the Notes to you and to each
Other Purchaser are to be separate sales.
C. Purchase for Investment.
1. Purchase for Investment. You represent to the
Company that you are purchasing the Notes listed on
Annex 1 hereto below your name for your own account
for investment and with no present intention of
distributing the Notes or any part thereof, but
without prejudice to your right at all times to:
a. sell or otherwise dispose of all or any part
of the Notes under a registration statement filed
under the Securities Act, or in a transaction
exempt from the registration requirements of the
Securities Act; and
b. have control over the disposition of all of
your assets to the fullest extent required by any
applicable insurance law.
It is understood that, in making the representations
set out in Section 2.14(a) hereof and Section 2.15
hereof, the Company is relying, to the extent
applicable, upon your representation as aforesaid.
2. ERISA. You represent that:
a. you are acquiring the Notes for your own
account with funds from your general account assets
or from assets of one or more segments of such
general account, as the case may be, and that,
solely for purposes of determining whether such
acquisition is a "prohibited transaction" (as
provided for in section 406 of ERISA or section
4975 of the IRC) and in reliance on the
representations of the Company set forth in Section
2.11(c)(ii) hereof and the related disclosure of
"employee benefit plans" set forth in Part
2.11(c)(ii) of Annex 3 hereto, you have met all
requirements for an exemption under DOL Prohibited
Transaction Exemption 95-60 (60 FR 35925, July 12,
1995) in respect of such "employee benefit plans";
or
b. if any part of the funds being used by you to
purchase the Notes shall come from assets of an
employee benefit plan (as defined in section 3 of
ERISA) or a plan (as defined in section 4975(e)(1)
of the IRC), that:
(1) if such funds are attributable to a
"separate account" (as defined in section 3 of
ERISA), then
(1) all requirements for an exemption under
DOL Prohibited Transaction Exemption 90-1,
issued January 29, 1990 are met with respect to
the use of such funds to purchase the Notes, or
(2) the employee benefit plans with an
interest in such separate account have been
identified in a writing delivered by you to the
Company;
(2) if such funds are attributable to a
"separate account" (as defined in section 3 of
ERISA) that is maintained solely in connection
with fixed contracted obligations of an insurance
company, any amounts payable, or credited, to any
employee benefit plan having an interest in such
account and to any participant or beneficiary of
such plan (including an annuitant) are not
affected in any manner by the investment
performance of the separate account; or
(3) if such funds are attributable to an
"investment fund" managed by a "qualified plan
asset manager" (as such terms are defined in Part
V of DOL Prohibited Transaction Exemption 84-14,
issued March 13, 1984), all requirements for an
exemption under such Exemption are met with
respect to the use of such funds to purchase the
Notes; or
c. such employee benefit plan is excluded from
the provisions of section 406 of ERISA by virtue of
section 4(b) of ERISA.
D. Failure To Deliver, Failure of Conditions,
Cancellation Fee.
If at the Closing the Company fails to tender to you
the Notes to be purchased by you thereat, or if the
conditions specified in Section 3 hereof to be fulfilled
at the Closing have not been fulfilled, you may
thereupon elect to be relieved of all further
obligations hereunder. Nothing in this Section 1.4
shall operate to relieve the Company from its
obligations hereunder or to waive any of your rights
against the Company.
E. Expenses.
1. Generally. Whether or not the Notes are sold,
the Company will promptly (and in any event within
thirty (30) days of receiving any statement or
invoice therefor) pay all fees, expenses and costs
relating hereto, including, but not limited to:
a. the cost of reproducing this Agreement and
the Notes;
b. the reasonable fees and disbursements of Hebb
& Gitlin, a Professional Corporation, your special
counsel (the "Special Counsel");
c. the cost of delivering to your home office or
custodian bank, insured to your satisfaction, the
Notes purchased by you at the Closing;
d. the fees, expenses and costs incurred
complying with each of the conditions to closing
set forth in Section 3 hereof; and
e. the expenses relating to the consideration,
negotiation, preparation or execution of any
amendments, waivers or consents pursuant to the
provisions hereof, whether or not any such
amendments, waivers or consents are executed or
become effective.
2. Counsel. Without limiting the generality of
the foregoing, it is agreed and understood that the
Company will pay, contemporaneously with the
execution and delivery of this Agreement and at the
Closing, each statement for reasonable fees and
disbursements of your Special Counsel presented in
connection with such execution and delivery at the
Closing and the Company will also pay, upon receipt
of any statement thereof, each additional statement
for reasonable fees and disbursements of your Special
Counsel rendered after the Closing in connection with
the issuance of the Notes or the matters referred to
in Section 1.5(a)(v) hereof.
3. Broker's Fees. The Company agrees to indemnify
and hold you harmless against any and all fees,
expenses and costs of NationsBanc Capital Markets,
Inc. and any other broker or investment banker
retained by the Company, if any, incurred in
connection with the offer, issuance, sale and
delivery of the Notes or the transactions
contemplated hereby.
4. Survival. The obligations of the Company under
this Section 1.5 shall survive the payment or
prepayment of the Notes and the termination hereof.
II. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement and to
purchase the Notes listed on Annex 1 hereto below your
name, the Company warrants and represents, as of the
Effective Date and as of the Closing Date, as follows:
A. Nature of Business.
Except as set forth in Part 2.1 of Annex 3 hereto,
the Private Placement Memorandum, dated June 1995 and
prepared by Nationsbanc Capital Markets, Inc. (together
with all exhibits and annexes thereto, the "Placement
Memorandum") (a copy of which previously has been
delivered to you), correctly describes the general
nature of the business and principal Properties of the
Company and the Subsidiaries as of the Effective Date
and as of the Closing Date.
B. Financial Statements; Debt; Material Adverse
Change.
1. Financial Statements. The Company has
delivered to you the consolidated balance sheets of
the Company and its consolidated subsidiaries as of
June 30 in the years 1990, 1991, 1992, 1993, 1994 and
1995 and the related consolidated statements of
income, changes in shareholders' equity and cash
flows for the fiscal years ended on such dates, all
accompanied by opinions thereon by Ernst & Young,
independent certified public accountants. Such
financial statements have been prepared in accordance
with generally accepted accounting principles
consistently applied, and present fairly, in all
material respects, the consolidated financial
position of the Company and its consolidated
subsidiaries as of such dates and the results of
their operations and cash flows for such periods.
All such financial statements include the accounts of
all subsidiaries of the Company for the respective
periods during which a subsidiary relationship has
existed. Except as set forth in Part 2.2(a) of Annex
3 hereto, all Restricted Subsidiaries were
subsidiaries of the Company during all of the periods
covered by such financial statements.
2. Indebtedness. Part 2.2(b) of Annex 3 hereto
correctly lists all outstanding Indebtedness of the
Company and the Subsidiaries (showing which portion
is classified as current under GAAP) as of the
Effective Date.
3. Material Adverse Change. Since June 30, 1995,
there has been no change in the business, prospects,
profits, Properties or condition (financial or
otherwise) of the Company or any of the Subsidiaries
except changes in the ordinary course of business
that, in the aggregate for all such changes, could
not reasonably be expected to have a Material Adverse
Effect.
C. Subsidiaries and Affiliates.
Part 2.3 of Annex 3 hereto states:
1. the name of each Subsidiary (indicating which
Subsidiaries are Restricted Subsidiaries), its
jurisdiction of incorporation and the percentage of
its Voting Stock owned by the Company and each other
Subsidiary; and
2. the name of each Affiliate that is a
corporation, partnership or joint venture (other than
Subsidiaries) and the nature of the affiliation.
Each of the Company and the Subsidiaries has good and
marketable title to all of the shares it purports to own
of the stock of each Subsidiary, free and clear in each
case of any Lien. All such shares have been duly issued
and are fully paid and nonassessable.
D. Pending Litigation.
There are no proceedings, actions or investigations
pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary in
any court or before any Governmental Authority or
arbitration board or tribunal that, in the aggregate for
all such proceedings, actions and investigations, could
reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Subsidiary is in
default with respect to any judgment, order, writ,
injunction, or decree of any court, Governmental
Authority or arbitration board or tribunal that, in the
aggregate for all such defaults, could reasonably be
expected to have a Material Adverse Effect.
E. Title to Properties.
1. Each of the Company and the Subsidiaries has
good and marketable title to all of the real
Property, and good title to all of the other
Property, reflected in the most recent balance sheet
referred to in Section 2.2(a) hereof (except as sold
or otherwise disposed of in the ordinary course of
business), except for such failures to have such good
and marketable title as are immaterial to such
financial statements and that, in the aggregate for
all such failures, could not reasonably be expected
to have a Material Adverse Effect. All such Property
is free from Liens not permitted by Section 8.9
hereof.
(b) Each lease of real Property in the name or for
the benefit of the Company or any Subsidiary is valid
and subsisting and in full force and effect and good
standing, except for such failures to be valid and
subsisting and in full force and effect and good
standing that, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
(c) Each of the Company and the Subsidiaries owns,
possesses or has the right to use all of the patents,
trademarks, service marks, trade names, copyrights
and licenses, and rights with respect thereto,
necessary for the present and currently planned
future conduct of its business, without any known
conflict with the rights of others, except for such
failures to own, possess, or have the right to use,
that, in the aggregate for all such failures, could
not reasonably be expected to have a Material Adverse
Effect.
F. Taxes.
1. Returns Filed; Taxes Paid. All tax returns
required to be filed by each of the Company and each
Subsidiary and any other Person with which the
Company or any Subsidiary files or has filed a
consolidated return in any jurisdiction have in fact
been filed on a timely basis, and all taxes,
assessments, fees and other governmental charges upon
each of the Company, such Subsidiary and any such
Person, and upon any of their respective Properties,
income or franchises, that are due and payable have
been paid. Except as disclosed in Part 2.6(a) of
Annex 3 hereto, the Company does not know of any
proposed additional tax assessment against it or any
such Person. All liabilities of the Company and such
Persons with respect to federal income taxes have
been finally determined except for the fiscal years
1989 through 1995, the only years not closed by the
completion of an audit or the expiration of the
statute of limitations.
2. Book Provisions Adequate. The amount of the
liability for taxes reflected in the consolidated
balance sheet of the Company and its consolidated
subsidiaries as of June 30, 1995 referred to in
Section 2.2(a) hereof is an adequate provision for
taxes (including, without limitation, any payment due
pursuant to any tax sharing agreement) as are or may
become payable by any one or more of the Company and
its consolidated subsidiaries in respect of all tax
periods ending on or prior to such date.
G. Full Disclosure.
The financial statements referred to in Section
2.2(a) hereof do not, nor does this Agreement, the
Placement Memorandum or any written statement furnished
by or on behalf of the Company to you in connection with
the negotiation of the sale of the Notes, contain any
untrue statement of a material fact or omit a material
fact necessary to make the statements contained therein
or herein not misleading. There is no fact that the
Company has not disclosed to you in writing that has had
or, so far as the Company can now reasonably foresee,
could have a Material Adverse Effect.
H. Corporate Organization and Authority.
Each of the Company and the Subsidiaries:
1. is a corporation duly incorporated, validly
existing and in good standing under the laws of its
jurisdiction of incorporation;
2. has all legal and corporate power and authority
necessary to own and operate its Properties and to
carry on its business as now conducted and as
presently proposed to be conducted;
3. has all licenses, certificates, permits,
franchises and other governmental authorizations
necessary to own and operate its Properties and to
carry on its business as now conducted and as
presently proposed to be conducted, except where the
failure to have such licenses, certificates and
permits, in the aggregate for all such failures,
could not reasonably be expected to have a Material
Adverse Effect; and
4. has duly qualified or has been duly licensed,
and is authorized to do business and is in good
standing, as a foreign corporation, in each state
where the failure to be so qualified or licensed and
authorized and in good standing could reasonably be
expected to have a Material Adverse Effect.
I. Restrictions on Company and Subsidiaries.
Neither the Company nor any Subsidiary:
1. is a party to any contract or agreement, or
subject to any charter or other corporate restriction
that, in the aggregate for all such contracts,
agreements, charter and corporate restrictions, could
reasonably be expected to have a Material Adverse
Effect;
2. is a party to any contract or agreement that
restricts the right or ability of such corporation to
incur Debt, other than this Agreement and the
agreements listed in Part 2.9 of Annex 3 hereto, the
terms of none of which is violated by the issuance of
the Notes or the execution and delivery of, or
compliance with, this Agreement by the Company; and
3. has agreed or consented to cause or permit in
the future (upon the happening of a contingency or
otherwise) any of its Property, whether now owned or
hereafter acquired, to be subject to a Lien not
permitted by Section 8.9 hereof.
J. Compliance with Law.
Neither the Company nor any Subsidiary is in
violation of any law, ordinance, governmental rule or
regulation to which it is subject, which violations, in
the aggregate, could reasonably be expected to have a
Material Adverse Effect.
K. ERISA.
1. Relationship of Vested Benefits to Pension Plan
Assets. The present value of all benefits,
determined as of the most recent valuation date for
such benefits as provided in Section 8.11(c) hereof,
vested under each Pension Plan does not exceed the
value of the assets of such Pension Plan allocable to
such vested benefits, determined as of such date as
provided in Section 8.11(c) hereof.
2. ERISA Requirements. Each of the Company and
the ERISA Affiliates:
a. has fulfilled all obligations under the
minimum funding standards of ERISA and the IRC with
respect to each Pension Plan that is not a
Multiemployer Plan;
b. has satisfied all respective contribution
obligations in respect of each Multiemployer Plan;
c. is in compliance in all material respects with
all other applicable provisions of ERISA and the
IRC with respect to each Pension Plan and each
Multiemployer Plan; and
d. has not incurred any liability under Title IV
of ERISA to the PBGC (other than in respect of
required insurance premiums, all of which that are
due having been paid), with respect to any Pension
Plan, any Multiemployer Plan or any trust
established thereunder.
No Pension Plan, or trust created thereunder, has
incurred any "accumulated funding deficiency" (as
defined in section 302 of ERISA), whether or not
waived, as of the last day of the most recently ended
plan year of such Pension Plan.
3. Prohibited Transactions.
a. The purchase of the Notes by you will not
constitute a "prohibited transaction" (as defined
in section 406 of ERISA or section 4975 of the IRC)
that could subject any Person to the penalty or tax
on prohibited transactions imposed by section 502
of ERISA or section 4975 of the IRC, and neither
the Company or any ERISA Affiliate, nor any
"employee benefit plan" (as hereinafter defined) of
the Company or any ERISA Affiliate or any trust
created thereunder or any trustee or administrator
thereof, has engaged in any "prohibited
transaction" that could subject any such Person, or
any other party dealing with such employee benefit
plan or trust, to such penalty or tax. The
representation by the Company in the preceding
sentence is made in reliance upon and subject to
the accuracy of the representations in Section
1.3(b) hereof as to the source of funds used by
you.
b. Part 2.11(c)(ii) of Annex 3 hereto completely
lists all ERISA Affiliates and all employee benefit
plans with respect to which the Company or any
"affiliate" (as hereinafter defined) is a "party-
in-interest" (as hereinafter defined) or in respect
of which the Notes could constitute an "employer
security" (as hereinafter defined).
As used in this Section 2.11(c), the terms "employee
benefit plan" and "party-in-interest" have the
meanings specified in section 3 of ERISA, "affiliate"
has the meaning specified in section 407(d) of ERISA
and section V of DOL Prohibited Transaction Exemption
95-60 (60 FR 35925, July 12, 1995) and "employer
security" has the meaning specified in section 407(d)
of ERISA.
4. Reportable Events. No Pension Plan or trust
created thereunder has been terminated, and there
have been no "reportable events" (as defined in
section 4043 of ERISA), with respect to any Pension
Plan or trust created thereunder or with respect to
any Multiemployer Plan, which reportable event or
events will or could result in the termination of
such Pension Plan or Multiemployer Plan and give rise
to a liability of the Company or any ERISA Affiliate
in respect thereof.
5. Multiemployer Plans. Except as set forth in
Part 2.11(e) of Annex 3 hereto, neither the Company
nor any ERISA Affiliate is an employer required to
contribute to any Multiemployer Plan. Neither the
Company nor any ERISA Affiliate has incurred, or is
expected to incur, any withdrawal liability (that has
not previously been fully satisfied) under ERISA with
respect to any Multiemployer Plan. None of the
Multiemployer Plans referred to in such Part of Annex
3 hereto have been terminated under section 4041A of
ERISA, have been placed in reorganization status
under Title IV of ERISA or have been determined to be
"insolvent" (as defined in section 4245 of ERISA).
6. Multiple Employer Pension Plans. Except as set
forth in Part 2.11(f) of Annex 3 hereto, neither the
Company nor any ERISA Affiliate is a "contributing
sponsor" (as defined in section 4001 of ERISA) in any
Multiple Employer Pension Plan and neither the
Company nor any ERISA Affiliate has incurred (without
fully satisfying the same), or reasonably expects to
incur, withdrawal liability in respect of any such
Multiple Employer Pension Plan listed in such Part of
Annex 3 hereto, which withdrawal liability could have
a Material Adverse Effect.
7. Foreign Pension Plan. No Foreign Pension Plans
presently exist or existed in the past.
L. Certain Laws.
1. Investment Company Act. Neither the Company
nor any Subsidiary is, or is directly or indirectly
controlled by, or acting on behalf of any Person that
is, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
2. Holding Company Status. Neither the Company
nor any Subsidiary is a "holding company" or an
"affiliate" of a "holding company," or a "subsidiary
company" of a "holding company," or a "public
utility" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
M. Environmental Compliance.
Except as set forth in Part 2.13 of Annex 3 hereto:
1. Compliance -- each of the Company and the
Subsidiaries is in compliance with all Environmental
Protection Laws in effect in each jurisdiction where
it is presently doing business, and in which the
failure so to comply could be reasonably expected to
have a Material Adverse Effect;
2. Liability -- neither the Company nor any of the
Subsidiaries is subject to any liability under any
Environmental Protection Laws that, in the aggregate,
could reasonably be expected to have a Material
Adverse Effect; and
3. Notices -- neither the Company nor any
Subsidiary has received any
a. notice from any Governmental Authority by
which any of its present or previously-owned or
leased real Properties has been designated, listed,
or identified in any manner by any Governmental
Authority charged with administering or enforcing
any Environmental Protection Law as a Hazardous
Substance disposal or removal site, "Super Fund"
clean-up site, or candidate for removal or closure
pursuant to any Environmental Protection Law,
b. notice of any Lien arising under or in
connection with any Environmental Protection Law
that has attached to any revenues of, or to, any of
its owned or leased real Properties, or
c. summons, citation, notice, directive, letter,
or other communication, written or oral, from any
Governmental Authority concerning any intentional
or unintentional action or omission by the Company
or such Subsidiary in connection with its ownership
or leasing of any real Property resulting in the
releasing, spilling, leaking, pumping, pouring,
emitting, emptying, dumping, or otherwise disposing
of any Hazardous Substance into the environment
resulting in any material violation of any
Environmental Protection Law,
in each case where the effect of the matters that are
the subject of any such notice, summons, citation,
directive, letter or other communication could
reasonably be expected to have a Material Adverse
Effect.
N. Sale is Legal and Authorized; Obligations are
Enforceable.
1. Sale is Legal and Authorized. Each of the
issuance, sale and delivery of the Notes by the
Company, the execution and delivery hereof by the
Company and compliance by the Company with all of the
provisions hereof and of the Notes:
a. is within the corporate powers of the Company;
and
b. is legal and does not conflict with, result in
any breach in any of the provisions of, constitute
a default under, or result in the creation of any
Lien upon any Property of the Company or any
Subsidiary under the provisions of, any agreement,
charter instrument, bylaw or other instrument to
which it is a party or by which it or any of its
Property may be bound.
2. Obligations are Enforceable. Each of this
Agreement and the Notes has been duly authorized by
all necessary action on the part of the Company, has
been executed and delivered by duly authorized
officers of the Company and constitutes a legal,
valid and binding obligation of the Company,
enforceable in accordance with its terms, except that
the enforceability hereof and of the Notes may be:
a. limited by applicable bankruptcy,
reorganization, arrangement, insolvency, moratorium
or other similar laws affecting the enforceability
of creditors' rights generally; and
b. subject to the availability of equitable
remedies.
O. Governmental Consent.
Neither the nature of the Company or any Subsidiary,
or of any of their respective businesses or Properties,
nor any relationship between the Company or any
Subsidiary and any other Person, nor any circumstance in
connection with the offer, issuance, sale or delivery of
the Notes and the execution and delivery of this
Agreement, is such as to require a consent, approval or
authorization of, or filing, registration or
qualification with, any Governmental Authority on the
part of the Company as a condition to the execution and
delivery of this Agreement or the offer, issuance, sale
or delivery of the Notes.
P. Private Offering.
Neither the Company nor NationsBanc Capital Markets,
Inc. (the only Person authorized or employed by the
Company as agent, broker, dealer or otherwise in
connection with the offering or sale of the Notes or any
similar Security of the Company, other than employees of
the Company) has offered any of the Notes or any similar
Security of the Company for sale to, or solicited offers
to buy any thereof from, or otherwise approached or
negotiated with respect thereto with, any prospective
purchaser, other than you and one hundred twenty-five
(125) other institutional investors, each of whom was
offered all or a portion of the Notes at private sale
for investment.
Q. No Defaults.
1. The Notes. No event has occurred and no
condition exists that, upon the issuance of the Notes
and the execution and delivery of this Agreement,
would constitute a Default or an Event of Default.
2. Charter Instrument, Other Agreements. Neither
the Company nor any Subsidiary is in violation in any
respect of any term of any charter instrument or
bylaw and neither the Company nor any Subsidiary is
in violation in any respect of any term in any
agreement or other instrument to which it is a party
or by which it or any of its Property may be bound,
except for violations which, in the aggregate for all
such violations, could not reasonably be expected to
have a Material Adverse Effect.
R. Use of Proceeds.
1. Use of Proceeds. The Company will apply the
proceeds from the sale of the Notes in the manner
specified in Part 2.18(a) of Annex 3 hereto.
2. Margin Securities. None of the transactions
contemplated herein and in the Notes (including,
without limitation, the use of the proceeds from the
sale of the Notes) violates, will violate or will
result in a violation of section 7 of the Securities
Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto, including, without
limitation, Regulations G, T and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II. Neither the Company nor any Subsidiary
owns, or with the proceeds of the sale of the Notes
intends to own, carry or purchase, or refinance
borrowings that were used to own, carry or purchase,
any Margin Security, including Margin Securities
originally issued by the Company or any Subsidiary.
The obligations of the Company under this Agreement
and the Notes are not and will not be secured by any
Margin Security, and no Notes are being sold on the
basis of any such collateral.
3. Absence of Foreign or Enemy Status. The
Company is not an "enemy" or an "ally of the enemy"
within the meaning of section 2 of the Trading with
the Enemy Act (50 U.S.C. App. 1 et seq.), as
amended. The Company is not in violation of, and
neither the issuance and sale of the Notes by the
Company nor its use of the proceeds thereof as
contemplated by this Agreement will violate, the
Trading with the Enemy Act, as amended, or the
International Emergency Economic Powers Act, as
amended, or any executive orders, proclamations or
regulations issued pursuant thereto including,
without limitation, regulations administered by the
Office of Foreign Asset Control of the Department of
the Treasury (31 C.F.R., Subtitle B, Chapter V).
III. CLOSING CONDITIONS
Your obligation to purchase and pay for the Notes to
be delivered to you at the Closing is subject to the
following conditions precedent:
A. Opinions of Counsel.
You shall have received from
1. Smith, Gambrell & Russell, counsel for the
Company,
2. Balch & Bingham, Alabama counsel for the
Company, and
3. your Special Counsel,
closing opinions, each dated as of the Closing Date,
substantially in the respective forms set forth in
Exhibit B1, Exhibit B2 and Exhibit B3 hereto and as
to such other matters as you may reasonably request.
This Section 3.1 shall constitute direction by the
Company to such counsel named in the foregoing clause
(a) and clause (b) to deliver such closing opinions
to you.
B. Warranties and Representations True; No Prohibited
Action.
1. Warranties and Representations True. The
warranties and representations contained in Section
2 hereof shall be true on the Closing Date with the
same effect as though made on and as of that date.
2. No Prohibited Action. Neither the Company nor
any Subsidiary shall have taken any action or
permitted any condition to exist that would have been
prohibited by Section 8.1 through Section 8.13
hereof, inclusive, had such Sections been binding and
effective at all times during the period from June
30, 1995 to and including the Closing Date.
C. Officers' Certificates.
You shall have received:
1. a certificate dated the Closing Date, signed by
the Chairman, the Vice Chairman, the President or a
Vice President and the Treasurer or an Assistant
Treasurer of the Company and substantially in the
form of Exhibit C hereto; and
2. a certificate dated the Closing Date, signed by
the Secretary or an Assistant Secretary of the
Company and substantially in the form of Exhibit D
hereto.
D. Legality.
The Notes shall on the Closing Date qualify as a
legal investment for you under applicable insurance law
(without regard to any "basket" or "leeway" provisions)
and you shall have received such evidence as you may
reasonably request to establish compliance with this
condition (provided, by execution and delivery of this
Agreement, you acknowledge to the Company that, as of
the date of such execution and delivery, you have no
reason to believe that the Notes do not qualify as a
legal investment under applicable insurance law).
E. Private Placement Numbers.
The Company shall have obtained or caused to be
obtained private placement numbers for the Series A
Notes, the Series B Notes and the Series C Notes from
the CUSIP Service Bureau of Standard & Poor's, a
division of McGraw-Hill, Inc., and you shall have been
informed of such private placement numbers.
F. Expenses.
All fees and disbursements required to be paid
pursuant to Section 1.5(b) hereof shall have been paid
in full.
G. Other Purchasers.
None of the Purchasers other than you shall have
failed to execute and deliver a Note Purchase Agreement
or to accept delivery of or make payment for the Notes
to be purchased by it on the Closing Date.
H. Compliance with this Agreement.
Each of the Company and the Subsidiaries shall have
performed and complied with all agreements and
conditions contained herein that are required to be
performed or complied with by the Company and the
Subsidiaries on or prior to the Closing Date, and such
performance and compliance shall remain in effect on the
Closing Date.
I. Proceedings Satisfactory.
All proceedings taken in connection with the issuance
and sale of the Notes and all documents and papers
relating thereto shall be satisfactory to you and your
special counsel. You and your special counsel shall
have received copies of such documents and papers as you
or they may reasonably request in connection therewith
or in connection with your special counsel's closing
opinion, all in form and substance satisfactory to you
and your special counsel.
IV. HOLDERS' SPECIAL RIGHTS
A. Direct Payment.
Notwithstanding anything to the contrary contained
herein or in the Notes, the Company will pay all amounts
payable with respect to each Note held by an
Institutional Investor (without any presentment of such
Notes and without any notation of such payment being
made thereon) by crediting (prior to 11:00 a.m. local
time of such Institutional Investor's bank), by federal
funds bank wire transfer, the account of such
Institutional Investor in any bank in the United States
of America as may be designated in writing by such
Institutional Investor, or in such other manner as may
be reasonably directed or to such other address in the
United States of America as may be reasonably designated
in writing by such Institutional Investor. Your address
on Annex 1 hereto will be deemed to constitute notice,
direction or designation (as appropriate) to the Company
with respect to direct payments as aforesaid. In all
other cases, all amounts payable with respect to each
Note will be made by check mailed and addressed to the
registered holder of each Note at the address shown in
the register maintained by the Company pursuant to
Section 8.3 hereof. Each holder of Notes agrees that,
in the event it shall sell or transfer any Note, it
shall:
1. prior to the delivery of such Note, make a
notation thereon of all principal, if any, prepaid on
such Note and shall also note thereon the date to
which interest shall have been paid on such Note; and
2. promptly notify the Company of the name and
address of the transferee of any such Note so
transferred and the effective date of such transfer.
B. Delivery Expenses.
If any holder of Notes surrenders any Note to the
Company pursuant hereto, the Company will pay the cost
of delivering to or from such holder's home office or
custodian bank from or to the Company, insured to the
reasonable satisfaction of such holder, the surrendered
Note and any Note issued in substitution or replacement
for the surrendered Note.
C. Issuance Taxes.
The Company will pay all taxes (other than any income
taxes imposed upon any Purchaser) arising in connection
with the issuance and sale of the Notes or in connection
with any modification of this Agreement and the Notes,
and will save each holder of Notes harmless without
limitation as to time against any and all liabilities
with respect to all such taxes. The obligations of the
Company under this Section 4.3 shall survive the payment
or prepayment of the Notes and the termination hereof.
V. PREPAYMENTS
A. Required Scheduled Prepayments.
(a) Series A Notes. There shall be no required
prepayments in respect of the Series A Notes. The
entire principal amount of the Series A Notes
remaining outstanding on December 15, 2002, together
with accrued unpaid interest thereon, shall be due
and payable on such date.
(b) Series B Notes. The Company shall prepay, and
there shall become due and payable, Three Million
Five Hundred Thousand Dollars ($3,500,000) in
aggregate principal amount of the Series B Notes on
December 15 in each year beginning on December 15,
2002 and ending on December 15, 2004, inclusive.
Each such prepayment shall be at one hundred percent
(100%) of the principal amount prepaid, together with
interest accrued thereon to the date of prepayment.
The entire principal amount of the Series B Notes
remaining outstanding on December 15, 2005, together
with accrued unpaid interest thereon, shall be due
and payable on such date.
(c) Series C Notes. There shall be no required
prepayments in respect of the Series C Notes. The
entire principal amount of the Series C Notes
remaining outstanding on December 15, 2005, together
with accrued unpaid interest thereon, shall be due
and payable on such date.
B. Other Prepayments.
1. Optional Prepayments. The Company may at any
time after the Closing Date prepay (without
distinguishing among the different Series) the
principal amount of the Notes in part, in integral
multiples of Five Million Dollars ($5,000,000), or in
whole, in each case together with:
a. an amount equal to the Make-Whole Amount at
such time in respect of the principal amount of
each Series of the Notes being so prepaid, and
b. interest on such principal amount then being
prepaid accrued to the prepayment date.
2. Special Prepayments. In any event wherein the
Company requests from all of the holders of the Notes
(pursuant to Section 12.5 hereof) an amendment to, or
waiver of (in each case setting forth in such request
detailed information concerning the transaction or
condition for which the amendment or waiver is
requested), the Company's obligations hereunder that
are permitted by the provisions of Section 12.5 to be
amended or waived with consent of the Majority
Holders, and the Majority Holders do not, within
sixty (60) days of the date on which such request is
made, grant their consent to the proposed amendment
or waiver, the Company may prepay Notes as set forth
in this Section 5.2(b), provided that all of the
following conditions are met:
a. the Company elects to prepay all, but not less
than all, of the Notes held by each holder of Notes
that shall have not consented to the proposed
amendment or waiver; and
b. the Company, within forty-five (45) days of
the expiration of such sixty (60) day period
contemporaneously prepays each holder of Notes who
has not consented to the proposed amendment or
waiver in an amount equal to the aggregate
principal amount of all Notes of each Series held
by such holder, together with interest accrued and
unpaid on such principal amount and the Make-Whole
Amount in respect of such principal amount of Notes
of each such Series.
3. Effect of Prepayments. Each prepayment of
principal of the Notes pursuant to Section 5.2(a)
hereof shall be applied first, to the principal
amount of the Notes of each Series due on the
maturity date of the Notes of such Series and second,
in the case of the Series B Notes, to the mandatory
principal prepayments applicable to the Series B
Notes, as set forth in Section 5.1 hereof, in the
inverse order of the maturity thereof. Each
prepayment of principal of the Notes of any Series
pursuant to Section 5.2(b) hereof shall be applied
ratably to the principal amount of the Notes of such
Series due on the maturity date of the Notes of such
Series and, in the case of the Series B Notes, to
each remaining mandatory principal prepayment
required by Section 5.1 hereof.
C. Notice of Optional Prepayment.
The Company will give notice of each prepayment of
the Notes made pursuant to the provisions of Section 5.2
to each holder of Notes (in the case of prepayments made
pursuant to Section 5.2(a)) and to each holder of Notes
to be prepaid (in the case of prepayments made pursuant
to Section 5.2(b)), in each case not less than thirty
(30) days or more than sixty (60) days before the date
fixed for prepayment, specifying:
1. such date;
2. the Section hereof under which the prepayment
is to be made;
3. the principal amount of each Note to be prepaid
on such date;
4. the interest to be paid on each such Note,
accrued to the date fixed for payment; and
5. a reasonably detailed calculation of an
estimated Make-Whole Amount, if any (calculated as if
the date of such notice was the date of prepayment),
that would be due in connection with such prepayment.
Such notice of prepayment shall also certify all facts
that are conditions precedent to any such prepayment.
Notice of prepayment having been so given, the aggregate
principal amount of the Notes specified in such notice,
together with the Make-Whole Amount, if any, and accrued
interest thereon shall become due and payable on the
specified prepayment date. Two (2) Business Days prior
to the making of any such prepayment, the Company shall
deliver to each holder of Notes to be prepaid a
certificate of the Chairman, the Vice Chairman, a Vice
President, the Treasurer or the President of the Company
specifying the calculation of such Make-Whole Amount as
of the specified prepayment date, accompanied by a copy
of any applicable documentation used in connection with
determining the Make-Whole Discount Rate in respect of
such prepayment.
D. Partial Prepayment Pro Rata.
If at the time any required or optional prepayment
under Section 5.1 or Section 5.2(a) hereof is due there
is more than one Note outstanding, the aggregate
principal amount of each required or optional partial
prepayment of the Notes shall be allocated among the
holders of the Notes at the time outstanding in
proportion (without distinguishing among the different
Series), as nearly as practicable, to the respective
unpaid principal amounts of the Notes then outstanding,
with adjustments, to the extent practicable, to equalize
for any prior prepayments not in such proportion.
E. Notation of Notes on Prepayment.
Upon any partial prepayment of a Note, such Note may,
at the option of the holder thereof, be
1. surrendered to the Company pursuant to Section
7.2 hereof in exchange for a new Note in a principal
amount equal to the principal amount remaining unpaid
on the surrendered Note,
2. made available to the Company for notation
thereon of the portion of the principal so prepaid,
or
3. marked by such holder with a notation thereon
of the portion of the principal so prepaid.
In case the entire principal amount of any Note is
prepaid, such Note shall be surrendered to the Company
for cancellation and shall not be reissued, and no Note
shall be issued in lieu of the prepaid principal amount
of any Note.
F. No Other Optional Prepayments.
Except as provided in Section 5.2 hereof or in
accordance with an offer made in compliance with Section
6 hereof, the Company shall not make any optional
prepayment (whether directly or indirectly by purchase
or other acquisition) in respect of the Notes.
RIGHT TO PUT
G. Interest Coverage Event.
If
(a) the Company shall fail to comply with the
provisions of Section 8.7 hereof at the end of any
fiscal quarter of the Company,
(b) such failure to comply is not waived within
thirty (30) days after the earlier of
(i) delivery of written notice pursuant to
Section 9.1(h) hereof by the Company in respect of
such failure, and
(ii) the date on which the Company shall have
been required to deliver written notice of such
failure to comply as required by Section 9.1(h)
hereof, and
(c) the Supermajority Holders (pursuant to Section
12.5 hereof) shall not have granted to the Company,
within said thirty (30) day period, an amendment to,
or waiver of, the provisions of Section 8.7 hereof to
eliminate such failure,
then the Company shall offer to prepay the Notes in the
manner provided in Section 6.2 hereof.
H. Interest Coverage Event Prepayment Procedure.
Within five (5) Business Days after the occurrence of
all of the conditions set forth in clauses (a), (b) and
(c) of Section 6.1, the Company shall give written
notice of such occurrence to each holder of Notes. Such
written notice (an "Offer Notice") shall contain and
constitute an irrevocable offer to prepay all, but not
less than all, the Notes held by such holder. To accept
such offered prepayment, a holder of Notes shall cause
a written notice of such acceptance with respect to all,
but not less than all, the Notes held by such holder
(which acceptance shall be irrevocable) to be delivered
to the Company not later than the sixtieth (60th) day
following the date on which such Offer Notice was first
delivered by the Company, whereupon such offered
prepayment shall be due and payable on the tenth (10th)
Business Day following the expiration of such sixty (60)
day period. Such offered prepayment shall be made at
one hundred percent (100%) of the principal amount of
Notes so to be prepaid, plus accrued interest thereon to
the prepayment date. Failure to accept an Offer Notice
shall not affect the right of any holder of Notes to
exercise its rights under Section 6.1 or this Section
6.2 with respect to any future failure by the Company to
comply with the provisions of Section 8.7 hereof.
I. Offer to Prepay upon Change in Control.
1. Notice and Offer. In the event of either
a. a Change in Control, or
b. the obtaining of knowledge of a Control Event
by the Company (including, without limitation, via
the receipt of notice of a Control Event from any
holder of Notes),
the Company will, within three (3) Business Days of
the occurrence of either of such events (or, in the
case of any Change in Control the consummation or
finalization of which would involve any action of the
Company, at least thirty (30) days prior to such
Change in Control), give written notice of such
Change in Control or Control Event to each holder of
Notes by registered mail and, simultaneously with the
sending of such written notice, send a copy of such
notice to each such holder via an overnight courier
of national reputation. In the event of a Change in
Control, such written notice shall contain, and such
written notice shall constitute, an irrevocable offer
to prepay all, but not less than all, the Notes held
by such holder on a date specified in such notice
(the "Control Prepayment Date") that is not less than
thirty (30) days and not more than sixty (60) days
after the date of such notice. If the Control
Prepayment Date shall not be specified in such
notice, the Control Prepayment Date shall be the
thirtieth (30th) day after the date of such holder's
first receipt of such notice. If the Company shall
not have received a written response to such notice
from each holder of Notes within ten (10) days after
the date of posting of such notice to such holder of
Notes, then the Company shall immediately send a
second written notice via an overnight courier of
national reputation to each such holder of Notes who
shall have not previously responded to the Company.
In no event will the Company take any action to
consummate or finalize a Change of Control unless
contemporaneously with such action the Company
prepays all Notes required to be prepaid in
accordance with Section 6.3(b) hereof.
2. Acceptance and Payment. To accept such offered
prepayment, a holder of Notes shall cause a notice of
such acceptance to be delivered to the Company not
later than fifteen (15) days after the date of
receipt by such holder of the latest written offer of
such prepayment (it being understood that the failure
by a holder to respond to such written offer of
prepayment within such period of fifteen (15) days
shall be deemed to constitute a rejection of such
offer, provided that such deemed rejection shall not
prejudice such holder's right to accept any
subsequent offer). If so accepted, such offered
prepayment shall be due and payable on the Control
Prepayment Date. Such offered prepayment shall be
made at one hundred percent (100%) of the principal
amount of such Notes, together with any Make-Whole
Amount as of the Control Prepayment Date with respect
thereto and interest on the Notes then being prepaid
accrued to the Control Prepayment Date. Two (2)
Business Days prior to the making of any such
prepayment, the Company shall deliver to each holder
of such Notes by facsimile transmission a certificate
of the Chairman, the Vice Chairman, a Vice President,
the Treasurer or the President of the Company
specifying the details of the calculation of such
Make-Whole Amount as of the specified Control
Prepayment Date, accompanied by a copy of any
applicable documentation used in connection with
determining the Make-Whole Discount Rate in respect
of such prepayment.
3. Officer's Certificate. Each offer to prepay
the Notes pursuant to this Section 6.3 shall be
accompanied by a certificate, executed by the
Chairman, a Vice Chairman, a Vice President, the
Treasurer or the President of the Company and dated
the date of such offer, specifying:
a. the Control Prepayment Date;
b. the Section hereof under which such offer is
made;
c. the principal amount of each Note offered to
be prepaid;
d. the interest that would be due on each such
Note offered to be prepaid, accrued to the date
fixed for payment;
e. a reasonably detailed calculation of an
estimated Make-Whole Amount, if any (calculated as
if the date of such notice was the date of
prepayment), that would be due in connection with
such offered prepayment;
f. that the conditions of this Section 6.3 have
been fulfilled; and
g. in reasonable detail, the nature and date or
proposed date of the Change in Control.
5. Effect of Prepayments.
Each prepayment of principal of the Notes of any
Series pursuant to this Section 6 shall be applied
ratably to the principal amount of the Notes of such
Series due on the maturity date of the Notes of such
Series and, in the case of the Series B Notes, to each
remaining mandatory principal prepayment required by
Section 5.1 hereof.
VI. REGISTRATION; SUBSTITUTION OF NOTES
A. Registration of Notes.
The Company will cause to be kept at its office,
maintained pursuant to Section 8.3 hereof, a register
for the registration and transfer of Notes. The name
and address of each holder of one or more Notes, the
outstanding principal amount and Series of each such
Note, each transfer thereof and the name and address of
each transferee of one or more Notes shall be registered
in the register. The Person in whose name any Note
shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and
the Company shall not be affected by any notice or
knowledge to the contrary.
B. Exchange of Notes.
Upon surrender of any Note at the office of the
Company maintained pursuant to Section 8.3 hereof duly
endorsed or accompanied by a written instrument of
transfer duly executed by the registered holder of such
Note or its attorney duly authorized in writing, the
Company will execute and deliver, within five (5)
Business Days after such surrender, at the Company's
expense (except as provided below), new Notes in
exchange therefor, of the same Series as such
surrendered Note, in denominations of at least One
Hundred Thousand Dollars ($100,000) (except as may be
necessary to reflect any principal amount not evenly
divisible by One Hundred Thousand Dollars ($100,000)),
in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new
Note shall be payable to such Person as such holder may
request and shall be substantially in the form of
Exhibit A1, Exhibit A2 or Exhibit A3 hereto, as
applicable. Each such new Note shall be dated and bear
interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid
thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge
imposed in respect of any such transfer of Notes.
C. Replacement of Notes.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any Note (which
evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor (or of
such Institutional Investor's nominee) of such ownership
and such loss, theft, destruction or mutilation) and
1. in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided
that if the holder of such Note is an Institutional
Investor or a nominee of an Institutional Investor,
such Institutional Investor's own unsecured
agreement of indemnity shall be deemed to be
satisfactory for such purpose), or
2. in the case of mutilation, upon surrender and
cancellation thereof,
the Company at its own expense will execute and deliver,
within five (5) Business Days after such receipt, in
lieu thereof, a new Note, dated and bearing interest
from the date to which interest shall have been paid on
such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.
VII. COMPANY BUSINESS COVENANTS
The Company covenants that on and after the Closing
Date and so long as any of the Notes shall be
outstanding:
A. Payment of Taxes and Claims.
The Company will, and will cause each Subsidiary to,
pay before they become delinquent:
1. all taxes, assessments and governmental charges
or levies imposed upon it or its Property; and
2. all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and
other like Persons that, if unpaid, might result in
the creation of a Lien upon its Property;
provided, that items of the foregoing description need
not be paid
a. while being contested in good faith and by
appropriate proceedings as long as adequate book
reserves have been established and maintained and
exist with respect thereto, and
b. so long as the title of the Company or the
Subsidiary, as the case may be, to, and its right
to use, such Property, is not materially adversely
affected thereby.
B. Maintenance of Properties and Corporate Existence.
The Company will, and will cause each Subsidiary to:
1. Property -- maintain its Property in good
condition for its intended purpose, ordinary wear and
tear excepted, and make all necessary renewals,
replacements, additions, betterments and improvements
thereto;
2. Insurance -- maintain, with Acceptable
Insurers, insurance with respect to its Property and
business against such casualties and contingencies,
of such types (including, without limitation,
insurance with respect to losses arising out of
Property loss or damage, public liability, business
interruption, larceny, workers' compensation,
embezzlement or other criminal misappropriation) and
in such amounts as is customary in the case of
corporations of established reputations engaged in
the same or a similar business and similarly
situated, provided, however, that if an insurer is an
Acceptable Insurer at the beginning of any policy
period, it shall be deemed to remain an Acceptable
Insurer for the balance of such policy period;
3. Financial Records -- keep accurate books of
records and accounts in which full and correct
entries shall be made of all its business
transactions and that will permit the provision of
accurate and complete financial statements in
accordance with GAAP;
4. Corporate Existence and Rights -- do or cause
to be done all things necessary
a. to preserve and keep in full force and effect
its corporate existence, rights (charter and
statutory) and franchises, subject to Section 8.10
hereof, except where the failure to do so could not
reasonably be expected to have a Material Adverse
Effect, and
b. to maintain each Restricted Subsidiary as a
Restricted Subsidiary, except as otherwise
permitted by Section 8.10(c) and Section 8.15
hereof; and
5. Compliance with Law -- not be in violation of
any law, ordinance or governmental rule or regulation
to which it is subject (including, without
limitation, any Environmental Protection Law and
OSHA) and not fail to obtain any license,
certificate, permit, franchise or other governmental
authorization necessary to the ownership of its
Properties or to the conduct of its business if such
violation or failure to obtain could be reasonably
expected to have a Material Adverse Effect.
C. Payment of Notes and Maintenance of Office.
The Company will punctually pay, or cause to be paid,
the principal of and interest (and Make-Whole Amount, if
any) on, the Notes, as and when the same shall become
due according to the terms hereof and of the Notes, and
will maintain an office at the address of the Company
set forth in Section 12.1 hereof where notices,
presentations and demands in respect hereof or the Notes
may be made upon it. Such office will be maintained at
such address until such time as the Company shall notify
the holders of the Notes of any change of location of
such office, which will in any event be located within
the United States of America.
D. Maintenance of Consolidated Tangible Net Worth.
The Company will not at any time permit Consolidated
Tangible Net Worth, determined as of the end of the
fiscal quarter of the Company most recently ended at
such time, to be less than the sum of
1. Three Hundred Fifteen Million Dollars
($315,000,000), plus
2. the sum of the Quarterly Net Worth Increase
Amounts for all fiscal quarters ended after the
Closing Date.
"Quarterly Net Worth Increase Amount" means, for any
fiscal quarter of the Company, the greater of
a. fifty percent (50%) of Consolidated Net
Earnings for such fiscal quarter, and
b. Zero Dollars ($0).
E. Current Debt.
The Company will not, and will not permit any
Restricted Subsidiary to, have any Current Debt
outstanding on any day unless, within the three hundred
sixty-five (365) days immediately preceding such day,
there shall have been at least one (1) period of not
less than thirty (30) consecutive days during which on
each day of such period Consolidated Current Debt did
not exceed the amount of additional Funded Debt that the
Company would have been permitted to have outstanding
(but did not have outstanding) under Section 8.6(b)
hereof on such day.
F. Funded Debt.
1. The Company will not permit any Restricted
Subsidiary to incur or in any other manner become
liable in respect of any Funded Debt at any time
unless, after giving effect thereto and to any
concurrent transactions:
a. such Funded Debt is owed to the Company or to
another Restricted Subsidiary;
b. such Funded Debt existed on the Effective Date
and is listed in Part 2.2(b) of Annex 3 hereto; or
c. both
(1) (x) the total outstanding amount of Funded
Debt and Current Debt of all Restricted
Subsidiaries (determined after elimination of
intercompany items among such Persons), plus,
without duplication,
(y) the aggregate amount of all Debt and other
obligations secured by Liens permitted by Section
8.9(a)(viii) hereof
does not exceed fifteen percent (15%) of
Consolidated Net Tangible Assets at such time; and
(2) immediately before and immediately after
giving effect to such transaction, no Default or
Event of Default exists or would exist.
2. The Company will at all times maintain a ratio
of Consolidated Funded Debt to Consolidated Net
Tangible Assets of not greater than 0.6 to 1.0.
G. Interest Coverage.
The Company will at all times maintain a ratio of
Consolidated Net Earnings Before Interest and Taxes for
each period of four (4) fiscal quarters then most
recently ended to Consolidated Interest Expense for such
period of not less than 1.75 to 1.0.
H. Investments.
The Company will not, and will not permit any
Restricted Subsidiary to, make any Investment other than
Permitted Investments.
I. Liens.
1. Negative Pledge. The Company will not, and
will not permit any Restricted Subsidiary to, cause
or permit to exist, or agree or consent to cause or
permit to exist in the future (upon the happening of
a contingency or otherwise), any of their Property,
whether now owned or hereafter acquired, to be
subject to a Lien except:
a. Liens securing taxes, assessments or
governmental charges or levies or the claims or
demands of materialmen, mechanics, carriers, ware-
housemen, landlords and other like Persons,
provided that the payment thereof is not at the
time required by Section 8.1 hereof;
b. Liens incurred or deposits made in the
ordinary course of business
(1) in connection with worker's compensation,
unemployment insurance, social security and other
like laws, and
(2) to secure the performance of letters of
credit, bids, tenders, sales contracts, leases,
statutory obligations, surety and performance
bonds (of a type other than set forth in Section
8.9(a)(iii)) hereof) and other similar
obligations not incurred in connection with the
borrowing of money, the obtaining of advances or
the payment of the deferred purchase price of
Property;
c. Liens
(1) arising from judicial attachments and
judgments,
(2) securing appeal bonds, supersedeas bonds,
and
(3) arising in connection with court
proceedings (including, without limitation,
surety bonds and letters of credit or any other
instrument serving a similar purpose),
provided that the execution or other enforcement of
such Liens is effectively stayed and the claims
secured thereby are being actively contested in
good faith and by appropriate proceedings, and
provided further that the aggregate amount so
secured will not at any time exceed Twenty-Five
Million Dollars ($25,000,000);
d. Liens on Property of a Restricted Subsidiary,
provided that such Liens secure only obligations
owing to the Company or a Restricted Subsidiary;
e. Liens in the nature of reservations,
exceptions, encroachments, easements, rights-of-
way, covenants, conditions, restrictions, leases
and other similar title exceptions or encumbrances
affecting real property, provided that such
exceptions and encumbrances do not in the aggregate
materially detract from the value of such
Properties or materially interfere with the use of
such Property in the ordinary conduct of the
business of the Company and the Restricted
Subsidiaries;
f. i) Liens securing Debt, in each case in
existence and securing Debt on the Effective Date
and listed in Part 8.9(a)(vi) of Annex 3 hereto,
and
(1) Liens securing renewals, extensions (as to
time) and refinancings of such Debt secured by
such Liens listed in such Part of Annex 3 hereto,
provided that the amount of Debt secured by each
such Lien is not increased in excess of the
amount of Debt outstanding on the date of such
renewal, extension or refinancing, and none of
such Liens is extended to include any additional
Property of the Company or any Restricted
Subsidiary; and
g. Purchase Money Liens, if, after giving effect
thereto and to any concurrent transactions
(1) each such Purchase Money Lien secures
Funded Debt of the Company or a Restricted
Subsidiary in an amount not exceeding one hundred
percent (100%) of the cost of construction or
acquisition of the particular Property to which
such Funded Debt relates (or, in the case of a
Lien existing on any Property of any corporation
at the time it becomes a Restricted Subsidiary,
the Fair Market Value of such Property at such
time), and
(2) immediately after, and after giving effect
thereto, no Default or Event of Default would
exist; and
h. additional Liens securing Debt of the Company
or any Restricted Subsidiary not otherwise
permitted pursuant to clause (i) through clause
(vii), inclusive, of this Section 8.9(a), provided
that, at any time, the sum of
(1) the aggregate amount of all Debt and other
obligations secured by such Liens at such time,
plus, without duplication,
(2) the total outstanding amount of Funded Debt
and Current Debt of all Restricted Subsidiaries
(determined after elimination of intercompany
items among such Persons) not secured by such
Liens,
does not exceed fifteen percent (15%) of
Consolidated Net Tangible Assets at such time.
2. Equal and Ratable Lien; Equitable Lien. In
case any Property shall be subjected to a Lien in
violation of this Section 8.9, the Company will
forthwith make or cause to be made, to the fullest
extent permitted by applicable law, provision whereby
the Notes will be secured equally and ratably with
all other obligations secured thereby pursuant to
such agreements and instruments as shall be approved
by the Majority Holders, and the Company will cause
to be delivered to each holder of a Note an opinion
of independent counsel to the effect that such
agreements and instruments are enforceable in
accordance with their terms, and in any such case the
Notes shall have the benefit, to the full extent
that, and with such priority as, the holders of Notes
may be entitled under applicable law, of an equitable
Lien on such Property securing the Notes. Such
violation of this Section 8.9 will constitute an
Event of Default hereunder, whether or not any such
provision is made pursuant to this Section 8.9(b).
3. Financing Statements. The Company will not,
and will not permit any Restricted Subsidiary to,
sign or file a financing statement under the Uniform
Commercial Code of any jurisdiction that names the
Company or such Restricted Subsidiary as debtor, or
sign any security agreement authorizing any secured
party thereunder to file any such financing
statement, except, in any such case, a financing
statement filed or to be filed to perfect or protect
a security interest that the Company or such
Restricted Subsidiary is entitled to create, assume
or incur, or permit to exist, under the foregoing
provisions of this Section 8.9 or to evidence for
informational purposes a lessor's interest in
Property leased to the Company or any such Restricted
Subsidiary.
J. Mergers; Consolidations; Transfers of Property;
Disposal of Shares of a Restricted Subsidiary.
1. Mergers; Consolidations. The Company will not,
and will not permit any Restricted Subsidiary to,
merge with or into or consolidate with or into any
other Person or permit any other Person to merge or
consolidate with or into it (except that a Restricted
Subsidiary may merge into or consolidate with the
Company or a Wholly-Owned Restricted Subsidiary),
provided, that the foregoing restriction does not
apply to the merger or consolidation of the Company
with another corporation if:
a. the corporation that results from such merger
or consolidation (the "Successor Corporation") is
organized under the laws of the United States of
America or any jurisdiction thereof;
b. the due and punctual payment of the principal
of and Make-Whole Amount, if any, and interest on
all of the Notes, according to their tenor, and the
due and punctual performance and observance of all
of the covenants in the Notes and this Agreement to
be performed or observed by the Company, are
expressly assumed or acknowledged by the Successor
Corporation pursuant to such agreements and
instruments as shall be approved by the Majority
Holders, and the Company causes to be delivered to
each holder of Notes an opinion of independent
counsel to the effect that such agreements and
instruments are enforceable in accordance with
their terms;
c. immediately prior to, and immediately after
the consummation of the transaction, and after
giving effect thereto, no Default or Event of
Default would exist; and
d. immediately prior to, and immediately after
the consummation of the transaction, and after
giving effect thereto, a Restricted Subsidiary
would be permitted to incur at least One Dollar
($1.00) of Debt pursuant to the provisions of
Section 8.6(a)(iii) hereof.
2. Transfers of Property. The Company will not,
and will not permit any Restricted Subsidiary to,
sell (including, without limitation, any sale and
subsequent leasing as lessee of such Property), lease
as lessor, transfer or otherwise dispose of any
Property (collectively referred to as "Transfers";
the various verb forms of the term "Transfer" shall
have correlative meanings as used herein), except:
a. Transfers of inventory, of unuseful, obsolete
or worn out Property and of delinquent accounts
receivables, in each case in the ordinary course of
business of the Company or such Restricted
Subsidiary;
b. Transfers from a Restricted Subsidiary to the
Company or to a Wholly-Owned Restricted Subsidiary;
c. any other Transfer of Property at any time to
a Person, other than an Affiliate, for an
Acceptable Consideration if:
(1) the aggregate of the amounts representing,
in each case, the book value of each item of
Property of the Company and the Restricted
Subsidiaries Transferred (other than in Transfers
referred to in the foregoing clause (i) and
clause (ii) (collectively, "Excluded Transfers"))
during the period
(a) of three hundred sixty-five (365) days
ended on the date of such Transfer, would not
exceed twenty percent (20%) of the consolidated
assets of the Company and the Restricted
Subsidiaries determined as of last day of the
fiscal year then most recently ended, and
(b) from the Effective Date and ending on the
date of such Transfer, would not exceed forty
percent (40%) of the consolidated assets of the
Company and the Restricted Subsidiaries as of
the close of the last day of the fiscal year
then most recently ended; and
(2) the Operating Income Contribution
Percentage of each item of Property of the
Company and the Restricted Subsidiaries
Transferred (other than in Excluded Transfers)
during the period of three hundred sixty-five
(365) days ended on the date of such Transfer,
would not exceed twenty percent (20%), and any
certificate contemplated by the definition of
Operating Income Contribution Percentage in
Section 11.1 hereof shall have been timely
delivered to each holder of Notes in respect of
such Transfer.
3. Disposal of Restricted Subsidiary Stock. The
Company will not, and will not permit any Restricted
Subsidiary to, at any time Transfer any shares of the
stock (or any options or warrants to purchase stock
or other Securities exchangeable for or convertible
into stock) of any Restricted Subsidiary (such stock,
options, warrants and other Securities herein called
"Restricted Subsidiary Stock") or Funded Debt or
Current Debt of any Restricted Subsidiary, nor will
the Company permit any Restricted Subsidiary to issue
its own Restricted Subsidiary Stock, or to Transfer
any shares of Restricted Subsidiary Stock issued by
any other Restricted Subsidiary, if the effect of the
transaction would be to reduce the proportionate
interest of the Company and the other Restricted
Subsidiaries in the outstanding Restricted Subsidiary
Stock (the "Disposition Stock") of the Restricted
Subsidiary (the "Disposition Subsidiary") whose
shares are the subject of the transaction or in any
manner increase the amount of Debt of any Restricted
Subsidiary held by Persons other than the Company and
other Restricted Subsidiaries, provided that the
foregoing restrictions do not apply to:
a. the issuance of directors' qualifying shares;
b. the issuance of Disposition Stock by a
Disposition Subsidiary in satisfaction of the
rights of minority shareholders of such Disposition
Subsidiary to receive such Disposition Stock,
provided that the transaction does not result in
the reduction of the proportionate interest of the
Company and the other Restricted Subsidiaries in
the outstanding Disposition Stock;
c( the Transfer for an Acceptable Consideration
payable at one time (the "Disposition Date") to a
Person (other than directly or indirectly to an
Affiliate) of the Disposition Stock, the Funded
Debt and the Current Debt of such Disposition
Subsidiary held by the Company and the other
Restricted Subsidiaries, if all of the following
conditions shall have been satisfied:
(1) all shares of Disposition Stock and all
Funded Debt and Current Debt of such Disposition
Subsidiary held by the Company and the
Subsidiaries shall be simultaneously sold;
(2) the Board of Directors shall have approved
such Transfer of Disposition Stock, Funded Debt
and Current Debt as in the best interests of the
Company;
(3) the consideration paid for such Disposition
Stock, Funded Debt and Current Debt is deemed
adequate and satisfactory by the Board of
Directors;
(4) the Restricted Subsidiary being disposed of
shall not have any continuing Investment in the
Company or any Subsidiary not being
simultaneously disposed of; and
(5) such Transfer satisfies the requirements of
Section 8.10(b) hereof.
For purposes of determining the book value of
Property constituting Disposition Stock being
Transferred as provided in clause (iii) above, such
book value shall be deemed to be the aggregate book
value of all assets of the Disposition Subsidiary
that shall have issued such Disposition Stock. The
designation of a Restricted Subsidiary as an
Unrestricted Subsidiary shall be treated, for the
purposes of this Section 8.10, as a deemed sale of
all of the Restricted Subsidiary Stock of such
Restricted Subsidiary by the Company.
K. ERISA.
1. Compliance. The Company will, and will cause
each ERISA Affiliate to, at all times with respect to
each Pension Plan, make timely payment of
contributions required to meet the minimum funding
standard set forth in ERISA or the IRC with respect
thereto, and to comply with all other applicable
provisions of ERISA.
2. Relationship of Vested Benefits to Pension Plan
Assets. The Company will not at any time permit the
present value of all employee benefits vested under
each Pension Plan to exceed the assets of such
Pension Plan allocable to such vested benefits at
such time, in each case determined pursuant to
Section 8.11(c) hereof.
3. Valuations. All assumptions and methods used
to determine the actuarial valuation of vested
employee benefits under Pension Plans and the present
value of assets of Pension Plans will be reasonable
in the good faith judgment of the Company and will
comply with all requirements of law.
4. Prohibited Actions. The Company will not, and
will not permit any ERISA Affiliate to:
a. engage in any "prohibited transaction" (as
defined in section 406 of ERISA or section 4975 of
the IRC) that would result in the imposition of a
material tax or penalty;
b. incur with respect to any Pension Plan any
"accumulated funding deficiency" (as defined in
section 302 of ERISA), whether or not waived;
c. terminate any Pension Plan in a manner that
could result in
(1) the imposition of a Lien on the Property of
the Company or any Subsidiary pursuant to section
4068 of ERISA, or
(2) the creation of any liability under section
4062 of ERISA;
d. fail to make any payment required by section
515 of ERISA; or
e. at any time be an "employer" (as defined in
section 3(5) of ERISA) required to contribute to
any Multiemployer Plan if, at such time, it could
reasonably be expected that the Company or any
Restricted Subsidiary will incur withdrawal
liability in respect of such Multiemployer Plan and
such liability, if incurred, together with the
aggregate amount of all other withdrawal liability
as to which there is a reasonable expectation of
incurrence by the Company or any Restricted
Subsidiary under any one or more Multiemployer
Plans, could reasonably be expected to have a
Material Adverse Effect.
L. Line of Business.
The Company will not, and will not permit any
Restricted Subsidiary to, engage in any business other
than the businesses related to their present businesses
or those that are substantially similar to their present
businesses.
M. Transactions with Affiliates.
The Company will not, and will not permit any
Restricted Subsidiary to, enter into any transaction,
including, without limitation, the purchase, sale or
exchange of Property or the rendering of any service,
with any Affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of the Company's
or such Restricted Subsidiary's business and upon fair
and reasonable terms no less favorable to the Company or
such Restricted Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an
Affiliate.
N. Private Offering.
The Company will not, and will not permit any Person
acting on its behalf to, offer the Notes or any part
thereof or any similar Securities for issuance or sale
to, or solicit any offer to acquire any of the same
from, any Person so as to bring the issuance and sale of
the Notes within the provisions of section 5 of the
Securities Act.
O. Designation of Subsidiaries.
1. Right of Designation. Subject to the
satisfaction of the requirements of Section 8.15(c)
hereof, the Company shall have the right to designate
each Subsidiary as a Restricted Subsidiary or an
Unrestricted Subsidiary by delivering to each holder
of Notes a writing, signed by the Chairman, the Vice
Chairman, a Vice President or the President of the
Company, so designating such Subsidiary within thirty
(30) days of the acquisition by the Company or any
Restricted Subsidiary of the necessary percentages of
Voting Stock and other equity interests of such
Subsidiary as set forth in the definition of
Restricted Subsidiary. Any such Subsidiary not so
designated within such thirty (30) day period shall
be deemed, on and after such date and without any
further action by the Company or any holder of Notes,
to have been designated by the Company as a
Restricted Subsidiary. Each Subsidiary designated as
a Restricted Subsidiary in Part 2.3 of Annex 3 hereto
shall, so long as it shall continue to satisfy the
requirements of the definition of Restricted
Subsidiary, be a Restricted Subsidiary on and after
the Closing Date and all other Subsidiaries, if any,
listed in such Part of Annex 3 shall, subject to
Section 8.15(b) hereof, be Unrestricted Subsidiaries
on and after the Closing Date.
*< Right of Redesignation. Subject to the
satisfaction of the requirements of Section 8.15(c)
hereof, the Company may at any time designate
(i) any Unrestricted Subsidiary as a Restricted
Subsidiary, or
(ii) any Restricted Subsidiary as an
Unrestricted Subsidiary,
by delivering a written notice to such effect, signed
by the Chairman, the Vice Chairman, a Vice President
or the President of the Company, to each holder of
Notes.
3. Designation Criteria.
a. No Subsidiary shall at any time after the
Closing Date be designated as a Restricted
Subsidiary unless:
(1) such Subsidiary at such time meets all of
the requirements of a Restricted Subsidiary as
set forth in the definition thereof;
(2) immediately before and after, and after
giving effect to such designation, and assuming
that all Investments of, all obligations and
liabilities of, and all Liens on the Property of,
such Subsidiary being so designated were made or
incurred contemporaneously with such designation,
no Default or Event of Default exists or would
exist; and
(C) such Subsidiary shall not previously have
been designated as a Restricted Subsidiary (not
including any designation pursuant to Section
8.15(a) hereof) pursuant to this Section 8.15.
b. No Subsidiary shall at any time after the
Closing Date be designated as an Unrestricted
Subsidiary unless:
(A) immediately before and after, and after
giving effect to such designation, no Default or
Event of Default exists or would exist;
(B) such Subsidiary shall not previously have
been designated as an Unrestricted Subsidiary
(not including any designation pursuant to
Section 8.15(a) hereof) pursuant to this Section
8.15; and
(C) such Subsidiary at such time meets all of
the requirements of an Unrestricted Subsidiary as
set forth in the definition thereof.
4. Effectiveness. Other than as set forth in the
last two sentences of Section 8.15(a) hereof, any
designation under this Section 8.15 that satisfies
all of the conditions set forth in this Section 8.15
shall become effective, for purposes of this
Agreement, on the day that notice thereof shall have
been mailed (postage prepaid, by registered or
certified mail, return receipt requested) by the
Company to each holder of Notes at the addresses as
provided in Section 12.1 hereof.
VIII. INFORMATION AS TO COMPANY
A. Financial and Business Information.
The Company will deliver to each holder of Notes
(and, prior to the Closing Date, to each Purchaser):
1. Quarterly Statements -- as soon as practicable
after the end of each quarterly fiscal period in each
fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year),
and in any event within fifty (50) days thereafter,
duplicate copies of:
a. a consolidated balance sheet of the Company
and the Restricted Subsidiaries as at the end of
such quarter, and
b. consolidated statements of income and cash
flows of the Company and the Restricted
Subsidiaries for such quarter and (in the case of
the second and third quarters) for the portion of
the fiscal year ending with such quarter,
setting forth in each case in comparative form the
figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly
financial statements generally, and certified as
complete and correct, subject to changes resulting
from year-end adjustments, by the Vice President-
Finance or Vice Chairman of the Company, and
accompanied by the certificate required by Section
9.2 hereof;
2. Annual Statements -- as soon as practicable
after the end of each fiscal year of the Company, and
in any event within ninety-five (95) days thereafter,
duplicate copies of:
a. a consolidated balance sheet of the Company
and the Restricted Subsidiaries as at the end of
such year, and
b. consolidated statements of income, changes in
shareholders' equity and cash flows of the Company
and the Restricted Subsidiaries for such year,
setting forth in each case in comparative form the
figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP,
and accompanied by
c. an opinion thereon of the accountants named in
Section 2.2 hereof or other independent certified
public accountants of recognized national standing
selected by the Company, which opinion shall,
without qualification, state that such financial
statements present fairly, in all material
respects, the financial position of the companies
being reported upon and their results of operations
and cash flows and have been prepared in conformity
with GAAP, and that the examination of such
accountants in connection with such financial
statements has been made in accordance with
generally accepted auditing standards, and that
such audit provides a reasonable basis for such
opinion in the circumstances, and
d. the certificates required by Section 9.2 and
Section 9.3 hereof;
3. Audit Reports -- promptly upon receipt thereof,
a copy of each other report submitted to the Company
or any Subsidiary by independent accountants in
connection with any management report, special audit
report or comparable analysis prepared by them with
respect to the books of the Company or any
Subsidiary;
4. SEC and Other Reports -- promptly upon their
becoming available, one copy of each financial
statement, report, notice or proxy statement sent by
the Company or any Subsidiary to stockholders
generally, and of each regular or periodic report and
any registration statement, prospectus or written
communication (other than transmittal letters and
routine comment letters with respect to drafts of
such statements, reports or prospectuses), and each
amendment thereto, in respect thereof filed by the
Company or any Subsidiary with, or received by, such
Person in connection therewith from, the National
Association of Securities Dealers, any securities
exchange or the Securities and Exchange Commission or
any successor agency;
5. ERISA -- immediately upon becoming aware of the
occurrence of any
a. "reportable event" (as defined in section 4043
of ERISA) or
b. "prohibited transaction" (as defined in sec-
tion 406 or section 4975 of the IRC)
in connection with any Pension Plan or any trust
created thereunder, a written notice specifying the
nature thereof, what action the Company is taking or
proposes to take with respect thereto, and, when
known, any action taken by the IRS, the DOL or the
PBGC with respect thereto;
6. ERISA Waivers -- prompt written notice of and
a description of any request pursuant to section 303
of ERISA or section 412 of the IRC for, or notice of
the granting pursuant to such section 303 or section
412 of, a waiver in respect of all or part of the
minimum funding standard set forth in ERISA or the
IRC, as the case may be, of any Pension Plan, and, in
connection with the granting of any such waiver, the
amount of any waived funding deficiency (as defined
in such section 303 or such section 412) and the
terms of such waiver, in each of the cases specified
in this clause (f), where the effect of such
conditions or events or of events or conditions
related thereto could reasonably be expected to have
a Material Adverse Effect;
7. Other ERISA Notices -- prompt written notice of
and, where applicable, a description of
a. any notice from the PBGC in respect of the
commencement of any proceedings pursuant to section
4042 of ERISA to terminate any Pension Plan or for
the appointment of a trustee to administer any
Pension Plan,
b. any distress termination notice delivered to
the PBGC under section 4041 of ERISA in respect of
any Pension Plan, and any determination of the PBGC
in respect thereof,
c. the placement of any Multiemployer Plan in
reorganization status under Title IV of ERISA,
d. any Multiemployer Plan becoming "insolvent"
(as defined in section 4245 of ERISA) under Title
IV of ERISA,
e. the whole or partial withdrawal of the Company
or any ERISA Affiliate from any Multiemployer Plan
and the withdrawal liability incurred in connection
therewith, and
f. the withdrawal of the Company or any ERISA
Affiliate from any Multiple Employer Pension Plan
and the withdrawal liability under ERISA incurred
in connection therewith;
in each of the cases specified in the foregoing
clauses (i) through (vi), inclusive, where the effect
of such conditions or events or of events or
conditions related thereto could reasonably be
expected to have a Material Adverse Effect;
8. Notice of Default or Event of Default --
immediately upon becoming aware of
a. the existence of any condition or event that
constitutes a Default or an Event of Default or
b. any failure by the Company to comply with the
provisions of Section 8.7 hereof
a written notice specifying the nature and period of
existence thereof or of such failure and what action
the Company is taking or proposes to take with
respect thereto;
9. Notice of Claimed Default -- immediately upon
becoming aware that the holder of any Note, or of any
evidence of indebtedness or other Security of the
Company or any Subsidiary, shall have given notice or
taken any other action with respect to a claimed
Default, Event of Default, default or event of
default, a written notice specifying the notice given
or action taken by such holder and the nature of the
claimed Default, Event of Default, default or event
of default and what action the Company is taking or
proposes to take with respect thereto;
10. Notice of Violation of Environmental
Protection Law -- promptly upon becoming aware of the
existence of any violation by the Company or any
Subsidiary of any Environmental Protection Law that
could reasonably be expected to have a Material
Adverse Effect, a written notice specifying the
nature and period of such violation and what action
any one or more of the Company and such Subsidiary,
as the case may be, are taking or propose to take
with respect thereto; and
11. Requested Information -- with reasonable
promptness, such other data and information as from
time to time may be reasonably requested by any
holder of Notes, including, without limitation,
a. copies of any statement, report or certificate
furnished to any holder of Indebtedness of the
Company or any Subsidiary,
b. information requested to comply with any
request of the National Association of Insurance
Commissioners in respect of the designation of the
Notes, and
c. information requested to comply with 17 C.F.R.
230.144A, as amended from time to time,
(any such request with respect to the data and
information referred to in the foregoing clauses (i),
(ii) and (iii) being deemed to be reasonable for
purposes of this clause (k)).
B. Officers' Certificates.
Each set of financial statements delivered to each
holder of Notes pursuant to Section 9.1(a) or Section
9.1(b) hereof shall be accompanied by a certificate of
the Chief Financial Officer or the Vice Chairman of the
Company setting forth:
1. Covenant Compliance -- the information
(including detailed calculations) required in order
to establish whether the Company was in compliance
with the requirements of Section 8.4 through Section
8.10 hereof, inclusive, during the period covered by
the income statement then being furnished (including
with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible
under the terms of such Sections, and the calculation
of the amounts, ratio or percentage then in
existence); and
2. Event of Default -- a statement that the
signers have reviewed the relevant terms hereof and
have made, or caused to be made, under their
supervision, a review of the transactions and
conditions of the Company and the Subsidiaries from
the beginning of the accounting period covered by the
income statements being delivered therewith to the
date of the certificate and that such review shall
not have disclosed the existence during such period
of any condition or event that constitutes a Default
or an Event of Default or, if any such condition or
event existed or exists, specifying the nature and
period of existence thereof and what action the
Company shall have taken or proposes to take with
respect thereto.
C. Accountants' Certificates.
Each set of annual financial statements delivered
pursuant to Section 9.1(b) shall be accompanied by a
certificate of the accountants who certify such
financial statements, stating that they have reviewed
this Agreement and stating further, whether, in making
their audit, such accountants have become aware of any
condition or event that then constitutes a Default or an
Event of Default, and, if such accountants are aware
that any such condition or event then exists, specifying
the nature and period of existence thereof.
D. Inspection.
The Company will permit the representatives of each
holder of Notes, once only during each fiscal quarter of
the Company at such reasonable time as may be requested
by such holder, to visit and inspect any of the
Properties of the Company or any Subsidiary, to examine
all their respective books of account, records, reports
and other papers, to make copies and extracts therefrom,
and to discuss their respective affairs, finances and
accounts with their respective officers, employees and
independent public accountants (and by this provision
the Company authorizes such accountants to discuss the
finances and affairs of the Company and the
Subsidiaries), provided that during any time when an
Event of Default exists, any such inspection or visit
shall be at the expense of the Company and may be made
as often as may be requested.
IX. EVENTS OF DEFAULT
A. Nature of Events.
An "Event of Default" shall exist if any of the
following occurs and is continuing:
1. Principal or Make-Whole Amount Payments -- the
Company shall fail to make any payment of principal
or Make-Whole Amount on any Note on or before the
date such payment is due;
2. Certain Prepayments -- the Company shall fail
to fulfill any of its obligations set forth in any
one or more of Section 6.1, Section 6.2 and Section
6.3 hereof;
3. Interest Payments -- the Company shall fail to
make any payment of interest on any Note on or before
five (5) Business Days after the date such payment is
due;
4. Other Defaults -- the Company or any Subsidiary
shall fail to comply with any other provision hereof,
and such failure shall continue for more than thirty
(30) days after such failure shall first become known
to any officer of the Company, provided that any
failure to comply with Section 8.7 shall not
constitute an Event of Default but shall be subject
to the terms of Section 6 hereof;
5. Warranties or Representations -- any warranty,
representation or other statement by or on behalf of
the Company contained herein or in any instrument
furnished in compliance with or in reference hereto
shall have been false or misleading in any material
respect when made or deemed made;
6. Default on Indebtedness or Other Security --
a. the Company or any Restricted Subsidiary shall
fail to make any payment on any Indebtedness when
due, or
b. any event shall occur or any condition shall
exist in respect of Indebtedness or any Security of
the Company or any Restricted Subsidiary, or under
any agreement securing or relating to such
Indebtedness or Security, that immediately or with
any one or more of (x) the passage of time, (y) the
giving of notice or (z) the expiration of waivers
or modifications granted in respect of such event
or condition:
(1) causes (or permits any one or more of the
holders thereof or a trustee therefor to cause)
such Indebtedness or Security, or a portion
thereof, to become due prior to its stated
maturity or prior to its regularly scheduled date
or dates of payment; or
(2) permits any one or more of the holders
thereof or a trustee therefor to require the
Company or any Restricted Subsidiary to
repurchase such Indebtedness or Security;
provided that the aggregate amount of all obligations
in respect of such Indebtedness and Securities
exceeds at such time Twenty-Five Million Dollars
($25,000,000);
7. Involuntary Bankruptcy Proceedings --
a. a receiver, liquidator, custodian or trustee
of the Company, or any Restricted Subsidiary, or of
all or any of the Property of either, shall be
appointed by court order and such order remains in
effect for more than forty-five (45) days; or an
order for relief shall be entered with respect to
the Company or any Restricted Subsidiary, or the
Company or any Restricted Subsidiary shall be
adjudicated a bankrupt or insolvent,
b. any of the Property of the Company or any
Restricted Subsidiary shall be sequestered by court
order and such order remains in effect for more
than forty-five (45) days, or
c. a petition shall be filed against the Company
or any Restricted Subsidiary under any bankruptcy,
reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation
law of any jurisdiction, whether now or hereafter
in effect, and shall not be dismissed within forty-
five (45) days after such filing;
8. Voluntary Petitions -- the Company or any
Restricted Subsidiary shall file a petition in
voluntary bankruptcy or seeking relief under any
provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, or shall consent
to the filing of any petition against it under any
such law;
9. Assignments for Benefit of Creditors, etc. --
the Company or a Restricted Subsidiary shall make an
assignment for the benefit of its creditors, or shall
admit in writing its inability, or shall fail, to pay
its debts generally as they become due, or shall
consent to the appointment of a receiver, liquidator
or trustee of the Company or a Restricted Subsidiary
or of all or any part of the Property of either; or
10. Undischarged Final Judgments -- a final
judgment or final judgments for the payment of money
aggregating in excess of Twenty-Five Million Dollars
($25,000,000) shall be outstanding against one or
more of the Company and the Restricted Subsidiaries
and any one of such judgments shall have been
outstanding for more than thirty (30) days from the
date of its entry and shall not have been discharged
in full or stayed.
B. Default Remedies.
1. Acceleration on Event of Default.
a. If an Event of Default specified in clause
(g), (h) or (i) of Section 10.1 hereof shall exist,
all of the Notes at the time outstanding shall
automatically become immediately due and payable
together with interest accrued thereon and, to the
extent permitted by law, the Make-Whole Amount at
such time with respect to the principal amount of
such Notes, without presentment, demand, protest or
notice of any kind, all of which are hereby
expressly waived.
b. If an Event of Default other than those
specified in clause (g), (h) or (i) of Section 10.1
hereof shall exist, the holder or holders of at
least thirty-five percent (35%) in principal amount
of the Notes then outstanding (exclusive of Notes
then owned by any one or more of the Company, any
Restricted Subsidiary or any Affiliate) may
exercise any right, power or remedy permitted to
such holder or holders by law, and shall have, in
particular, without limiting the generality of the
foregoing, the right to declare the entire
principal of, and all interest accrued on, all the
Notes then outstanding to be, and such Notes shall
thereupon become, forthwith due and payable,
without any presentment, demand, protest or other
notice of any kind, all of which are hereby
expressly waived, and the Company shall forthwith
pay to the holder or holders of all the Notes then
outstanding the entire principal of, and interest
accrued on, the Notes and, to the extent permitted
by law, the Make-Whole Amount at such time with
respect to such principal amount of such Notes.
2. Acceleration on Payment Default. During the
existence of an Event of Default described in Section
10.1(a), Section 10.1(b) or Section 10.1(c) hereof,
and irrespective of whether the Notes then
outstanding shall have been declared to be due and
payable pursuant to Section 10.2(a)(ii) hereof, any
holder of Notes that shall have not consented to any
waiver with respect to such Event of Default may, at
its option, by notice in writing to the Company,
declare the Notes then held by such holder to be, and
such Notes shall thereupon become, forthwith due and
payable together with all interest accrued thereon,
without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly
waived, and the Company shall forthwith pay to such
holder the entire principal of and interest accrued
on such Notes and, to the extent permitted by law,
the Make-Whole Amount at such time with respect to
such principal amount of such Notes.
3. Valuable Rights. The Company acknowledges, and
the parties hereto agree, that the right of each
holder to maintain its investment in the Notes free
from repayment by the Company (except as herein
specifically provided for) is a valuable right and
that the provision for payment of a Make-Whole Amount
by the Company in the event that the Notes are
prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the
deprivation of such right under such circumstances.
4. Other Remedies. During the existence of an
Event of Default and irrespective of whether the
Notes then outstanding shall have been declared to be
due and payable pursuant to Section 10.2(a)(ii)
hereof and irrespective of whether any holder of
Notes then outstanding shall otherwise have pursued
or be pursuing any other rights or remedies, any
holder of Notes may proceed to protect and enforce
its rights hereunder and under such Notes by
exercising such remedies as are available to such
holder in respect thereof under applicable law,
either by suit in equity or by action at law, or
both, whether for specific performance of any
agreement contained herein or in aid of the exercise
of any power granted herein, provided that the
maturity of such holder's Notes may be accelerated
only in accordance with Section 10.2(a) and Section
10.2(b) hereof.
5. Nonwaiver and Expenses. No course of dealing
on the part of any holder of Notes nor any delay or
failure on the part of any holder of Notes to
exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights,
powers and remedies. If the Company shall fail to
pay when due any principal of, or Make-Whole Amount
or interest on, any Note, or shall fail to comply
with any other provision hereof, the Company shall
pay to each holder of Notes, to the extent permitted
by law, such further amounts as shall be sufficient
to cover the costs and expenses, including, but not
limited to, reasonable attorneys' fees, incurred by
such holder in collecting any sums due on such Notes
or in otherwise assessing, analyzing or enforcing any
rights or remedies that are or may be available to
it.
C. Annulment of Acceleration of Notes.
If a declaration is made pursuant to Section
10.2(a)(ii) hereof, then and in every such case, the
holders of sixty-six percent (66%) in aggregate
principal amount of the Notes then outstanding
(exclusive of Notes then owned by any one or more of the
Company, any Restricted Subsidiaries and any Affiliates)
may, by written instrument filed with the Company,
rescind and annul such declaration, and the consequences
thereof, provided that at the time such declaration is
annulled and rescinded:
1. no judgment or decree shall have been entered
for the payment of any moneys due on or pursuant
hereto or the Notes;
2. all arrears of interest upon all the Notes and
all other sums payable hereunder and under the Notes
(except any principal of, or interest or Make-Whole
Amount on, the Notes that shall have become due and
payable by reason of such declaration under Section
10.2(a)(ii) hereof) shall have been duly paid; and
3. each and every other Default and Event of
Default shall have been waived pursuant to Section
12.5 hereof or otherwise made good or cured,
and provided further that no such rescission and
annulment shall extend to or affect any subsequent
Default or Event of Default or impair any right
consequent thereon.
X. INTERPRETATION OF THIS AGREEMENT
A. Terms Defined.
As used herein, the following terms have the
respective meanings set forth below or set forth in the
Section hereof following such term:
Acceptable Consideration -- means, with respect to
any Transfer of any Property of the Company or a
Restricted Subsidiary, cash consideration, promissory
notes or such other consideration (or any combination of
the foregoing) received by such Person in connection
with such Transfer as is, in each case, determined by
the Board of Directors, in its good faith opinion, to be
in the best interests of the Company.
Acceptable Insurer -- means any financially sound and
reputable insurance company accorded a rating by A.M.
Best Company of "A-" or better and a size rating of "VI"
or better (or a comparable rating by any comparable
successor rating agency).
Affiliate -- means, at any time, a Person (other than
a Restricted Subsidiary)
(a) that directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or
is under common Control with, the Company,
(b) that beneficially owns or holds five percent
(5%) or more of any class of the Voting Stock of the
Company, or
(c) five percent (5%) or more of the Voting Stock
(or in the case of a Person that is not a
corporation, five percent (5%) or more of the equity
interest) of which is beneficially owned or held by
the Company or a Subsidiary,
at such time.
As used in this definition:
Control -- means the possession, directly or
indirectly, of the power to direct or cause the
direction of the management and policies of a Person,
whether through the ownership of voting securities,
by contract or otherwise.
Agreement, this -- means this agreement, as it may be
amended and restated from time to time.
Board of Directors -- means, at any time, the board
of directors of the Company or any committee thereof
that, in the instance, shall have the lawful power to
exercise the power and authority of such board of
directors.
Business Day -- means a day other than a Saturday, a
Sunday or, if the provisions of Section 4.1 hereof are
applicable with respect to any Note, a day on which the
bank designated (by the holder of such Note) to receive
(for such holder's account) payments on such Note is
required by law (other than a general banking moratorium
or holiday for a period exceeding four (4) consecutive
days) to be closed.
Capitalized Lease -- means, at any time, a lease with
respect to which, under GAAP, the lessee is or will be
required to recognize the acquisition of an asset and
the incurrence of a liability at such time.
Change in Control -- means any Acquisition subsequent
to the Closing Date by any Person, or related Persons
constituting a "group" (as such term is defined in
section 13(d) of the Securities Exchange Act of 1934),
of
1. the power to elect, appoint or cause the
election or appointment of at least a majority of the
members of the Board of Directors (other than the
normal acquisition of proxies by the then current
Board of Directors), through beneficial ownership of
the capital stock of the Company or otherwise, or
2. all or substantially all of the properties and
assets of the Company;
provided, however, that a Change in Control pursuant to
the foregoing clause (b) shall not be deemed to have
occurred if
(x) the Acquisition of such properties and assets
is pursuant to a transaction in compliance with the
provisions of Section 8.10 hereof and
(y) no Person, or related Persons constituting a
"group" for purposes of section 13(d) of the
Securities Exchange Act of 1934, shall have the power
to elect, appoint or cause the election or
appointment of at least a majority of the members of
the board of directors of such successor or
transferee.
For purposes of this definition "Acquisition" of the
power or properties and assets stated in the preceding
sentence means the earlier of
(i) the actual possession thereof and
(ii) the consummation of any transaction or
series of related transactions which, with the
passage of time, will give such Person or Persons
the actual possession thereof.
Closing -- Section 1.2.
Closing Date -- Section 1.2.
Company -- has the meaning specified in the
introductory sentence hereof.
Consolidated Current Debt -- means, at any time, all
Current Debt of the Company and the Restricted
Subsidiaries outstanding at such time (determined after
elimination of intercompany items among such Persons).
Consolidated Current Maturities -- means, at any
time, all Current Debt of the Company and the Restricted
Subsidiaries outstanding at such time (determined after
elimination of intercompany items among such Persons),
in each case where such Current Debt constitutes a
liability payable within one (1) year with respect to
the principal amount of Indebtedness expressed to mature
more than one (1) year from the time such Indebtedness
shall have been incurred and which, but for the
provisions of the parenthetical phrase in clause (a) of
the definition of Funded Debt, would constitute Funded
Debt.
Consolidated Funded Debt -- means, at any time, all
Funded Debt of the Company and the Restricted
Subsidiaries outstanding at such time (determined after
elimination of intercompany items among such Persons).
Consolidated Interest Expense -- means, for any
period, all interest charges for such period accrued on
or with respect to Consolidated Funded Debt and
Consolidated Current Maturities (including, without
limitation, amortization of debt discount and expense
and imputed interest on Capitalized Lease obligations).
Consolidated Net Earnings -- means, for any period,
net earnings (or loss) after income taxes of the Company
and the Restricted Subsidiaries, determined on a
consolidated basis for such Persons, but excluding:
(a) any gain or loss (net of tax effects
applicable thereto) resulting from the sale,
conversion, write-down or other disposition of
capital assets other than in the ordinary course of
business;
(b) any extraordinary, unusual or nonrecurring
gains or losses;
(c) any gains resulting from any write-up of
assets;
(d) any portion of the earnings of the Company or
any Restricted Subsidiary attributable to the
unremitted earnings of any Person that is not a
Restricted Subsidiary;
(e) any earnings of any Person acquired by the
Company or any Restricted Subsidiary through
purchase, merger or consolidation or otherwise for
any year prior to the year of acquisition;
(f) any earnings attributable to the amortization
of negative goodwill; and
(g) that portion of net earnings of any Restricted
Subsidiary that is unavailable for payment as
dividends to the Company or another Restricted
Subsidiary as a result of a legal or contractual
prohibition, unless such portion of such net earnings
is legally available for either:
(i) reimbursement to the Company or another
Restricted Subsidiary for advances, loans or
allocated expenses, or
(ii) advances or loans to the Company or another
Restricted Subsidiary.
Consolidated Net Earnings Before Interest and Taxes -
- - means, for any period, the sum of
(a) Consolidated Net Earnings for such period,
plus
(b) the aggregate amount of
(i) taxes imposed on, or measured by, income or
excess profits, and
(ii) Consolidated Interest Expense
(to the extent, and only to the extent, that any such
amount was deducted in the computation of
Consolidated Net Earnings for such period),
in each case accrued for such period by the Company and
the Restricted Subsidiaries, determined on a
consolidated basis for such Persons.
Consolidated Net Tangible Assets -- means, at any
time, the result of
(a) the gross book value of the assets of the
Company and the Restricted Subsidiaries (exclusive of
goodwill, patents, trademarks, trade names,
organization expense, treasury stock [to the extent
reflected in said gross book value], unamortized debt
discount and expense and other like intangibles and
Investments in and loans to Subsidiaries that are not
Restricted Subsidiaries), minus
(b) all reserves (including, without limitation,
accumulated depreciation) applicable to such assets
and all liabilities (including deferred income taxes)
other than Funded Debt, capital stock and surplus,
all as would be shown on a consolidated balance sheet of
such Persons at such time.
Consolidated Tangible Net Worth -- means, at any
time, Consolidated Net Tangible Assets at such time
minus Consolidated Funded Debt at such time.
Control Event -- means the execution of any written
agreement that, when fully performed by the parties
thereto, would result in a Change in Control.
Control Prepayment Date -- Section 6.3.
Current Debt -- means, at any time, with respect to
any Person
(a) all liabilities for borrowed money and all
liabilities secured by any Lien existing on Property
owned by such Person whether or not such liabilities
have been assumed, that, in either case are payable
on demand or within one (1) year from such time,
except any such liabilities that are renewable or
extendible at the option of such Person to a date
more than one (1) year from such time, and
(b) its liabilities under Guaranties of
obligations described in clause (a) above;
provided, however, that any such liability shall be
treated as Funded Debt of such Person, regardless of its
terms, if such liability is renewable by such Person
pursuant to the terms of a revolving credit or similar
agreement effective for more than one (1) year after the
date of the creation of such liability, or may be
payable out of the proceeds of a similar liability
pursuant to the terms of such liability or of any such
agreement.
Debt -- means, with respect to any Person, at any
time, without duplication, all Funded Debt and Current
Debt of such Person at such time.
Default -- means an event or condition the occurrence
of which would, with the lapse of time or the giving of
notice or both, become an Event of Default.
Disposition Date -- Section 8.10.
Disposition Stock -- Section 8.10.
Disposition Subsidiary -- Section 8.10.
DOL -- means the Department of Labor of the United
States of America or any successor organization thereof.
Dollars or $ -- means United States of America
dollars.
Effective Date -- means the date on which this
Agreement becomes binding between you and the Company in
accordance with the paragraph at the top of the
signature page hereto.
Environmental Protection Law -- means any federal,
state, county, regional or local law, statute or
regulation (including, without limitation, CERCLA, RCRA
and SARA) enacted in connection with or relating to the
protection or regulation of the environment, including,
without limitation, those laws, statutes and regulations
regulating the disposal, removal, production, storing,
refining, handling, transferring, processing or
transporting of Hazardous Substances, and any
regulations, issued or promulgated in connection with
such statutes by any Governmental Authority and any
orders, decrees or judgments issued by any court of
competent jurisdiction in connection with any of the
foregoing.
As used in this definition:
CERCLA -- means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as
amended from time to time (by SARA or otherwise), and
all rules and regulations promulgated in connection
therewith.
RCRA -- means the Resource Conservation and
Recovery Act of 1976, as amended from time to time,
and all rules and regulations issued in connection
therewith.
SARA -- means the Superfund Amendments and
Reauthorization Act of 1986, as amended from time to
time, and all rules and regulations promulgated in
connection therewith.
ERISA -- means the Employee Retirement Income
Security Act of 1974, as amended from time to time.
ERISA Affiliate -- means any corporation or trade or
business that
(i) is a member of the same controlled group of
corporations (within the meaning of section 414(b) of
the IRC) as the Company, or
(ii) is under common control (within the meaning
of section 414(c) of the IRC) with the Company.
Event of Default -- Section 10.1.
Excluded Transfers -- Section 8.10.
Fair Market Value -- means, at any time, with respect
to any Property, the sale value of such Property that
would be realized in an arm's-length sale at such time
between an informed and willing buyer, and an informed
and willing seller, under no compulsion to buy or sell,
respectively.
Foreign Pension Plan -- means any plan, fund or
other similar program
(a) established or maintained outside of the
United States of America by any one or more of the
Company or the Subsidiaries primarily for the benefit
of the employees (substantially all of whom are
aliens not residing in the United States of America)
of the Company or such Subsidiaries which plan, fund
or other similar program provides for retirement
income for such employees or results in a deferral of
income for such employees in contemplation of
retirement, and
(b) not otherwise subject to ERISA.
Funded Debt -- means, at any time, with respect to
any Person, without duplication:
(a) any obligation, payable more than one (1) year
from the date of creation thereof, that is shown on
the balance sheet of such Person as a liability
(including Capitalized Lease obligations but
excluding current maturities of such obligations,
reserves for deferred income taxes and other reserves
to the extent that such reserves do not constitute an
obligation);
(b) indebtedness payable more than one (1) year
from the date of creation thereof that is secured by
any Lien on Property owned by such Person, whether or
not the indebtedness secured thereby shall have been
assumed by such Person;
(c) guarantees, endorsements (other than
endorsements of negotiable instruments for collection
in the ordinary course of business) and other
contingent liabilities (whether direct or indirect)
in connection with the obligations, stock or
dividends of another Person;
(d) the obligations of such Person under any
executory contract providing for the making of loans,
advances or capital contributions to any Person other
than a Restricted Subsidiary or for the purchase of
any Property from any Person, in each case in order
to enable such Person to maintain working capital,
net worth or any other balance sheet condition or to
pay debts, dividends or expenses; provided, however,
that upon the making of such loan, advance or capital
contribution pursuant to any such obligation, such
obligation shall no longer constitute part of Funded
Debt;
(e) obligations of such Person under any contract
for the purchase of materials, supplies or other
Property or services if such contract (or any related
document) requires that payment for such materials,
supplies or other Property or services shall be made
regardless of whether or not delivery of such
materials, supplies or other Property or services is
ever made or tendered;
(f) obligations of such Person under any contract
to rent or lease (as lessee) any real or personal
Property if such contract (or any related document)
provides that the obligation to make payments
thereunder is absolute and unconditional under
conditions not customarily found in commercial leases
then in general use or requires that the lessee
purchase or otherwise acquire securities or
obligations of the lessor;
(g) obligations of such Person under any contract
for the sale or use of materials, supplies or other
Property, or the rendering of services, if such
contract (or any related document) requires that
payment for such materials, supplies, Property or
services, shall be subordinated to any Indebtedness
of such Person;
(h) the obligations of such Person under any other
contract that, in economic effect, is substantially
equivalent to a Guaranty; and
(i) obligations treated as Funded Debt pursuant to
the proviso of the definition of the term "Current
Debt" herein.
GAAP -- means accounting principles as promulgated
from time to time in statements, opinions and
pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting
Standards Board and in such statements, opinions and
pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be
accepted by a substantial segment of the accounting
profession in the United States.
Governmental Authority -- means
(a) the government of
(i) the United States of America and any State
or other political subdivision thereof, or
(ii) any jurisdiction (y) in which the Company
or any Subsidiary conducts all or any part of
its business or (z) that asserts jurisdiction
over the conduct of the affairs or Properties of
the Company or any Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of,
or pertaining to, any such government.
Guaranty -- means with respect to any Person (for the
purposes of this definition, the "Guarantor") any
obligation (except the endorsement in the ordinary
course of business of negotiable instruments for deposit
or collection) of such Person guaranteeing or in effect
guaranteeing any indebtedness, dividend or other
obligation of any other Person (the "Primary Obligor")
in any manner, whether directly or indirectly, including
(without limitation) obligations incurred through an
agreement, contingent or otherwise, by the Guarantor:
(a) to purchase such indebtedness or obligation or
any Property or assets constituting security
therefor;
(b) to advance or supply funds
(i) for the purpose of payment of such
indebtedness or obligation, or
(ii) to maintain working capital or other
balance sheet condition or any income statement
condition of the Primary Obligor or otherwise to
advance or make available funds for the purchase or
payment of such indebtedness or obligation;
(c) to lease Property or to purchase Securities or
other Property or services primarily for the purpose
of assuring the owner of such indebtedness or
obligation of the ability of the Primary Obligor to
make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of the
indebtedness or obligation of the Primary Obligor
against loss in respect thereof.
For purposes of computing the amount of any Guaranty, in
connection with any computation of indebtedness or other
liability, it shall be assumed that the indebtedness or
other liabilities that are the subject of such Guaranty
are direct obligations of the issuer of such Guaranty.
Hazardous Substances -- means any and all pollutants,
contaminants, toxic or hazardous wastes or any other
substances that might pose a hazard to health or safety,
the removal of which may be required or the generation,
manufacture, refining, production, processing,
treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or
filtration of which is or shall be restricted,
prohibited or penalized by any applicable law.
Indebtedness -- means, at any time, with respect to
any Person, without duplication,
(a) its liabilities for borrowed money (whether or
not evidenced by a Security) and its obligations in
respect of mandatorily redeemable preferred stock;
(b) any liabilities for borrowed money secured by
any Lien existing on Property owned by such Person
(whether or not such liabilities have been assumed);
(c) any obligations in respect of any Capitalized
Lease of such Person;
(d) the present value of all payments due under
any arrangement for retention of title or any
conditional sale agreement (other than a Capitalized
Lease) discounted at the implicit rate, if known,
with respect thereto or, if unknown, at 8% per annum;
(e) obligations of such Person in respect of
letters of credit or instruments serving a similar
function issued or accepted by banks and other
financial institutions for the account of such Person
(whether or not representing obligations for borrowed
money); and
(f) any Guaranty of such Person of any
Indebtedness of another Person.
Institutional Investor -- means the Purchasers, any
affiliate of any of the Purchasers, and any holder of
Notes that is an "accredited investor" as defined in
section 2(15) of the Securities Act.
Investment -- means any investment, made in cash or
by delivery of Property, by the Company or any
Restricted Subsidiary (x) in any Person, whether by
acquisition of stock, indebtedness or other obligation
or Security, or by loan, Guaranty, advance or capital
contribution, or otherwise, or (y) in any Property.
IRC -- means the Internal Revenue Code of 1986,
together with all rules and regulations promulgated
pursuant thereto, as amended from time to time.
IRS -- means the Internal Revenue Service and any
successor agency.
Lien -- means any interest in Property constituting
any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, conditional sale
or title retaining contract, sale and leaseback
transaction, financing statement filing, lessor's or
lessee's interest under any lease, subordination of any
claim or right, or any type of lien, charge,
encumbrance, preferential arrangement or other claim or
right. The term "Lien" includes, with respect to stock,
stockholder agreements, voting trust agreements, buy-
back agreements and all similar arrangements. For the
purposes hereof, the Company and each Subsidiary is
deemed to be the owner of any Property that it shall
have acquired or holds subject to a conditional sale
agreement, Capitalized Lease or other arrangement
pursuant to which title to the Property has been
retained by or vested in some other Person for security
purposes, and such retention or vesting is deemed a
Lien.
Majority Holders -- means, at any time, the holders
of at least fifty-one percent (51%) in principal amount
of the Notes at the time outstanding (exclusive of Notes
then owned by any one or more of the Company, any
Restricted Subsidiary, any Affiliate and any officer or
director of any thereof).
Make-Whole Amount -- means, with respect to any date
(the "Payment Date") and any principal amount of Notes
of any Series required for any reason to be paid prior
to the regularly scheduled maturity thereof on such
Payment Date:
(a) if the Make-Whole Discount Rate, determined
with respect to such principal amount of such Series
and such Payment Date,
(i) in the case of the Series A Notes equals or
exceeds six and ninety-six one-hundredths percent
(6.96%) per annum,
(ii) in the case of the Series B Notes equals or
exceeds seven and seven one-hundredths percent
(7.07%) per annum, or
(iii) in the case of the Series C Notes equals or
exceeds seven and seventeen one-hundredths percent
(7.17%) per annum,
then Zero Dollars ($0); or
(b) if the Make-Whole Discount Rate, determined
with respect to such principal amount of such Series
and such Payment Date,
(i) in the case of the Series A Notes is less
than six and ninety-six one-hundredths percent
(6.96%) per annum,
(ii) in the case of the Series B Notes is less
than seven and seven one-hundredths percent (7.07%)
per annum, or
(iii) in the case of the Series C Notes is less
than seven and seventeen one-hundredths percent
(7.17%) per annum,
then
(A) the sum of the present values of the then
remaining scheduled payments of principal and
interest that would be payable in respect of such
principal amount of such Series but for such
prepayment or acceleration, minus
(B) such principal amount of such Series plus
the amount of interest accrued on such principal
amount since the scheduled interest payment date
immediately preceding such Prepayment Date.
In determining such present values, a discount rate
equal to the Make-Whole Discount Rate (with respect to
the Payment Date and such principal amount of such
Series) divided by two (2), and a discount period of six
(6) months of thirty (30) days each, shall be used.
Make-Whole Discount Rate -- means, with respect to
any date and any principal amount of Notes of any Series
required for any reason to be paid prior to the
regularly scheduled maturity thereof on such date, the
sum of
(a) the Treasury Rate with respect to such
principal amount of such Series and such date, plus
(b) if such payment is made
(i) pursuant to Section 5.2(b) hereof, ninety
one-hundredths percent (0.90%) per annum, or
(ii) pursuant to Section 6.3 hereof, ninety-five
one-hundredths percent (0.95%) per annum, or
(iii) pursuant to any provision of this Agreement
other than Section 5.2(b) or Section 6.3 hereof,
fifty one-hundredths percent (0.50%) per annum.
As used in this definition only:
Remaining Dollar-Years -- means, with respect to
any date and any principal amount of Notes of any
Series being paid prior to the regularly scheduled
maturity thereof for any reason on such date, the
result obtained by
(a) multiplying, in the case of each required
payment of principal (including payment at
maturity) that would be payable in respect of such
principal amount being so prepaid but for such
prepayment,
(i) an amount equal to such required payment of
principal, by
(ii) the number of years (calculated to the
nearest one-twelfth (1/12)) that will elapse
between such date and the date such required
principal payment would be due if such prepayment
had not occurred, and
(b) calculating the sum, with respect to each of
such required payments of principal, of each of the
products obtained in the preceding subsection (a).
Treasury Rate -- means, with respect to any date
and any principal amount of Notes of any Series
required for any reason to be paid prior to the
regularly scheduled maturity thereof on such date,
(a) the yield reported as of 10:00 a.m., New York
City time, on the second Business Day preceding the
date of payment, on the display designated as "Page
678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service)
(or, if not available, any other nationally
recognized trading screen reporting on-line
intraday trading in United States government
Securities) providing the most current yields for
actively traded United States Treasury securities
with maturities corresponding to the remaining
Weighted Average Life to Maturity on such date of
such principal amount of the Notes of such Series
(such Weighted Average Life to Maturity being
determined as of the date of such calculation and
rounded to the nearest month), or
(b) if and only if such Telerate Service ceases
to exist or fails to report such yield, such yield
as reported on a reasonably comparable electronic
service as may be designated by the Majority
Holders, or
(c) if and only if such Telerate Service ceases
to exist or fails to report such yield and the
Majority Holders shall fail to agree upon a
comparable electronic service pursuant to clause
(b) of this definition, such yield reported under
the heading "Week Ending" for the week most
recently ended and under the caption "Treasury
Constant Maturities" of the maturity corresponding
to the remaining Weighted Average Life to Maturity
on such date of such principal amount of the Notes
being prepaid or accelerated (such Weighted Average
Life to Maturity being determined as of the date of
such calculation and rounded to the nearest month)
as most recently published and made available to
the public in the statistical release designated
"H.15(519)" or any successor publication that is
published weekly by the Federal Reserve System and
that establishes yields on actively traded United
States Treasury securities or, if no such successor
publication is available, then any other source of
current information in respect of interest rates on
the securities of the United States of America that
is generally available and, in the judgment of the
Majority Holders, provides information reasonably
comparable to the H.15(519) statistical release.
If no maturity exactly corresponds to such rounded
Weighted Average Life to Maturity, yields for the two
(2) most closely corresponding published maturities
next above and below such rounded Weighted Average
Life to Maturity shall be calculated pursuant to the
immediately preceding sentence and the Treasury Rate
shall be interpolated from such yields on a straight-
line basis, rounding with respect to each such
relevant period to the nearest month.
Weighted Average Life to Maturity -- means, with
respect to any date and any principal amount of Notes
of any Series being paid on such date, the number of
years obtained by dividing the Remaining Dollar-Years
on such date of such principal amount of such Series
by such principal amount.
Margin Security -- means "margin stock" within the
meaning of Regulations G, T, and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II, as amended from time to time.
Material Adverse Effect -- means a material adverse
effect on the business, prospects, profits, Properties
or condition (financial or otherwise) of the Company and
the Restricted Subsidiaries, taken as a whole, or on the
ability of the Company to perform its obligations set
forth herein and in the Notes.
Multiemployer Plan -- means any multiemployer plan
(as defined in section 3(37) of ERISA) in respect of
which the Company or any ERISA Affiliate is an
"employer" (as defined in section 3 of ERISA).
Multiple Employer Pension Plan -- means any employee
benefit plan within the meaning of section 3(3) of ERISA
(other than a Multiemployer Plan), subject to Title IV
of ERISA, to which the Company or any ERISA Affiliate
and an employer (as defined in section 3 of ERISA) other
than an ERISA Affiliate or the Company contribute.
Notes -- Section 1.1.
Note Purchase Agreements -- Section 1.2.
Offer Notice -- Section 6.2.
Operating Income Contribution Percentage -- means, in
respect of any Property of the Company or any Restricted
Subsidiary that is the subject of a Transfer or proposed
Transfer, the percentage of Consolidated Net Earnings
contributed by such Property during the period of twelve
(12) consecutive fiscal months of the Company most
recently ended prior to the Transfer or proposed
Transfer of such Property; provided that such percentage
so contributed may be determined in good faith by the
Company so long as, if the consideration received in
connection with such Transfer exceeds Ten Million
Dollars ($10,000,000), such determination shall have
been supported by a certificate of the Chairman, the
Vice Chairman, a Vice President or the President of the
Company detailing such determination and that such
certificate is delivered to each of the holders of the
Notes within thirty (30) days of such Transfer.
OSHA -- means the Occupational Safety and Health Act
of 1970, together with all rules, regulations and
standards promulgated pursuant thereto, as amended from
time to time.
Other Purchaser -- Section 1.2.
PBGC -- means the Pension Benefit Guaranty
Corporation and any successor corporation or
governmental agency.
Pension Plan -- means, at any time, any "employee
pension benefit plan" (as defined in section 3 of ERISA)
maintained at such time by the Company or any ERISA
Affiliate for employees of the Company or such ERISA
Affiliate, excluding any Multiemployer Plan, but
including, without limitation, any Multiple Employer
Pension Plan.
Permitted Investments -- means any of the following
Investments:
(a) direct obligations of the United States of
America or obligations guaranteed by the United
States of America maturing no later than three
hundred sixty-five (365) days from the date of
acquisition;
(b) repurchase agreements or eurodollar deposits
with or certificates of deposit maturing no later
than three hundred sixty-five (365) days from the
date of acquisition and issued by banks having a
combined capital and surplus of over Two Hundred
Fifty Million Dollars ($250,000,000) and rated at
least A- by Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc., and at least A3 by
Moody's Investor Service, Inc.;
(c) Investments in Restricted Subsidiaries or
Persons that contemporaneously with such Investment
become Restricted Subsidiaries;
(d) Investments in commercial paper issued by
corporations incorporated in the United States of
America or any state thereof and maturing in two
hundred seventy (270) days or less and rated at least
A-1 by Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., or P-1 by Moody's Investor
Service, Inc.;
(e) Investments in Property used in the ordinary
course of business of the Company and the Restricted
Subsidiaries; and
(f) other Investments so long as after giving
effect to such other Investments the aggregate book
value of all such other Investments of the Company
and the Restricted Subsidiaries at such time does not
exceed thirty percent (30%) of Consolidated Net
Tangible Assets at such time.
Person -- means an individual, partnership,
corporation, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
Placement Memorandum -- Section 2.1.
Preferred Stock -- means any class of capital stock
of a corporation that is preferred over any other class
of capital stock of such corporation as to the payment
of dividends or the payment of any amount upon
liquidation or dissolution of such corporation.
Property -- means any interest in any kind of
property or asset, whether real, personal or mixed, and
whether tangible or intangible.
Purchase Money Lien -- means
(a) a Lien held by any Person (whether or not the
seller of such Property) on tangible Property (or a
group of related items of Property the substantial
portion of which are tangible) acquired or
constructed by the Company or any Subsidiary, which
Lien secures all or a portion of the related purchase
price or construction costs of such Property,
provided that such Purchase Money Lien
(i) encumbers only Property acquired or
constructed after the Effective Date and acquired
with the proceeds of the Debt secured thereby, and
(ii) such Lien is not thereafter extended to any
other Property, and
(b) any Lien existing on Property of any
corporation at the time it becomes a Restricted
Subsidiary, provided that
a. no such Lien shall extend to or cover any
Property other than the Property subject to such
Lien at the time of any such transaction, and
b. such Lien was not created in contemplation of
any such transaction.
Purchaser -- means the Persons listed as purchasers
of Notes on Annex 1 hereto.
Quarterly Net Worth Increase Amount -- Section 8.4.
Restricted Subsidiary -- means, at any time, a
corporation,
(a) organized under the laws of the United States,
Puerto Rico or Canada or a jurisdiction thereof at
such time,
(b) that conducts substantially all of its
business and has substantially all of its Property
within the United States, Puerto Rico and Canada at
such time, and
(c) at least eighty percent (80%) (by number of
votes) of each class of Voting Stock of which and one
hundred percent (100%) of all Preferred Stock and
other equity Securities of which are legally and
beneficially owned by the Company and its Wholly-
Owned Restricted Subsidiaries at such time.
Restricted Subsidiary Stock -- Section 8.10.
Securities Act -- means the Securities Act of 1933,
as amended from time to time.
Security -- means "security" as defined by section
2(1) of the Securities Act.
Series -- means any or all of any series of Notes
issued hereunder.
Series A Notes -- Section 1.1(a).
Series B Notes -- Section 1.1(b).
Series C Notes -- Section 1.1(c).
Special Counsel -- Section 1.5(a).
Subsidiary -- means, at any time, a corporation of
which the Company owns, directly or indirectly, more
than fifty percent (50%) (by number of votes) of each
class of Voting Stock at such time.
Successor Corporation -- Section 8.10.
Supermajority Holders -- means, at any time, the
holders of at least sixty percent (60%) in principal
amount of the Notes at the time outstanding (exclusive
of Notes then owned by any one or more of the Company,
any Restricted Subsidiary, any Affiliate and any officer
or director of any thereof).
Transfers or To Transfer -- Section 8.10.
Voting Stock -- means capital stock of any class or
classes of a corporation the holders of which are
ordinarily, in the absence of contingencies, entitled to
elect corporate directors (or Persons performing similar
functions).
Unrestricted Subsidiary -- means, at any time, any
Subsidiary that has been designated by the Company's
Board of Directors as an Unrestricted Subsidiary,
provided that at the time of such designation
(a) the Subsidiary so designated neither owns,
directly or indirectly, any Funded Debt of the
Company or any Restricted Subsidiary or any capital
stock of any Restricted Subsidiary,
(b) no Indebtedness of such Subsidiary is
guaranteed by the Company or a Restricted Subsidiary,
and
(c) no Default or Event of Default would occur as
a result of such designation.
Wholly-Owned Restricted Subsidiary -- means, at any
time, any Restricted Subsidiary one hundred percent
(100%) of all of the Indebtedness and equity Securities
(except directors' qualifying shares) of which are owned
by any one or more of the Company and the Company's
other Wholly-Owned Restricted Subsidiaries at such time.
B. GAAP.
Where the character or amount of any asset or
liability or item of income or expense, or any
consolidation or other accounting computation is
required to be made for any purpose hereunder, it shall
be done in accordance with GAAP as in effect on the date
of, or at the end of the period covered by, the
financial statements from which such asset, liability,
item of income, or item of expense, is derived, or, in
the case of any such computation, as in effect on the
date as of which such computation is required to be
determined, provided, that if any term defined herein
includes or excludes amounts, items or concepts that
would not be included in or excluded from such term if
such term were defined with reference solely to GAAP,
such term will be deemed to include or exclude such
amounts, items or concepts as set forth herein.
C. Directly or Indirectly.
Where any provision herein refers to action to be
taken by any Person, or that such Person is prohibited
from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such
Person, including actions taken by or on behalf of any
partnership in which such Person is a general partner.
D. Section Headings and Table of Contents and
Construction.
1. Section Headings and Table of Contents, etc..
The titles of the Sections and the Table of Contents
appear as a matter of convenience only, do not
constitute a part hereof and shall not affect the
construction hereof. The words "herein," "hereof,"
"hereunder" and "hereto" refer to this Agreement as
a whole and not to any particular Section or other
subdivision.
2. Construction. Each covenant contained herein
shall be construed (absent an express contrary
provision herein) as being independent of each other
covenant contained herein, and compliance with any
one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance
with one or more other covenants.
E. Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL
NEW YORK LAW.
XI. MISCELLANEOUS
A. Communications.
1. Method; Address. All communications hereunder
or under the Notes shall be in writing, shall be hand
delivered, deposited into the United States mail
(registered or certified mail), postage prepaid, or
sent by overnight courier, and shall be addressed,
a. if to the Company,
1000 Urban Center Drive, Suite 300
Birmingham, Alabama 35242-2516
Attention: John M. Casey
(with a copy to:
Smith, Gambrell & Russell
3343 Peachtree Road, N.E., Suite 1800
Atlanta, Georgia 30326-1010
Attention: Arthur J. Schwartz, Esq.
provided, that the failure to provide any such
copy shall in no way affect the validity of any
communication to the Company for purposes of this
Agreement)
or at such other address as the Company shall have
furnished in writing to all holders of the Notes at
the time outstanding, and
b. if to any of the holders of the Notes,
(1) if such holders are the Purchasers, at
their respective addresses set forth on Annex 1
hereto, and further including any parties
referred to on such Annex 1 that are required to
receive notices in addition to such holders of
the Notes, and
(2) if such holders are not the Purchasers, at
their respective addresses set forth in the
register for the registration and transfer of
Notes maintained pursuant to Section 8.3 hereof,
or to any such party at such other address as such
party may designate by notice duly given in
accordance with this Section 12.1 to the Company
(which other address shall be entered in such
register).
2. When Given. Any communication so addressed and
deposited in the United States mail, postage prepaid,
by registered or certified mail (in each case, with
return receipt requested) shall be deemed to be
received on the third (3rd) succeeding Business Day
after the day of such deposit (not including the date
of such deposit). Any notice so addressed and
otherwise delivered shall be deemed to be received
when actually received at the address of the
addressee.
B. Reproduction of Documents.
This Agreement and all documents relating thereto,
including, without limitation,
1. consents, waivers and modifications that may
hereafter be executed,
2. documents received by you at the closing of
your purchase of the Notes (except the Notes
themselves), and
3. financial statements, certificates and other
information previously or hereafter furnished to you
or any other holder of Notes,
may be reproduced by any holder of Notes by any
photographic, photostatic, microfilm, micro-card,
miniature photographic, digital or other similar process
and each holder of Notes may destroy any original
document so reproduced. The Company agrees and
stipulates that any such reproduction shall be
admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not
the original is in existence and whether or not such
reproduction was made by such holder of Notes in the
regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction
shall likewise be admissible in evidence. Nothing in
this Section 12.2 shall prohibit the Company or any
holder of Notes from contesting the accuracy of any such
reproduction.
C. Survival.
All warranties, representations, certifications and
covenants made by the Company herein or in any
certificate or other instrument delivered by it or on
its behalf hereunder shall be considered to have been
relied upon by you and shall survive the delivery to you
of the Notes regardless of any investigation made by you
or on your behalf. The representations made in Section
1.3 hereof shall be considered to have been relied upon
by the Company and shall survive the purchase by you of
the Notes regardless of any investigation made by the
Company or on its behalf. All statements in any such
certificate or other instrument shall constitute
warranties and representations by the Company hereunder.
D. Successors and Assigns.
This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the
parties hereto. The provisions hereof are intended to
be for the benefit of all holders, from time to time, of
Notes, and shall be enforceable by any such holder,
whether or not an express assignment to such holder of
rights hereunder shall have been made by you or your
successor or assign.
E. Amendment and Waiver.
1. Requirements. This Agreement may be amended,
and the observance of any term hereof may be waived,
with (and only with) the written consent of the
Company and the Majority Holders; provided that no
such amendment or waiver of any of the provisions of
Section 1 through Section 4 hereof, inclusive, or any
defined term used therein, shall be effective as to
any holder of Notes unless consented to by such
holder in writing; provided further that no such
amendment or waiver of the provisions of Section 8.7
or any defined term used therein shall be effective
unless consented to by the Supermajority Holders; and
provided further that no such amendment or waiver
shall, without the written consent of the holders of
all Notes (exclusive of Notes held by the Company,
any Restricted Subsidiary or any Affiliate) at the
time outstanding,
a. subject to the provisions of Section 10.2 and
Section 10.3 hereof, change the amount or time of
any prepayment or payment of principal or Make-
Whole Amount or the rate or time of payment of
interest (including, without limitation, by
amendment of Section 5 or Section 6 hereof),
b. amend Section 10 hereof,
c. amend the definition of Majority Holders,
d. amend the definition of Supermajority Holders,
or
e. amend this Section 12.5.
The holder of any Note may specify that any such
written consent executed by it shall be effective
only with respect to a portion of the Notes held by
it (in which case it shall specify, by Dollar amount,
the aggregate principal amount of Notes with respect
to which such consent shall be effective) and in the
event of any such specification such holder shall be
deemed to have executed such written consent only
with respect to the portion of the Notes so
specified.
2. Solicitation of Noteholders.
a. Solicitation. The Company shall not solicit,
request or negotiate for or with respect to any
proposed waiver or amendment of any of the
provisions hereof or of the Notes unless each
holder of Notes (irrespective of the amount of
Notes then owned by it) shall be informed thereof
by the Company with sufficient information to
enable it to make an informed decision with respect
thereto. Executed or true and correct copies of
any waiver or consent effected pursuant to the
provisions of this Section 12.5 shall be delivered
by the Company to each holder of outstanding Notes
forthwith following the date on which the same
shall have been executed and delivered by all
holders of outstanding Notes required to consent or
agree to such waiver or consent.
b. Payment. The Company shall not, directly or
indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any
security, to any holder of Notes as consideration
for or as an inducement to the entering into by any
holder of Notes of any waiver or amendment of any
of the terms and provisions hereof unless such
remuneration is concurrently paid, or such security
is concurrently granted, on the same terms, ratably
to the holders of all Notes then outstanding.
c. Scope of Consent. Any consent made pursuant
to this Section 12.5 by a holder of Notes that has
transferred or has agreed to transfer its Notes to
the Company, any Restricted Subsidiary or any
Affiliate and has provided or has agreed to provide
such written consent as a condition to such
transfer shall be void and of no force and effect
except solely as to such holder, and any amendments
effected or waivers granted or to be effected or
granted that would not have been or would not be so
effected or granted but for such consent (and the
consents of all other holders of Notes that were
acquired under the same or similar conditions)
shall be void and of no force and effect,
retroactive to the date such amendment or waiver
initially took or takes effect, except solely as to
such holder.
3. Binding Effect. Except as provided in Section
12.5(b) hereof, any amendment or waiver consented to
as provided in this Section 12.5 shall apply equally
to all holders of Notes and shall be binding upon
them and upon each future holder of any Note and upon
the Company whether or not such Note shall have been
marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any
obligation, covenant, agreement, Default or Event of
Default not expressly amended or waived or impair any
right consequent thereon.
F. Payments, When Received.
1. Payments Due on Holidays. If any payment due
on, or with respect to, any Note shall fall due on a
day other than a Business Day, then such payment
shall be made on the first Business Day following the
day on which such payment shall have so fallen due;
provided that if all or any portion of such payment
shall consist of a payment of interest, for purposes
of calculating such interest, such payment shall be
deemed to have been originally due on such first
following Business Day, such interest shall accrue
and be payable to (but not including) the actual date
of payment, and the amount of the next succeeding
interest payment shall be adjusted accordingly.
2. Payments, When Received. Any payment to be
made to the holders of Notes hereunder or under the
Notes shall be deemed to have been made on the
Business Day such payment actually becomes available
to such holder at such holder's bank prior to 11:00
a.m. (local time of such bank).
G. Entire Agreement.
This Agreement constitutes the final written
expression of all of the terms hereof and is a complete
and exclusive statement of those terms.
H. Duplicate Originals, Execution in Counterpart.
Two or more duplicate originals hereof may be signed
by the parties, each of which shall be an original but
all of which together shall constitute one and the same
instrument. This Agreement may be executed in one or
more counterparts and shall be effective when at least
one counterpart shall have been executed by each party
hereto, and each set of counterparts that, collectively,
show execution by each party hereto shall constitute one
duplicate original. Each of the parties hereto agrees
that this Agreement will be delivered in New York, New
York and the contract evidenced by this Agreement shall
for all purposes be considered to have been made in New
York, New York.
[Remainder of page intentionally left blank; next page
is signature page.]<PAGE>
If this Agreement is satisfactory to you, please so
indicate by signing the acceptance at the foot of a
counterpart hereof and returning such counterpart to the
Company, whereupon this Agreement shall become binding
between us in accordance with its terms.
Very truly yours,
BIRMINGHAM STEEL CORPORATION
By /s/ John M. Casey
Name: John M. Casey
Title: Executive Vice President
Accepted:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By /s/ Thomas P. Shea
Name: Thomas P. Shea
Title: Vice President
LIFE INSURANCE COMPANY OF NORTH AMERICA
By CIGNA Investments, Inc.
By /s/ Thomas P. Shea
Name: Thomas P. Shea
Title: Vice President
<PAGE>
CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY
By CIGNA Investments, Inc.
By /s/ Thomas P. Shea
Name: Thomas P. Shea
Title: Vice President
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By /s/ Warren Shank
Name: Warren Shank
Title: Counsel
By /s/ Austin Ramzy
Name: Austin Ramzy
Title: Assistant Director
Investment Securities
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ Jeffrey G. Milburn
Name: Jeffrey G. Milburn
Title: Vice President
Corporate Fixed-Income Securities
<PAGE>
EMPLOYERS LIFE INSURANCE COMPANY OF WAUSAU
By /s/ Jeffrey G. Milburn
Name: Jeffrey G. Milburn
Title: Attorney-In-Fact
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
By /s/ J. Thomas Christofferson
Name: J. Thomas Christofferson
Title: Vice President
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED
STATES
By /s/ Ina Lane
Name: Ina Lane
Title: Investment Officer
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
By /s/ L. Brock Thomson
Name: L. Brock Thomson
Title: Treasurer
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA
By /s/ John N. Whelihan
Name: John N. Whelihan
Title: Vice President, Private Placements
for President
By /s/ L. Brock Thomson
Name: L. Brock Thomson
Title: Vice President, Portfolio Management
for President
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
By /s/ L. Brock Thomson
Name: L. Brock Thomson
Title: Treasurer
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By /s/ Loren Haugland
Name: Loren Haugland
Title: Vice President
<PAGE>
MUTUAL TRUST LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By /s/ Loren Haugland
Name: Loren Haugland
Title: Vice President
THE RELIABLE LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By /s/ Loren Haugland
Name: Loren Haugland
Title: Vice President
FEDERATED MUTUAL INSURANCE COMPANY
By: MIMLIC Asset Management Company
By /s/ Loren Haugland
Name: Loren Haugland
Title: Vice President
FEDERATED LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By /s/ Marilyn Froelich
Name: Marilyn Froelich
Title: Vice President<PAGE>
MINNESOTA FIRE & CASUALTY COMPANY
By: MIMLIC Asset Management Company
By /s/ Marilyn Froelich
Name: Marilyn Froelich
Title: Vice President
NATIONAL TRAVELERS LIFE COMPANY
By: MIMLIC Asset Management Company
By /s/ Marilyn Froelich
Name: Marilyn Froelich
Title: Vice President
FIRST NATIONAL LIFE INSURANCE COMPANY OF AMERICA
By: MIMLIC Asset Management Company
By /s/ Marilyn Froelich
Name: Marilyn Froelich
Title: Vice President
GUARANTEE RESERVE LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By /s/ Marilyn Froelich
Name: Marilyn Froelich
Title: Vice President
FIRST COLONY LIFE INSURANCE COMPANY
By /s/ George D. Vermilya, Jr.
Name: George D. Vermilya, Jr.
Title: Associate Vice President
AMERICAN UNITED LIFE INSURANCE COMPANY
By /s/ Kent R. Adams
Name: Kent R. Adams
Title: Vice President
THE STATE LIFE INSURANCE COMPANY
By /s/ Kent R. Adams
Name: Kent R. Adams
Title: Vice President
AMERITAS LIFE INSURANCE COMPANY
By: Ameritas Investment Advisors, Inc. as agent
By /s/ Patrick J. Henry
Name: Patrick J. Henry
Title: Vice President
Fixed Income Securities
10.1 EMPLOYMENT AGREEMENT WITH
ROBERT A. GARVEY
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as
of January 5, 1996, is by and between Birmingham Steel
Corporation, a Delaware corporation (the "Company"), and
Robert A. Garvey (the "Executive").
WHEREAS, the Company wishes to employ the Executive,
and the Executive wishes to serve the Company, in the
capacities and on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, it is hereby agreed as follows:
1. Employment. (a) Agreement to Employ. Upon the
terms and subject to the conditions of this Agreement,
the Company hereby agrees to employ the Executive and
the Executive hereby agrees to accept his employment by
the Company.
(b) Employment Period. The Company shall employ
the Executive for the period commencing on January 5,
1996 (the "Commencement Date") and ending on the fifth
anniversary of the Commencement Date. This Agreement
shall be renewable on each anniversary date thereafter
for additional periods of one (1) year upon the mutual
agreement of the Executive and the Board of Directors of
the Company (the "Board"). The period during which the
Executive is employed pursuant to this Agreement,
including any extension thereof in accordance with this
Paragraph 1(b), shall be referred to as the "Employment
Period."
2. Duties. During the Employment Period, the
Executive shall serve as Chairman of the Board and Chief
Executive Officer of the Company, as an employee of the
Company and with such duties and responsibilities as are
customarily assigned to such positions, and such other
duties and responsibilities as may from time to time be
assigned to him by the Board. The Executive shall be a
member of the Board on the Commencement Date, and the
Board shall propose the Executive for re-election to the
Board throughout the Employment Period. During the
Employment Period, the Executive shall devote reasonable
attention and time during normal business hours to the
business and affairs of the Company and shall use the
Executive's reasonable best efforts to carry out such
responsibilities faithfully and efficiently. The
Executive's services shall be performed primarily at the
Company's headquarters in Birmingham, Alabama.
3. Compensation and Related Matters. (a) Base
Salary. The Executive's compensation during the
Employment Period shall be determined by the Board upon
the recommendation of the Compensation Committee of the
Board, subject to the next sentence. During the
Employment Period, the Executive shall receive an annual
base salary (the "Base Salary") of $450,000. The Base
Salary shall be payable in accordance with the Company's
regular payroll practice for its senior executives, as
in effect from time to time.
(b) Bonus. The Executive shall be eligible,
during the Employment Period, to receive cash bonuses as
part of the Company's annual bonus plan; provided,
however, that the Executive shall receive a cash bonus
in the amount of at least $300,000 for each of the 1996
and 1997 fiscal years of the Company if the Executive is
employed by the Company pursuant to this Agreement at
the end of each respective fiscal year; provided,
however, that a cash bonus in excess of $300,000 for
either such year shall be paid only in the sole
discretion of the Board.
(c) Special Reimbursement. As soon as practical
after the execution of this Agreement, the Company shall
reimburse the Executive (i) for the pro rata portion of
the Executive's nonvested amount in the profit sharing
plan of his immediately former employer, which amount
would have vested for the current fiscal year had the
Executive completed the year of employment with such
former employer, the amount of which pro rata portion is
estimated to be approximately $100,000, and (ii) for a
pro rata portion of the value of shares of stock in such
former employer with respect to which shares the
Executive would have vested for the current fiscal year
had the Executive completed the year of employment with
such former employer, the amount of which pro rata
portion is estimated to be approximately $100,000.
(d) Monthly Automobile Allowance. During the
Employment Period, the Executive shall receive a monthly
automobile allowance of $550, which shall be payable in
accordance with the Company's regular payroll practice
for its senior executives, as in effect from time to
time. Such amount shall be treated as additional current
cash compensation to the Executive, and shall not be
subject to increase over the initial amount thereof.
(e) Club Dues and Initiation Fee. During the
Employment Period, the Company shall pay the Executive
an amount equal to the monthly dues incurred by the
Executive for membership in a country club located in
Birmingham, Alabama, which amount shall be paid in
accordance with the Company's regular payroll practice
for its senior executives, as in effect from time to
time. Such amount shall be treated as additional current
cash compensation to the Executive, and shall not be
subject to increase over the initial amount thereof. In
addition, the Company shall reimburse the Executive for
the initiation fee of membership in such country club.
In the event the initiation fee includes an equity
interest in such country club, the equity interest shall
initially be owned by the Company, but shall vest in the
Executive after five (5) years of employment hereunder.
(f) Restricted Stock Plan. During the Employment
Period, the Executive shall participate in the
restricted stock plan of the Company; provided, that
notwithstanding the terms of such plan, the Executive
shall receive 50,000 shares of common stock of the
Company, of which 10,000 shares shall vest upon the
execution of this Agreement and the remaining 40,000
shares shall vest in increments of 8,000 shares upon
each anniversary date of this Agreement.
(g) Stock Option Plan. During the Employment
Period, the Executive shall participate in the stock
option plan of the Company; provided, that
notwithstanding the terms of such plan, (i) the Company
shall grant to the Executive options to purchase 100,000
shares of the common stock of the Company, (ii) the
option price with respect to such shares shall be the
closing price quoted on the New York Stock Exchange on
the date of this Agreement, and (iii) one-sixth of such
options shall vest on each of the first three
anniversary dates of this Agreement, commencing with the
first anniversary date, and one fourth of such options
shall vest on each of the fourth and fifth anniversary
dates of this Agreement.
(h) Stock Accumulation Plan. During the
Employment Period, the Executive shall participate in
the stock accumulation plan of the Company; provided,
that notwithstanding the terms of such plan, the
Executive shall contribute twenty percent (20%) of his
Base Salary to the stock accumulation plan.
(i) Management Security Plan. During the
Employment Period, the Executive shall participate in
the Management Security Plan of the Company; provided,
that notwithstanding the terms of such plan, the
retirement benefit to be provided to the Executive
thereunder shall be based upon an annual retirement
benefit of $225,000. If the Management Security Plan is
terminated by the Company, the Company shall provide a
similar benefit to the Executive by the purchase of an
annuity or otherwise. In addition, the Executive shall
be eligible to elect an alternative benefit arrangement
in the form of split dollar ownership of the life
insurance policy held on his life, pursuant to which his
designated beneficiary would receive life insurance
proceeds in lieu of monthly death payments.
(j) Relocation Expenses. The Company shall
reimburse the Executive for (i) the amount of sales
commission paid on the sale of the Executive's current
residence, (ii) the amount of sales commission paid on
the purchase of a residence for the Executive in
Birmingham, Alabama, and (iii) in accordance with the
Company's regular practice for its senior executives,
reasonable moving expenses incurred by the Executive in
relocating to Birmingham, Alabama.
(k) Reimbursement of Expenses. During the term of
his employment hereunder, the Executive shall be
entitled to receive prompt reimbursement for all
reasonable expenses incurred by him in performing
services hereunder, in accordance with the Company's
policies and procedures established for reimbursement of
expenses of its senior executives. Such expenses shall
be subject to review, from time to time, by the
Compensation Committee of the Board.
4. Termination of Employment. (a) Termination of
the Employment Period. Notwithstanding Paragraph 1(b),
the Employment Period shall end upon the earliest to
occur of (i) a termination of the Executive's employment
on account of the Executive's death or Disability, (ii)
a Termination for Cause, (iii) a Termination Without
Cause, (iv) a Special Termination, or (v) a Resignation
by Executive.
(b) Benefits Payable Upon Termination. Following
the end of the Employment Period pursuant to Paragraph
4(a), the Executive (or, in the event of his death, his
surviving spouse, if any, or his estate) shall be paid
the type or types of compensation determined to be
payable in accordance with the following table at the
times established pursuant to Paragraph 4(d):
Earned Vested Additional Termination
Salary Benefits Benefits Payment
------ -------- ---------- -----------
Termination due
to death or
Disability Payable Payable Available Not Payable
Termination for
Cause Payable Payable Not Available Not Payable
Termination Early
Without Cause Payable Payable Available* Termination
Payment
Payable
Special Special
Termination Payable Payable Available Termination
Payment
Payable
Resignation by
Executive Payable Payable Not Available Not Payable
*However, upon a Termination Without Cause during the
first year of the Employment Period, the Executive shall
not be entitled to an additional year of stock option
vesting.
(c) Resignation by Executive. In the event the
Executive resigns, or refuses to perform the duties
assigned to him by the Board, prior to the expiration of
the Employment Period, the Executive shall be paid his
Earned Salary and Vested Benefits, but shall not be
entitled to any Additional Benefits, a Special
Termination Payment or an Early Termination Payment.
(d) Timing of Payments. Earned Salary shall be
paid in cash in a single lump sum as soon as
practicable, but in no event more than ten (10) days,
following the end of the Employment Period. Vested
Benefits shall be payable in accordance with the terms
of the plan, policy, practice, program, contract or
agreement (including, without limitation, the extension
of the exercise period of options under the Equity
Documents (as defined below) following a termination due
to death or disability) under which such benefits have
been awarded or accrued except as otherwise expressly
modified by this Agreement. Additional benefits shall
be provided or made available at the times specified
below as to each such Additional Benefit.
(e) Definitions. For purposes of Paragraphs 4 and
5, capitalized terms have the following meanings:
"Additional Benefits" consists of the following
rights and benefits:
(i) the Executive (or, in the event of the
Executive's death during such period, the Executive's
beneficiary or estate) shall have the right to exercise
any outstanding options to purchase shares of Common
Stock of the Company then exercisable by the Executive
or which would become exercisable in accordance with the
applicable option agreement and the applicable entity
incentive plan of the Company (such agreements and plans
referred to collectively as the "Equity Documents") for
a period of one year after the Executive's termination
of employment (or, if less, until the end of the stated
term of the option);
(ii) except as otherwise provided below, the
Executive (and, to the extent applicable, his
dependents) will be entitled to continue participation
in all of the Company's pension and welfare benefit
plans (the "Benefit Plans"), excluding any defined
contribution plans, until the first anniversary of the
Executive's termination of employment (the "End Date");
provided that the Executive's participation in the
Company's welfare benefit plans shall cease on any
earlier date that the Executive becomes eligible for
comparable welfare benefits from a subsequent employer.
To the extent any such benefits cannot be provided under
the terms of the applicable plan, policy or program, the
Company shall provide a comparable benefit under another
plan or from the Company's general assets. The
Executive's participation in the Benefit Plans will be
on the same terms and conditions that would have applied
had the Executive continued to be employed by the
Company through the End Date, except that the Executive
shall cease to accrue all service for purposes of
determining his entitlement to, and the amount of, his
pension benefits upon the Executive's commencement of
receipt of benefits under any of the Company's pension
plans. Except as expressly provided above, the
Executive's vested right to benefits under the Benefit
Plans and the amount of such benefits shall be
determined based on the Executive's age and service as
though he had been employed with the Company through the
End Date; and
(iii) for purposes of the Benefit Plans and the
Equity Documents, the Executive will be deemed to have
terminated employment under mutually satisfactory
conditions.
"Disability" shall be deemed the reason for the
termination of the Executive's employment, if, as a
result of the Executive's incapacity due to physical or
mental illness, the Executive shall have been absent
from the full-time performance of the Executive's duties
with the Company for a period of six (6) consecutive
months, the Company shall have given the Executive a
notice of termination for Disability, and, within thirty
(30) days after such notice is given, the Executive
shall not have returned to the full-time performance of
the Executive's duties.
"Early Termination Payment" means a payment in cash
within ten (10) days of the Executive's Termination
Without Cause during the first five (5) year term of the
Agreement in an amount equal to $2,250,000 less the
amount of Base Salary paid to the Executive prior to the
date of such termination.
"Earned Salary" means any Base Salary earned, but
unpaid, for services rendered to the Company on or prior
to the date on which the Employment Period ends pursuant
to Paragraph 4(a).
"Special Termination" means the discharge of the
Executive by the Company other than in a Termination for
Cause or as a part of a general reduction in management
if (i) such termination occurs after any person, within
twelve (12) months after the date of this Agreement,
becomes the beneficial owner of securities of the
Company having at least twenty percent (20%) of the
voting power of the Company's then outstanding
securities (a "Controlling Person") and (ii) within the
24-month period after a person becomes a Controlling
Person, the persons who were directors of the Company
immediately before the beginning of such 24-month period
shall, on account of the vote of the Controlling Person
or pursuant to an agreement between the Company and the
Controlling Person, cease to constitute at least a
majority of the Board or the board of a successor to the
Company. Upon a Special Termination, the Executive shall
be entitled to receive a "Special Termination Payment"
in cash within ten (10) days of his discharge, in an
amount equal to $2,250,000 less the amount of Base
Salary paid to the Executive prior to the date of such
discharge.
"Termination for Cause" means a termination of the
Executive's employment by the Company due to (i) the
Executive's conviction of a felony or (ii) the
Executive's (A) refusal to perform the duties assigned
to him by the Board or failure to carry out any
directive of the Board, (B) willful fraud against the
Company or failure to conduct himself in an ethical
manner, or (C) material breach of any provision of this
Agreement which has had (or is expected to have) a
material adverse effect on the business of the Company
or its subsidiaries. The Executive shall be permitted
to respond and defend himself before the Board within
thirty (30) days after delivery to the Executive of
written notification of any proposed Termination for
Cause which specifies in detail the reasons for such
termination. If the majority of the members of the
Board (excluding the Executive) do not confirm that the
Company had grounds for a "Cause" termination within
thirty (30) days after the Executive has had his hearing
before the Board, the Executive shall have the option of
treating his employment as not having terminated or as
having been terminated pursuant to a Termination Without
Cause.
"Termination Without Cause" means any termination of
the Executive's employment by the Company other than a
Termination for Cause or a Special Termination. Neither
the Executive's death nor Disability shall give rise to
a Termination Without Cause
"Vested Benefits" means amounts which are vested or
which the Executive is otherwise entitled to receive
under the terms of or in accordance with any plan,
policy, practice or program of, or any contract or
agreement with, the Company or any of its subsidiaries,
at or subsequent to the date of his termination without
regard to the performance by the Executive or further
services or the resolution of a contingency.
(f) Nondeductibility of Payments. Notwithstanding
anything to the contrary contained herein, any amounts
payable to the Executive pursuant to this Paragraph 4
that, if paid when otherwise provided under this
Paragraph 4, would be nondeductible by the Company under
Section 162(m) of the Internal Revenue Code of 1986, as
amended, shall be paid to the Executive, or his estate
in the event of his death, on April 1 of the next
following taxable year, together with simple interest
thereon at the 90-day United States Treasury Bill rate
as in effect from time to time during such period of
deferral.
(g) Full Discharge of Company Obligations. Except
as expressly provided in the last sentence of this
Paragraph 4(g), the amounts payable to the Executive
pursuant to this Paragraph 4 following termination of
his employment (including amounts payable with respect
to Vested Benefits) shall be in full and complete
satisfaction of the Executive's rights under this
Agreement and any other claims he may have in respect of
his employment by the Company or any of its
subsidiaries. Such amounts shall constitute liquidated
damages with respect to any and all such rights and
claims and, upon the Executive's receipt of such
amounts, the Company shall be released and discharged
from any and all liability to the Executive in
connection with this Agreement or otherwise in
connection with the Executive's employment with the
Company and its subsidiaries. Nothing in this Paragraph
4(g) shall be construed to release the Company from its
commitment to indemnify the Executive and hold the
Executive harmless from and against any claim, loss or
cause of action arising from or out of the Executive's
performance as an officer, director or employee of the
Company or any of its subsidiaries or in any other
capacity, including any fiduciary capacity, in which the
Executive served at the request of the Company to the
maximum extent permitted by applicable law and the
Governing Documents.
5. Noncompetition and Confidentiality. By and in
consideration of the salary and benefits to be provided
by the Company hereunder, the Executive agrees that:
(a) Noncompetition. During the Employment Period
and during (i) the two year period following termination
of the Executive's employment, other than a Termination
Without Cause, and (ii) the one year period following
termination of the Executive's employment by the Company
in a Termination Without Cause (in either event, the
"Restriction Period"), the Executive shall not become
associated with any entity, whether as a principal,
partner, employee, agent, consultant, shareholder (other
than as a holder, or a member of a group which is a
holder, of not in excess of one percent (1%) of the
outstanding voting shares of any publicly traded
company) or in any other relationship or capacity, that
is actively engaged in any geographic area in any
business which is in competition with the business of
the Company.
(b) Confidentiality. Unless specifically
authorized to do so, except to the extent required by an
order of a court having competent jurisdiction or under
subpoena from an appropriate government agency, the
Executive shall not disclose any trade secrets, customer
lists, drawings, designs, information regarding product
development, marketing plans, sales plans, manufacturing
plans, management organization information (including
data and policies or manuals, business plans, financial
records, packaging design or other financial,
commercial, business or technical information relating
to the Company or any of its subsidiaries or information
designated as confidential or proprietary that the
Company or any of its subsidiaries may receive belonging
to suppliers, customers or others who do business with
the Company or any of its subsidiaries (collectively,
"Confidential Information") to any third person unless
such Confidential Information has been previously
disclosed to the public by the Company or is in the
public domain (other than by reason of the Executive's
breach of this Paragraph 5(b)).
(c) Nonsolicitation of Employees. During the
Employment Period and the Restriction Period, the
Executive shall not directly or indirectly solicit,
encourage or induce any employee of the Company or any
of its subsidiaries to terminate employment with such
entity, and shall not directly or indirectly, either
individually or as owner, agent, employee, consultant or
otherwise, employ or offer employment to any person who
is or was employed by the Company or a subsidiary
thereof unless such person shall have ceased to be
employed by such entity for a period of at least six
months.
(d) Company Property. Except as expressly
provided herein, promptly following the Executive's
termination of employment, the Executive shall return to
the Company all property of the Company, and all copies
thereof in the Executive's possession or under his
control.
(e) Injunctive Relief and Other Remedies with
Respect to Covenants. The Executive acknowledges and
agrees that the covenants and obligations of the
Executive with respect to noncompetition,
nonsolicitation, confidentiality and Company property,
relate to special, unique and extraordinary matters and
that a violation of any of the terms of such covenants
and obligations will cause the Company irreparable
injury for which adequate remedies are not available at
law. Therefore, the Executive agrees that the Company
shall (i) be entitled to an injunction, restraining
order or such other equitable relief (without the
requirement to post bond) restraining the Executive from
committing any violation of the covenants and
obligations contained in this Paragraph 5 and (ii) have
no further obligation to make any payments to the
Executive hereunder following any material violation of
the covenants and obligations contained in this
Paragraph 5. These remedies are cumulative and are in
addition to any other rights and remedies the Company
may have at law or in equity. In connection with the
foregoing provisions of this Paragraph 5, the Executive
represents that his economic means and circumstances are
such that such provisions will not prevent him from
providing for himself and his family on a basis
satisfactory to him.
6. Miscellaneous. (a) Survival. Paragraphs 4
(relating to early termination), 5 (relating to
noncompetition, nonsolicitation and confidentiality),
6(b) (relating to arbitration), and 6(m) (relating to
governing law) shall survive the termination hereof.
(b) Arbitration. Any dispute or controversy
arising under or in connection with this Agreement shall
be resolved by binding arbitration. The arbitration
shall be held in the city of Birmingham, Alabama and
except to the extent inconsistent with this Agreement,
shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration
Association then in effective at the time of the
arbitration, and otherwise in accordance with principles
which would be applied by a court of law or equity. The
arbitrator shall be acceptable to both the Company and
the Executive. If the parties cannot agree on an
acceptable arbitrator, the dispute shall be heard by a
panel of three arbitrators one appointed by each of the
parties and the third appointed by the other two
arbitrators.
(c) Binding Effect. This Agreement shall be
binding on, and shall inure to the benefit of, the
Company and any person or entity that succeeds to the
interest of the Company (regardless of whether such
succession does or does not occur by operation of law)
by reason of the sale of all or a portion of the
Company's stock, a merger, consolidation or
reorganization involving the Company, or unless the
Company otherwise elects in writing, a sale of the
assets of the business of the Company (or portion
thereof) in which the Executive performs a majority of
his services. This Agreement shall also inure to the
benefit of the Executive's heirs, executors,
administrators and legal representatives.
(d) Assignment. Except as provided under
Paragraph 6(c), neither this Agreement nor any of the
rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written
consent of the other party.
(e) Entire Agreement. This Agreement constitutes
the entire agreement between the parties hereto with
respect to the matters referred to herein. No other
agreement relating to the terms of the Executive's
employment by the Company, oral or otherwise, shall be
binding between the parties unless it is in writing and
signed by the party against whom enforcement is sought.
There are no promises, representations, inducements or
statements between the parties other than those that are
expressly contained herein. The Executive acknowledges
that he is entering into this Agreement of his own free
will and accord, and with no duress, that he has read
this Agreement and that he understands it and its legal
consequences.
*<a Severability; Reformation. In the event that
one or more of the provisions of this Agreement shall
become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the
remaining provisions contained herein shall not be
affected thereby. In the event that any of the
provisions of Paragraph 5(a) or (b) is not enforceable
in accordance with its terms, the Executive and the
Company agree that such Paragraph shall be reformed to
make such Paragraph enforceable in a manner which
provides the Company the maximum rights permitted.
(g) Waiver. Waiver by any party hereto of any
breach or default by the other party of any of the terms
of this Agreement shall not operate as a waiver of any
other breach or default, whether similar to or different
from the breach or default waived. No waiver of any
provision of this Agreement shall be implied from any
course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his
rights hereunder on any occasion or series of occasions.
(h) Notices. Any notice required or desired to be
delivered under this Agreement shall be in writing and
shall be delivered personally, by courier service, by
registered mail, return receipt requested, or by
telecopy and shall be effective upon actual receipt by
the party to which such notice shall be directed, and
shall be addressed as follows (or to such other address
as the party entitled to notice shall hereafter
designate in accordance with the terms hereof):
If to the Company:
Birmingham Steel Corporation
1000 Urban Center Drive, Suite 300
Birmingham, Alabama 35242
Attention:Chairman of the Executive
Committee
[or, if the Executive is serving as such, to
the Chairman of the Compensation Committee]
with a copy to:
Attention:
If to the Executive:
The home address of the Executive noted on the
records of the Company.
(i) Amendments. This Agreement may not be
altered, modified or amended except by a written
instrument signed by each of the parties hereto.
(j) Headings. Headings to paragraphs in this
Agreement are for the convenience of the parties only
and are not intended to be part of or to affect the
meaning or interpretation hereof.
(k) Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an
original but all of which together shall constitute one
and the same instrument.
(l) Withholding. Any payments provided for herein
shall be reduced by any amounts required to be withheld
by the Company from time to time under applicable
Federal, State or local income or employment tax laws or
similar statutes or other provisions of law then in
effect.
(m) Governing Law. This Agreement shall be
governed by the laws of the State of Alabama, without
reference to principles of conflicts or choice of law
under which the law of any other jurisdiction would
apply.
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed by its duly authorized officer
and the Executive has hereunto set his hand as of the
day and year first above written.
WITNESS: BIRMINGHAM STEEL CORPORATION
/s/ William R. Lucas By: /s/ James A. Todd
- ---------------------- ----------------------------
Name: William R. Lucas Name: James A. Todd
Its: Chairman & Chief
Executive Officer
WITNESS: EXECUTIVE
/s/ James V. Roth By: /s/ Robert A. Garvey
- ------------------- ----------------------------
Name: James V. Roth Name: Robert A. Garvey
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.
Birmingham Steel
Corporation
February 12, 1996 Robert A. Garvey
----------------
Robert A. Garvey
Chairman, Chief
Executive Officer
February 12, 1996 John M. Casey
------------------
John M. Casey
Vice President,
Chief Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
December 31, 1995 Consolidated Balance Sheets and Consolidated Statements
of Income of Birmingham Steel Corporation and is qualified in its entirety
by reference to such.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 52,566
<SECURITIES> 0
<RECEIVABLES> 98,878
<ALLOWANCES> 1,742
<INVENTORY> 215,115
<CURRENT-ASSETS> 378,772
<PP&E> 603,509
<DEPRECIATION> 120,835
<TOTAL-ASSETS> 920,361
<CURRENT-LIABILITIES> 88,504
<BONDS> 307,500
<COMMON> 296
0
0
<OTHER-SE> 463,650
<TOTAL-LIABILITY-AND-EQUITY> 920,361
<SALES> 404,650
<TOTAL-REVENUES> 404,650
<CGS> 364,048
<TOTAL-COSTS> 364,048
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,055
<INTEREST-EXPENSE> 5,364
<INCOME-PRETAX> 15,101
<INCOME-TAX> 6,267
<INCOME-CONTINUING> 8,834
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,834
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
