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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 25, 1994 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
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COMMISSION FILE NUMBER 0-14727
ACME METALS INCORPORATED
(Exact name of registrant as specified in its charter)
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DELAWARE 36-3802419
(State of (I.R.S. Employer
incorporation) Identification
No.)
13500 SOUTH PERRY
AVE., 60627-1182
RIVERDALE, ILLINOIS (Zip Code)
(Address of principal
executive offices)
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(708) 849-2500
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
TITLE OF EACH CLASS
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Common stock, par value $1.00 per share
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ____
The aggregate market value as of February 10, 1995 of common stock, $1 par
value, held by non-affiliates of the Registrant was: $185,807,862
Number of shares of Common Stock outstanding as of February 10, 1995,
11,434,330.
The following documents are partially incorporated into this report by
reference:
(1) Proxy Statement filed in connection with the Annual Meeting of Shareholders
scheduled April 27, 1995 partially incorporated by reference into Part III,
Items 10, 11, 12 and 13.
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ACME METALS INCORPORATED
1994 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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PART I
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Page
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Item 1. Business................................................. 3
Item 2. Properties............................................... 7
Item 3. Legal Proceedings........................................ 8
Item 4. Submission of Matters to a Vote of Security Holders...... 14
PART II
Item 5. Market for the Company's Common Stock and Related
Stockholder Matters..................................... 14
Item 6. Selected Financial Data.................................. 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 17
Item 8. Financial Statements and Supplementary Data.............. 24
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure..................... 24
PART III
Item 10. Directors and Executive Officers of the Company.......... 25
Item 11. Executive Compensation................................... 26
Item 12. Security Ownership of Certain Beneficial Owners and
Management.............................................. 26
Item 13. Certain Relationships and Related Transactions........... 26
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K................................................ 26
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PART I
ITEM 1. BUSINESS
(A) GENERAL DESCRIPTION OF BUSINESS
Acme Metals Incorporated, based in Riverdale, Illinois, is the successor to
the original Acme Steel Company which merged with the Interlake Iron Company in
1964 to form Interlake Steel Corporation. The Company's name was changed to
Interlake, Inc. and was subsequently reincorporated in Delaware on December 19,
1969.
As a result of a reorganization in 1986, The Interlake Corporation ("new
Interlake") became the parent company of Interlake, Inc. ("old Interlake"). Old
Interlake transferred all but its iron, steel and domestic steel strapping
assets and businesses to new Interlake. Old Interlake was again renamed Acme
Steel Company, and pursuant to the reorganization, was spun off from new
Interlake as a public company in May, 1986.
Acme Steel Company undertook a further reorganization in May, 1992 when Acme
Metals Incorporated ("Company") was formed and became the parent of Acme Steel
Company ("Acme"), and Acme's former subsidiaries, Acme Packaging Corporation
("Packaging"), Alpha Tube Corporation ("Alpha"), and Universal Tool & Stamping
Co., Inc. ("Universal"). The Company has been publicly traded on NASDAQ since
1986.
The principal business activities of the Company consist of two separate
industry segments namely:
Steel Making Segment
Acme Steel Company - an integrated iron and steel producer
Steel Fabricating Segment
Acme Packaging Corporation - steel strapping and strapping products
Alpha Tube Corporation - welded steel tube products
Universal Tool & Stamping Co., Inc. - auto and light truck jack
products.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company reports its operations by two industry segments, Steel Making
and Steel Fabricating. Financial information about the Company's industry
segments is contained in the BUSINESS SEGMENTS section of the Notes to the
Consolidated Financial Statements on page 51.
(C) NARRATIVE DESCRIPTION OF BUSINESS
Steel Making Segment
Acme is a fully integrated producer of steel products. Acme's line of
products is concentrated on the manufacture of flat-rolled steels, including
sheet and strip steel. In the flat-rolled steel market Acme specializes in
producing carbon steels, especially high carbon steels, alloy steels, and high
strength steels. The principal markets served by Acme include the agricultural
equipment, automotive components, industrial equipment, industrial fastener,
pipe and tube, processor, and tool manufacturing industries. The Company's Steel
Fabricating Segment consumes approximately 30 - 50 percent of Acme's steel
production. Acme's focus on external customers is centered around customers
whose demand levels and metallurgical requirements are for the small production
quantities available from Acme's facilities. Acme's sales represented about 44,
41 and 37 percent of total Company sales in 1994, 1993 and 1992 respectively.
Acme's facilities are located in Riverdale and Chicago, Illinois, and
include the following plant facilities: coke ovens, blast furnaces, pigging
machines, basic oxygen furnaces, rolling mill, a slab grinder, hot strip mills,
pickle lines, cold mills, annealing furnaces, slitter lines, and cut-to-length
lines.
Acme is the smallest integrated steel producer in the U.S. with annual hot
band shipping capability of approximately 720,000 tons. This compares with total
U.S. shipments of all steel products of approximately 88 million tons.
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Steel Fabricating Segment
Packaging, which was incorporated as a separate entity in December 1991, is
one of the two major domestic producers of steel strapping and strapping tools
in North America and, by management estimates, shares approximately 80 percent
of the domestic market equally with its primary competitor. Strapping is
currently produced at four plants located throughout the U.S. and represented
approximately 32, 33 and 36 percent of the Company's sales in 1994, 1993 and
1992, respectively. Principal markets served by Packaging include the
agricultural, automotive, brick, construction, fabricated and primary metals,
forest products, paper and wholesale industries. Packaging receives all of its
flat-rolled steel supply from Acme.
Packaging currently manufactures its products in four steel strapping
plants, located in Riverdale, Illinois; New Britain, Connecticut; Leeds, Alabama
and Bay Point (formerly Pittsburg-West), California.
Alpha, which was acquired in May 1989, is a leading producer of high quality
welded carbon steel tubing used for furniture, recreational, contractors' and
automotive applications. Alpha receives a significant portion of its flat-rolled
steel supply from Acme. Alpha markets its products to the appliance, automotive,
construction, heating and cooling equipment, household and leisure furniture,
material handling, recreational products, and warehouse industries. Alpha's
sales represented approximately 16 percent of total sales for the Company in
each of the last three years.
Alpha operates three facilities in Toledo, Ohio, including two manufacturing
facilities equipped with rolling mills for the production of steel tube and
pipe, and a plant for slitting steel.
Universal, acquired in May 1987, produces automotive and light truck jacks,
tire wrenches and accessories for the original equipment manufacturer ("OEM")
market in North America. Management estimates that it currently holds a 30
percent share of the OEM market for auto and light truck jacks in North America.
Universal receives virtually all its flat-rolled steel supply from Acme.
Universal markets its products to domestic and foreign transplant automotive
manufacturers and the automotive aftermarket. Universal's sales were
approximately 8, 10 and 11 percent of total Company sales in 1994, 1993 and
1992, respectively.
Universal's production facilities, located in Butler, Indiana, include a
computer assisted design and manufacturing system, and automated stamping and
assembly lines.
Employee Relations
The Company has a work force of 2,748 employees, of which 659 are salaried
and 2,089 are paid hourly. The unionized work force totals 1,943, or 71 percent
of total employment. None of the salaried work force is unionized and the hourly
work force at one site (Alpha) is non-union as well. The Company's relationships
with the unions are good. There have been no strikes or work stoppages at any
location since the Company's purchase of the plants in Connecticut, Alabama,
California and Indiana. The last strike at the Riverdale and Chicago locations
was in 1959 during a major steel industry work stoppage. In addition, the
Company instituted Labor Management Participation Teams in 1982 as a vehicle for
problem solving in a team environment and a Total Quality Improvement Program in
1991 to establish standards to achieve the highest quality product from the
existing facilities. Union members participate extensively in these two
programs.
The Company has a contract in place with the United Steelworkers covering
approximately 1,500 employees at the Acme and Packaging operations in Chicago
and Riverdale, Illinois. The contract expires in 1999, contains a no-strike
provision, and a wage reopener in 1996 subject to binding arbitration.
Raw Materials
Acme's principal raw materials are iron ore and coal. Iron ore requirements
are expected to continue to be satisfied through an equity interest in Wabush
Mines in Newfoundland (Labrador) and Quebec, Canada and through term contracts
and purchases on the open market. Acme is obligated to purchase iron ore from
Wabush at the higher of production cost or market. Production cost currently
approximates market; however, there can be no assurance that the mine's cost
structure will not increase in the future in excess of world market prices.
During 1994, Acme acquired approximately 53 percent of its iron ore needs from
Wabush under this agreement with the balance of ore requirements at a
competitive delivered cost. Coal
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requirements are expected to be satisfied through term contracts and purchases
on the open market. The Company believes Acme's sources of iron ore, coal and
other raw materials are adequate to provide for its foreseeable needs.
Environmental Compliance
The operations of the Company and its subsidiary companies are subject to
numerous Federal, state and local laws and regulations providing a comprehensive
program of controlling the discharge of materials into the environment and
remediation of certain waste disposal sites by responsible parties for the
protection of public health and the environment. In addition, various Federal
and state occupational safety and health laws and regulations apply to the work
place environment. See ITEM 3, LEGAL PROCEEDINGS, (B) ENVIRONMENTAL for a
complete discussion of environmental proceedings.
Backlog; Trademarks; Patents
None of the Company's subsidiaries had a significant amount of backlog at
December 25, 1994 and neither the Company nor its subsidiaries hold any patents,
trademarks, licenses or franchises which are deemed material to its overall
business.
(D) COMPETITIVE CONDITIONS IN THE STEEL INDUSTRY
General Steel Market
The U.S. integrated steel industry has suffered economically in the past
decade due to increased competition from mini-mills, lack of investment in newer
steel making technologies, foreign competition (often government subsidized),
increasing costs associated with government-mandated environmental regulations
and high labor and benefit costs compared to its competition.
U.S. domestic shipments for all steel products have averaged approximately
88 million tons per year for the last three years. While total U.S. shipments of
steel have grown by an average of 2.4 percent per year since 1982, steel exports
by U.S. producers have accounted for most of that growth. Domestic steel
consumption has been essentially flat over the past ten years.
The industry has raw steel production capacity estimated to be 110 to 117
million tons. In addition, over 85 percent of current U.S. steel production is
continuously cast. These two factors together with the industry's ongoing
successful efforts to improve productivity and reduce costs have contributed to
significant downward pressure on the price of steel in the marketplace. Real
steel selling prices have fallen at an annual rate of 3.5 percent over the past
decade although during 1993 and 1994, steel prices have increased on average.
The Company believes the trend toward lower real steel prices will continue,
although at a slower rate.
Over the long-term, steel prices will be set by the lowest cost producers,
and the lowest costs will be attained through the implementation of new
technologies. The flat-rolled steel market provides strong evidence of this
downward trend in real steel prices due to decreasing costs. Technological
innovation is likely to continue in the steel industry and producers will be
required to achieve significant, sustainable cost reductions to succeed.
Special Grade Market
This component of the flat-rolled market represents the medium carbon, high
carbon, high strength low alloy ("HSLA") and alloy markets. The total annual
specialty market is approximately 3 million tons, of which Acme's share is
estimated to be 6 to 7 percent. However, in the portion of the market where Acme
is not facility-limited (where customers can use narrow widths and have no
continuous cast requirement), it holds an approximately 30 percent share. Acme's
principal customer markets are agricultural equipment, industrial fasteners,
hand and power tools, rerollers, automotive components and construction.
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Low Carbon Flat-rolled Market
Flat-rolled products comprise approximately 50 percent of the U.S. steel
market, or about 40-45 million tons per year, of which the majority is in low
carbon sheet and strip. Acme's share is estimated to be less than 1 percent. The
key end users are automotive OEMs, automotive stampers, can and container
manufacturers, the construction industry, appliance makers, tubing manufacturers
and steel service centers.
Acme's Competitive Position
For commercial sales to unaffiliated customers, Acme currently competes
principally in the mid- and high-carbon and alloy steel markets. Acme has
numerous competitors composed principally of steel service centers and, to a
lesser extent, smaller integrated mills.
Acme faces the same challenges as the rest of the steel industry. While Acme
has reported operating losses in one of its last 3 years, it has generally
outperformed the industry on average. Because of Acme's high overall cost
structure resulting from its outmoded steel finishing process and the
competitive forces affecting the entire steel industry, steel making has proven
to be only marginally profitable even at the upper end of the business cycles.
Management believes that Acme, and the U.S. steel industry as a whole,
benefitted during 1993 and 1994 from an upturn in the business cycle and
increases in steel prices on average over the past two years. There can be no
assurance that this upturn in the business cycle will continue or that the
industry will be successful in maintaining current price levels.
(E) THE MODERNIZATION AND EXPANSION PROJECT
Acme's existing rolling mill facilities cannot produce a coil which is large
and wide (more than 30 inches) enough to satisfy the needs of many users of
flat-rolled steel. In addition, the existing physical limitations of the mill
facilities do not allow Acme to fully utilize its existing raw steel
manufacturing capability. Further, large users increasingly demand continuously
cast materials, and many other users prefer such materials.
Since 1982, a number of U.S. steel mills have constructed conventional thick
slab continuous casting production facilities. Currently, about 90 percent of
U.S. Steel Mills producing sheet, sheet strip, and plate utilize conventional
thick slab casting.
The conventional thick slab facilities are a technological step behind the
new continuous thin slab casting facilities, which eliminate the extra heating
and rolling necessary to flatten thick slabs to an appropriate dimension. At
present there are 2 operating thin slab casting facilities in North America,
which have a combined estimated capacity of 4 million tons per year. In
addition, thin slab casting facilities are under construction with an estimated
combined capacity of 5.5 million tons. Three other sites are also currently
under consideration. Of the companies currently using or planning to construct
continuous thin slab casters, none have or will have the facilities to use basic
oxygen furnace steel. Instead, these new installations will use scrap steel as
their raw material.
In response to these and other competitive concerns, in July 1992, the
Company announced it was conducting a feasibility study of a new continuous thin
slab caster/hot strip rolling mill complex (the "Modernization and Expansion
Project") at the Company's Riverdale, Illinois plant. The study concluded that
successful implementation of the Modernization and Expansion Project should
result in significantly more favorable financial results for the Company
beginning in 1997 than those it would achieve if it continued its steel making
business with its existing facilities. This improved financial performance would
result from increased sales due to increased production capability and product
range, higher yields, lower costs, increased efficiency, and more consistent
product quality.
The Board of Directors of the Company decided to proceed with the
Modernization and Expansion Project in August 1994 coincident with the
completion of the financing. The final cost, including equipment, ancillary
facilities and construction, is expected to be approximately $392 million
excluding capitalized interest costs and certain internal costs directly related
to the Modernization and Expansion Project. See LIQUIDITY AND CAPITAL RESOURCES
in MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
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The Modernization and Expansion Project will include facilities for both the
continuous casting of thin steel slabs (approximately 2" in thickness and 60" in
width) ("Caster") and the hot rolling of those slabs into steel strip ("Mill")
and is being constructed in a new building on a site adjacent to Acme's current
steel making facilities. Steel production at Acme's existing facilities will
continue during construction without disruption or reduction of product
available for supply to customers. When fully operational, the Modernization and
Expansion Project should be capable of producing Acme's anticipated product mix.
The Modernization and Expansion Project will involve substantial costs in
addition to those for the construction of the facility itself. The new Caster
and Mill will eliminate several labor-intensive operations Acme now must employ.
The efficiencies resulting from the elimination of these operations will result
in a reduction of Acme's workforce of between 250 and 300 people. The Company
has taken a $2.3 million charge to income in 1994 to account for the contractual
employee reduction costs associated with the project. The Company also took a
$7.2 million charge to income in 1994 to reflect an impairment of the existing
steel finishing facilities which will be replaced by the Modernization and
Expansion Project. The charges were reflected in the Company's third quarter
results. Further, during the Modernization and Expansion Project's final
completion phase, including initial testing, the Company anticipates incurring
approximately $15 million of start-up related costs, some of which may be
capitalized as part of the Modernization and Expansion Project. In addition, the
Company will be required to capitalize the interest expenses associated with the
Modernization and Expansion Project during the construction period. These
capitalized expenses are estimated to be approximately $70-75 million, which
will be added to the cost of the Modernization and Expansion Project during the
construction period and amortized over the lives of the related assets.
During construction of the Modernization and Expansion Project, the Company
believes Acme's existing steel manufacturing operations will continue during
construction with minimal disruption. The Modernization and Expansion Project
and the activities of the general contractor will be monitored by a project
management team composed primarily of existing officers and employees. In the
event there are significant problems with the construction of the Modernization
and Expansion Project, senior management may have to devote substantial time to
those problems and, as a result, may devote substantially less time than is
normal to existing operations. See LIQUIDITY AND CAPITAL RESOURCES in
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS for a discussion of the financing for the Modernization and Expansion
Project.
ITEM 2. PROPERTIES
The Company, through its subsidiaries, has facilities throughout the United
States.
Acme's principal properties consist of an iron-producing plant in Chicago,
Illinois and a steel producing plant in Riverdale, Illinois. These facilities
include blast furnaces, coke ovens, pigging machines for the production of
molten iron and pig iron, basic oxygen furnaces and rolling mills for the
production of flat-rolled steel. Acme also owns equity interests in raw material
mining ventures in Newfoundland (Labrador) and Quebec, Canada (iron ore). In
addition, Acme owns land adjacent to its steel producing plant in Riverdale,
Illinois on which it is constructing the Modernization and Expansion Project.
Packaging's principal properties consist of steel strapping plants, which
include slitting and painting equipment, in Riverdale, Illinois; New Britain,
Connecticut; and Leeds, Alabama; and a steel strapping plant in Bay Point
(formerly Pittsburg-West), California.
Alpha's three facilities are located in the Toledo, Ohio metropolitan area.
Alpha's facilities include two manufacturing and office buildings and rolling
mills for the production of welded steel tubing. Alpha has a third plant at
which steel is slit.
Universal's facilities are located in Butler, Indiana. Universal's
facilities include a manufacturing and office building, a computer assisted
design and manufacturing system, and automated forming and assembly lines.
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All of these plants are owned in fee except for the Alpha facilities which
are leased through 1999, and are renewable at the option of the Company.
In the opinion of management, the manufacturing facilities of the Company's
subsidiaries are properly maintained and their productive capacity is adequate
to meet its requirements.
ITEM 3. LEGAL PROCEEDINGS
(A) GENERAL
Pursuant to an Agreement and Plan of Reorganization as of March 5, 1986, the
Company (prior to the Company's 1992 reorganization, the Company was Acme Steel
Company, now a subsidiary and formerly called Interlake, Inc. hereinafter
referred to as the "Company") and Interlake, its former parent company, entered
into a Tax Indemnification Agreement ("TIA"). The TIA generally provides for
Interlake to indemnify the Company for certain tax matters. Per the TIA,
Interlake is solely responsible for any additional income taxes it is assessed
related to adjustments relating to all tax years prior to 1982. With respect to
any additional income taxes that are finally determined to be due with respect
to the tax years beginning in 1982 through the date of the "Spin-Off" (as said
term is identified in the Reorganization documents), the Company is responsible
for taxes relating to "Timing Differences" related to the Company's "Continuing
Operations." A "Timing Difference" is defined generally as an adjustment to
income, deductions or credits which is required to be reported in a tax year
beginning subsequent to 1981 through the Spin-Off, but which will reverse in a
subsequent year. "Continuing Operations" is defined generally as any business
and operations conducted by the Company as of the Spin-Off date. Interlake is
principally responsible for any additional income taxes the Company is assessed
relating to all other adjustments prior to the Spin-Off.
While certain issues have been negotiated and settled between the Company,
Interlake and the Internal Revenue Service for the tax years beginning 1982
through the date of the Spin-Off, certain significant issues for the tax years
beginning 1985 through the Spin-Off remain unresolved; and on March 17, 1994,
the Company received a Statutory Notice of Deficiency ("Notice") in the amount
of $16.9 million in tax as a result of the Internal Revenue Service's
examination of the 1982 through 1984 tax years. Interlake has been principally
responsible, pursuant to the TIA, for representing the Company before the
Internal Revenue Service for the 1982 through 1984 tax years. Should the
government sustain its position as proposed for those unresolved issues and
those contained in the Notice, substantial interest would also be due
(potentially in an amount greater than the tax claimed). The taxes claimed
relate principally to adjustments for which the Company is indemnified by
Interlake pursuant to the TIA. The Company has adequate reserves to cover that
portion of the tax for which it believes it may be responsible per the TIA. The
Company is contesting the unresolved issues and the Notice.
To date, Interlake has met its obligations under the TIA with respect to all
covered matters. In the event, Interlake, for any reason, is unable to fulfill
its obligations under the TIA, the Company could have increased future
obligations.
The Company's subsidiaries also have various litigation matters pending
which arise out of the ordinary course of their businesses. In the opinion of
management, the ultimate resolution of these matters will not have a material
adverse effect on the financial position of the Company.
(B) ENVIRONMENTAL
In addition to the general matters noted above, the operations of the
Company and its subsidiary companies are subject to numerous Federal, state and
local laws and regulations providing a comprehensive program of controlling the
discharge of materials into the environment and remediation of certain waste
disposal sites by responsible parties for the protection of public health and
the environment. In addition, various Federal and state occupational safety and
health laws and regulations apply to the work place environment.
The current environmental control requirements are comprehensive and reflect
a long-term trend towards increasing stringency as these laws and regulations
are subject to periodic renewal and revision. The
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Company expects these requirements will continue to become even more stringent
in future years. The 1990 Federal Clean Air Act amendment, for example, imposed
significant additional environmental control requirements upon Acme's coke plant
facilities.
In prior years, the Company has made substantial capital investments in
environmental control facilities to achieve compliance with these laws,
incurring expenditures of $7.7 million for environmental projects in the period
from 1992 through 1994. The Company anticipates making further capital
expenditures of approximately $6.2 million for environmental projects during
1995 and $1 million in 1996 to maintain compliance with these laws (exclusive of
any such expenditures related to the continuous thin slab caster and hot strip
mill project). In addition, maintenance, depreciation and operating expenses
attributable to installed environmental control facilities are having, and will
continue to have, an adverse effect upon the Company's earnings. Although all of
the Company's subsidiary operating companies are affected by these laws and
regulations, similar to other steel manufacturing operations, they have had, and
are expected to continue to have, a greater impact upon the Company's steel
manufacturing subsidiary than on the Company's other operating subsidiaries.
The Company, principally through its operating subsidiaries, is and, from
time to time, in the future will be involved in administrative proceedings
involving the issuance, or renewal, of environmental permits relating to the
conduct of its business. The final issuance of these permits are generally
resolved on terms satisfactory to the Company. In the future, the Company
expects such permits will be similarly resolved on satisfactory terms; however,
from time to time, the Company is required to pursue administrative and/or
judicial appeals prior to achieving a resolution of the terms of such permits.
The Company, from time to time, may be involved in administrative or
judicial proceedings with various regulatory agencies or private parties in
connection with claims the Company's operations have violated certain
environmental laws, conditions of existing permits or with respect to the
disposal of materials at waste disposal sites. The resolution of such matters
may involve the payment of civil penalties, damages, remediation expenses and/or
the expenditure of funds to add or modify pollution control equipment.
Waste Remediation Matters
Pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C., Section 9601 et seq. ("Superfund") and
similar state statutes, liability for remediation of property, including waste
disposal sites, contaminated by hazardous materials may be imposed on present
and former owners or operators of such property and generators or transporters
of such materials to a waste disposal site (i.e., Potentially Responsible
Parties, "PRPs"). The Company and its operating subsidiaries have been named as
PRPs with respect to several such sites. In each instance, the Company's
investigation has evidenced either, i) the Company had not disposed of waste
materials at the site and was not properly named as a PRP; or, ii) the Company's
proportion of materials disposed of at such sites is of sufficiently small
volume to qualify the Company as a DE MINIMIS contributor of waste material at
such sites. This DE MINIMIS status has been confirmed at essentially all of the
applicable sites.
Although no assurances can be given that new information will not be
uncovered which would cause the Company and its subsidiaries to lose their DE
MINIMIS status at these sites, or, that the Company, or its subsidiary
companies, would not be named as PRPs at additional sites, the Company presently
believes its total costs for the sites named above will not be material.
In addition to the foregoing Superfund sites, the following waste
remediation matters relating to the Company's subsidiary companies are currently
pending:
LEEDS, ALABAMA - ELEVATED LEVELS OF LEAD. In September 1992, Packaging
hired a consulting engineering firm for the purpose of providing soil sampling
and analysis in connection with an application for a storm water permit for its
Leeds, Alabama, plant. Pursuant to an investigation conducted by the consultant,
elevated levels of lead were discovered on the property, including one area of
the property wherein buried drums were discovered containing lead.
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In January 1993, Packaging advised the seller of this plant site that the
sampling program was initiated in conjunction with filing a Notice of Intent for
the plant for coverage under the Alabama Department of Environmental
Management's General Storm Water Discharge Permit. The seller was advised that
the results of the sampling program showed runoff from the west parking lot area
contained elevated concentrations of lead in the samples. Pursuant to
Packaging's investigation, Packaging advised the seller that all evidence
indicated these conditions were present on the property at the time the seller
owned the property and were present at the time the Leeds, Alabama, facility was
sold to the Company on March 29, 1989; and, pursuant to the terms of the
purchase and sale agreements relating to this property, the seller is
responsible for remediating any lead or other contaminants located on this
property. Without admitting or denying its liability, the seller has retained a
consultant to conduct a full investigation, sampling and analysis of the
property.
Packaging is cooperating with the seller regarding the investigation of the
contamination of this property by lead, and/or other substances; however,
Packaging intends to vigorously pursue its remedies under the purchase and sale
agreements with the seller.
Administrative and Litigation Matters
The Company, or its operating subsidiaries are currently involved in the
following matters relating to administrative regulations which affect, or may
affect, the operations, the permits or the issuance of permits; or litigation
relating to the Company:
ACME STEEL COMPANY - NPDES PERMIT. In 1991, the Illinois Environmental
Protection Agency ("IEPA"), issued Acme a permit, pursuant to the National
Pollution Discharge Elimination System ("NPDES") regulating non-contact water
discharges to the Calumet River from Acme's coke and blast furnace plant
facilities. The NPDES permit contains strict temperature and storm water
discharge limitations. Acme filed an appeal of certain conditions of the permit
with the Illinois Pollution Control Board ("IPCB"). Acme is proceeding to
resolve this matter through the administrative proceedings which allow for the
filing of a Petition for an Adjusted Standard and a request that the IPCB grant
Acme an adjusted standard and relief from the temperature limitations. Further,
through modification of certain provisions in the permit and the implementation
of best management practices, Acme anticipates achieving control of the Acme's
storm water discharge to an the extent that it will achieve compliance with
other permit conditions.
In the event these matters are not resolved through the administrative
process as outlined above, Acme will petition the IPCB for a variance from the
General Use Water Quality Standards. If issued, a variance will provide
temporary relief. Future compliance with permit conditions would be achieved at
an estimated capital expenditure of approximately $4 million and operating
expenses would be incurred at an annual rate of approximately $650,000. In the
event Acme's Petition for an Adjusted Standard is denied and a variance is
denied, Acme may be subject to penalties until compliance is achieved.
The Company believes Acme has demonstrated it is entitled to the issuance of
an Adjusted Standard, or absent an Adjusted Standard, a Variance allowing the
Company sufficient time to install additional capital equipment to achieve
compliance, however, there are no assurances the same will be granted. If such
relief is not granted, and penalties are assessed, the Company does not have
sufficient information to estimate its liabilities for such penalties, if any,
which may be assessed.
REMOVAL CREDITS AND PRETREATMENT. The Metropolitan Water Reclamation
District of Greater Chicago ("MWRD") is a publicly owned treatment works
("POTW"). The MWRD applied to the U.S. Environmental Protection Agency ("U.S.
EPA") for authority to revise categorical pretreatment standards to reflect the
actual treatment provided by the MWRD for waste water discharged to the MWRD's
POTW by industrial users ("Removal Credits"). These revised categorical
standards, reflecting Removal Credits are essential for Acme to avoid
expenditures for control of 4AAP phenol found in discharges from its coke
by-products plant and for control of certain other pollutants. In 1987, the
MWRD's application was denied by the U.S. EPA and the denial was upheld by the
United States Court of Appeals for the Seventh Circuit. The U.S. EPA maintained
that under the Clean Water Act and decisions of U.S. District Courts, that it
could not approve Removal Credits until it promulgated "sludge criteria."
10
<PAGE>
In 1993, the U.S. EPA promulgated sludge criteria which included the
possibility of granting Removal Credits for phenols only in certain
circumstances. Acme petitioned the MWRD for Removal Credits. Following this
petition, the MWRD again applied to the U.S. EPA for authority to grant Removal
Credits. While this application was denied, the U.S. EPA stated that if the
Agency amends its regulations with respect to phenol 4AAP either as a result of
the petition filed by the MWRD or independently, that the MWRD may then resubmit
its application.
Acme, together with a similarly situated steel company, filed Comments and a
Request for Reconsideration and Clarification concerning the 4AAP phenol
component of U.S. EPA's Standards for Disposal of Sludges with the U.S. EPA and
filed a Petition for Review of the U.S. EPA's decision with the Court of Appeals
for the DC Circuit. Both the Comments and Request for Reconsideration and the
Petition for Review are pending. The steel companies filed a motion with the DC
Circuit Court to stay the appeal pending U.S. EPA's consideration of the
Comments and Administrative Request for Reconsideration and Clarifications. The
Court granted this Motion on September 14, 1994. While Acme continues to
challenge the U.S. EPA's denial of the Removal Credits application and is
pursuing administrative and legal remedies, Acme could be subject to allegations
it is in violation of currently applicable pretreatment standards and could be
required to negotiate appropriate resolutions with the U.S. EPA and the MWRD
which could result in the payment of penalties. In the event Acme is
unsuccessful in its challenge of U.S. EPA's actions, capital expenditures
required to bring its discharges to the MWRD into compliance with the current
applicable pretreatment standards are estimated at approximately $6 million.
Although Acme is vigorously pursuing its administrative and judicial
remedies and would vigorously contest any action to assess civil penalties
against Acme, the Company does not have sufficient information to estimate its
potential liability, if any, if Acme's efforts to obtain such relief, or contest
such penalty assessments, are not successful.
ILLINOIS STATE IMPLEMENTATION PLAN FOR PARTICULATES. Acme, together with
other Illinois steel companies, engaged in extensive discussions with the IEPA
leading to the development of regulations governing the emissions of particulate
matter from various steel manufacturing facilities operated by Acme and others.
These regulations were submitted to the U.S. EPA for approval as part of IEPA's
State Implementation Plan ("SIP").
On November 18, 1994, the U.S. EPA conditionally approved these regulations.
The conditions imposed by the U.S. EPA for this SIP approval required a
commitment by the IEPA to adopt more stringent rules for various sources at Acme
and other steel companies. Acme, together with other steel companies, filed a
Petition for Review of U.S. EPA's action in the U.S. Court of Appeals for the
Seventh Circuit on January 4, 1995 (Docket No. 95-1025).
The steel companies, including Acme, are engaged in discussions with the
U.S. EPA and the IEPA regarding the need for these more stringent rules and what
additional particulate emission controls, if any, may be appropriate or required
under Federal law. These discussions and the Petition for Review are pending and
no estimate can be made whether additional emission controls will be required or
the cost of such controls at this time.
Other Matters
ACME STEEL COMPANY - MELT SHOP DESULFURIZATION FUGITIVE EMISSIONS. Following
internal reviews of current desulfurization requirements, Acme determined that
existing environmental controls for desulfurizing molten iron at its Riverdale,
Illinois, melt shop were not sufficient to control fugitive emissions from this
process. The higher percentage of molten iron needing desulfurization is a
result of increased market place demands for lower sulfur content in finished
steel goods sold by Acme.
Acme, after completion of its internal review and preliminary engineering
evaluation, requested a meeting and began discussions with the U.S. EPA and IEPA
in August 1994 regarding an improved fugitive emission control program. During
these discussions, concerns were raised regarding fugitive emissions from the
iron transfer station and Acme will include this operation in its new emission
control system. The cost of this emission control system, which will be
completed in 1995, is currently estimated to be $2.5 million.
11
<PAGE>
Discussions are ongoing with the environmental agencies towards a final
agreement on this new control system. U.S. EPA has indicated it may seek
penalties for past violations and for any economic benefit which may have
accrued to Acme by reason of a delay in achieving compliance with fugitive
emission regulations for the iron desulfurization and transfer operations under
U.S. EPA's civil penalties policies. The Company does not believe Acme incurred
any economic benefits from delayed compliance with respect to these emissions
and intends to vigorously oppose any efforts to assess such penalties against
Acme.
METROPOLITAN WATER RECLAMATION DISTRICT OF GREATER CHICAGO (MWRD) - CEASE
AND DESIST ORDERS (C&D ORDER). Cease and Desist Order No. 32453. On March 24,
1994, the MWRD issued C&D Order No. 32453 relating to Acme's self-reported
discharges of total cyanide to the MWRD's sanitary sewer system in quantities in
excess of the limits authorized by the MWRD's Sewage and Waste Control Ordinance
at its Chicago, Illinois Coke Plant. Following extensive investigation of the
cause and evaluation and testing of appropriate treatment methodologies, Acme
selected a treatment system and submitted a proposed construction schedule to
the MWRD for review. The cost of this treatment system will be approximately
$1.1 million. In the interim, the MWRD has agreed to extend the date for
demonstrating compliance at this source to March 23, 1995, and based on
reasonable progress towards achieving compliance, further extensions of this
deadline.
Cease and Desist Order No. 38357. On July 13, 1994, the MWRD issued C&D
Order No. 38357 relating to Acme's self-reported discharges of lead, mercury,
iron and pH in quantities in excess of, or out of the range of, the limits
authorized by the MWRD's Sewage and Waste Control Ordinance. Following
investigation and corrective action, these violations were corrected for all
parameters except lead. Acme is continuing its investigation of the potential
source(s) of the excess lead discharges and whether modifications will be
necessary for the treatment system at this source at its Riverdale, Illinois
plant. Pending the completion of these investigations and evaluations, the
Company is unable to determine the cost to demonstrate compliance at this
source. Acme intends to seek an extension from the MWRD of the date for
demonstrating compliance with the lead limitations. If the MWRD does not grant
an extension, Acme may be subject to penalties until compliance is achieved.
1986 REORGANIZATION MATTERS. Pursuant to an Agreement and Plan of
Reorganization dated as of March 5, 1986, (the "Reorganization") between the
Company and Interlake entered into a Cross-Indemnification Agreement, dated May
29, 1986, (the "Agreement") more specifically described in Exhibit 10.2 to the
Company's Annual Report/Form 10-K filed with the U.S. Securities Exchange
Commission for the fiscal year 1992.
Pursuant to the terms of this Agreement, for a period of ten (10) years
following the date of the Spin-Off (as said term is identified in the
Reorganization documents), the Company undertook to defend, indemnify and hold
Interlake and its affiliates harmless from and against any and all Claims, as
that term is defined in the Agreement, occurring either before or after the date
of the Reorganization and which arose out of or are related to the Acme
Business. The Acme Business is more specifically defined in the Agreement as the
iron and steel and domestic U.S. steel strapping business as conducted by the
Company on or about May 29, 1986. The indemnification by the Company of
Interlake with respect to any claims includes, but is not limited to, all claims
asserted in connection with the Company's interests or obligations with respect
to: Wabush Iron Company, Ltd.; Wabush Mines; Erie Mining Company; Olga Coal
Company; assets and liabilities related to qualified welfare and benefit plans
with respect to retired, current and future employees of the Company; certain
environmental matters relating to the Acme Business, whether brought by a
governmental agency or a private entity; workers' compensation matters and
occupational safety, health and administration matters; and product liability
and general liability matters related to the Acme Businesses. The Agreement
designated certain mineral property interests retained by the Company, including
land held for the account of the Company by Syracuse Mining Company, a
subsidiary of Pickands Mather and Company; stock of Tilden Iron Mining Company;
and, lands in Bruce County, Ontario, Canada, being within the scope of the
indemnification.
Similarly, and for the same period of time, Interlake undertook to defend,
indemnify and hold the Company and its affiliates harmless from and against all
Claims, as that term is defined in the Agreement,
12
<PAGE>
occurring either before or after the date of the Reorganization related to the
operation of all businesses and properties currently owned, directly or
indirectly, by Interlake or any subsidiary of Interlake (other than the Company
and its affiliates) and relating to the Transferred Property, as that term is
defined in the Reorganization Agreement (but excluding the Acme Business), and,
any business and properties discontinued or sold by Interlake Inc. prior to May
29, 1986, including any discontinued or sold businesses or property which, if
continued, would be part of the Acme Business. The indemnification by Interlake
with respect to any Claims incurred in connection with or arising out of or
related to the Interlake Business, as that term is defined more specifically in
the Agreement, includes but is not limited to: those claims asserted in
connection with certain stock options, rights, awards and programs; certain
deferred compensation matters; certain matters arising under qualified welfare
and benefit plans and post-retirement income plans; and, environmental matters
relating to the Interlake Businesses whether brought by governmental agencies or
private entities. These environmental matters include, without limitation, the
lawsuit captioned People of the State of Illinois v. Waste Management of
Illinois, Interlake, Inc. and First National Bank of Western Springs, Circuit
Court of Cook County, Illinois (No. 85 L 30162); the disposal of materials at
the landfill operated by Conservation Chemical located at Gary, Indiana, to the
extent such materials originated at the plant of Gary Steel Company; and,
operation of facilities by predecessors of Interlake, Inc. at Duluth, Minnesota;
workers' compensation, occupational safety and health matters relating to the
Interlake Business; general products liability and general litigation matters
related to the Interlake Business; and, the matters arising from Lake Mining
Company, Mauthe Mining Company, Odanah Iron Company, Vermillion Mining Company
and Western Mining Company.
Pursuant to this Agreement, Interlake has provided the defense and paid all
costs in the matter of City of Toledo v. Beazer Materials and Services, Inc.,
successor-in-interest to Koppers Company, Inc., Toledo Coke Corporation, the
Interlake Corporation, successor-in-interest to Interlake, Inc., The Interlake
Companies, Inc., successor-in-interest to Interlake, Inc., Acme Steel Company,
Successor-in-interest to Interlake, Inc., United States District Court, Northern
District of Ohio, Western Division, Case No. 3:90 CV 7344, which is an action
for declaratory and injunctive relief by the City of Toledo (the "City") to
recover its past and future costs and damages associated with the presence of
and release of hazardous substances, hazardous wastes, solid waste, industrial
waste and other waste at or about property located on Front Street in Toledo,
Ohio. The City seeks relief pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Resource Conservation
Recovery Act ("RCRA") and on the basis of nuisance. City claims that the
defendants owned and/or operated facilities located on Front Street in Toledo,
Ohio which generated, transported and/or treated, stored or disposed of
hazardous substances, hazardous wastes, solid wastes and industrial wastes or
other wastes which were released at and from the facility by defendants or
successors-in-interest to the entities which owned, operated, generated,
transported and/or treated, stored or disposed of said substances. The trial of
the Phase I issues (RCRA claims) in this case was concluded in late 1994;
however, the Court has not rendered a decision on the Phase I claims.
Interlake also has and continues to provide indemnification to the Company
for the Duluth, Minnesota, facility which has been designated as a Superfund
Site pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Section 9601, et seq. Interlake's
estimate, obtained from publicly filed documents, of the potential remediation
costs of contaminated soils, under alternatives Interlake deems appropriate and
which it indicates are consistent with U.S. EPA's policy guidance and the
Minnesota environmental agency ("MPCA"), range from $3 to $4 million. Other
remediation plans for the contaminated soils which contemplate the continued
industrial use of the property could cost as much as $20 million. However,
Interlake believes that the risks and other assumptions associated with these
plans may be overstated. The MPCA also requested Interlake to investigate and
evaluate remediation alternatives for the underwater sediments at the Duluth
site; however, Interlake indicates it is unable to provide meaningful estimates
of the potential cost estimates of such remediation, if any is deemed
appropriate, until the investigation is complete and remediation alternatives
are reviewed with the MPCA.
13
<PAGE>
To date, Interlake has met its obligations under the Cross-Indemnification
Agreement with respect to all matters covered therein affecting the Company,
including those matters related to litigation and environmental matters. The
Company does not have sufficient information to determine the potential
liability of the Company, if any, for the matters covered by the Agreement in
the event Interlake fails to meet its obligations thereunder in the future. In
the event Interlake, for any reason, was unable to fulfill its obligations under
the Cross-Indemnification Agreement, the Company could have increased future
obligations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders during
the last quarter of the last fiscal year.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND
RELATED SHAREHOLDER MATTERS
The information relating to the market for the Company's common stock and
related shareholder matters appears in the note to consolidated financial
statements titled Long-term Debt and Revolving Credit Agreement, page 46, and on
page 1 under the captions Stock Market Information and Dividend Policy which is
incorporated by reference in this Form 10-K Annual Report.
14
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
TEN YEARS IN REVIEW (dollars in thousands except for per share data)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Income Data
Net sales $ 522,880 $ 457,406
--------------------------------------------------------------------------------------------
Gross profit $ 76,288 $ 45,223
--------------------------------------------------------------------------------------------
Income (loss) before income taxes, extraordinary items and
cumulative effect of changes in accounting principle $ 28,693 $ 10,432
--------------------------------------------------------------------------------------------
Income tax provision (credit) $ 9,935 $ 4,173
--------------------------------------------------------------------------------------------
Net income (loss) before extraordinary items and cumulative effect
of changes in accounting principle $ 18,758 $ 6,259
--------------------------------------------------------------------------------------------
Extraordinary credit resulting from utilization of net operating
loss
--------------------------------------------------------------------------------------------
Extraordinary expense item related to penalty on prepayment of debt $ (1,787)
--------------------------------------------------------------------------------------------
Cumulative effect on prior years of changes in accounting principle
--------------------------------------------------------------------------------------------
Net income (loss) $ 16,971 $ 6,259
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Per Share Data
Income (loss) before extraordinary (expense) credit and cumulative
effect of changes in accounting principle $ 2.38 $ 1.15
--------------------------------------------------------------------------------------------
Extraordinary credit (expense) item $ (0.22)
--------------------------------------------------------------------------------------------
Weighted average shares outstanding (in thousands) 7,873 5,439
--------------------------------------------------------------------------------------------
Cumulative effect of changes in accounting principle
--------------------------------------------------------------------------------------------
Net income (loss) $ 2.16 $ 1.15
--------------------------------------------------------------------------------------------
Shareholders' equity $ 19.31 $ 15.39
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Balance Sheet
Current assets $ 273,842 $ 170,394
--------------------------------------------------------------------------------------------
Property, plant and equipment, net $ 148,829 $ 115,539
--------------------------------------------------------------------------------------------
Total assets $ 682,330 $ 333,869
--------------------------------------------------------------------------------------------
Current liabilities $ 81,391 $ 77,197
--------------------------------------------------------------------------------------------
Long-term debt $ 265,055 $ 49,333
--------------------------------------------------------------------------------------------
Shareholders' equity $ 223,278 $ 83,203
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Cash flows
Net cash provided by (used for) operating activities $ 47,422 $ 16,041
--------------------------------------------------------------------------------------------
Net cash used for investing $(334,124) $ (11,749)
--------------------------------------------------------------------------------------------
Net cash provided by (used for) financing $ 312,897 $ (3,072)
--------------------------------------------------------------------------------------------
Net increase (decrease) in cash $ 26,195 $ 1,220
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Ratio Analysis ( percent)
Gross profit margin 14.6 9.9
--------------------------------------------------------------------------------------------
Pre-tax margin 5.5 2.3
--------------------------------------------------------------------------------------------
Net margin 3.3 1.4
--------------------------------------------------------------------------------------------
Return on shareholders' equity 11.1 7.3(d)
--------------------------------------------------------------------------------------------
Debt as a percentage of capitalization 54 40
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Additional Information
Depreciation $ 15,514 $ 15,234
--------------------------------------------------------------------------------------------
Capital expenditures $ 56,339 $ 11,749
--------------------------------------------------------------------------------------------
Working capital $ 192,451 $ 93,197
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
<FN>
(a) Includes net transactions with Interlake prior to the public company
formation.
(b) Computed before cumulative effect of changes in accounting principle.
(c) Includes result of cumulative effect of changes in accounting principle and
an $8 million reduction in retained earnings related to a minimum pension
liability adjustment.
(d) Includes a $13.1 million reduction in retained earnings related to a
minimum pension liability adjustment.
</TABLE>
15
<PAGE>
Certain amounts have been reclassified to conform with the 1994 presentation. A
ten-year presentation is provided. Acme Metals Incorporated, formerly Acme Steel
Company, became a public company in 1986 when, following the reorganiza-
tion of Interlake, Inc., the shares of the company were distributed to
shareholders of The Interlake Corporation, pursuant to a reorganization of
Interlake, Inc. Financial data for 1985 has been reconstructed.
<TABLE>
<CAPTION>
1992 1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------
$ 391,562 $ 376,951 $ 446,042 $ 439,412 $ 412,453 $ 335,488 $ 240,314 $ 239,861
----------------------------------------------------------------------------------------------
$ 29,546 $ 27,748 $ 36,712 $ 51,886 $ 54,493 $ 31,314 $ 14,174 $ 12,032
----------------------------------------------------------------------------------------------
$ (4,522) $ (3,050) $ 9,388 $ 26,126 $ 30,982 $ 13,302 $ (21,103) $ (2,847)
----------------------------------------------------------------------------------------------
$ (1,673) $ (732) $ 3,755 $ 9,926 $ 12,393 $ 6,360 $ (1,451)
----------------------------------------------------------------------------------------------
$ (2,849) $ (2,318) $ 5,633 $ 16,200 $ 18,589 $ 6,942 $ (21,103) $ (1,396)
----------------------------------------------------------------------------------------------
$ 1,010 $ 6,041
----------------------------------------------------------------------------------------------
$ (50,323)
----------------------------------------------------------------------------------------------
$ (53,172) $ (2,318) $ 5,633 $ 16,200 $ 19,599 $ 12,983 $ (21,103) $ (1,396)
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
$ (0.53) $ (0.43) $ 1.05 $ 3.00 $ 3.22 $ 1.19 $ (3.66) $ (0.24)
----------------------------------------------------------------------------------------------
0.17 1.03
----------------------------------------------------------------------------------------------
5,396 5,373 5,356 5,393 5,776 5,856 5,769 N/A
----------------------------------------------------------------------------------------------
$ (9.32)
----------------------------------------------------------------------------------------------
$ (9.85) (0.43) 1.05 3.00 3.39 2.22 (3.66) (0.24)
----------------------------------------------------------------------------------------------
$ 16.55 $ 28.13 $ 28.65 $ 27.63 $ 24.62 $ 21.43 $ 19.01 $ 19.31
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
$ 148,860 $ 134,192 $ 126,497 $ 149,199 $ 102,572 $ 86,117 $ 70,772 $ 58,837
----------------------------------------------------------------------------------------------
$ 120,689 $ 129,730 $ 133,419 $ 116,552 $ 104,024 $ 99,285 $ 91,583 $ 88,806
----------------------------------------------------------------------------------------------
$ 300,702 $ 290,736 $ 286,603 $ 285,275 $ 224,070 $ 201,155 $ 177,085 $ 171,205
----------------------------------------------------------------------------------------------
$ 59,425 $ 50,027 $ 50,026 $ 57,683 $ 66,331 $ 51,511 $ 47,297 $ 49,250
----------------------------------------------------------------------------------------------
$ 56,000 $ 59,500 $ 59,500 $ 59,500 $ 9,500 $ 9,500 $ 10,000
----------------------------------------------------------------------------------------------
$ 89,295 $ 150,664 $ 152,370 $ 147,106 $ 130,390 $ 124,775 $ 110,486 $ 110,474
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
$ 24.018 $ 21,721 $ 24,045 $ 20,805 $ 23,252 $ 22,750 $ (5,731) $ 18,128
----------------------------------------------------------------------------------------------
$ (6,562) $ (10,611) $ (37,693) $ (38,804) $ (16,014) $ (18,909) $ (12,363) $ (6,754)
----------------------------------------------------------------------------------------------
$ 34 $ (443) $ (328) 50,155 $ (15,410) $ 1,213 $ 22,947 (11,381)(a)
----------------------------------------------------------------------------------------------
$ 17,490 $ 10,667 $ (13,976) $ 32,156 $ (8,172) $ 5,054 $ 4,853 $ (7)(a)
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
7.5 7.4 8.2 11.8 13.2 9.3 5.9 5.0
----------------------------------------------------------------------------------------------
(1.2 (b) (0.8) 2.1 5.9 7.5 4 (8.8) (1.2)
----------------------------------------------------------------------------------------------
(0.7 (b) (0.6) 1.3 3.7 4.8 3.9 (8.8) (0.6)
----------------------------------------------------------------------------------------------
(59.5 (c) (1.5) 3.8 11.6 15 11 (17.9) (1.2)
----------------------------------------------------------------------------------------------
40 (c) 28 28 29 7 7 8
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
$ 14,705 $ 14,224 $ 13,031 $ 12,031 $ 10,742 $ 9,873 $ 9,629 $ 9,202
----------------------------------------------------------------------------------------------
$ 7,557 $ 10,611 $ 28,604 $ 14,960 $ 9,314 $ 7,151 $ 12,363 $ 6,754
----------------------------------------------------------------------------------------------
$ 89,435 $ 84,165 $ 76,471 $ 91,516 $ 36,241 $ 34,606 $ 23,475 $ 9,587
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage
relationship that items in the Statements of Operations bear to net sales.
<TABLE>
<CAPTION>
For the Years Ended
<S> <C> <C> <C>
-------------------------------------------------
<CAPTION>
December 25, December 26, December 27,
1994 1993 1992
--------------- --------------- ---------------
<S> <C> <C> <C>
NET SALES 100.0% 100.0% 100.0%
----- ----- -----
COSTS AND EXPENSES:
Cost of products sold 82.5 86.9 88.8
Depreciation expense 2.9 3.2 3.7
----- ----- -----
Gross profit 14.6 9.9 7.5
Selling and administrative expense 6.4 6.7 7.4
Restructuring/nonrecurring charges 1.8 0.4 0.6
----- ----- -----
Operating income (loss) 6.4 2.8 (0.5)
Interest expense, net (1.2) (0.9) (1.0)
Other non-operating income, net 0.3 0.1 0.1
Unusual income items 0.0 0.3 0.3
Income tax provision (credit) 1.9 0.9 (0.4)
----- ----- -----
Net income (loss) before extraordinary item and cumulative
effect of accounting changes 3.6 1.4 (0.7)
Cumulative effect of changes in accounting principles, net
of taxes (12.9)
----- ----- -----
Net income (loss) before extraordinary item 3.6 1.4 (13.6)
Extraordinary item, net of taxes (0.3) 0.0
----- ----- -----
Net income (loss) 3.3% 1.4% (13.6)%
----- ----- -----
----- ----- -----
</TABLE>
FISCAL 1994 AS COMPARED TO FISCAL 1993
NET SALES. In 1994, the Company continued to enjoy an improvement both in
order volume and prices that benefitted the steel industry and the national
economy as a whole. Order rates for all of the Company's products increased as
sales volume improved 13 percent during the year. As a result of the improving
economy and price increases, the Company experienced the highest quarterly net
sales in its history in 1994's fourth quarter achieving sales of $143.3 million.
Consolidated net sales of $522.9 million for the year ended December 25, 1994
were $65.4 million, or 13 percent higher than net sales in 1993. Higher shipment
volume represented a $37.7 million increase in sales supplemented by a 6 percent
increase in average selling prices over last year's comparable period. The
increased selling prices had a $27.7 million favorable impact on sales in
comparison to 1993.
STEEL MAKING SEGMENT. Net sales for the Steel Making Segment advanced to
$349.4 million in 1994, a $45.6 million, or 15 percent, improvement over last
year's comparable period. Sales to unaffiliated customers increased 23 percent
to $231.2 million while intersegment sales of $118.2 million were 2 percent
higher than in 1993. The increase in the Steel Making Segment's net sales was
the result of the phase in of two separate 2 percent price increases in average
selling prices as well as the full year impact of 1993's price increases and a
15,694 ton increase in shipments of flat-rolled products.
STEEL FABRICATING SEGMENT. Steel Fabricating Segment net sales of $293.5
million in 1994 were $21.9 million, or 8 percent, higher than the comparable
period in the prior year. An increase in average selling prices accounted for
$15.9 million of the sales improvement while increased shipments generated the
remainder of the increase over last year.
17
<PAGE>
Sales of steel strapping and strapping tools totaled $166.8 million in 1994,
a $12.7 million, or 8 percent, increase over a year earlier. Increased volume
accounted for $8.6 million, or 68 percent, of the improvement over last year's
results. Average selling prices were 3 percent higher than last year's levels
with all of the increase coming in the latter part of the year.
Steel tube sales for 1994 reached $82.8 million, up 11 percent from the
prior year. The $8.6 million improvement in sales was due entirely to increased
average selling prices. Selling prices rose 18 percent during the year while
shipments fell 7 percent due to on-going rationalization of customer base
towards higher margin accounts.
Sales of jacks and lifting tools for cars and light trucks totaled $43.9
million, 2 percent higher than the prior year. The improvement in sales was due
entirely to increased selling prices, which, on average, were slightly above the
previous year's levels.
COMPARATIVE SALES BY SEGMENT. The table below presents the percentage
make-up of the products comprising the Company's business segments, for the past
three years.
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Sheet and strip steel 38% 37% 33%
Semi-finished steel 4% 2% 2%
Iron products and other 2% 2% 2%
TOTAL STEEL MAKING SEGMENT 44% 41% 37%
Sheet strapping and strapping tools 32% 33% 36%
Welded steel tube 16% 16% 16%
Auto and light truck jacks 8% 10% 11%
TOTAL STEEL FABRICATING SEGMENT 56% 59% 63%
</TABLE>
GROSS PROFIT. The gross profit for the year ended December 25, 1994 of
$76.3 million was $31.1 million higher than the gross profit recorded during
last year's comparable period. The increase in gross profit was due to higher
average selling prices for the Company's products and increased shipment volume.
Operating costs, however, were higher in 1994. Higher material costs and higher
retiree insurance and pension costs were the primary reasons for the increased
operating costs. The gross profit, as a percentage of net sales, was 14.6
percent in 1994 versus 9.9 percent in last year's comparable period.
SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative expense
totaled $33.2 million (6.4 percent of net sales) and $30.6 million (6.7 percent
of net sales) for the years ended 1994 and 1993, respectively. While expenses
increased principally due to the increased sales activity, as a percentage of
sales they decreased.
OPERATING INCOME. Operating income for the Company for the year ended
December 25, 1994 was $33.6 million as compared to operating income of $12.7
million for the year ended December 26, 1993.
STEEL MAKING SEGMENT. Operating income for the Steel Making Segment totaled
$14.5 million, a significant improvement over operating income of $0.7 million
recorded in 1993. The Operating income in 1994 was reduced by a $9.5 million
non-cash, nonrecurring charge recorded to recognize the impairment of existing
steel making facilities and contractual employee reduction costs related to the
decision to proceed with the Modernization and Expansion Project. The earnings
improvement was driven by increased shipments and higher average selling prices.
Shipments to external customers in 1994 increased 62,000 tons over
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<PAGE>
the prior year while shipments to the Steel Fabricating Segment were 13,200 tons
lower than in 1993. Approximately 65 percent of 1994's shipments and gross
margin was attributable to external customers while the remaining 35 percent of
gross margin was generated by shipments to the Steel Fabricating Segment. In
1993, the Steel Making Segment shipped 60 percent of its products to external
customers which generated approximately 60 percent of its margin while shipments
to the Fabricating Segment produced the remaining 40 percent of gross margin.
The increased percentage of shipments to external customers in 1994 is
consistent with the Company's two-pronged strategy to obtain the highest
possible margin on flat-rolled steel and obtain the highest earnings for the
Company as a whole. In total, the increased shipments generated $8.1 million in
increased revenue while a 4 percent increase in average selling prices
contributed $11.4 million to the improvement over last year's results. Partially
offsetting the Steel Making Segment's sales related gains were increased
material costs, retiree and active medical costs, increased pension expense,
higher major maintenance spending, and increased selling expenses.
STEEL FABRICATING SEGMENT. Operating income for the Steel Fabricating
Segment of $19.0 million in 1994 was $7.1 million higher than the results
recorded in 1993. The segment benefitted from the strong economy and increased
average selling prices in 1994. Packaging, which sells steel strapping used to
secure various finished products to pallets or within shipping containers during
transportation, was helped by higher demand for its products in connection with
increases in the domestic construction and forest products markets. Alpha's
results advanced due to increased average selling prices resulting from a shift
from commodity markets to specialty value added tubing products. Alpha's
business also benefitted from higher margins due to increased demand for its
more technologically advanced products and gains in product quality and
manufacturing productivity. Downward pressure on its selling prices in 1994 left
Universal's operating income just slightly lower than that of the prior year.
Partially offsetting the Steel Fabricating Segment's sales and productivity
related gains were increased raw material costs in the form of higher flat-
rolled steel prices.
INTEREST EXPENSE. Interest expense increased significantly over the prior
year. The increase in interest expense of $8.6 million resulted from the
issuance of $255 million and the retirement of $50 million of long-term debt in
the third quarter of 1994. See LIQUIDITY AND CAPITAL RESOURCES AND LONG-TERM
DEBT AND REVOLVING CREDIT AGREEMENT IN THE NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.
INTEREST INCOME. Interest income was $6.1 million higher than in 1993 due
mainly to additional interest income earned on the net proceeds received from
the issuance of debt and equity during the year.
OTHER NON-OPERATING INCOME. Non-operating income in 1994 was $1.1 million
higher than last year's comparable period due primarily to a refund of prior
years' utility costs recorded in the current year.
INCOME TAX EXPENSE. The income tax expense in 1994 totaled $9.9 million
based on a 34.6 percent effective tax rate as compared to the $4.2 million
expense in 1993, based on a 40 percent effective rate. The reduction in the
effective tax rate was due primarily to the significant level of interest income
related to tax-free investments during the year.
NET INCOME. The Company recorded earnings of $17.0 million, or $2.16 per
share in 1994 versus the $6.3 million, or $1.15 per share, recorded in 1993. In
1994, net income per share was reduced by an extraordinary expense item of $1.8
million, net of tax, or 22 cents per share related to the early extinguishment
of debt in the third quarter.
FISCAL 1993 AS COMPARED TO FISCAL 1992
NET SALES. In 1993, the Company benefited from the strengthening economy in
terms of increased shipments and higher average selling prices. For the year,
consolidated net sales totaled $457.4 million, up $65.8 million, or 17 percent,
over 1992 sales. Shipments of products were strong, representing a $57.5 million
increase from last year's shipment volume levels. Average selling prices were 2
percent higher than in 1992 with all of the increase coming in the second half
of the year. The improvement in selling prices added $8.3 million to 1993 net
sales.
STEEL MAKING SEGMENT. Total net sales for the Steel Making Segment advanced
to $303.8 million in 1993, a $43.7 million, or 17 percent, improvement over the
prior year. Sales to unaffiliated customers
19
<PAGE>
increased 29 percent to $187.8 million while intersegment sales of $116.1
million were 1 percent higher than in 1992. The increase in total net sales was
principally the result of a 13 percent jump in shipments. Steel selling prices,
on average, were 3 percent higher than the prior year. Nearly all of the price
increases materialized in the second half of the year as the Steel Making
Segment began to benefit from two $20 per ton (5 percent) increases initiated in
the second and third quarters of 1993.
Sales of sheet and strip steel, which accounted for 94 percent of the Steel
Making Segment's sales in 1993, advanced $41.8 million, or 17 percent, over the
prior year. Semi-finished steel sales increased $3.3 million, or 45 percent,
over the prior year, while sales of iron products fell $1.5 million, or 18
percent, as compared to a year earlier.
STEEL FABRICATING SEGMENT. Steel Fabricating Segment net sales of $271.5
million were $24.6 million, or 10 percent, higher than the prior year. Higher
shipments accounted for $20 million of the improvement while a 2 percent
increase in average selling prices generated the remainder of the increase over
a year earlier.
Sales of steel strapping and strapping tools totaled $154.1 million in 1993,
an $11.7 million, or 8 percent, increase over a year earlier. Increased shipping
volume accounted for $9.4 million, or 80 percent, of the improvement over the
prior year's results. Average selling prices were 2 percent higher than the
prior year's levels with all of the increase coming in the latter part of the
year.
Steel tube sales for 1993 reached $74.3 million, up 17 percent from the
prior year. The $10.8 million improvement in sales was due mainly to increased
shipping volume. Selling prices rose 4 percent during the year with most of the
increase in the last half of 1993.
Sales of jacks and lifting tools for cars and light trucks totaled $43.1
million, 5 percent higher than the prior year. The improvement in sales was due
entirely to increased shipping volume as selling prices, on average, were
slightly below the prior year's levels.
GROSS PROFIT. Gross profit as a percent of consolidated net sales in 1993
was 9.9 percent, the highest percentage since 1989. The gross profit percentage
in 1992 was 7.5 percent. Increased sales volume and higher average selling
prices were the primary determinants for the significant increase in gross
profit over last year. Operating costs, however, were higher in 1993. Labor
costs increased due to a combination of higher overtime premiums and incentive
bonuses, a negotiated bonus payment to Acme's and Packaging's union workers at
the Riverdale facilities for ratifying the one year labor contract that ended
August, 1993 of $0.8 million and a union signing bonus and lump sum payments
negotiated as part of the current labor contract resulting in charges of $0.3
million during the year. Unplanned expenditures to repair Acme's basic oxygen
furnace and primary rolling mill also reduced gross profit in 1993. Pension
expense was $1.5 million higher than in 1992 as the Company recorded a $0.3
million expense in 1993 versus a $1.2 million pension benefit in the prior year.
Depreciation increased $0.5 million over the last year due partially to a major
relining of Acme's blast furnace in 1990.
SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative expenses in
1993 were $1.7 million higher than the prior year. However, on a percentage of
sales basis, selling and administrative expenses improved over the prior year as
expenses totaled 6.7 percent of sales in 1993 versus 7.4 percent in 1992. The
Company began to benefit from lower labor costs resulting from a program,
initiated in the 1992 third quarter and substantially completed by year end, to
reduce the Company's salaried employee work-force by 10 percent. The 1993
savings from this program were sufficient to offset higher medical costs for
selling and administrative employees.
RESTRUCTURING CHARGE. During 1992, the Company recorded a $2.7 million
restructuring charge in connection with its 10 percent salaried work force
reduction which was completed during 1993. This charge covered additional
pension liability and extra vacation pay as part of an early retirement offer
and severance payments for involuntary separations. See RESTRUCTURING CHARGE in
the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for further specific
components of the charge.
20
<PAGE>
NONRECURRING CHARGE. The Company recorded a $1.9 million non-recurring
charge in 1993 in connection with the $1.3 million write-off of Acme's No. 3 Hot
Strip Mill and Billet Mill and a $0.6 million expense to close Packaging's
Pittsburg-East facility in California and write off a strapping line at its New
Britain, Connecticut, facility.
OPERATING INCOME. Operating income for the Company was $12.7 million in
1993 as compared to an operating loss of $2.1 million in 1992.
STEEL MAKING SEGMENT. Operating income for the Steel Making Segment totaled
$0.7 million, a significant improvement over the $9.3 million loss from
operations recorded in 1992. The earnings improvement was driven by increased
shipments and higher average selling prices. Shipments to external customers in
1993 increased 87,000 tons over the prior year while shipments to the Steel
Fabricating Segment were 5,600 tons lower than in 1992. Approximately 60 percent
of 1993's shipments and gross profit was attributable to external customers
while the remaining 40 percent of gross profit was generated by shipments to the
Steel Fabricating Segment. In 1992, the Steel Making Segment shipped 55 percent
of its products to external customers which generated 52 percent of its gross
profit while shipments to the Steel Fabricating Segment produced the remaining
48 percent of gross profit. The increased percentage of shipments to external
customers in 1993 is consistent with the Company's two-pronged strategy to
obtain the highest possible margin on flat-rolled steel and obtain the highest
earnings for the Company as a whole. In total, the increased shipments generated
$8.6 million in increased revenue while a 3 percent increase in average selling
prices contributed $5.9 million to the improvement over the prior year's
results. Partially offsetting the Steel Making Segment's sales related gains
were increased labor costs in connection with overtime and union negotiated
payments, unexpected repairs to its basic oxygen furnace and primary rolling
mill and a $1.3 million write-off of the No. 3 Hot Strip Mill recorded in the
fourth quarter.
STEEL FABRICATING SEGMENT. Operating income for the Steel Fabricating
Segment of $11.9 million in 1993 was $4.6 million higher than the results
recorded in 1992. The Steel Fabricating Segment benefited from the improving
economy and increased average selling prices in 1993.
Partially offsetting the Steel Fabricating Segment's sales and productivity
related gains were increased raw material costs in the form of higher
flat-rolled steel prices and a $0.6 million expense to close Packaging's
Pittsburg-East facility in California and the write-off of a strapping line at
its New Britain, Connecticut facility. Packaging, which sells steel strapping
used to secure various finished products to pallets or within shipping
containers during transportation, was helped by higher demand for its products
in connection with increased U.S. industrial output.
Alpha's results advanced due to the improvement in the housing and
recreational product markets. Alpha Tube's business also benefited from higher
margins due to increased demand for its more technologically advanced products
and gains in product quality and manufacturing productivity.
Despite downward pressure on its selling prices in 1993, Universal's
business achieved record results due to improved manufacturing productivity.
INTEREST EXPENSE AND INCOME. Interest expense was slightly lower than the
prior year. The decrease resulted from a reduced balance on the Company's
long-term debt as the result of a $3.5 million principal payment in May 1993.
Interest income was $0.1 million lower than in 1992 due mainly to reduced
returns on cash balances.
NON-OPERATING INCOME. In 1993, the Company recorded a $1.2 million pre-tax
gain as the result of a settlement of prior claims against LTV Steel Company
(LTV) by Wabush Iron, in an iron ore mine equity interest held by Acme, pursuant
to the finalization of LTV's plan of reorganization. The sale of all of the
Company's interests in a coal producing property located in West Virginia added
approximately $1 million to pre-tax income in 1992.
INCOME TAX EXPENSE. The income tax expense for 1993 equaled $4.2 million
based on a 40 percent effective tax rate. Because of a loss in 1992, the Company
recognized income tax benefits of $1.7 million in 1992, based on a 37 percent
effective tax rate.
21
<PAGE>
NET INCOME. For 1993, the Company registered net income of $6.3 million, or
$1.15 per share. In 1992, the Company incurred a net loss of $2.8 million, or 53
cents per share, before the cumulative effect of changes in accounting
principles. The improvement in net income was due primarily to increased
shipments, and to a lesser extent, higher average selling prices for steel,
steel strapping and welded steel tube.
In 1992, the Company adopted both FAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions and FAS No. 109, Accounting for
Income Taxes. The cumulative effect of adopting FAS No. 106 resulted in a $42.2
million after-tax charge to 1992 earnings. The cumulative effect of the adoption
of FAS No. 109 increased the 1992 net loss by $8.1 million.
FISCAL 1992 AS COMPARED TO FISCAL 1991
NET SALES. As a result of the modest economic recovery that began in 1992,
consolidated net sales of $391.6 million were $14.6 million, or 4 percent,
higher than prior year consolidated net sales. Shipments of products rebounded,
representing a $22 million increase from 1991 levels. However, selling prices on
average declined 2 percent from the prior year's prices. The weakness in selling
prices, particularly for steel and steel strapping products, had a $7.4 million
negative effect on 1992 sales.
STEEL MAKING SEGMENT. Sales for the Steel Making Segment of $260.1 million
in 1992 were up modestly (4 percent) over the year earlier due entirely to
increased shipments as average selling prices were 2 percent lower than 1991
price levels. Sales to unaffiliated customers increased 3 percent to $145.6
million while inter segment sales of $114.5 million were 4 percent higher than
in 1991.
STEEL FABRICATING SEGMENT. Steel Fabricating Segment sales of $247.0
million in 1992 were $10.9 million, or 5 percent, higher than the prior year.
Steel strapping sales of $142.3 million in 1992 were unchanged. Sales of steel
tubing amounted to $63.5 million in 1992, up 4 percent from a year earlier while
auto and truck jack sales of $41.2 million increased 20 percent over the 1991
levels.
GROSS PROFIT. Gross profit as a percent of consolidated net sales equaled
7.5 percent in 1992, an improvement over the 7.4 percent registered in 1991. The
improvement in the 1992 gross profit over the prior year was the result of
reduced material costs and lower expenditures in connection with the Company's
aggressive cost control efforts. These cost reduction measures were more than
enough to overcome a combination of unfavorable margin impacts resulting from
lower average selling prices for most of the Company's products, a 12 percent
jump in costs associated with medical and life insurance coverage for the
Company's active and retired employees, increased property and franchise taxes
and expenses for a feasibility study of options for building a new continuous
thin slab caster/hot strip mill complex at Acme's Riverdale facility. The
Company's gross profit margin benefited from a $1 million pension benefit in
1992, compared to no benefit in 1991. Depreciation expense increased $0.5
million in 1992 over the prior years' expense partially due to the major
relining of the Company's blast furnace in 1990.
SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative expenses in
1992 were approximately the same as in 1991. As a percent of sales, selling and
administrative expenses were 7.4 and 7.8 percent in 1992 and 1991, respectively.
The Company began to benefit from lower labor costs resulting from a program,
initiated in the 1992 third quarter and substantially completed by year end, to
reduce its salaried employee work-force by 10 percent. The 1992 savings from
this program were sufficient to offset higher medical costs for selling and
administrative employees. Expenses associated with the reorganization of the
Company, completed in June 1992, added about $0.4 million to selling and
administrative costs in 1991.
RESTRUCTURING CHARGE. During 1992, the Company recorded a $2.7 million
restructuring charge in connection with its 10 percent salaried work force
reduction. This charge covered additional pension liability and extra vacation
pay as part of an early retirement offer as well as severance payments in
conjunction with involuntary separations.
OPERATING INCOME (LOSS). The operating loss for the Company was $2.1
million in 1992 as compared to a $1.5 million loss recorded in 1991.
STEEL MAKING SEGMENT. The Steel Making Segment incurred a $9.4 million
operating loss in 1992 as compared to a $4.4 million loss in 1991. The $5
million decline in the Steel Making Segment's results was primarily due to a
combination of a two percent decline in average selling prices for sheet, strip
and
22
<PAGE>
semifinished steel which decreased sales by $4.8 million partially offset ($2.9
million) by a 9 percent increase in steel shipments, a $2.2 million reduction in
operating income due to a $6 million decline in iron sales as the result of a
one-time spot sale of molten iron to LTV Steel Company, Inc. in 1991 and a $2.7
million restructuring charge in connection with a 10 percent salaried work force
reduction plan. Operating costs, however, were lower than in 1992 due to reduced
material costs and lower expenditures.
STEEL FABRICATING SEGMENT. Operating income for the Steel Fabricating
Segment of $7.1 million in 1992 was $4.6 million higher than the results
recorded in 1991. Packaging's 1992 results were $0.1 million, or 3 percent,
lower than the prior year due almost entirely to a 3 percent drop in average
selling prices. Alpha's results in 1992 were $2.8 million higher than in 1991 as
the result of lower raw material costs and more efficient operations.
Universal's operating income jumped $1.9 million due to a 19 percent increase in
shipments.
INTEREST EXPENSE AND INCOME. Interest expense remained constant from 1991
to 1992. Interest income grew $0.4 million primarily because of higher cash
balances during the year.
NON-OPERATING INCOME. The sale of all of the Company's interests in a coal
producing property located in West Virginia added approximately $1 million to
pre-tax income in 1992. In 1991, pre-tax income benefited from a one-time gain
of $1.2 million in connection with the assignment to a third party of the
Company's rights in claims allowed in the LTV Steel Company, Inc Bankruptcy.
Other non-operating income dropped by $1 million from a year earlier stemming
principally from lower royalty income from coal properties and a $0.4 million
loss on disposal of fixed assets recorded in 1992.
INCOME TAX EXPENSE. Because of the Company's losses in 1992 and 1991, the
Company recognized income tax benefits of $1.7 million in 1992, based on a 37
percent effective tax rate, and $0.7 million in 1991, based on a 24 percent
effective tax rate. The Company adopted FAS No. 109, Accounting for Income Taxes
in 1992. The impact of the adoption of this pronouncement on 1992's results was
to increase the credit for taxes by $0.9 million.
NET (LOSS). For 1992, the Company suffered a net loss of $2.8 million, or
53 cents per share, before the cumulative effect of changes in accounting
principles. In 1991, the Company incurred a net loss of $2.3 million, equal to
43 cents per share. The decline in operating earnings was due primarily to
weaker selling prices for steel and steel strapping.
The Company was required to change its accounting for retiree health care
and life insurance to conform with FAS No. 106, Employers' Accounting for
Postretirement Benefits other than Pensions. The Company chose to adopt this
accounting standard effective December 30, 1991, the first day of the Company's
1992 fiscal year. The transition effect of adopting FAS No. 106 resulted in a
$67.6 million charge to 1992 earning, partially offset by $25.4 million in
income tax effects.
The Company also elected to adopt FAS No. 109, Accounting for Income Taxes
in 1992. This accounting standard prescribes a new method of accounting for
deferred income taxes and requires the restatement of prior year deferred income
taxes. The cumulative effect of the adoption of this pronouncement increased the
1992 net loss by $8.1 million.
LIQUIDITY AND CAPITAL RESOURCES
As of December 25, 1994, the Company's long-term indebtedness was $265
million. The Company also currently has an unused $80 million Working Capital
Facility with an initial term of three years from the date of consummation of
the Note Offering. At December 25, 1994, the Company's ratio of debt to total
capitalization was .54 to 1.
On March 28, 1994, the Company sold special warrants on a private placement
basis exclusively in Canada and Europe. On August 11, 1994, the special warrants
were exercised on a one-for-one basis for 5,600,000 shares of the Company's
Common Stock. Furthermore, the Company sold 375,000 shares of it's common stock
to Raytheon Engineers & Constructors, Inc. ("Raytheon") for $24 per share less
issuance costs. The total net proceeds from the equity issued during the year
was $119.3 million.
23
<PAGE>
The Company's cash and cash equivalents balance at December 25, 1994 was
$76.6 million. The Company historically has financed its operating and investing
activities principally with cash from operations and expects to continue to do
so in the next few years except for expenditures related to the Modernization
and Expansion Project. Net cash provided by operations was $47.4 million, $16.0
million and $24.0 million for 1994, 1993 and 1992, respectively. At December 25,
1994, the Company had total cash and cash equivalents, short-term investments
and restricted cash and investments of $354.4 million. These funds are all
invested in compliance with the Company's bond indenture which restricts the
type, quality and maturity of investments.
Capital expenditures totaled $56.3 million, $11.7 million and $7.6 million
in 1994, 1993 and 1992, respectively. Of the $75.6 million spent on capital
expenditures from 1992 through 1994, approximately $7.7 million or 10 percent,
was attributable to compliance with environmental regulations. The majority of
the remainder of the capital project expenditures was for replacement and
rehabilitation of production facilities throughout the Company and payments to
Raytheon and capitalized interest related to the construction of the
Modernization and Expansion Project. Based on the turnkey contract price now
estimated to be $377 million, without taking into account financing costs,
internally generated costs related directly to the project or additional changes
that may be requested by Acme during construction, management estimates that the
cost of the Modernization and Expansion Project, including equipment, ancillary
facilities, construction, general contractor fees, and certain other project
costs which will be paid by the Company, will not exceed $392 million. The
increase in the turnkey contract price is related to the assumption of the
foreign exchange risk on the equipment contract in exchange for an acceleration
of the completion date of the new facility. In addition, the Company has decided
to add a roll grinding shop to the facility which accounts for the majority of
the remaining increase. The Company currently has sufficient cash and
investments resulting from the issuance of the notes, term loan and equity
which, when combined with funds that will be generated from operations in the
future, will enable the Company to complete construction of the Modernization
and Expansion Project and meet the working capital needs of the Company. In
addition, the Company has an available $80 million working capital facility
which the Company expects to remain undrawn. The Company also plans to spend
approximately $24 million in 1998 related to the relining and upgrading of
Acme's A blast furnace at its Chicago facilities, and the Company is continually
evaluating opportunities for incremental capital expenditures which meet certain
financial return criteria.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to Item 8 is submitted in a separate section of this Annual
Report on Form 10-K. See the audited Consolidated Financial Statements and
Financial Statement Schedules of Acme Metals Incorporated attached hereto and
listed in the index on page 32 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
24
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information with respect to directors of the Company is incorporated herein
by reference from the proxy statement for the Annual Meeting of Shareholders of
the Company to be held on April 27, 1995 under the caption ELECTION OF
DIRECTORS.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth, as of March 15, 1995, with respect to each
executive officer of the Company, his name and all positions held during the
last five years. Executive officers are elected annually by the Board of
Directors of the Company to serve for a term of office of one year and until
their successors are elected.
As a result of a Reorganization effected May 25, 1992, Acme Steel Company
became and continues to be a subsidiary of the Company. Prior to the
Reorganization the executive officers listed below were executive officers of
Acme Steel Company and, at the time of the reorganization, were elected to
similar positions within the Company.
<TABLE>
<CAPTION>
Name and Age Positions During Last 5 Years
----------------------------- ---------------------------------------------------------------------------------
<S> <C>
Brian W. H. Marsden (63) Chairman and Chief Executive Officer of the Company since January 1, 1993 and
Chairman, President and Chief Executive Officer May 1992 through December 1992;
President and Chief Executive Officer of Acme Steel Company (integrated steel
producer) June 1986 to May 1992.
Stephen D. Bennett (46) Director, President and Chief Operating Officer of the Company since January 1,
1993 and Group Vice President May 1992 through December 1992; Group Vice
President of Acme Steel Company (integrated steel producer) January 1992 to May
1992 and Vice President - Operations June 1990 through December 1991; General
Manager of Fairfield Works, USS Division of USX Corporation (integrated steel
producer) December 1987 to May 1990.
James W. Hoekwater (48) Treasurer of the Company since July 1, 1994. Corporate Controller of ITT Rayonier
(producer of pulp and wood products) from December 1989 to October 1993.
Gregory J. Pritz (37) Controller of the Company since August 1, 1994; Director of Accounting and
Compliance of Acme Metals Incorporated from January 1993 to July 1994. Manager of
Internal Audit of Acme Steel Company from December 1989 to December 1992.
Gerald J. Shope (51)* Vice President - Human Resources of the Company effective April 1, 1995. Vice
President - Human Resources of Acme Steel Company since January 1, 1992. Director
-Human Resources of Acme Steel Company from June 1986 to January 1992.
Richard J. Stefan (58)** Vice President - Employee Relations of the Company since May 25, 1992; Vice
President - Employee Relations of Acme Steel Company (integrated steel producer)
June 1986 to May 1992.
Edward P. Weber, Jr. (57) Vice President, General Counsel and Secretary of the Company since May 25, 1992;
Vice President, General Counsel and Secretary of Acme Steel Company (integrated
steel producer) June 1986 to May 1992.
</TABLE>
25
<PAGE>
<TABLE>
<S> <C>
Jerry F. Williams (55) Vice President - Finance and Administration and Chief Financial Officer of the
Company since May 25, 1992; Vice President - Finance and Administration of Acme
Steel Company (integrated steel producer) May 1986 to May 1992.
</TABLE>
* Note that Gerald Shope's appointment will be effective April 1, 1995.
** Note that Richard Stefan is retiring as of March 31, 1995.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is incorporated herein by
reference from the proxy statement for the Annual Meeting of Shareholders of the
Company to be held on April 27, 1995 under the caption Executive Compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to security ownership of certain beneficial owners and
management is incorporated herein by reference from the proxy statement for the
Annual Meeting of Shareholders of the Company to be held on April 27, 1995 under
the caption SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements:
The response to this portion of Item 14 is submitted in a separate
section of this report. See the audited Consolidated Financial
Statements and Schedules of Acme Metals Incorporated attached hereto
and listed on the index on page 32 of this report.
(2) Financial Statement Schedules:
The response to this portion of Item 14 is submitted in a separate
section of this report. See the audited Consolidated Financial
Statements and Schedules of Acme Metals Incorporated attached hereto
and listed on the index on page 32 of this report.
(3) Exhibits
<TABLE>
<CAPTION>
Exhibit Description
----------- ---------------------------------------------------------------------------------------------------
<C> <S> <C>
3. Articles of Incorporation and By-Laws
3(i) Restated Certificate of Incorporation of the Registrant. Filed as Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended December 27, 1992 (the
"1992 10-K") and incorporated by reference herein.
3(ii) Amended and Restated By-Laws of Registrant as adopted May 25, 1992. Filed as Exhibit 3.2
to the 1992 10-K and incorporated by reference herein.
4. Instruments Defining the Rights of Security Holders, Including Indentures
4.1 Rights Agreement dated as of July 15, 1994 between the Registrant and First Chicago
Trust Company of New York, Rights Agent. Filed on Form 8-A August 8, 1994 and Form 8A/A
August 12, 1994 and incorporated by reference herein.
</TABLE>
26
<PAGE>
<TABLE>
<C> <S> <C>
4.2 Form of Indenture dated as of August 11, 1994 among the Registrants and Shawmut Bank
Connecticut, National Association as trustee, relating to the 12.5 percent Senior
Secured Notes due 2002. (Filed as Exhibit 4.1 to Amendment No. 3 To Form S-1
Registration Statement, No. 33-54101 ("Amendment No. 3 to Form S-1").
4.3 Form of 12.5 percent Senior Secured Note due 2002 (included in Exhibit 4.2). Filed as
Exhibit 4.2 to Amendment No. 3 to Form S-1.
4.4 Form of Indenture dated as of August 11, 1994 among the Registrant and each of the
Guarantors and Shawmut Bank, Connecticut, National Association as trustee, relating to
the 13.5 percent Senior Secured Discount Notes due 2004. Filed as Exhibit 4.3 to
Amendment No. 3 to the S-1 and incorporated by reference herein.
4.5 Form of 13.5 percent Senior Secured Discount Note due 2004 (included in Exhibit 4.4).
Filed as Exhibit 4.4 to Amendment No. 3 to the S-1 and incorporated by reference herein.
4.6 Form of Collateral Agency Agreement dated as of August 11, 1994 among the Company, Acme
Steel, Acme Packaging, the Trustees, the Term Loan Agent and the Collateral Agent. Filed
as Exhibit 4.5 to Amendment No. 3 to the S-1 and incorporated by reference herein.
4.7 Form of Securities Pledge Agreement dated as of August 11, 1994 between the Company and
the Collateral Agent. Filed as Exhibit 4.6 to Amendment No. 3 to the S-1 and
incorporated by reference herein.
4.8 Form of Securities Pledge Agreement dated as of August 11, 1994 among Acme Steel, Acme
Packaging and the Collateral Agent. Filed as Exhibit 4.7 to Amendment No. 3 to the S-1
and incorporated by reference herein.
4.9 Form of Security Agreement dated as of August 11, 1994 between Acme Steel and the
Collateral Agent. Filed as Exhibit 4.8 to Amendment No. 3 to the S-1 and incorporated by
reference herein.
4.10 Form of Mortgage dated as of August 11, 1994 from Acme Steel to the Collateral Agent.
Filed as Exhibit 4.9 to Amendment No. 3 to the S-1 and incorporated by reference herein.
4.11 Form of Intercreditor Agreement dated as of August 11, 1994 among Acme Steel, the Term
Loan Agreement, Harris Trust and Savings Bank and the Collateral Agent. Filed as Exhibit
4.10 to Amendment No. 3 to the S-1 and incorporated by reference herein.
4.12 Form of Disbursement Agreement dated as of August 11, 1994 between the Company and the
Collateral Agent. Filed as Exhibit 4.11 to Amendment No. 3 to the S-1 and incorporated
by reference herein.
* 4.13 Form of Registration Rights Agreement dated March 28, 1994 Among the Registrant and The
Substituted Purchasers.
10. Material contracts
10.1 Tax Indemnification Agreement between Acme Steel Company (a subsidiary of the Company)
("Acme") and The Interlake Corporation dated May 30, 1986. Filed as Exhibit 10.1 to the
1992 10-K and incorporated by reference herein.
10.2 Cross-Indemnification Agreement between Acme and The Interlake Corporation dated May 29,
1986. Filed as Exhibit 10.2 to the 1992 10-K and incorporated by reference herein.
</TABLE>
27
<PAGE>
<TABLE>
<C> <S> <C>
* 10.3 $80,000,000 Credit Agreement by and among Acme Group and Harris Trust and Savings Bank
individually and as Agent and the Lenders which are or become parties hereto dated as of
August 11, 1994 (the "Credit Agreement").
* 10.4 Assignment and Acceptance dated August 24, 1994 relating to the Credit Agreement
(National City Bank, Assignee).
* 10.5 Assignment and Acceptance dated August 24, 1994 relating to the Credit Agreement (NBD
Bank, N.A., Assignee).
* 10.6 Assignment and Acceptance dated August 24, 1994 relating to the Credit Agreement
(Mercantile Bank of St. Lewis National Association, Assignee).
* 10.7 Assignment and Acceptance dated September 1, 1994 relating to the Credit Agreement
(General Electric Capital Corporation, Assignee).
10.8 Term Loan Agreement dated August 4, 1994 among the Registrant, the Lenders and Lehman
Commercial Paper Inc. (the "Term Loan"). Filed as Exhibit 10.42 to Amendment No. 3 to
the S-1 and incorporated by reference herein.
* 10.9 Amendment to the Term Loan dated as of December 15, 1994.
10.10 Form of Engineering, Procurement and Construction Contract dated July 28, 1994 between
Acme Steel Company and Raytheon Engineers & Constructors, Inc. Filed as Exhibit 10.41 to
Amendment No. 3 to the S-1 and incorporated by reference herein.
* 10.11 Amendment 1 to Engineering, Procurement and Construction Contract between Acme Steel
Company and Raytheon Engineers & Constructors, Inc. dated as of July 28, 1994.
* 10.12 Amendment 2 to Engineering, Procurement and Construction Contract between Acme Steel
Company and Raytheon Engineers & Constructors, Inc. dated as of March 21, 1995.
* 10.13 Joint Development Program Agreement dated July 28, 1994 between Acme Steel Company and
SMS Schloemann-Siemag, AG.
10.14 Agreement between the Registrant and Reynold C. MacDonald dated June 1, 1992.(1) Filed
as Exhibit 10.3 to the 1992 10-K and incorporated by reference herein.
10.15 Non-Employee Directors Retirement Plan dated February 22, 1990 as adopted May 25,
1992.(1) Filed as Exhibit 10.4 to the 1992 10-K and incorporated by reference herein.
</TABLE>
<TABLE>
<C> <S> <C>
* 10.16 Non-Employee's Directors' Stock Compensation Plan adopted January 27,
1995.(1)
10.17 Assignment and Assumption Agreement dated May 24, 1992 relating to
Indemnification Agreements including Form of Indemnification
Agreement. Filed as Exhibit 10.12 to the 1992 10-K and incorporated by
reference herein.
10.18 Indemnification Agreement between the Registrant and William R. Wilson
dated July 23, 1992. Filed as Exhibit 10.13 to the 1992 10-K and
incorporated by reference herein.
* 10.19 Indemnification Agreement between the Registrant and Carol
O'Cleireacain dated April 28, 1994.
</TABLE>
* Filed herewith.
(1) Filed pursuant to Item 14 of Form 10-K.
(2) Also see Amendment and Assignment Agreement filed with Exhibit 10.13 to the
1992 10-K.
28
<PAGE>
<TABLE>
<C> <S> <C>
* 10.20 Indemnification Agreement between the Registrant and L. Frederick
Sutherland dated January 26, 1995.
* 10.21 1994 Executive Incentive Compensation Plan of Acme Metals Incorporated
as adopted April 28, 1994.(1)
10.22 Deferred Compensation Agreement dated May 24, 1986 between the
Registrant and Brian W. H. Marsden as adopted May 25, 1992.(1) Filed
as Exhibit 10.15 to the 1992 10-K and incorporated by reference
herein.
* 10.23 Acme Metals Incorporated Deferred Compensation Plan as Amended and
Restated effective January 1, 1994 as adopted November 21, 1994.(1)
10.24 Key Executive Severance Pay Plan dated January 22, 1987, as adopted
May 25, 1992, with Exhibit 1 amended through May 25, 1992.(1) Filed as
Exhibit 10.17 to the 1992 10-K and incorporated by reference herein.
* 10.25 Acme Metals Incorporated 1994 Stock Incentive Program as adopted April
28, 1994.(1)
10.26 Form of Grant of Stock Option including Form of First Amendment dated
October 30, 1986 - 10 executive officers, 30 other employees.(1)(2)
Filed as Exhibit 10.19 to the 1992 10-K and incorporated by reference
herein.
10.27 Form of Grant of Stock Option dated July 22, 1987 including Form of
First Amendment dated October 30, 1986 - 10 executive officers, 41
other employees.(1)(2) Filed as Exhibit 10.20 to the 1992 10-K and
incorporated by reference herein.
10.28 Form of Grant of Stock Option dated May 26, 1988 -10 executive
officers, 49 other employees.(1)(2) Filed as Exhibit 10.21 to the 1992
10-K and incorporated by reference herein.
10.29 Form of Grant of Stock Option dated June 1, 1989 -10 executive
officers, 48 other employees.(1)(2) Filed as Exhibit 10.22 to the 1992
10-K and incorporated by reference herein.
10.30 Grant of Stock Option Agreement dated June 1, 1990 - S. D.
Bennett.(1)(2) Filed as Exhibit 10.23 to the 1992 10-K and
incorporated by reference herein.
</TABLE>
<TABLE>
<C> <S> <C>
10.31 Form of Grant of Stock Option dated June 7, 1990 -9 executive
officers, 50 other employees.(1)(2) Filed as Exhibit 10.24 to the 1992
10-K and incorporated by reference herein.
10.32 Form of Grant of Stock Option dated May 20, 1991 -10 executive
officers, 54 other employees.(1)(2) Filed as Exhibit 10.25 to the 1992
10-K and incorporated by reference herein.
10.33 Form of Grant of Stock Option dated June 12, 1992 - 5 executive
officers, 10 other employees.(1)(2) Filed as Exhibit 10.26 to the 1992
10-K and incorporated by reference herein.
10.34 Form of Grant of Stock Option dated May 27, 1993 -5 executives
officers, 26 other employees.(1) Filed as Exhibit 10.27 to the 1992
10-K and incorporated by reference herein.
* 10.35 Form of Grant of Stock Option dated May 26, 1994 - 6 executive
officers, 24 other employees.
</TABLE>
* Filed herewith.
(1) Filed pursuant to Item 14 of Form 10-K.
(2) Also see Amendment and Assignment Agreement filed with Exhibit 10.13 to the
1992 10-K.
29
<PAGE>
<TABLE>
<C> <S> <C>
10.36 Form of Grant of Stock Award dated January 25, 1991 including Form of
First Amendment dated January 25, 1991 - 11 executive officers, 14
other employees.(1)(2) Filed as Exhibit 10.29 to the 1992 10-K and
incorporated by reference herein.
10.37 Form of Grant of Stock Award dated January 22, 1992 - 5 executive
officers, 10 other employees.(1)(2) Filed as Exhibit 10.30 to the 1992
10-K and incorporated by reference herein.
10.38 Stock Award Agreement dated June 12, 1992 - S. D. Bennett.(1)(2) Filed
as Exhibit 10.31 to the 1992 10-K and incorporated by reference
herein.
10.39 Form of Grant of Stock Award dated January 26, 1993 - 5 executive
officers, 16 other employees.(1)(2) Filed as Exhibit 10.32 to the 1992
10-K and incorporated by reference herein.
10.40 Form of Grant of Stock Award dated January 26, 1994, 5 executive
officers, 14 other employees. Filed as Exhibit 10.33 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 26, 1993 (the "1993 10-K") and incorporated by reference
herein.
* 10.41 Form of Grant of Stock Award dated January 27, 1995, 5 executive
officers, 6 other employees.(1)
* 10.42 Acme Metals Incorporated Employee Stock Ownership Plan Restated
effective November 1, 1994.(1)
* 10.43 Acme Metals Incorporated Salaried Employees' Retirement Savings Plan
Restated effective November 1, 1994.(1)
* 10.44 Consolidated Pension Plan for Acme Salaried and Hourly Employees As
Amended and Restated effective November 1, 1994 with Appendix A to the
Consolidated Pension Plan for Acme Salaried and Hourly Employees As
Amended and Restated Effective July 31, 1994.(1)
* 10.45 Acme Metals Incorporated Supplemental Benefits Plan effective January
1, 1994.(1)
10.46 Acme Metals Incorporated Salaried Employees' Past Service Pension Plan
("Past Service Pension Plan") dated June 1, 1992.(1) Filed as Exhibit
10.37 to the 1992 10-K and incorporated by reference herein.
10.47 Amendment No. 1 to the Past Service Pension Plan.(1) Filed as Exhibit
10.38 to the 1993 10-K and incorporated by reference herein.
* 10.48 Amendment No. 2 to the Past Service Pension Plan.(1)
* 13. Registrant's Annual Report to Security Holders for the fiscal year
ended December 25, 1994
* 21. Subsidiaries of the registrant
23. Consent of experts and counsel
* 23.1 Consent of Price Waterhouse LLP.
* 27. Financial Data Schedule
* Filed herewith.
(1) Filed pursuant to Item 14 of Form 10-K.
(2) Also see Amendment and Assignment Agreement filed with Exhibit 10.13 to the
1992 10-K.
</TABLE>
30
<PAGE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed in the fourth quarter of 1994.
No financial statements were filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ACME METALS INCORPORATED
<TABLE>
<S> <C>
/s/ B. W. H. Marsden
--------------------------------------------
Brian W. H. Marsden March 17, 1995
Chairman and Chief Executive Officer
/s/ S. D. Bennett
--------------------------------------------
Stephen D. Bennett March 17, 1995
Director, President, and Chief Operating
Officer
/s/ J. F. Williams
--------------------------------------------
Jerry F. Williams
Vice President-Finance and Administration and March 17, 1995
Chief Financial Officer
(Principal Financial Officer)
/s/ G. J. Pritz
--------------------------------------------
Gregory J. Pritz March 17, 1995
Controller
(Principal Accounting Officer)
</TABLE>
31
<PAGE>
SIGNATURES (continued)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
/s/ C. J. Gauthier
--------------------------------------------
C. J. Gauthier March 17, 1995
Director
/s/ Edward G. Jordan
--------------------------------------------
Edward G. Jordan March 17, 1995
Director
/s/ Andrew R. Laidlaw
--------------------------------------------
Andrew R. Laidlaw March 17, 1995
Director
Frank A. LePage March 17, 1995
Director
/s/ Reynold C. MacDonald
--------------------------------------------
Reynold C. MacDonald March 17, 1995
Director
/s/ Julien L. McCall
--------------------------------------------
Julien L. McCall March 17, 1995
Director
/s/ Carol O'Cleireacain
--------------------------------------------
Carol O'Cleireacain March 17, 1995
Director
/s/ W. P. Sovey
--------------------------------------------
William P. Sovey March 17, 1995
Director
/s/ L. F. Sutherland
--------------------------------------------
L. Frederick Sutherland March 17, 1995
Director
/s/ William R. Wilson
--------------------------------------------
William R. Wilson March 17, 1995
Director
</TABLE>
32
<PAGE>
ACME METALS INCORPORATED
FORM 10-K -- ITEM 8 AND ITEMS 14 (A) (1) AND 14 (A) (2)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
The following Consolidated Financial Statements of Acme Metals Incorporated
and the related Report of Independent Accountants are included in Item 8 and
Item 14 (a) (1):
<TABLE>
<CAPTION>
Page in this
Form 10-K
---------------
<S> <C>
Report of Independent Accountants 34
Report of Management 34
Consolidated Statements of Operations for the fiscal years ended December 25, 1994,
December 26, 1993 and December 27, 1992 35
Consolidated Balance Sheets at December 25, 1994 and December 26, 1993 36
Consolidated Statements of Cash Flows for the fiscal years ended December 25, 1994,
December 26, 1993 and December 27, 1992 37
Consolidated Statements of Changes in Shareholders' Equity for the fiscal years ended
December 25, 1994, December 26, 1993 and December 27, 1992 38
Notes to Consolidated Financial Statements 39
</TABLE>
The following Consolidated Financial Statement Schedule of Acme Metals
Incorporated is included in Item 14 (a) (2):
<TABLE>
<S> <C>
Quarterly Results (Unaudited) 53
Schedule VIII -- Valuation and Qualifying Accounts and Reserves 54
</TABLE>
All other schedules have been omitted because they are not applicable, or
not required, or because the required information is shown in the consolidated
financial statements or notes thereto.
33
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Acme Metals Incorporated
In our opinion, the accompanying consolidated financial statements listed in the
index appearing on page 32 present fairly, in all material respects, the
financial position of Acme Metals Incorporated and its subsidiaries at December
25, 1994 and December 26, 1993 and the results of their operations and their
cash flows for each of the three years in the period ended December 25, 1994, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in the Notes to Consolidated Financial Statements, Acme Metals
Incorporated changed its method of accounting for postretirement benefits other
than pensions and income taxes in 1992.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
March 17, 1995
Chicago, Illinois
REPORT OF MANAGEMENT
The management of Acme Metals Incorporated has prepared and is responsible for
the consolidated financial statements and other financial information included
in this Form 10-K Annual Report. The consolidated financial statements have been
prepared in conformity with generally accepted accounting principles and include
amounts that are based upon informed judgments and estimates by management. The
other financial information in this annual report is consistent with the
consolidated financial statements.
The Company maintains a system of internal accounting controls. Management
believes the internal accounting controls provide reasonable assurance that
transactions are executed and recorded in accordance with Company policy and
procedures and that the accounting records may be relied on as a basis for
preparation of the consolidated financial statements and other financial
information.
The financial statements have been audited by Price Waterhouse LLP, the
Company's independent accountants, whose report is included herein. In addition,
the Company has a professional staff of internal auditors who coordinate their
financial audits with the procedures performed by the independent accountants
and conduct operational and special audits.
The Audit Review Committee of the Board of Directors, composed of directors who
are not employees of the Company, meets periodically with management, the
internal auditors and the independent accountants to discuss the adequacy of
internal accounting controls and the quality of financial reporting. Both the
independent accountants and internal auditors have full and free access to the
Audit Review Committee.
<TABLE>
<S> <C>
/s/ B. W. H. /s/ J. F. Williams
Marsden
Brian W. H. Marsden Jerry F. Williams
Chairman and Chief Vice President
Executive Officer Finance and
Administration
Chief Financial Officer
</TABLE>
34
<PAGE>
ACME METALS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the Years Ended
-------------------------------------------
December 25, December 26, December 27,
1994 1993 1994
------------- ------------- -------------
<S> <C> <C> <C>
NET SALES $ 522,880 $ 457,406 $ 391,562
COSTS AND EXPENSES:
Cost of products sold 431,615 397,526 347,624
Depreciation expense 14,977 14,657 14,392
------------- ------------- -------------
Gross profit 76,288 45,223 29,546
Selling and administrative expense 33,249 30,633 28,901
Nonrecurring charge 9,459 1,925
Restructuring charge 2,700
------------- ------------- -------------
Operating income (loss) 33,580 12,665 (2,055)
NON-OPERATING INCOME (EXPENSE):
Interest expense (14,031) (5,384) (5,569)
Interest income 7,712 1,571 1,700
Other - net 1,432 370 355
Unusual income item 1,210 1,047
------------- ------------- -------------
Income (loss) before income taxes, extraordinary item and
cumulative effect of changes in accounting principles 28,693 10,432 (4,522)
Income tax provision (credit) 9,935 4,173 (1,673)
------------- ------------- -------------
18,758 6,259 (2,849)
Extraordinary item (expense), net of tax (1,787)
Cumulative effect of changes in accounting principles:
Retirement benefits other than pensions, net of taxes (42,246)
Income taxes (8,077)
------------- ------------- -------------
(50,323)
------------- ------------- -------------
Net income (loss) $ 16,971 $ 6,259 $ (53,172)
------------- ------------- -------------
------------- ------------- -------------
PER SHARE:
Income (loss) before extraordinary item and cumulative effect
of changes in accounting principles $ 2.38 $ 1.15 $ (0.53)
Extraordinary item (expense) net of tax (0.22)
Cumulative effect of changes in accounting principles:
Retirement benefits other than pensions, net of taxes (7.82)
Income taxes (1.50)
------------- ------------- -------------
Net income (loss) $ 2.16 $ 1.15 $ (9.85)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of this financial statement.
35
<PAGE>
ACME METALS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
December 25, December 26,
1994 1993
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 76,639 $ 50,444
Short-term investments 76,384
Receivables, less allowances of $1,301 in 1994 and $1,155 in 1993 60,878 58,479
Inventories 44,982 47,867
Deferred income taxes 13,354 12,337
Other current assets 1,605 1,267
------------- -------------
Total current assets 273,842 170,394
------------- -------------
INVESTMENTS AND OTHER ASSETS:
Investments in associated companies 14,358 14,701
Restricted cash and investments 201,397
Other assets 23,221 13,389
Deferred income taxes 20,683 19,846
------------- -------------
Total investments and other assets 259,659 47,936
------------- -------------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 363,699 405,670
Construction in progress 46,605 2,886
Accumulated depreciation (261,475) (293,017)
------------- -------------
Total property, plant and equipment 148,829 115,539
------------- -------------
$ 682,330 $ 333,869
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 36,732 $ 32,800
Accrued expenses 42,718 34,089
Income taxes payable 1,941 3,641
Current maturities of long-term debt 6,667
------------- -------------
Total current liabilities 81,391 77,197
------------- -------------
LONG-TERM LIABILITIES
Long-term debt 265,055 49,333
Other long-term liabilities 10,012 10,543
Postretirement benefits other than pensions 83,867 82,630
Retirement benefit plans 18,727 30,963
------------- -------------
Total long-term liabilities 377,661 173,469
------------- -------------
Commitments and contingencies (see note titled
COMMITMENTS AND CONTINGENCIES)
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 2,000,000 shares authorized, no shares issued
Common stock, $1 par value, 20,000,000 shares authorized, 11,558,127 and
5,406,387 shares issued in 1994 and 1993, respectively 11,558 5,406
Additional paid-in capital 164,599 48,344
Retained earnings 67,719 50,748
Minimum pension liability adjustment (20,598) (21,295)
------------- -------------
Total shareholders' equity 223,278 83,203
------------- -------------
$ 682,330 $ 333,869
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of this financial statement.
36
<PAGE>
ACME METALS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the Years Ended
-------------------------------------------
December 25, December 26, December 27,
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 16,971 $ 6,259 $ (53,172)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Depreciation 15,514 15,234 14,705
Deferred income taxes (2,893) (1,629) (1,848)
Cumulative effect of changes in accounting principles 50,323
Gain on sale of assets (1,047)
Nonrecurring charge 9,459 1,925
Investments in associated companies 334 (596)
Accretion of senior discount notes 4,055
Pension contribution (13,951) (100)
CHANGE IN CURRENT ASSETS AND LIABILITIES:
Receivables (2,399) (11,388) 1,403
Inventories 2,885 (8,379) 1,698
Accounts payable 3,932 6,815 4,843
Other current accounts 6,591 7,826 3,170
Other, net 6,924 74 3,943
------------- ------------- -------------
Net cash provided by operating activities 47,422 16,041 24,018
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments (1,310,998)
Sales and/or maturities of investments 1,033,213
Capital expenditures (11,677) (11,749) (7,557)
Capital expenditure - modernization project (44,662)
Proceeds from sales of assets 995
------------- ------------- -------------
Net cash used for investing activities (334,124) (11,749) (6,562)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt (50,000) (3,500)
Issuance of equity, net of costs 119,262
Issuance of long-term debt 255,000
Debt issuance costs (14,253)
Exercise of stock options and other 2,888 428 34
------------- ------------- -------------
Net cash provided by (used for) financing activities 312,897 (3,072) 34
------------- ------------- -------------
Net increase in cash and cash equivalents 26,195 1,220 17,490
Cash and cash equivalents at beginning of period 50,444 49,224 31,734
------------- ------------- -------------
Cash and cash equivalents at end of period $ 76,639 $ 50,444 $ 49,224
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of this financial statement.
37
<PAGE>
ACME METALS INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
Common Additional Minimum
stock, $1 paid-in Retained Pension Treasury
par value capital earnings Liability stock
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 29, 1991 $ 6,009 $ 47,466 $ 112,963 $ (15,774)
----------- ---------- ---------- ---------- ----------
Net loss (53,172)
Stock plans - issuance of shares 7 191
Tax benefit arising from stock plan
transactions 22
Purchase of common stock for treasury (79)
Redemption of stock rights (107)
Retirement of treasury stock (658) (15,195) 15,853
Minimum pension liability $ (8,231)
----------- ---------- ---------- ---------- ----------
BALANCE - DECEMBER 27, 1992 5,358 47,679 44,489 (8,231)
----------- ---------- ---------- ---------- ----------
Net income 6,259
Stock plans - issuance of shares 48 635
Tax benefit arising from stock plan
transactions 30
Minimum pension liability (13,064)
----------- ---------- ---------- ---------- ----------
BALANCE - DECEMBER 26, 1993 5,406 48,344 50,748 (21,295)
----------- ---------- ---------- ---------- ----------
Net income 16,971
Stock plans - issuance of shares 177 2,711
Tax benefit arising from stock plan
transactions 257
Issuance of equity 5,975 113,287
Minimum pension liability 697
----------- ---------- ---------- ---------- ----------
BALANCE - DECEMBER 25, 1994 $ 11,558 $ 164,599 $ 67,719 $ (20,598) $
----------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of this financial statement.
38
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Acme Metals
Incorporated (the Company) and its majority-owned subsidiaries. Investments in
mining ventures are accounted for by the equity method. All intercompany
transactions have been eliminated.
The Company's fiscal year ends on the last Sunday in December.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash balances and highly liquid
investments with a maturity of three months or less. The funds are invested in
compliance with the Company's bond indenture which restricts the type, quality
and maturity of investments.
SHORT-TERM INVESTMENTS
Short-term investments have a maturity of more than three months and less
than 1 year. These investments are stated at cost as it is the intent of the
Company to hold these securities until maturity. The funds are invested in
compliance with the Company's bond indenture which restricts the type, quality
and maturity of investments.
INVENTORIES
Inventories are stated at the lower of cost or market. The primary method
used to determine inventory costs is the last-in, first-out (LIFO) method.
RESTRICTED CASH AND INVESTMENTS
Restricted cash and investments consists of cash and investments held in
trust and committed for the construction of the continuous thin slab caster/hot
strip mill complex and payment of the related debt service according to the
Company's bond indenture. These investments are stated at cost as it is the
intent of the Company to hold these securities until maturity. The funds are
invested in compliance with the Company's bond indenture which restricts the
type, quality and maturity of investments.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
Property, plant and equipment are stated at cost. Depreciation of plant and
equipment is computed principally on a straight-line basis over the estimated
useful lives of the assets. Expenditures for maintenance, repairs and minor
renewals and betterments are charged to expense as incurred. Furnace relines and
major renewals and betterments are capitalized.
Upon disposition of property, plant and equipment, the cost and related
accumulated depreciation are removed from the accounts, and the resulting gain
or loss is recognized.
The Company regularly reviews the carrying value of certain of its long-term
assets and recognizes impairments when the discounted present value of future
net cash flows is less than the carrying value.
CONSTRUCTION IN PROGRESS
Construction in progress includes all costs, including capitalized interest,
associated with the construction of the Company's continuous thin slab
caster/hot strip mill complex at its Riverdale, Illinois steelmaking facility.
Also included in construction in progress are other capital projects not
completed at the end of the reporting period.
RETIREMENT BENEFIT PLANS
Pension costs include service cost, interest cost, return on plan assets and
amortization of the unrecognized initial net asset. The Company's policy is to
fund not less than the minimum funding required under ERISA.
39
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company has unfunded postretirement health care and life insurance
plans. Provisions for postretirement costs in 1994, 1993 and 1992 were
determined pursuant to the provisions of Financial Accounting Standards (FAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." Under this standard, the annual expense represents a combination of
interest and service cost provisions of the annual accrual. The postretirement
benefits are not funded.
INCOME TAXES
The credits for deferred income taxes in 1994, 1993 and 1992 were determined
pursuant to the provisions of FAS No. 109, "Accounting for Income Taxes." Under
this standard, the provision for deferred income taxes represents the tax effect
of temporary differences between the financial reporting basis and the tax basis
of the Company's assets and liabilities.
PER SHARE DATA
Amounts per common share are based on the weighted average number of common
and dilutive common equivalent shares outstanding during the year; 7,872,642 in
1994, 5,439,784 in 1993 and 5,396,311 in 1992.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current
year presentation.
CONTINUOUS THIN SLAB CASTER/HOT STRIP MILL PROJECT:
On August 11, 1994, the Company completed the financing for its $392 million
(exclusive of capitalized interest and internally generated project costs
directly related to the Modernization and Expansion Project) continuous thin
slab caster/hot strip mill project (Modernization and Expansion Project). The
Company recorded a nonrecurring charge and an extraordinary expense item related
to this transaction. See NONRECURRING CHARGE AND LONG TERM DEBT AND REVOLVING
CREDIT AGREEMENT in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
NONRECURRING CHARGE:
During 1994, the Company completed financing for its Modernization and
Expansion Project. As a result of the decision to commence with this project,
the Company recorded a $9.5 million (pre-tax) nonrecurring charge. The
nonrecurring charge was recorded to address the impairment of the existing
steelmaking facilities and contractual employee reduction costs related to the
construction and commissioning of the Modernization and Expansion Project.
The Company recorded a $1.9 million nonrecurring charge in 1993 including
$1.3 million in connection with a decision made during the year to permanently
idle Acme Steel's No. 3 Hot Strip Mill and Billet Mill; a $0.6 million charge to
close Acme Packaging's Pittsburg-East facility in California; and, the
elimination of a strapping line at its New Britain, Connecticut facility
following a determination made during the year to consolidate production
facilities and eliminate unprofitable lines.
RESTRUCTURING CHARGE:
During 1993, the Company completed its program to reduce its salaried work
force by 10 percent. The pre-tax reserve of $2.7 million established by the
Company included $1.1 million related to increased pension benefits and
acceleration of the payment of pension benefits, a special postretirement
termination charge of $1.3 million, a postretirement plan curtailment gain of
$0.4 million and $0.7 million related to increased vacation benefits, severance
pay and a reserve for contingencies related to the program.
40
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNUSUAL INCOME ITEM:
In 1993, the Company recorded a benefit in connection with its investment in
Wabush Iron Company (WabIron). As a result of the finalization of a plan of
reorganization for LTV Steel Company, a former participant in WabIron, Acme was
awarded $1.2 million (market value) of LTV securities in a settlement of a
bankruptcy claim filed by all of the participants in the Wabush Mines Project
joint venture.
During 1992, the Company sold all of its interests in certain coal producing
property located in West Virginia. This transaction added approximately $1
million of pre-tax income to 1992 results.
INVENTORIES:
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(in thousands)
<S> <C> <C>
Raw materials $ 5,200 $ 6,201
Semi-finished and finished products 31,434 32,364
Supplies 8,348 9,302
--------- ---------
$ 44,982 $ 47,867
--------- ---------
--------- ---------
</TABLE>
On December 25, 1994 and December 26, 1993, inventories valued on the LIFO
method were less than the current costs of such inventories by $58.3 million and
$57.4 million, respectively.
In 1994, inventory quantities decreased from the prior year which resulted
in liquidation of LIFO inventory quantities carried at the lower cost that
prevailed in prior years, the effect of which decreased cost of products sold
and increased income before income taxes and extraordinary item by $0.7 million.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
(in thousands)
<S> <C> <C>
Land $ 3,786 $ 3,786
Buildings 41,117 49,578
Equipment 318,796 352,306
Construction in progress, Modernization and Expansion Project 44,662
Construction in progress, other 1,943 2,886
----------- -----------
410,304 408,556
Less accumulated depreciation (261,475) (293,017)
----------- -----------
$ 148,829 $ 115,539
----------- -----------
----------- -----------
</TABLE>
The difference between depreciation expense presented in the Consolidated
Statements of Cash Flows and the Consolidated Statements of Operations
represents that portion of depreciation expense that is classified in selling
and administrative expense on the Consolidated Statements of Operations.
The Company capitalized expenditures related to the construction of the
Modernization and Expansion Project totaling $44.7 million as of December 25,
1994. The capitalized expenditures are comprised of a $42.0 million payment to
Raytheon Engineers & Constructors, Inc., the general contractor, for the
construction project, $2.0 million of related capitalized interest, and $0.7
million of other costs directly related to the construction of the Modernization
and Expansion Project.
41
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RETIREMENT BENEFIT PLANS:
The Company has various retirement benefit plans covering substantially all
salaried and hourly employees. Certain salaried employees with one full calendar
quarter of service are eligible to participate in the Company's defined
contribution plan and employee stock ownership plan (ESOP). Company
contributions to the defined contribution plan and employee stock ownership plan
are based upon 7.5 and 3.5 percent (the ESOP contribution was reduced from 6.5
to 3.5 percent in the second quarter of 1993), respectively, of eligible
compensation. Amounts charged to operations under these plans were $3.5 million
in 1994, $3.4 million in 1993 and $4.1 million in 1992.
Salaried employees who joined the Company prior to December 31, 1981 and
certain hourly employees participate in defined benefit retirement plans which
provide benefits based upon either years of service and final average pay or
fixed amounts for each year of service.
The net defined benefit pension credit (expense) included the following
components:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Service cost $ (2,605) $ (1,852) $ (1,979)
Interest cost on projected benefit obligation (14,700) (14,526) (14,231)
Actual return on plan assets (1,558) 16,094 9,715
Net amortization and deferral 17,371 7,662
---------- ---------- ----------
Net pension credit (cost) $ (1,492) $ (284) $ 1,167
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Pension plan curtailment losses of $1.1 million are included in the 1992
restructuring charge.
Actuarial assumptions used for the Company's pensions plans were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Weighted average discount rate:
For defined benefit pension credits (costs) 7.5% 8.5% 8.5%
For projected benefit obligation 8.5% 7.5% 8.5%
Increase in future compensation levels 5% 5% 5%
Expected rate of return on plan assets 9.75% 9.75% 9.75%
</TABLE>
42
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table sets forth the funded status of the Company's defined
benefit retirement plans and amounts recognized in the balance sheet.
<TABLE>
<CAPTION>
1994 1993
------------------------- -------------------------
Underfunded Overfunded Underfunded Overfunded
Plans Plans Plans Plans
------------ ----------- ------------ -----------
(in thousands)
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $165,271 in 1994 and $182,993 in 1993 $ 174,308 $ 8,626 $ 189,939 $ 9,648
Effect of increase in compensation levels 4,119 655 4,419 709
------------ ----------- ------------ -----------
Projected benefit obligation for service rendered to date 178,427 9,281 194,358 10,357
Plan assets at fair value, primarily U.S. government bonds
and notes and common stock of publicly traded companies 155,581 9,779 158,975 9,860
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions 48,510 1,554 51,465 2,461
Prior service cost not yet recognized in net periodic
pension cost 5,334 0 5,539 0
Unrecognized net asset at December 30, 1985 being
recognized over 15 years (11,038) (518) (12,879) (604)
Minimum pension liability adjustment (38,687) (39,705)
------------ ----------- ------------ -----------
Prepaid (accrued) pension cost $ (18,727) $ 1,534 $ (30,963) $ 1,360
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
</TABLE>
In accordance with FAS No. 87, "Employer's Accounting for Pensions," the
Company has recorded an adjustment, net of applicable income taxes, as shown in
the table above, to recognize a minimum pension liability relating to certain
under-funded pension plans.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
The Company and its subsidiaries sponsor several unfunded defined benefit
postretirement plans that provide medical, dental, and life insurance for
retirees and eligible dependents.
In 1994, 1993, and 1992, the cost for all plans, calculated pursuant to FAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," amounted to $9.1 million, $7.9 million and $7.8 million,
respectively.
The net periodic postretirement benefit cost for 1994, 1993 and 1992, net of
retiree contributions of approximately 10 percent of costs, included the
following components:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(in thousands)
<S> <C> <C> <C>
Service cost - benefits attributed to service during the period $ 1,685 $ 1,185 $ 1,109
Interest cost on accumulated postretirement benefit obligation 7,203 6,743 6,708
Net amortization and deferral 239 (64)
--------- --------- ---------
Net periodic postretirement benefit cost $ 9,127 $ 7,864 $ 7,817
--------- --------- ---------
--------- --------- ---------
</TABLE>
43
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table sets forth the plans' combined status at December 25,
1994 and December 26, 1993:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(in thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 56,859 $ 55,687
Fully eligible active plan participants 10,716 9,675
Other active plan participants 24,332 25,619
--------- ---------
91,907 90,981
Unrecognized net gain and prior service cost (1,497) (3,036)
--------- ---------
Accrued postretirement benefit cost $ 90,410 $ 87,945
--------- ---------
--------- ---------
</TABLE>
The accrued postretirement obligation was determined by application of the
terms of medical, dental, and life insurance plans, together with relevant
actuarial assumptions and health care cost trend rates projected at annual rates
ranging ratably from 12 percent in 1992 to 5 percent through 1999 and beyond.
The effect of a 1 percent annual increase in these assumed cost trend rates
would increase the accumulated postretirement benefit obligation by
approximately $11.2 million; the net periodic postretirement benefit costs would
increase by approximately $2.1 million. The obligation for postretirement
benefits as of December 25, 1994 was determined using an 8.5 percent discount
rate, as compared to the 7.5 percent discount rate used for the year ended
December 26, 1993.
The increase in the discount rate contributed to a net decrease in the
obligations of approximately $9.2 million. As the measurement of net periodic
postretirement benefits cost is based on beginning of the year assumptions, the
lower revalued obligation at the end of fiscal 1994 did not have any impact on
the expense recorded for 1994.
ACCRUED EXPENSES:
Included in the Consolidated Balance Sheets caption Accrued Expenses are the
following:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(in thousands)
<S> <C> <C>
Accrued salaries and wages $ 15,650 $ 16,235
Accrued postretirement benefits other than pensions 6,543 5,315
Accrued taxes other than income taxes 5,283 4,970
Accrued interest 6,675 837
Other current liabilities 8,567 6,732
--------- ---------
$ 42,718 $ 34,089
--------- ---------
--------- ---------
</TABLE>
INVESTMENTS IN ASSOCIATED COMPANIES:
The Company has a 31.7 percent interest in an iron ore mining venture. In
1994, 1993 and 1992, the Company made iron ore purchases of $20.7 million, $18.3
million, and $21.7 million, respectively from the venture. At December 25, 1994,
$5.6 million was owed to the venture for iron ore purchases; amounts owed to the
venture for such ore purchases were $4.2 million at December 26, 1993.
The Company has a 37 percent interest in Olga Coal Company. In 1987, Olga
Coal Company filed for protection under Chapter 11 of the U.S. Bankruptcy Act
and the coal mining operation was idled. The coal mining investment is carried
at no value in the Consolidated Balance Sheets.
44
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INCOME TAXES:
The provision (credit) for taxes consisted of the following:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(in thousands)
<S> <C> <C> <C>
Taxes on income:
Current:
Federal $ 10,108 $ 5,399 $ 62
State 2,720 403 113
--------- --------- ---------
12,828 5,802 175
Deferred (2,893) (1,629) (1,848)
--------- --------- ---------
$ 9,935 $ 4,173 $ (1,673)
--------- --------- ---------
--------- --------- ---------
</TABLE>
The effective income tax rates for 1994, 1993 and 1992 are reconciled to the
Federal statutory tax rate in the following table:
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Statutory Federal income tax rate 35.0% 34.0% (34.0)%
Change in tax rate due to:
Federal surtax - 1.9 -
Reorganization and restructuring costs - - 1.7
State taxes - net of Federal tax effect 5.3 4.7 .8
Reserves no longer required - - (6.4)
Penalties - .6 2.3
Municipal bond interest (4.8) - -
Rate change impact on net deferred tax asset (1.4) - -
Other - net .5 (1.2) (1.4)
--- --- -----
34.6% 40.0% (37.0)%
--- --- -----
--- --- -----
</TABLE>
As of the beginning of 1992, the Company adopted FAS No. 109, Accounting for
Income Taxes. The cumulative effect of the change in accounting for income taxes
increased the 1992 net loss by $8.1 million or $1.50 per share. The change in
accounting for income taxes increased the credit for taxes in 1992 by $0.9
million.
45
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Significant components of the Company's deferred tax liabilities and assets
at December 25, 1994 and December 26, 1993 are summarized below:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(in thousands)
<S> <C> <C>
Deferred Tax Liabilities
-------------------------------------------------------------------------------
Property, plant and equipment $ 17,733 $ 21,319
--------- ---------
Gross deferred tax liabilities 17,733 21,319
--------- ---------
Deferred Tax Assets
-------------------------------------------------------------------------------
Postretirement benefits other than pensions 36,004 34,381
Pensions 3,308 8,620
Other employee benefits 3,741 2,712
Inventories 4,541 4,313
Interest expense 1,591
Other liabilities 1,204 670
Other assets 983 910
Miscellaneous 398 310
Alternative minimum tax credits 1,496
Other 90
--------- ---------
Gross deferred tax assets 51,770 53,502
--------- ---------
Net deferred tax asset $ 34,037 $ 32,183
--------- ---------
--------- ---------
</TABLE>
In 1994 and 1993, the change in the deferred income tax liability primarily
represents the effect of changes in the amounts of temporary differences from
the prior year. In addition, based on the Company's expected future
profitability, the net deferred tax asset was increased in 1994 recognizing the
effect of legislation enacted during 1993 which increased the maximum corporate
tax rate from 34 to 35 percent.
The Company believes it is more likely than not to realize the net deferred
tax asset and accordingly no valuation allowance has been provided. This
conclusion is based on, (i) reversing deductible temporary differences
(excluding postretirement amounts) being offset by reversing taxable temporary
differences, (ii) the extremely long period that is available to realize the
future tax benefits associated with the postretirement related deductible
temporary differences and, (iii) the Company's expected future profitability.
The Company's Federal tax liability is the greater of its regular tax or
alternative minimum tax. At December 25, 1994, the Company had no alternative
minimum tax credits available to be carried forward.
In 1994, cash flows were reduced by $12.3 million resulting from net income
tax payments. In 1993, cash flows were reduced by $4.5 million resulting from
income tax payments of $5.0 million and income tax refunds of $0.5 million in
connection with net operating loss carryback claims. In 1992, cash flows were
increased by $4.8 million resulting from $6.0 million of income tax refunds in
connection with net operating loss carryback claims and income tax payments of
$1.2 million.
46
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENT:
The Company's long-term debt at December 25, 1994 and December 26, 1993 is
summarized as follows:
<TABLE>
<CAPTION>
1994 1993
---------- ---------
(in thousands)
<S> <C> <C>
Senior Secured Notes, 12.5%, due 2002 $ 125,000
Senior Secured Discount Notes, 13.5%, due 2004 84,055
Term loan, three month LIBOR rate plus 400 basis points (10.375% at December
25, 1994), due 1998-2001 50,000
Senior Notes, 9.35%, due 1994-1999 $ 50,000
Note payable, 6.5% to 6.75%, due 1998-2008 6,000 6,000
---------- ---------
265,055 56,000
Less current portion - 6,667
---------- ---------
$ 265,055 $ 49,333
---------- ---------
---------- ---------
</TABLE>
During 1994, the Company issued long-term debt in the form of Senior Secured
Notes, Senior Secured Discount Notes and a Term Loan for gross cash proceeds of
$255 million in connection with the financing of the construction of the
Modernization and Expansion Project. The gross proceeds were reduced by debt
issuance costs of $14.3 million which is being amortized over the lives of the
respective bond issues and the term loan.
Coincident with issuance of new debt, the Company prepaid the total
principal remaining on the previously existing Senior Notes of $50 million and
incurred approximately $3 million ($1.8 million after-tax) in prepayment
penalties which are shown as an extraordinary expense item net of taxes in the
Consolidated Statements of Operations.
SENIOR SECURED NOTES
The Senior Secured Notes were issued for $125 million, bearing 12.5 percent
interest due in 2002. The Senior Secured Notes may be redeemed at the option of
the Company, in whole, or in part on or after August 1, 1998 at fixed redemption
prices, together with accrued and unpaid interest to the redemption date.
SENIOR SECURED DISCOUNT NOTES
The Senior Secured Discount Notes provided gross proceeds of $80 million and
mature in 2004, which will yield 13.5 percent and accrete to an aggregate
principal amount of $117.9 million on August 1, 1997. During 1994, the Senior
Secured Discount Notes accreted to a value of $84.1 million. The Senior Secured
Discount Notes may be redeemed at the option of the Company in whole or in part,
on or after August 1, 1999, at fixed redemption prices, together with accrued
and unpaid interest to the redemption date.
TERM LOAN
The Term Loan provided gross proceeds of $50 million and matures on a
graduated schedule beginning in 1998, and may be redeemed at par, in whole or in
part, by the Company on the last day of any quarterly interest period. The Term
Loan bears interest at 400 basis points above three month LIBOR. At December 25,
1994, the interest rate in effect was 10.375 percent.
WORKING CAPITAL FACILITY
The Company has a Working Capital Facility agreement with a group of banks
which provides aggregate commitments of $80 million secured by the inventories
and accounts receivable of the Company's subsidiaries. During 1993 and 1992, the
Company had a $60 million revolving credit agreement with a group of banks. At
December 25, 1994 and December 26, 1993, no amounts were outstanding under
either credit agreement. The Company pays an annual commitment fee of one-half
percent on the unused portion of the credit line.
47
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company's obligations under the Senior Notes and Term Loan are secured
by a pledge of all capital stock of the Company's direct subsidiaries. The
guarantee of the Notes and Term Loan by Acme Steel is secured by a first
property lien on substantially all existing and future real property and
equipment of Acme Steel, including all of the assets required in connection with
the Modernization and Expansion Project. The guarantee of the Notes and Term
Loan by Acme Packaging are secured by a pledge of all of the capital stock of
its subsidiaries.
The maturities during the five years ending December 26, 1999 are $4.3
million in 1998 and $15.2 million in 1999. Cash flows from operating activities
were reduced by cash paid for interest on debt by $5.3 million in 1994 and $5.2
million in 1993 and $5.6 million in 1992.
The Senior Notes, Term Loan and Working Capital Facility contain certain
restrictive covenants that limit the Company's ability to incur additional
indebtedness, create liens, pay dividends, repurchase capital stock, engage in
transactions with affiliates, sell assets, engage in sale or leaseback
transactions and engage in mergers or consolidations.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
CASH AND CASH EQUIVALENTS, SHORT-TERM INVESTMENTS AND RESTRICTED CASH AND
INVESTMENTS
The carrying value of cash and cash equivalents, short-term investments and
restricted cash and investments approximates the current value.
LONG-TERM DEBT
The fair value of the Company's Senior Secured Notes and Senior Secured
Discount Notes is determined by using the quoted market price at the end of the
reporting period.
The fair value of the Term Loan and Note Payable is estimated by calculating
the present value of the remaining interest and principal payments on the debt
to maturity. The present value of the Term Loan uses a discount rate equal to
the three month LIBOR rate plus 400 basis points at the end of the reporting
period. The Note Payable present value computation uses a discount rate equal to
the prime rate at the end of the reporting period plus or minus the spread
between the prime rate and the rate negotiated on the debt at the inception of
the loan.
The following table presents information on the Company's financial
instruments:
<TABLE>
<CAPTION>
1994 1993
---------------------- ----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C>
Cash and Cash Equivalents $ 76,639 $ 76,639 $ 50,444 $ 50,444
Short-term Investments 76,384 76,107
Restricted Cash and Investments 201,397 201,204
Long-term debt
- Senior Secured Notes 125,000 121,250
- Senior Secured Discount Notes 84,055 80,211
- Term Loan 50,000 51,448
- Senior Notes 50,000 56,130
- Note Payable 6,000 5,378 6,000 7,021
---------- ---------- ---------- ----------
$ 619,475 $ 612,237 $ 106,444 $ 113,595
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
48
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ISSUANCE OF COMMON STOCK:
On August 11, 1994, the Company issued 5.6 million shares of $1 par value
common stock in exchange for 5.6 million special warrants sold on March 2, 1994.
The issue price of the special warrants was $21 providing gross proceeds to the
Company of $117.6 million. The gross proceeds were reduced by related equity
issuance costs of $6.8 million providing net equity proceeds of $110.8 million.
In addition, on September 23, 1994, Raytheon entered into an agreement with
the Company to purchase 375,000 shares of its common stock for $24 per common
share. The gross proceeds of $9 million was reduced by the related issuance
costs of $0.5 million. The sale closed on October 7, 1994. These common shares
have not been registered.
COMMON STOCK:
The Company has a stock incentive program which provides, among other
benefits, for the granting of stock options and stock awards to officers and key
employees. Stock options for the Company's common stock are granted at prices
not less than the market price at date of grant and no option may be exercised
more than ten years from the grant date.
Information regarding stock options is summarized below:
<TABLE>
<CAPTION>
Option Per share
Shares option price
---------- -------------------
<S> <C> <C>
OUTSTANDING AT DECEMBER 29, 1991 560,025 $ 8.375 - $24.25
Granted 58,000 $18.75
Exercised (10,100) $ 8.375 - $15.625
Canceled (30,950) $13.563 - $24.25
----------
OUTSTANDING AT DECEMBER 27, 1992 576,975
Granted 88,500 $14.50
Exercised (39,450) $ 8.375 - $17.00
Canceled (17,675) $13.563 - $24.25
----------
OUTSTANDING AT DECEMBER 26, 1993 608,350
Granted 83,500 $23.875
Exercised (165,400) $ 8.375 - $24.25
Canceled (5,750) $17.875 - $24.25
----------
OUTSTANDING AT DECEMBER 25, 1994 520,700
----------
----------
</TABLE>
At December 25, 1994, 394,450 options were exercisable; 490,850 options were
exercisable at December 26, 1993. Options vest over a two year period.
Stock awards granted in 1994 totaled 13,000 shares at a value of either
$23.19 or $22.88 per share depending on the grant date. Stock awards granted in
1993 totaled 15,400 shares at a value of either $16.00 or $16.75 per share
depending on the grant date. Stock awards granted in 1992 totaled 18,650 shares
at a value of either $15.00 or $18.75 per share depending on the grant date. The
compensation expense for the value of stock awards granted is recognized ratably
over the vesting period of 5 years.
COMMITMENTS AND CONTINGENCIES:
The Company's interest in an iron ore mining joint venture requires payment
of its proportionate share of all fixed operating costs, regardless of the
quantity of ore received, plus the variable operating costs of minimum ore
production for the Company's account. Normally, the Company reimburses the joint
venture for these costs through its purchase of ore at the higher of cost or
market prices. During 1994, the Company obtained approximately 56 percent of its
iron ore needs from the joint venture and purchases generally approximated
market prices.
49
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company has entered into a turnkey contract with Raytheon Engineers &
Constructors, Inc. ("Raytheon") to build the Modernization and Expansion Project
at its steelmaking facilities located in Riverdale, Illinois. A significant
portion of Raytheon's subcontract with the key equipment vendor is denominated
in German Deutsche Marks, DM133 million ($83.2 millions at the inception of the
contract). The Company agreed to assume the DM foreign exchange costs in return
for an acceleration of the final completion date of the facility. At this time,
approximately DM42.5 million of this foreign exchange exposure remain unhedged.
The Company is subject to various Federal, state and local environmental
statutes and regulations which provide a comprehensive program for controlling
the release of materials into the environment and require responsible parties to
remediate certain waste disposal sites. In addition, various health and safety
statutes and regulations apply to the work-place environment. Administrative,
civil and criminal penalties may be applicable for failure to comply with these
laws. These environmental laws and regulations are subject to periodic revision
and modification. The United States Congress, for example, has recently
completed a major overhaul of the Federal Clean Air Act which is a major
component of the Federal environmental statutes affecting the Company's
operations.
From time to time, the Company is also involved in administrative
proceedings involving the issuance, or renewal, of environmental permits
relating to the conduct of its business. The final issuance of these permits
have been resolved on terms satisfactory to the Company; and, in the future, the
Company expects such permits will similarly be resolved on satisfactory terms.
Although management believes it will be required to make further substantial
expenditures for pollution abatement facilities in future years, because of the
continuous revision of these regulatory and statutory requirements, the Company
is not able to reasonably estimate the specific pollution abatement
requirements, the amount or timing of such expenditures to maintain compliance
with these environmental laws. While such expenditures in future years may be
substantial, management does not presently expect they will have a material
adverse effect on the Company's future ability to compete within its markets.
In those cases where the Company has been identified as a Potentially
Responsible Party ("PRP") or is otherwise made aware of a possible exposure to
incur costs associated with an environmental matter, management determines (i)
whether, in fact, the Company has been properly named or is otherwise obligated,
(ii) the extent to which the Company may be responsible for costs associated
with the site in question, (iii) an assessment as to whether another party may
be responsible under various indemnification agreements or insurance policies
the Company is a party to, and (iv) an estimate, if one can be made, of the
costs associated with the clean-up efforts or settlement costs. It is the
Company's policy to make provisions for environmental clean-up costs at the time
that a reasonable estimate can be made. At December 31, 1994, the Company had
recorded reserves of less than $0.3 million for environmental clean-up matters.
While it is not possible to predict the ultimate costs of resolving
environmental related issues facing the Company, based upon information
currently available, they are not expected to have a material effect on the
consolidated financial condition or results of operations of the Company.
In connection with the Spin-Off from The Interlake Corporation ("Interlake")
on May 29, 1986, Acme Steel Company (a subsidiary of the Company) entered into
certain indemnification agreements with Interlake. Pursuant to the terms of the
indemnification agreements, Interlake undertook to defend, indemnify and hold
Acme Steel Company harmless from any claims, as defined, relating to Acme Steel
Company operations or predecessor operations occurring before May 29, 1986, the
inception of Acme Steel Company. The indemnification agreements cover certain
environmental matters including certain litigation and Superfund sites in
Duluth, Minnesota and Gary, Indiana for which either Interlake or Acme Steel
Company's predecessor operations have been named as defendants or PRP's, as
applicable. To date, Interlake has met its obligations under the indemnification
agreements and has provided the defense and paid all costs
50
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
related to these environmental matters. The Company does not have sufficient
information to determine the potential liability, if any, for the matters
covered by the indemnification agreements in the event Interlake fails to meet
its obligations thereunder in the future. In the event that Interlake, for any
reason, was unable to fulfill its obligations under the indemnification
agreements, the Company could have increased future obligations which could be
significant.
Also in connection with the Spin-Off from Interlake, Acme Steel Company
entered into a Tax Indemnification Agreement ("TIA") which generally provides
for Interlake to indemnify Acme Steel Company for certain tax matters. While
certain issues have been negotiated and settled between the Company, Interlake
and the Internal Revenue Service, certain significant issues for the tax years
beginning in 1982 through 1986 remain unresolved.
On March 17, 1994, Acme Steel Company received a Statutory Notice of
Deficiency ("Notice") in the amount of $16.9 million in tax as a result of the
Internal Revenue Service's examination of the 1982-1984 tax years. The Company
is contesting the unresolved issues and the Notice. Should the government
sustain its position as proposed for those unresolved issues and those contained
in the Notice, substantial interest would also be due (potentially in an amount
greater than the tax claimed). The taxes claimed relate principally to
adjustments for which Acme Steel Company is indemnified by Interlake pursuant to
the TIA. The Company has adequate reserves to cover that portion for which it
believes it may be responsible per the TIA. To date, Interlake has met its
obligations under the TIA with respect to all covered matters. In the event that
Interlake, for any reason, were unable to fulfill its obligations under the TIA,
the Company could have increased future obligations.
The Company's subsidiaries also have various litigation matters pending
which arise out of the ordinary course of their businesses. In the opinion of
management, the ultimate resolution of these matters will not have a material
adverse effect on the financial position of the Company.
BUSINESS SEGMENTS:
The Company presents its operations in two segments, Steel Making and Steel
Fabricating.
Steel Making operations include the manufacture of sheet, strip and
semifinished steel in low-, mid-, and high-carbon alloy and specialty grades.
Principal markets include agricultural, automotive, industrial equipment,
industrial fasteners, welded steel tubing, processor and tool manufacturing
industries.
The Steel Fabricating Segment processes and distributes steel strapping,
strapping tools and industrial packaging (Acme Packaging Corporation), welded
steel tube (Alpha Tube Corporation) and auto and light truck jacks (Universal
Tool & Stamping Co., Inc.). The Steel Fabricating Segment sells to a number of
markets.
All sales between segments are recorded at current market prices. Income
from operations consists of total sales less operating expenses. Operating
expenses include an allocation of expenses incurred at the Corporate Office that
are considered by the Company to be operating expenses of the segments rather
than general corporate expenses. Income (loss) from operations does not include
other non-operating income or expense, interest income or expense, the
cumulative effect of changes in accounting principles, or income taxes.
Identifiable assets are those that are associated with each business segment.
Corporate assets are principally investments in cash equivalents and deferred
income taxes.
The products and services of the Steel Making and Steel Fabricating Segments
are distributed through their own respective sales organizations which have
sales offices at various locations in the United States. Export sales are
insignificant for the years presented.
51
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEGMENT INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Net Sales
Steel Making
Sales to unaffiliated customers $ 231,224 $ 187,750 $ 145,627
Intersegment sales 118,196 116,094 114,517
----------- ----------- -----------
349,420 303,844 260,144
Steel Fabricating
Sales to unaffiliated customers 291,655 269,656 245,935
Intersegment sales 1,806 1,873 1,023
----------- ----------- -----------
293,461 271,529 246,958
Eliminations (120,001) (117,967) (115,540)
----------- ----------- -----------
Total $ 522,880 $ 457,406 $ 391,562
----------- ----------- -----------
----------- ----------- -----------
Income (Loss) from Operations
Steel Making $ 14,536(1) $ 736(2) $ (9,363)(4)
Steel Fabricating $ 19,044(1) $ 11,929(3) $ 7,308(5)
----------- ----------- -----------
Total $ 33,580 $ 12,665 $ (2,055)
----------- ----------- -----------
----------- ----------- -----------
Identifiable Assets
Steel Making $ 248,876 $ 203,366 $ 185,743
Steel Fabricating 105,699 108,254 94,514
Corporate 327,755 22,249 20,445
----------- ----------- -----------
Total $ 682,330 $ 333,869 $ 300,702
----------- ----------- -----------
----------- ----------- -----------
Depreciation
Steel Making $ 11,753 $ 11,285 $ 10,805
Steel Fabricating 3,696 3,842 3,804
Corporate 65 107 96
----------- ----------- -----------
Total $ 15,514 $ 15,234 $ 14,705
----------- ----------- -----------
----------- ----------- -----------
Capital Expenditures
Steel Making $ 53,205 $ 9,368 $ 5,661
Steel Fabricating 3,076 2,283 1,823
Corporate 58 98 73
----------- ----------- -----------
Total $ 56,339 $ 11,749 $ 7,557
----------- ----------- -----------
----------- ----------- -----------
Steel Shipments (in tons) 675,430 659,736 585,540
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
(1) Includes a $9.5 million nonrecurring charge to recognize asset impairment
costs and contractual employee reduction cost related to construction of the
Modernization and Expansion Project.
(2) Includes a $1.3 million write off of Acme Steel Company's No. 3 Hot Strip
Mill and Billet Mill.
(3) Includes a $0.6 million expense to close Acme Packaging's Pittsburg-East
facility in California and the write-off of a strapping line at its New
Britain, Connecticut facility.
(4) Includes a $2.1 million restructuring charge in connection with a 10 percent
salaried work force reduction plan.
(5) Includes a $0.3 million restructuring charge in connection with a 10 percent
salaried work force reduction plan.
SUBSEQUENT EVENT:
On December 30, 1994, the Company sold its interest in the LAS Virginia
Properties. A gain on sale of the properties, net of the adjusted cost basis,
will be recognized in the amount of $1.6 million, in fiscal 1995.
52
<PAGE>
ACME METALS INCORPORATED
QUARTERLY RESULTS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
1994
Net Sales $ 123,560 $ 132,863 $ 123,142 $ 143,315
Gross profit 13,519 19,617 18,141 25,011
Net income (loss) 3,598 6,856 (1,019) 7,536
Net income (loss) per share $ 0.64 $ 1.20 $ (0.12) $ 0.65
Net income before extraordinary item $ 768
Net income per share before extraordinary item $ .09
-----------------------------------------------------------------------------------------------------------------
1993
Net sales $ 107,863 $ 117,169 $ 111,919 $ 120,455
Gross profit 7,518 11,670 9,206 16,829
Net income 114 2,056 115 3,974
Net income per share $ 0.02 $ 0.38 $ 0.02 $ 0.73
-----------------------------------------------------------------------------------------------------------------
1992
Net sales $ 98,522 $ 99,993 $ 94,884 $ 98,163
Gross profit 7,967 5,897 6,303 9,379
Net income (loss)(1) (50,144) (1,288) (2,647) 907
Net income (loss) per share(1) (9.29) $ (0.24) $ (0.49) $ 0.17
Net income (loss) before accounting changes 179 (1,288) (2,647) 907
Net income (loss) per share before accounting changes $ 0.03 $ (0.24) $ (0.49) $ 0.17
-----------------------------------------------------------------------------------------------------------------
</TABLE>
The third quarter of 1994 includes a $9.5 million nonrecurring charge to
address the impairment of existing steelmaking facilities and contractual
employee costs related to construction and commissioning of the Modernization
and Expansion Project. In addition, the third quarter also includes a $1.8
million extraordinary expense item resulting from prepayment of previously
existing senior notes.
The fourth quarter of 1993 includes a $1.2 million benefit related to Acme's
investment in Wabush Mines, a $1.3 million expense to write-off the Steel
subsidiary's No. 3 Hot Strip Mill and Billet Mill, $0.6 million of expense
associated with the closure of the Packaging subsidiary's Pittsburg-East
facility in California and the write-off of a strapping line at the Packaging
subsidiary's New Britain, Connecticut facility.
The third quarter of 1992 includes a $3.1 million restructuring charge in
connection with the Company's work force reduction plan.
The fourth quarter of 1992 includes a $1 million gain on the sale of all the
Company's interests in a coal producing property in West Virginia, and a
postretirement plan curtailment gain of $0.4 million related to the
restructuring charge was included in fourth quarter results.
<TABLE>
<S> <C>
<FN>
(1) Reflects the adoption of Financial Accounting Standards (FAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" and
FAS No. 109, "Accounting for Income Taxes," in the first quarter of 1992.
</TABLE>
53
<PAGE>
ACME METALS INCORPORATED
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
AND RESERVES
(IN THOUSANDS)
<TABLE>
<CAPTION>
Additions
----------------------
Balance at Charged to Charged to
beginning costs and other
Fiscal Year of year expenses Accounts Deductions
----------------------------------------------------------------- ---------- ---------- ---------- ----------
Balance
at
end
of
year
--
1994
<S> <C> <C> <C> <C>
Allowance for doubtful accounts receivable $ 1,155 $ 541 $ 240(a) $ (635)(b) $ 1,301
----------- ----- ----- ----- ---------
----------- ----- ----- ----- ---------
1993
Allowance for doubtful accounts receivable $ 1,081 $ 240 $ 232(a) $ (398)(b) $ 1,155
----------- ----- ----- ----- ---------
----------- ----- ----- ----- ---------
1992
Allowance for doubtful accounts receivable $ 741 $ 645 $ 300(a) $ (605)(b) $ 1,081
----------- ----- ----- ----- ---------
----------- ----- ----- ----- ---------
(a) Consists principally of recoveries of accounts charged off in prior years.
(b) Uncollectible accounts charged off.
</TABLE>
54
<PAGE>
EXHIBIT 4.13
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated March 28, 1994
among
ACME METALS INCORPORATED
and
THE SUBSTITUTED PURCHASERS LISTED ON SCHEDULE A HERETO
--------------------------------------------------------------------------------
<PAGE>
1953A
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into March 28, 1994, among ACME METALS INCORPORATED, a Delaware
corporation (the "Company"), and the substituted purchasers of Special Warrants
of the Company listed on Schedule A hereto (collectively, the "Purchasers" and
individually, "Purchaser").
This Agreement is made pursuant to the Subscription Agreements dated
March 11, 1994 (the "Subscription Agreements") between the Company and each of
the Purchasers and the Purchase Agreement dated March 11, 1994 (the "Purchase
Agreement") between the Company and Nesbitt Thomson Inc. (the "Dealer"), which
together provide for the sale by the Company to the Purchasers of an aggregate
of 5,600,000 special common stock purchase warrants (the "Special Warrants"), as
described in the Purchase Agreement. Each Special Warrant entitles the holder
thereof to acquire one share of common stock of the Company (each a "Security"
and collectively, the "Securities") upon the exercise of the Special Warrants in
accordance with the terms of the Special Warrant Indenture dated March 28, 1994
between the Company and Montreal Trust Company of Canada. In order to induce
the Purchasers to enter into the Subscription Agreements, the Company has agreed
to provide to the Purchasers and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution of this
Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended from time
to time.
<PAGE>
2
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"CLOSING DATE" shall mean the Closing Date as defined in the Purchase
Agreement.
"COMMON SHARE CLOSING DATE" shall have the meaning set forth in the
Purchase Agreement.
"COMPANY" shall have the meaning set forth in the preamble and shall
also include the Company's successors.
"DESIGNATED OFFSHORE SECURITIES MARKET" shall have the meaning
ascribed thereto under Rule 902(a) of Regulation S of the 1933 Act.
"HOLDER" shall mean any Purchaser, for so long as it owns any Special
Warrants or Registrable Securities, and each of its successors, assigns and
direct and indirect transferees who become registered owners of Special Warrants
or Registrable Securities. "Registered owners" are owners of the Special
Warrants or the Common Shares, as the case may be, as reflected in the register
maintained by the warrant agent or by the registrar and transfer agent of the
Common Shares, as the case may be.
"OBLIGOR" shall mean and refer to the Company.
"PERSON" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"PROSPECTUS" shall mean the prospectus included in a Shelf
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Shelf Registration Statement, and by
all other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all materials incorporated by reference
therein.
"PURCHASE AGREEMENT" shall have the meaning set forth in the preamble.
"PURCHASER" shall have the meaning set forth in the preamble.
<PAGE>
3
"REGISTRABLE SECURITIES" shall mean the Securities; PROVIDED, HOWEVER,
that any Security shall cease to be a Registrable Security when (i) a Shelf
Registration Statement with respect to the Securities shall have been declared
effective under the 1933 Act and such Security shall have been disposed of
pursuant to such Shelf Registration Statement, (ii) such Security shall have
been sold outside the United States in or through a Designated Offshore
securities market, (iii) such Security shall have ceased to be outstanding or
(iv) three years have elapsed from the Common Share Closing Date.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Registrable Securities), (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus, any amendments or supplements thereto,
any underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees and (v) the fees and disbursements of counsel for the Company
and of the independent public accountants of the Company, including the expenses
of any special audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding fees of counsel to the underwriters or
the Holders and underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of Registrable Securities by a Holder.
"SECURITIES" shall have the meaning set forth in the Preamble.
"SEC" shall mean the Securities and Exchange Commission.
"SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2(a) hereof.
<PAGE>
4
"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Obligor pursuant to the provisions of Section 2(a) of this
Agreement which covers all of the Registrable Securities on an appropriate
form under Rule 415 under the 1933 Act, or any similar rule that may be
adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SPECIAL WARRANTS" shall have the meaning set forth in the Preamble.
2. SHELF REGISTRATION UNDER THE 1933 ACT.
(a) SHELF REGISTRATION. The Obligor shall use its best efforts to
cause to be filed as soon as practicable after the date hereof, a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities and to have such Shelf Registration Statement declared
effective by the SEC at the earliest possible moment after the qualification of
the Securities in Canada. The Obligor agrees to use its best efforts to keep
the Shelf Registration Statement continuously effective until the first to occur
of (i) the third anniversary of the date of the Common Share Closing Date and
(ii) the date there ceases to be any Registrable Securities. The Obligor
further agrees, if necessary, to supplement or amend the Shelf Registration
Statement, if required by the rules, regulations or instructions applicable to
the registration form used by the Obligor for such Shelf Registration Statement
or by the 1933 Act or by any other rules and regulations thereunder for shelf
registration, and the Obligor agrees to furnish to the Holders copies of any
such supplement or amendment promptly after its being used or filed with the
SEC.
(b) EXPENSES. The Obligor shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a). Each Holder shall
pay all expenses of its counsel, underwriting discounts and commissions, if any,
and transfer taxes, if any, relating to the sale or disposition of such Holders
Registrable Securities pursuant to the Shelf Registration Statement.
<PAGE>
5
(c) EFFECTIVE REGISTRATION STATEMENT. A Shelf Registration
Statement pursuant to Section 2(a) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC; PROVIDED, HOWEVER,
that, if, after it has been declared effective, the offering of Registrable
Securities pursuant to a Shelf Registration Statement is interfered with by any
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Shelf Registration Statement will be deemed
not to be effective during the period of such interference until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume.
3. REGISTRATION PROCEDURES.
In connection with the obligations of the Obligor pursuant to Section
2(a) hereof, the Obligor shall:
(a) prepare and file with the SEC a Shelf Registration Statement on
the appropriate form under the 1933 Act, which form (x) shall be selected
by the Obligor and (y) shall be available for the sale of the Registrable
Securities by the selling Holders thereof and (z) shall comply as to form
in all material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed therewith,
and use its best efforts to cause such Shelf Registration Statement to
become effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement as may be necessary to keep
such Shelf Registration Statement effective for the applicable period,
cause each Prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424 under
the 1933 Act;
(c) furnish to each Holder and to each underwriter of an underwritten
offering of Registrable Securities, if any, without charge, as many copies
of each Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto and such other documents as such Holder or
underwriter may reasonably request, in order to facilitate the public sale
or other disposition of the Registrable Securities; and the Company hereby
consents to the use of each such Prospectus, including each such
<PAGE>
6
preliminary Prospectus and any amendment or supplement thereto, by each
such Holder and by any such agent and underwriter, in each case in the form
most recently provided to such party by the Company, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus,
including each such preliminary Prospectus, or any amendment or supplement
thereto;
(d) use its best efforts to register or qualify the Registrable
Securities under the applicable state securities or "blue sky" laws of such
United States jurisdictions as any Holder shall reasonably request in
writing during the time the Shelf Registration Statement is effective, and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder; PROVIDED,
HOWEVER, that the Company shall not be required to (i) qualify as a foreign
partnership, or corporation, as the case may be, or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (ii) file any general consent to service
of process or (iii) subject itself to taxation in any such jurisdiction if
it is not so subject;
(e) notify each Holder promptly and, if requested by such Holder,
confirm such advice in writing (i) when a Shelf Registration Statement has
become effective and when any post-effective amendments and supplements
thereto become effective, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to a Shelf Registration
Statement and Prospectus or for additional information after the Shelf
Registration Statement has become effective, (iii) of the issuance by the
SEC or any state securities authority of any stop order suspending the
effectiveness of a Shelf Registration Statement or the initiation of any
formal proceedings for that purpose, (iv) if, between the effective date of
a Shelf Registration Statement and the closing of any sale of Registrable
Securities covered thereby, the representations and warranties of the
Company contained in any underwriting agreement, securities sales agreement
or other similar agreement, if any, relating to the offering cease to be
true and correct in all material respects or if the Obligor receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of
any proceeding for such purpose and (v) of the happening of
<PAGE>
7
any event during the period a Shelf Registration Statement is effective
which makes any statement made in such Shelf Registration Statement or the
related Prospectus untrue in any material respect or which requires the
making of any changes in such Shelf Registration Statement or Prospectus in
order to make the statements therein not misleading;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Shelf Registration Statement at the
earliest possible moment;
(g) furnish to each Holder, without charge, at least one conformed
copy of each Shelf Registration Statement and any post-effective amendment
thereto (without documents incorporated therein by reference or exhibits
thereto, unless requested);
(h) cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends
and enable such Registrable Securities to be in such denominations and
registered in such names as the selling Holders may reasonably request
prior to the closing of any sale of Registrable Securities;
(i) upon the occurrence of any event contemplated by Section 3(e)(v)
hereof, prepare and furnish to each Holder without delay a supplement or
post-effective amendment to the Shelf Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; and
(j) for a reasonable period prior to the filing of the Shelf
Registration Statement, and throughout the period specified in Section
2(a), make available for inspection by Holders who shall certify to the
Company that they have current intention to sell the Registrable Securities
pursuant to the Shelf Registration Statement such financial and other
information and books and records of the Company, and cause the officers,
<PAGE>
8
employees, counsel and independent certified public accountants of the
Company to respond to such inquiries, as shall be reasonably necessary, in
the judgment of counsel to the Holders, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act;
PROVIDED, HOWEVER, that each such party shall be required to maintain in
confidence and not to disclose to any other Person any information or
records reasonably designated by the Company in writing as being
confidential, until such time as (i) such information becomes a matter of
public record (whether by virtue of its inclusion in the Shelf Registration
Statement or otherwise), (ii) such party shall be required to disclose such
information pursuant to the subpoena or order of any court or other
governmental agency or body having jurisdiction over the matter (subject to
the requirements of such order, and only after such person shall have given
the Company prompt prior written notice of such requirement) or (iii) such
information is required to be set forth in the Shelf Registration Statement
or the Prospectus or in an amendment to the Registration Statement or an
amendment or supplement to the Prospectus in order that the Shelf
Registration Statement, Prospectus, amendment or supplement, as the case
may be, does not contain an untrue statement of a material fact or omit to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing.
The Obligor may (as a condition to such Holder's participation in the
Shelf Registration) require each Holder to furnish to the Obligor such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Securities as the Obligor may from time to time reasonably
request in writing.
Each Holder agrees that, upon receipt of any notice from the Obligor
of the happening of any event of the kind described in Section 3(e)(v) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(i) hereof,
and, if so directed by the Obligor, such Holder will deliver to the Obligor (at
its expense) all copies in its possession, other than permanent file copies then
in such Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice.
<PAGE>
9
4. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to, and agrees with, each
Purchaser and each of the Holders that:
(a) The Shelf Registration Statement covering Registrable Securities
and each Prospectus (including any preliminary Prospectus) contained therein or
furnished pursuant to Section 3(e) hereof and any further amendments or
supplements to the Shelf Registration Statement or Prospectus, when it becomes
effective or is filed with the SEC, as the case may be, and, in the case of an
underwritten offering of Registrable Securities, at the time of the closing
under the underwriting agreement relating thereto, will conform in all material
respects to the requirements of the 1933 Act and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make statements therein not misleading; and at
all times subsequent to the effectiveness of the Shelf Registration Statement
when a Prospectus would be required to be delivered under the 1933 Act, other
than from (i) such time as a notice has been given to holders of Registrable
Securities pursuant to Section 3(e)(v) hereof until (ii) such time as the
Company furnishes an amended or supplemented Prospectus pursuant to Section 3(i)
hereof, each such Shelf Registration Statement, and each prospectus (including
any preliminary Prospectus) contained therein or furnished pursuant to Section
3(c) hereof, as then amended or supplemented, will conform in all material
respects to the requirements of the 1933 Act and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; PROVIDED, HOWEVER, that this
representation and warranty shall not apply to any statements or omission made
in reliance upon and in conformity with information furnished in writing to the
Company by any Purchaser, Holder or any underwriter, expressly for use therein.
(b) Any documents incorporated by reference in the Prospectus, when
they become or became effective or are or were filed with the SEC, as the case
may be, will conform or conformed in all material respects to the requirements
of the 1933 Act or the 1934 Act, as applicable, and none of such documents will
contain or contained an untrue statement of a material fact or will omit or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; PROVIDED, HOWEVER, that this
representation and warranty shall not apply to any
<PAGE>
10
statements or omission made in reliance upon and conformity with information
furnished in writing to the Company by a Holder or any underwriter expressly for
use therein.
(c) The compliance by the Company with all of the provisions of this
Agreement and the rights granted hereby and the consummation of the transactions
herein contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any material indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which the Company or any subsidiary is a party or by which the
Company or any subsidiary is bound or to which any of the property or assets of
the Company or any subsidiary is subject nor create or give rise to a right in
any other party to or beneficiary of any such material indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to take security in
assets of the Company or any of its subsidiaries, nor will such action result in
any violation of the provisions of the certificate of incorporation or the by-
laws of the Company or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or any
subsidiary or any of their properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the consummation by the Company of the
transactions contemplated by this Agreement and the rights granted hereby,
except the registration under the 1933 Act of the Registrable Securities and
such consents, approvals, authorizations, registrations or qualifications as may
be required under state securities or blue sky laws in connection with the
offering and distribution of the Registrable Securities.
5. INDEMNIFICATION; CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each of the
Purchasers, each Holder and each Person, if any, who controls any Holder within
the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Shelf Registration
Statement (or any amendment thereto) pursuant to which Registrable
Securities were registered under the 1933 Act, including all documents
incorporated therein by reference, or by the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in
<PAGE>
11
any Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading (other than in connection with a settlement
described in Section 5(a)(ii) below);
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including, subject to the provisions of subsection (c), reasonable fees
and disbursements of counsel chosen by any Holder or any underwriter
(except to the extent otherwise expressly provided in Section 5 (c))),
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expenses are not paid under
subparagraph (i) or (ii) above;
PROVIDED, HOWEVER, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by the Purchasers, such Holder or underwriter
expressly for use in a Shelf Registration Statement (or any amendment thereto)
or any Prospectus (or any amendment or supplement thereto).
(b) Each of the Purchasers and (as a condition to such Holder's
participation in such registration) each Holder severally and not jointly agrees
to indemnify and hold harmless the Company, the other Purchasers, each
underwriter and the other selling Holders, and each of their respective
directors and officers (including each officer of the Company who signed the
Shelf Registration Statement), and each Person, if any, who controls the
Company, any of the Purchasers, any underwriter or any other selling Holder
<PAGE>
12
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
Section 5(a) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by the applicable Purchaser or selling
Holder expressly for use in the Shelf Registration Statement (or any amendment
thereto) or such Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give reasonably prompt notice to
each indemnifying party of any action or proceeding commenced against it in
respect of which indemnity may be sought hereunder, but failure so to notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than under this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action. If it so elects within a reasonable time after receipt of such notice,
an indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume the defense of such action with counsel chosen by it and
approved by the indemnified parties defendant in such action, which approval
shall not be unreasonably withheld, provided that, if such indemnified party or
parties reasonably determine that there may be legal defenses available to them
which are different from or in addition to those available to such indemnifying
party or parties, then such indemnifying party or parties shall not be entitled
to assume such defense. If the indemnifying party or parties are not entitled
to assume the defense of such action as a result of the proviso to the preceding
sentence, counsel for the indemnifying party or parties shall be entitled to
conduct the defense of such indemnifying party or parties and counsel for the
indemnified party or parties shall be entitled to conduct the defense of such
indemnified party or parties, it being understood that both such counsel will
cooperate with each other to conduct the defense of such action as efficiently
as possible. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action.
In no event shall the indemnifying parties be liable for the fees and expenses
of more than one counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
<PAGE>
13
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section 5 is
for any reason held to be unenforceable although applicable in accordance with
its terms, the Company, the Purchasers and the Holders shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement incurred by the Company, the Purchasers
and the Holders; PROVIDED, HOWEVER, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. As between the Company, the Purchasers and the Holders, such
parties shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement in such
proportion as shall be appropriate to reflect (i) the relative benefits received
by the Company on the one hand and the Purchasers and the Holders on the other
hand, from the offering of the Registrable Securities included in such offering
and (ii) the relative fault of the Company on the one hand and the Purchasers
and the Holders on the other, with respect to the statements or omissions which
resulted in such loss, liability, claim, damage or expense, or action in respect
thereof, as well as any other relevant equitable considerations. The Company,
the Purchasers and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 5 were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the relevant equitable considerations. For purposes of this Section 5, each
Person, if any, who controls any of the Purchasers or a Holder within the
meaning of Section 15 of the 1933 Act shall have the same rights to contribution
as such Purchaser or such Holder, and each director of the Company, each officer
of the Obligor who signed the Registration Statement, and each Person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as the Company.
6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not entered into nor
will the Company on or after the date of this Agreement enter into any agreement
which is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.
<PAGE>
14
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least 66-2/3% of the outstanding Registrable Securities affected by such
amendment, modification, supplement, waiver or departure; PROVIDED that no
amendment, modification or supplement or waiver or consents to departure with
respect to the provisions of Section 5 hereof shall be effective as against any
Holder unless consented to in writing by such Holder.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Purchasers, the
as address set forth in the Subscription Agreement signed by the applicable
Purchaser; and (ii) if to the Company, initially at the Company's address set
forth in the Purchase Agreement and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 6(c). If any
Holder other than a Purchaser does not give notice of its most current address
to the Company pursuant to Section 6(c)(i), the Company shall be entitled to
make all notices and other communications provided for and permitted hereunder
to the address of such Holder as reflected in the register maintained by the
warrant agent or by the registrar and transfer agent of the Common Shares, as
the case may be, and such notice or communication shall be deemed to have
fulfilled all of the Company's obligations hereunder with respect to notice or
communication to such Holder required or permitted by the event or circumstance
triggering the notice or communication.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
<PAGE>
15
(d) SPECIFIC PERFORMANCE. It is expressly acknowledged that, on and
after the Common Share Closing Date, there may be no adequate remedy at law if
the Company or a Holder, as the case may be, fails to perform any of its
obligations hereunder and that each such party may be irreparably harmed by and
such failure, and accordingly each such party, in addition to any other remedy
to which it may be entitled at law or in equity, shall be entitled, on and after
the Common Share Closing Date, to compel specific performance of the obligations
of the other party under this Agreement in accordance with the terms and
conditions of this Agreement, in any court of the United States or any State
thereof having jurisdiction.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; PROVIDED that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement. If any
transferee of any Holder shall acquire Special Warrants or Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Special Warrants or Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Special Warrants or
Registrable Securities such person shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this Agreement
and such person shall be entitled to receive the benefits hereof.
(f) SURVIVAL. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this Agreement
shall remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of any Holder, any
director, officer or partner or such Holder, any agent or underwriter or any
director, officer or partner thereof, or any controlling person of any of the
foregoing, and shall survive delivery of and payment for the Registrable
Securities and the transfer and registration of Registrable Securities by such
Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE>
16
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this 28th day of March, 1994.
ACME METALS INCORPORATED
By /s/ Edward P. Weber, Jr.
------------------------------
Name: Edward P. Weber, Jr.
Title: Vice President,
General Counsel
and Secretary
Confirmed and accepted as of
March 28, 1994:
By /s/ Joseph F. Conway
-----------------------------
Name: Joseph F. Conway
Title: Attorney-in-fact for the
Substituted Purchasers listed
on Schedule A hereto
<PAGE>
EXHIBIT 10.3
U.S. $80,000,000
CREDIT AGREEMENT
by and among
ACME GROUP
and
HARRIS TRUST AND SAVINGS BANK
individually and as Agent
and
the Lenders
which are or become parties hereto
Dated as of August 11, 1994
<PAGE>
TABLE OF CONTENTS
SECTION 1. THE REVOLVING CREDIT. . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Revolving Credit . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Revolving Loans. . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Letters of Credit. . . . . . . . . . . . . . . . . . . . 2
(a) General Terms. . . . . . . . . . . . . . . . . . . . . . 2
(b) Applications . . . . . . . . . . . . . . . . . . . . . . 2
(c) The Reimbursement Obligation . . . . . . . . . . . . . . 3
(d) The Participating Interests. . . . . . . . . . . . . . . 4
(e) Indemnification. . . . . . . . . . . . . . . . . . . . . 5
Section 1.4. Manner of Borrowing Loans. . . . . . . . . . . . . . . . 5
(a) Generally. . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Reimbursement Obligation . . . . . . . . . . . . . . . . 5
(c) Agent Reliance on Bank Funding . . . . . . . . . . . . . 6
Section 1.5. Appointment of Company as Agent for
Borrowers; Reliance by Agent . . . . . . . . . . . . . . 6
(a) Appointment . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 2. INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.1. Options. . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.2. Domestic Rate Portion. . . . . . . . . . . . . . . . 7
Section 2.3. LIBOR Portions . . . . . . . . . . . . . . . . . . . 7
Section 2.4. Manner of Rate Selection . . . . . . . . . . . . . . 8
Section 2.5. Change of Law. . . . . . . . . . . . . . . . . . . . 8
Section 2.6. Unavailability of Deposits or
Inability to Ascertain the Adjusted
LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7. Taxes and Increased Costs. . . . . . . . . . . . . . 9
Section 2.8. Funding Indemnity. . . . . . . . . . . . . . . . . .10
Section 2.9. Lending Branch . . . . . . . . . . . . . . . . . . .10
Section 2.10. Change of Lending Branch . . . . . . . . . . . . . .10
Section 2.11. Discretion of Lenders as to Manner of Funding. . . .11
Section 2.12. Computation of Interest. . . . . . . . . . . . . . .11
Section 2.13. Interest Rate and Exchange Rate Protection.. . . . .11
Section 2.14. Capital Adequacy . . . . . . . . . . . . . . . . . .11
SECTION 3. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND
NOTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 3.1. Commitment Fee . . . . . . . . . . . . . . . . . . .12
Section 3.2. Agent's Fees . . . . . . . . . . . . . . . . . . . .12
Section 3.3. Letter of Credit Fees. . . . . . . . . . . . . . . .12
Section 3.4. Audit Fees . . . . . . . . . . . . . . . . . . . . .12
Section 3.5. Voluntary Prepayments. . . . . . . . . . . . . . . .12
Section 3.6. Mandatory Prepayment upon Borrowing Base Deficiency.13
Section 3.7. Voluntary Terminations . . . . . . . . . . . . . . .13
Section 3.8. Place and Application. . . . . . . . . . . . . . . .13
Section 3.9. Notations and Requests . . . . . . . . . . . . . . .15
SECTION 4. THE COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . .15
Section 4.1. Collateral . . . . . . . . . . . . . . . . . . . . .15
-1-
<PAGE>
Section 4.2. Further Assurances.. . . . . . . . . . . . . . . . .16
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . .16
Section 5.1. Acme Group's Organization, Licenses
and Authorizations . . . . . . . . . . . . . . . . .16
Section 5.2. Acme Group's Power and Authority . . . . . . . . . .16
Section 5.3. Subsidiaries . . . . . . . . . . . . . . . . . . . .16
Section 5.4. Good Title . . . . . . . . . . . . . . . . . . . . .17
Section 5.5. Regulation U . . . . . . . . . . . . . . . . . . . .17
Section 5.6. Financial Reports. . . . . . . . . . . . . . . . . .17
Section 5.7. Litigation; No Labor Controversies . . . . . . . . .17
Section 5.8. Approvals. . . . . . . . . . . . . . . . . . . . . .18
Section 5.9. Affiliates . . . . . . . . . . . . . . . . . . . . .18
Section 5.10. ERISA . . . . . . . . . . . . . . . . . . . . . . .18
Section 5.11. Government Regulation . . . . . . . . . . . . . . .19
Section 5.12. Environmental Requirements. . . . . . . . . . . . .19
Section 5.13. Reliance. . . . . . . . . . . . . . . . . . . . . .19
Section 5.14. No Burdensome Restrictions; Compliance
with Agreements . . . . . . . . . . . . . . . . . .19
SECTION 6. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . .20
Section 6.1. All Advances . . . . . . . . . . . . . . . . . . . .20
Section 6.2. Initial Advance. . . . . . . . . . . . . . . . . . .20
SECTION 7. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . .22
Section 7.1. Maintenance of Business and Compliance with Laws . .22
Section 7.2. Maintenance of Property. . . . . . . . . . . . . . .23
Section 7.3. Taxes and Assessments. . . . . . . . . . . . . . . .23
Section 7.4. Insurance. . . . . . . . . . . . . . . . . . . . . .23
Section 7.5. Financial Reports and Rights of Inspection . . . . .23
Section 7.6. Current Ratio. . . . . . . . . . . . . . . . . . . .25
Section 7.7. Consolidated Tangible Net Worth. . . . . . . . . . .26
Section 7.8. Leverage . . . . . . . . . . . . . . . . . . . . . .26
Section 7.9. Cash Flow Coverage Ratio . . . . . . . . . . . . . .26
Section 7.10. Liens. . . . . . . . . . . . . . . . . . . . . . . .26
Section 7.11. Indebtedness . . . . . . . . . . . . . . . . . . . .26
Section 7.12. Acquisitions, Investments, Loans, Advances and
Guarantees. . . . . . . . . . . . . . . . . . . . .27
Section 7.13. Dividends and Certain Other Restricted Payments. . .28
(a) Restricted Equity Payments . . . . . . . . . . . . .28
(b) Restricted Debt Payments . . . . . . . . . . . . . .29
(c) Exceptions . . . . . . . . . . . . . . . . . . . . .29
Section 7.14. Mergers, Consolidations, Leases and Sales. . . . . .29
Section 7.15. Maintenance of Subsidiaries. . . . . . . . . . . . .30
Section 7.16. ERISA. . . . . . . . . . . . . . . . . . . . . . . .30
Section 7.17. Burdensome Contracts with Affiliates . . . . . . . .31
Section 7.18. Change in Fiscal Year. . . . . . . . . . . . . . . .31
Section 7.19. Change in the Nature of Business . . . . . . . . . .31
Section 7.20. Compliance with Laws . . . . . . . . . . . . . . . .31
SECTION 8. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . .31
-2-
<PAGE>
SECTION 9. DEFINITIONS INTERPRETATIONS. . . . . . . . . . . . . . .34
Section 9.1. Definitions. . . . . . . . . . . . . . . . . . . . .34
Section 9.2. Interpretation.. . . . . . . . . . . . . . . . . . .49
SECTION 10. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . .50
Section 10.1. Appointment and Authorization. . . . . . . . . . . .50
Section 10.2. Rights as a Lender . . . . . . . . . . . . . . . . .50
Section 10.3. Standard of Care . . . . . . . . . . . . . . . . . .50
Section 10.4. Costs and Expenses . . . . . . . . . . . . . . . . .51
Section 10.5. Indemnity. . . . . . . . . . . . . . . . . . . . . .52
Section 10.6. Conflict . . . . . . . . . . . . . . . . . . . . . .52
SECTION 11. THE GUARANTEES . . . . . . . . . . . . . . . . . . . . .52
Section 11.1. The Guarantees . . . . . . . . . . . . . . . . . . .52
Section 11.2. Guarantee Unconditional. . . . . . . . . . . . . . .53
Section 11.3. Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances . . . . . . .54
Section 11.4. Waivers. . . . . . . . . . . . . . . . . . . . . . .54
Section 11.5. Limit on Recovery. . . . . . . . . . . . . . . . . .54
Section 11.6. Stay of Acceleration . . . . . . . . . . . . . . . .54
SECTION 12. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . .54
Section 12.1 Withholding Taxes. . . . . . . . . . . . . . . . . .54
Section 12.2. Holidays . . . . . . . . . . . . . . . . . . . . . .56
Section 12.3. No Waiver, Cumulative Remedies . . . . . . . . . . .56
Section 12.4. Waivers, Modifications and Amendments. . . . . . . .56
Section 12.5. Costs and Expenses . . . . . . . . . . . . . . . . .56
Section 12.6. Stamp Taxes. . . . . . . . . . . . . . . . . . . . .57
Section 12.7. Survival of Representations. . . . . . . . . . . . .57
Section 12.8. Construction . . . . . . . . . . . . . . . . . . . .57
Section 12.9. Addresses for Notices. . . . . . . . . . . . . . . .57
Section 12.10.Obligations Several. . . . . . . . . . . . . . . . .58
Section 12.11.Headings . . . . . . . . . . . . . . . . . . . . . .58
Section 12.12.Severability of Provisions . . . . . . . . . . . . .58
Section 12.13.Counterparts . . . . . . . . . . . . . . . . . . . .58
Section 12.14.Binding Nature and Governing Law . . . . . . . . . .58
Section 12.15.Entire Understanding . . . . . . . . . . . . . . . .58
Section 12.16.Extensions of the Commitments. . . . . . . . . . . .58
Section 12.17.Participations . . . . . . . . . . . . . . . . . . .59
Section 12.18.Assignment Agreements. . . . . . . . . . . . . . . .59
Section 12.19.Confidentiality. . . . . . . . . . . . . . . . . . .60
Section 12.20.Terms of Collateral Documents not Superseded . . . .61
Section 12.21.Personal Jurisdiction. . . . . . . . . . . . . . . .61
(a) Exclusive Jurisdiction . . . . . . . . . . . . . . . . .61
(b) Other Jurisdictions. . . . . . . . . . . . . . . . . . .61
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
EXHIBIT A - Revolving Credit Note
EXHIBIT B - Notice of Participation in Letter of Credit
EXHIBIT C - Security Agreement
EXHIBIT D - Opinion of Counsel
EXHIBIT E - Borrowing Base Certificate
EXHIBIT F - Compliance Certificate
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EXHIBIT G - Assignment and Acceptance
SCHEDULE 1.3 - Applications for Letters of Credit
SCHEDULE 5.3 - Subsidiaries
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ACME GROUP
CREDIT AGREEMENT
Harris Trust and Savings Bank
Chicago, Illinois
Lehman Commercial Paper, Inc.
New York, New York
and their from time to time assigns
Gentlemen:
The undersigned, Acme Steel Company, a Delaware corporation ("ACME
STEEL"), Acme Packaging Corporation, a Delaware corporation ("ACME PACKAGING"),
Alpha Tube Corporation, a Delaware corporation, ("ALPHA TUBE"), and Universal
Tool & Stamping Company, Inc., an Indiana corporation ("UNIVERSAL TOOL") (Acme
Steel, Acme Packaging, Alpha Tube and Universal Tool are being hereinafter
referred to collectively as the "BORROWERS" and individually as a "BORROWER")
apply to you for your several commitments, subject to all of the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, to make a revolving credit (the "REVOLVING CREDIT")
available to the Borrowers, all as more fully hereinafter set forth. The
undersigned, Acme Metals Incorporated, a Delaware corporation (the "COMPANY"),
executes and delivers this Agreement to confirm certain of its Agreements made
in connection with the extension of such credit to the Borrowers.
SECTION 1. THE REVOLVING CREDIT;.
SECTION 1.1. REVOLVING CREDIT;. Subject to all of the terms and
conditions hereof, each Lender, by its acceptance hereof, severally agrees to
extend a Revolving Credit to the Borrowers in the amount of its commitment to
extend the Revolving Credit set forth on the applicable signature page hereof
(its "COMMITMENT" and cumulatively for all the Lenders, the "COMMITMENTS")
(subject to any reductions thereof pursuant to the terms hereof) prior to the
Termination Date. Such Revolving Credit may be availed of by each Borrower in
its discretion from time to time, be repaid and used again, during the period
from the date hereof to and including the Termination Date. The Revolving
Credit, subject to all of the terms and conditions hereof, may be utilized by
any one or more of the Borrowers in the form of Revolving Loans and Letters of
Credit, all as more fully hereinafter set forth; PROVIDED, HOWEVER, that the
aggregate amount of the Revolving Loans and L/C Obligations outstanding at any
one time from all the Borrowers taken together shall not at any time exceed the
lesser of the Commitments then in effect or the Available Borrowing Base as then
determined and computed for all the Borrowers; PROVIDED FURTHER, HOWEVER, that
the aggregate amount outstanding at any time on Revolving Loans made to each
Borrower, and L/C Obligations in respect of Letters of Credit issued for such
Borrower's sole or joint account, shall not exceed such Borrower's Available
Borrowing Base as then determined and
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computed. For all purposes of this Agreement, where a determination of the
unused or available amount of the Commitments is necessary, the Revolving Loans
and L/C Obligations shall all be deemed to utilize the Commitments. The
obligations of the Lenders hereunder are several and not joint and no Lender
shall under any circumstances be obligated to extend credit hereunder in excess
of its Commitment.
SECTION 1.2. REVOLVING LOANS;. Subject to all of the terms and conditions
hereof, the Revolving Credit may be availed of in the form of loans
(individually a "REVOLVING LOAN" and collectively the "REVOLVING LOANS"). Each
Borrowing of Revolving Loans shall be made ratably by the Lenders in accordance
with their Percentages. Each Borrowing of Revolving Loans shall be in a minimum
amount of $1,000,000 or such greater amount which is an integral multiple of
$500,000; PROVIDED, HOWEVER, that (i) a Borrowing made to repay a Reimbursement
Obligation may be made in the amount thereof and (ii) a Borrowing of Revolving
Loans which bears interest with reference to the Adjusted LIBOR Rate shall be in
such greater amount as is required by Section 2 hereof. All Revolving Loans
made by a Lender to the Borrowers shall be evidenced by a single Revolving
Credit Note of the Borrowers, jointly and severally, (individually a "REVOLVING
CREDIT NOTE" and collectively the "REVOLVING CREDIT NOTES") payable to the order
of such Lender in the amount of its Commitment, each Revolving Credit Note to be
in the form (with appropriate insertions) attached hereto as Exhibit A. Without
regard to the face principal amount of each Lender's Revolving Credit Note, the
actual principal amount at any time outstanding and owing by the Borrowers on
account thereof during the period ending on the Termination Date shall be the
sum of all Revolving Loans then or theretofore made thereon by such Lender to
the Borrowers less all payments actually received thereon during the same
period.
SECTION 1.3. LETTERS OF CREDIT;.
(a) GENERAL TERMS;. Subject to the terms and conditions hereof, as part
of the Revolving Credit, the Agent shall issue standby or commercial letters of
credit (each a "LETTER OF CREDIT") for the account of any one or more of the
Borrowers in U.S. Dollars in an aggregate undrawn face amount up to the amount
of the L/C Commitment; PROVIDED, HOWEVER, that the aggregate L/C Obligations at
any time outstanding shall not exceed the difference between the Commitments in
effect at such time and the aggregate principal amount of Revolving Credit Loans
then outstanding; PROVIDED FURTHER, HOWEVER, that the aggregate amount
outstanding at any time on Revolving Loans made to each Borrower, and L/C
Obligations in respect of Letters of Credit issued for such Borrower's account,
shall not exceed such Borrower's Borrowing Base as then determined and computed.
Each Letter of Credit shall be issued by the Agent, but each Lender shall be
obligated to reimburse the Agent for its Percentage of the amount of each
drawing thereunder and, accordingly, the undrawn face amount of each Letter of
Credit shall constitute usage of the
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Commitment of each Lender PRO RATA in accordance with each Lender's Percentage.
(b) APPLICATIONS;. At any time before the Termination Date, the Agent
shall, at the request of the Company (which is acting on behalf of the Borrowers
pursuant to Section 1.5 hereof), issue one or more Letters of Credit for the
account of any one or more of the Borrowers, in a form satisfactory to the
Agent, with expiration dates no later than the Termination Date, in an aggregate
face amount as set forth above, upon the receipt of an application for the
relevant Letter of Credit in the form customarily prescribed by the Agent for
the type of Letter of Credit, whether standby or commercial, duly executed by
each Borrower for whose account such Letter of Credit was issued (each an
"APPLICATION"). The current form of the Agent's Applications are attached as
Schedule 1.3 (Standby) and Schedule 1.3 (Commercial) hereto. The Agent shall
provide the Borrowers and each Lender with copies of any new form of Application
that may, from time to time, be adopted by the Agent. Notwithstanding anything
contained in any Application to the contrary (i) the Borrowers shall be jointly
and severally liable for all obligations in respect of each Letter of Credit,
(ii) the Acme Group's obligation to pay fees in connection with each Letter of
Credit shall be as exclusively set forth in Section 3.3 hereof, (iii) except
during the continuance of an Event of Default , the Agent will not call for the
funding by the Acme Group of any amount under a Letter of Credit, or any other
form of collateral security for the Acme Group's obligations in connection with
such Letter of Credit, before being presented with a drawing thereunder, and
(iv) if the Agent is not timely reimbursed for the amount of any drawing under a
Letter of Credit on the date such drawing is paid, the Borrowers' obligation to
reimburse the Agent for the amount of such drawing shall bear interest (which
the Borrowers hereby promise to pay) from and after the date such drawing is
paid at a rate per annum equal to the sum of 2% plus the Domestic Rate from time
to time in effect. The Agent will promptly notify the Lenders of each issuance
by it of a Letter of Credit. If the Agent issues any Letters of Credit with
expiration dates that are automatically extended unless the Agent gives notice
that the expiration date will not so extend beyond its then scheduled expiration
date, the Agent will give such notice of non-renewal before the time necessary
to prevent such automatic extension if before such required notice date (i) the
expiration date of such Letter of Credit if so extended would be after the
Termination Date, (ii) the Commitments have been terminated or (iii) an Event of
Default exists and the Required Lenders have given the Agent instructions not to
so permit the extension of the expiration date of such Letter of Credit. The
Agent agrees to issue amendments to the Letter(s) of Credit increasing the
amount, or extending the expiration date, thereof at the request of the Company
subject to the conditions of Section 6 and the other terms of this Section 1.3.
Without
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limiting the generality of the foregoing, the Agent's obligation to issue, amend
or extend the expiration date of a Letter of Credit is subject to the conditions
of Section 6 and the other terms of this Section 1.3 and the Agent will not
issue, amend or extend the expiration date of any Letter of Credit if any Lender
notifies the Agent of any failure to satisfy or otherwise comply with such
conditions and terms and directs the Agent not to take such action.
(c) THE REIMBURSEMENT OBLIGATION;. Subject to Section 1.3(b) hereof, the
obligation of a Borrower to reimburse the Agent for all drawings under a Letter
of Credit issued for such Borrower's account (a "REIMBURSEMENT OBLIGATION")
shall be governed by the Application related to such Letter of Credit, except
that reimbursement of each drawing shall be made in immediately available funds
at the Agent's principal office in Chicago, Illinois by no later than 12:00 Noon
(Chicago time) on the date when such drawing is paid or, if drawing was paid
after 11:30 a.m. (Chicago time), by the end of such day. If the relevant
Borrower does not make any such reimbursement payment on the date due and the
Participating Lenders fund their participations therein in the manner set forth
in Section 1.3(d) below, then all payments thereafter received by the Agent in
discharge of any of the relevant Reimbursement Obligations shall be distributed
in accordance with Section 1.3(d) below.
(d) THE PARTICIPATING INTERESTS;. Each Lender (other than the Lender then
acting as Agent in issuing Letters of Credit), by its acceptance hereof,
severally agrees to purchase from the Agent, and the Agent hereby agrees to sell
to each such Lender (a "PARTICIPATING LENDER"), an undivided percentage
participating interest (a "PARTICIPATING INTEREST"), to the extent of its
Percentage, in each Letter of Credit issued by, and each Reimbursement
Obligation owed to, the Agent. Upon any failure by a Borrower to pay any
Reimbursement Obligation in respect of a Letter of Credit issued for such
Borrower's account at the time required on the date the related drawing is paid,
as set forth in Section 1.3(c) above, or if the Agent is required at any time to
return to a Borrower or to a trustee, receiver, liquidator, custodian or other
Person any portion of any payment of any Reimbursement Obligation, each
Participating Lender shall, not later than the Business Day it receives a
certificate in the form of Exhibit B hereto from the Agent to such effect, if
such certificate is received before 1:00 p.m. (Chicago time), or not later than
the following Business Day, if such certificate is received after such time, pay
to the Agent an amount equal to its Percentage of such unpaid or recaptured
Reimbursement Obligation together with interest on such amount accrued from the
date the related payment was made by the Agent to the date of such payment by
such Participating Lender at a rate per annum equal to (i) from the date the
related payment was made by the Agent to the date two (2) Business Days after
payment by such Participating Lender is due hereunder, the Federal Funds Rate
for each such day
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and (ii) from the date two (2) Business Days after the date such payment is due
from such Participating Lender to the date such payment is made by such
Participating Lender, the Domestic Rate in effect for each such day. Each such
Participating Lender shall thereafter be entitled to receive its Percentage of
each payment received in respect of the relevant Reimbursement Obligation and of
interest paid thereon, with the Agent retaining its Percentage as a Lender
hereunder.
The several obligations of the Participating Lenders to the Agent
under this Section 1.3 shall be absolute, irrevocable and unconditional under
any and all circumstances whatsoever (except, without limiting the Borrowers'
joint and several obligations under each Application for a Letter of Credit
issued for any Borrower's account, to the extent such Borrower is relieved from
its obligation to reimburse the Agent for a drawing under a Letter of Credit
because of the Agent's gross negligence or willful misconduct in determining
that documents received under the Letter of Credit comply with the terms
thereof) and shall not be subject to any set-off, counterclaim or defense to
payment which any Participating Lender may have or have had against any one or
more of the Borrowers, the Agent, any other Lender or any other Person
whatsoever. Without limiting the generality of the foregoing, such obligations
shall not be affected by any Default or Event of Default or by any reduction or
termination of any Commitment of any Lender, and each payment by a Participating
Lender under this Section 1.3 shall be made without any offset, abatement,
withholding or reduction whatsoever. The Agent shall be entitled to offset
amounts received for the account of a Lender under this Agreement against unpaid
amounts due from such Lender to the Agent hereunder (whether as fundings of
participations, indemnities or otherwise), but shall not be entitled to offset
against amounts owed to the Agent by any Lender arising outside this Agreement.
(e) INDEMNIFICATION;. Each Participating Lenders shall, to the extent of
their respective Percentages, indemnify the Agent (to the extent not reimbursed
by the Borrower) against any cost, expense (including reasonable counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with any Letter of Credit. The obligations of
the Participating Lenders under this Section 1.3(d) and all other parts of this
Section 1.3 shall survive termination of this Agreement and of all other L/C
Documents.
SECTION 1.4. MANNER OF BORROWING LOANS;.
(a) GENERALLY;. The Company (which is acting on behalf of the Borrowers
pursuant to Section 1.5 hereof) shall give the Agent notice (which may be
written or oral, but if oral, promptly confirmed in writing) by 10:00 a.m.
Chicago time on any Business Day of each request that any Borrowing of Revolving
Loans, in each case specifying the Borrower to which the proceeds of such
Borrowing are to be
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disbursed, the amount of each such Borrowing and the date such Borrowing is to
be made (which date shall be at least three Business Days subsequent to the date
of such notice in the case of any Borrowing of Revolving Loans constituting a
LIBOR Portion). The Agent shall notify each Lender of its receipt of each such
notice by 12:00 Noon Chicago time on the Business Day any Borrowing of Revolving
Loans constituting the Domestic Rate Portion is to be made and by 12:00 Noon
Chicago time on the Business Day it receives such a request for any Borrowing of
Revolving Loans constituting a LIBOR Portion. Each Revolving Loan from each
Lender shall initially constitute part of the Domestic Rate Portion except to
the extent the Company on behalf of the Borrowers has timely elected otherwise
as provided in Section 2 hereof. Not later than 2:00 p.m. Chicago time on the
date specified for any Borrowing of Revolving Loans to be made hereunder, such
Lender shall make the proceeds of its Revolving Loan comprising part of such
Borrowing available in immediately available funds to the Agent in Chicago.
Subject to all of the terms and conditions hereof, the proceeds of each Lender's
Revolving Loan shall be made available to the relevant Borrower at the office of
the Agent in Chicago and in funds there current by crediting such Borrower's
general operating account maintained with the Agent in Chicago, Illinois upon
receipt by the Agent from such Lender of the proceeds of such Revolving Loan.
(b) REIMBURSEMENT OBLIGATION;. In the event the Company fails to give
notice pursuant to Section 1.4(a) above of a Borrowing equal to the amount of a
Reimbursement Obligation and has not notified the Agent by 10:00 a.m. (Chicago
time) on the day such Reimbursement Obligation becomes due that it intends to
repay such Reimbursement Obligation through funds not borrowed under this
Agreement, the Company shall be deemed to have requested a Borrowing of
Revolving Loans constituting part of the Domestic Rate Portion on such day in
the amount of the Reimbursement Obligation then due, subject to Section 6.1
hereof, which Borrowing shall be applied to pay the Reimbursement Obligation
then due.
(c) AGENT RELIANCE ON BANK FUNDING;. Unless the Agent shall have been
notified by a Lender before the date on which such Lender is scheduled to make
payment to the Agent of the proceeds of a Revolving Loan (which notice shall be
effective upon receipt) that such Lender does not intend to make such payment,
the Agent may assume that such Lender has made such payment when due and the
Agent may in reliance upon such assumption (but shall not be required to) make
available to the relevant Borrower the proceeds of the Revolving Loan to be made
by such Lender and, if any Lender has not in fact made such payment to the
Agent, such Lender shall, on demand, pay to the Agent the amount made available
to such Borrower attributable to such Lender together with interest thereon in
respect of each day during the period commencing on the date such amount was
made available to such Borrower and ending on (but excluding) the date
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such Lender pays such amount to the Agent at a rate per annum equal to the
Federal Funds Rate. If such amount is not received from such Lender by the
Agent immediately upon demand, the Borrowers will, on demand, repay to the Agent
the proceeds of the Revolving Loan attributable to such Lender with interest
thereon at a rate per annum equal to the interest rate applicable to the
relevant Revolving Loan, but without such payment being considered a payment or
prepayment of a Revolving Loan under Section 2.8 hereof, so that the Borrowers
will have no liability under such Section with respect to such payment.
'SECTION 1.5. APPOINTMENT OF COMPANY AS AGENT FOR BORROWERS; RELIANCE BY
AGENT';. (a) APPOINTMENT;. Each Borrower irrevocably appoints the Company as
its agent hereunder to make requests on such Borrower's behalf under Section 1
hereof for Borrowings to be made by such Borrower and for Letters of Credit to
be issued for such Borrower's account, to select on such Borrower's behalf the
interest rate to be applicable under Section 2 hereof to Borrowings made by such
Borrower and to take any other action contemplated by the Loan Documents with
respect to credit extended hereunder to such Borrower. The Agent and the
Lenders shall be entitled to conclusively presume that any action by the Company
under the Loan Documents is taken on behalf of any one or more of the Borrowers
whether or not the Company so indicates.
(b) RELIANCE;. All requests for Borrowings and selection of interest
rates to be applicable thereto may be written or oral, including by telephone or
telecopy. The Acme Group agrees that the Agent may rely on any such notice
given by any person the Agent in good faith believes is an Authorized
Representative without the necessity of independent investigation (the Borrowers
hereby indemnifying the Agent and Lenders from any liability or loss ensuing
from such reliance), and in the event any such telephonic or other oral notice
conflicts with any written confirmation, such oral or telephonic notice shall
govern if the Agent has acted in reliance thereon.
SECTION 2. Interest;.
SECTION 2.1. OPTIONS;. Subject to all of the terms and conditions of this
Section 2, portions of the principal indebtedness evidenced by the Revolving
Credit Notes ("PORTIONS") may, at the option of the Company (which is acting on
behalf of the Borrowers pursuant to Section 1.5 hereof), bear interest with
reference to the Domestic Rate (the "DOMESTIC RATE PORTION") or with reference
to the Adjusted LIBOR Rate ("LIBOR PORTIONS"), and Portions may be converted
from time to time from one basis to the other. All of the indebtedness
evidenced by the Revolving Credit Notes which is not part of a LIBOR Portion
shall constitute a single Domestic Rate Portion. All of the indebtedness
evidenced by the Revolving Credit Notes which bears interest with reference to a
particular Adjusted LIBOR Rate for a particular Interest Period shall constitute
a single LIBOR Portion. Anything contained herein to the contrary
notwithstanding, there shall not
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be more than six LIBOR Portions applicable to the Revolving Credit at any one
time and each Lender shall have a ratable interest in each Portion. The
Borrowers promise to pay interest on each Portion at the rates and times
specified in this Section 2.
SECTION 2.2. DOMESTIC RATE PORTION;. Each Domestic Rate Portion shall
bear interest (which the Borrowers promise to pay at the times herein provided)
at the rate per annum determined by adding the Domestic Rate Margin to the
Domestic Rate as in effect from time to time, provided that if a Domestic Rate
Portion is not paid when due (whether by lapse of time, acceleration or
otherwise), such Portion shall bear interest (which the Borrowers promise to pay
at the times hereinafter provided), whether before or after judgment, and until
payment in full thereof, at the rate per annum determined by adding 2-1/2% to
the Domestic Rate as in effect from time to time. Interest on the Domestic Rate
Portions shall be payable on the last day of each calendar month (beginning
August 31, 1994) and at maturity of the Revolving Credit Notes and interest
after maturity shall be due and payable upon demand.
SECTION 2.3. LIBOR PORTIONS;. Each LIBOR Portion shall bear interest
(which the Borrowers promise to pay at the times herein provided) for each
Interest Period selected therefor at a rate per annum determined by adding the
LIBOR Margin to the Adjusted LIBOR Rate for such Interest Period, provided that
if any LIBOR Portion is not paid when due (whether by lapse of time,
acceleration or otherwise), such Portion shall bear interest (which the
Borrowers promise to pay at the times hereinafter provided), whether before or
after judgment, and until payment in full thereof, through the end of the
Interest Period then applicable thereto at the rate per annum determined by
adding 2% to the interest rate otherwise applicable thereto and effective at the
end of such Interest Period, such LIBOR Portion shall automatically be converted
into and added to the Domestic Rate Portion and shall thereafter bear interest
at the interest rate applicable to the Domestic Rate Portion after default.
Interest on each LIBOR Portion shall be due and payable on the last day of each
Interest Period applicable thereto (provided that if any Interest Period is
longer than three months, then interest on the LIBOR Portion having such
Interest Period shall be due and payable on the date occurring every three
months after the date such Interest Period began and on the last day of such
Interest Period), and interest after maturity shall be due and payable upon
demand. The Company, on behalf of the relevant Borrower, shall notify the Agent
on or before 10:00 a.m. Chicago time on the third Business Day preceding the end
of an Interest Period applicable to a LIBOR Portion whether such LIBOR Portion
is to continue as a LIBOR Portion, in which event the Company shall notify the
Agent of the new Interest Period selected therefor, and in the event the Company
shall fail to so notify the Agent, such LIBOR Portion shall automatically be
converted into and
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added to the Domestic Rate Portion as of and on the last day of such Interest
Period. The Agent shall promptly notify each Lender of each notice received
from the Company pursuant to the foregoing provisions. Anything contained
herein to the contrary notwithstanding, the obligation of the Lenders to create,
continue or effect by conversion any LIBOR Portion shall be conditioned upon the
fact that at the time no Default or Event of Default shall have occurred and be
continuing.
SECTION 2.4. MANNER OF RATE SELECTION;. The Company, on behalf of the
relevant Borrower, shall notify the Agent by 10:00 a.m. Chicago time at least
three Business Days prior to the date upon which it requests that any LIBOR
Portion be created or that any part of the Domestic Rate Portion be converted
into a LIBOR Portion (such notice to specify in each instance the amount thereof
and the Interest Period selected therefor) and the Agent shall advise each
Lender of each such notice by 12:00 Noon Chicago time on the same Business Day
it receives such notice. If any request is made to convert a LIBOR Portion into
the Domestic Rate Portion, such conversion shall only be made so as to become
effective as of the last day of the Interest Period applicable thereto. All
requests for the creation, continuance or conversion of Portions under this
Agreement shall, subject to Section 2.6 hereof, be irrevocable.
SECTION 2.5. CHANGE OF LAW;. Notwithstanding any other provisions of this
Agreement or the Revolving Credit Notes, if at any time a Lender shall determine
in good faith that any change in applicable laws, treaties or regulations or in
the interpretation thereof makes it unlawful for such Lender to create or
continue to maintain LIBOR Portions, it shall promptly so notify the Agent
(which shall in turn promptly notify the Company and the other Lenders) and the
obligation of such Lender to create, continue or maintain any LIBOR Portion
under this Agreement shall terminate until it is no longer unlawful for such
Lender to create, continue or maintain LIBOR Portions. The Borrowers on demand,
shall, if the continued maintenance of a LIBOR Portion is unlawful, thereupon
prepay the outstanding principal amount of the LIBOR Portions, together with all
interest accrued thereon and all other amounts payable to the affected Lenders
with respect thereto under this Agreement; PROVIDED, HOWEVER, that the Company,
on behalf of the relevant Borrower, may instead elect to convert the principal
amount of the affected LIBOR Portion into the Domestic Rate Portion, subject to
the terms and conditions of this Agreement.
SECTION 2.6. UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN THE
ADJUSTED LIBOR RATE;. Notwithstanding any other provision of this Agreement or
the Revolving Credit Notes, if prior to the commencement of any Interest Period,
any Lender shall either (a) inform the Agent that such Lender has determined
that United States dollar deposits in the amount of any LIBOR Portion scheduled
to be outstanding during such Interest Period are not readily available to such
Lender in the offshore
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interbank market or (b) advise the Agent that LIBOR as determined by the Agent
will not adequately and fairly reflect the cost to such Lender of funding its
LIBOR Portion for such Interest Period, the Agent shall promptly give notice
thereof to the Company and each other Lender and the obligations of the Lenders
to create, continue or effect by conversion any LIBOR Portion in such amount and
for such Interest Period shall terminate until United States dollar deposits in
such amount and for the Interest Period selected by the Company shall again be
readily available in the offshore interbank market.
SECTION 2.7. TAXES AND INCREASED COSTS;. With respect to the LIBOR
Portions, if any Lender shall determine in good faith that any change in any
applicable law, treaty, regulation or guideline (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or any new
law, treaty, regulation or guideline, or any interpretation of any of the
foregoing by any governmental authority charged with the administration thereof
or any central bank or other fiscal, monetary or other authority having
jurisdiction over such Lender or its lending branch or the Portions contemplated
by this Agreement (whether or not having the force of law) shall:
(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in or
for the account of, or loans by, or any other acquisition of funds or
disbursements by, such Lender which is not in any instance already
accounted for in computing the Adjusted LIBOR Rate;
(ii) subject such Lender, the LIBOR Portions or a Revolving Credit
Note to the extent it evidences such Portions, to any tax (including,
without limitation, any United States interest equalization tax or similar
tax however named applicable to the acquisition or holding of debt
obligations and any interest or penalties with respect thereto), duty,
charge, stamp tax, fee, deduction or withholding in respect of this
Agreement, any LIBOR Portion or a Revolving Credit Note to the extent it
evidences such a Portion, except such taxes as may be measured by the
overall net income or gross receipts of such Lender or its lending branches
and imposed by the jurisdiction, or any political subdivision or taxing
authority thereof, in which such Lender's principal executive office or its
lending branch is located;
(iii) change the basis of taxation of payments of principal and
interest due from any Borrower to such Lender hereunder or under a
Revolving Credit Note to the extent it evidences any LIBOR Portion (other
than by a change in taxation of the overall net income or gross receipts of
such Lender); or
(iv) impose on such Lender any penalty with respect to the foregoing
or any other condition regarding this Agreement, its disbursement, any
LIBOR Portion or a
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Revolving Credit Note to the extent it evidences any LIBOR Portion;
and such Lender shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to such
Lender of creating or maintaining any LIBOR Portion hereunder or to reduce the
amount of principal or interest received or receivable by such Lender, then the
Borrowers shall pay on demand to the Agent for the account of such Lender from
time to time as specified by such Lender such additional amounts as such Lender
shall reasonably determine are sufficient to compensate and indemnify it for
such increased cost or reduced amount. If a Lender makes such a claim for
compensation, it shall provide to the Company a certificate setting forth in
reasonable detail the computation of the increased cost or reduced amount as a
result of any event mentioned herein and such certificate shall be deemed prima
facie correct.
SECTION 2.8. FUNDING INDEMNITY;. In the event any Lender shall incur any
loss, cost or expense (including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired or contracted to be acquired by such Lender to fund or maintain its
part of any LIBOR Portion or the relending or reinvesting of such deposits or
other funds or amounts paid or prepaid to such Lender but not including a loss
of profit), as a result of:
(i) any payment of a LIBOR Portion on a date other than the last day
of the then applicable Interest Period for any reason, whether before or
after default, and whether or not such payment is required by any
provisions of this Agreement; or
(ii) any failure by any Borrower to create, borrow, continue or
effect by conversion a LIBOR Portion on the date specified in a notice
given pursuant to this Agreement unless such failure results from such
Lender's inability or unwillingness pursuant to Sections 2.5 or 2.6 hereof
to create, continue or effect by conversion such LIBOR Portion;
then upon the demand of such Lender, the Borrowers shall pay on demand to the
Agent for the account of such Lender such amount as will reimburse such Lender
for such loss, cost or expense. If a Lender requests such a reimbursement, it
shall provide the Company with a certificate setting forth in reasonable detail
the computation of the loss, cost or expense giving rise to the request for
reimbursement and such certificate shall be deemed prima facie correct.
SECTION 2.9. LENDING BRANCH;. Each Lender may, at its option, elect to
make, fund or maintain its loans hereunder at the branches or offices specified
on the signature pages hereof or on any Assignment Agreement executed and
delivered pursuant to Section 12.18 hereof or at such other of its branches or
offices as such Lender may from time to time elect.
SECTION 2.10. CHANGE OF LENDING BRANCH;. Each Lender agrees
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that, as promptly as practicable after it becomes aware of the occurrence of an
event or the existence of a condition that would cause it to be affected under
Section 2.5, 2.6 or 2.7 hereof, such Lender will, after notice to the Company,
use its best efforts to create, fund or maintain the affected LIBOR Portion,
through another lending office of such Lender if as a result thereof the
unlawfulness which would otherwise require payment of such Portion pursuant to
Section 2.5 hereof would cease to exist or the circumstances which would
otherwise terminate such Lender's obligation to create such Portion under
Section 2.6 hereof would cease to exist or the increased costs which would
otherwise be required to be paid in respect of such Portion pursuant to Section
2.7 hereof would be materially reduced, and if, as determined by such Lender, in
its sole discretion, the creating, funding or maintaining of such Portion, as
the case may be, through such other lending office would not otherwise adversely
affect such Portion or such Lender. The Borrowers hereby agree to pay all
reasonable expenses incurred by each such Lender in utilizing another lending
office pursuant to this Section 2.10.
SECTION 2.11. DISCRETION OF LENDERS AS TO MANNER OF FUNDING;.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
share of its Revolving Credit Notes in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder (including determinations under Sections 2.6, 2.7 and 2.8 hereof)
shall be made as if each such Lender had actually funded and maintained each
LIBOR Portion during each Interest Period applicable thereto through the
purchase of deposits in the offshore interbank market in the amount of its share
of such LIBOR Portion, having a maturity corresponding to such Interest Period
and bearing an interest rate equal to LIBOR for such Interest Period.
SECTION 2.12. COMPUTATION OF INTEREST;. All interest on the Revolving
Credit Notes and unless otherwise stated herein, all fees, charges and
commissions due hereunder, shall be computed on the basis of a year of 360 days
for the actual number of days elapsed.
SECTION 2.13. INTEREST RATE AND EXCHANGE RATE PROTECTION.;. Any one or
more of the Borrowers may hedge its interest rate risk, commodity price risk and
exchange rate risk through the use of one or more Hedging Arrangements for time
periods and with such parties (who need not be Lenders) as such Borrower elects,
with such Borrower's obligations to any such party who is a Lender in connection
with such Hedging Arrangements not to constitute usage of the Commitment of such
Lender. No Lender not a party to a Hedging Arrangement shall participate in any
risk in connection therewith; PROVIDED, HOWEVER, that the Hedging Liability
shall be secured by the Collateral.
SECTION 2.14. CAPITAL ADEQUACY;. If any Lender shall
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determine that any applicable law, rule or regulation regarding capital adequacy
instituted after the date hereof, or any change in the interpretation or
administration of any applicable law, rule or regulation regarding capital
adequacy by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof or compliance by such
Lender (or its lending office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital as a consequence of its obligations hereunder or
the Letters of Credit or credit extended by it hereunder to a level below that
which such Lender could have achieved but for such law, rule, regulation, change
or compliance (taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time as specified by such Lender the Borrowers shall pay on demand such
additional amount or amounts as will compensate such Lender for such reduction.
A certificate of any Lender claiming compensation under this Section 2.14 and
setting forth the additional amount or amounts to be paid to it hereunder in
reasonable detail shall be prima facie evidence thereof. In determining such
amount, such Lender may use any reasonable averaging and attribution methods.
SECTION 3. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND NOTATIONS;.
SECTION 3.1. COMMITMENT FEE;. For the period from the date hereof to and
including the Termination Date, the Borrowers shall pay to the Agent for the
account of the Lenders a commitment fee at the rate of 1/2 of 1% per annum
(computed on the basis of a year of 360 days for the actual number of days
elapsed) on the average daily unused amount of the Commitments hereunder
(whether or not available). Such fee is payable in arrears on the last day of
each calendar quarter (commencing with the first of such dates after the date
hereof) and on the Termination Date.
SECTION 3.2. AGENT'S FEES;. On the date of the initial extension of
credit hereunder and on each yearly anniversary date thereof when any credit, or
commitment to extend credit, is outstanding hereunder, the Borrowers shall pay
to the Agent for its own use and benefit an agent's fee in the amount set forth
in the July 13, 1994 letter to the Company from the Lenders signatory hereto.
SECTION 3.3. LETTER OF CREDIT FEES;. On the date of issuance or
extension, or increase in the amount, of any Letter of Credit pursuant to
Section 1.3 hereof, the Borrowers shall pay to the Agent for its own use and
benefit an issuance fee equal to 1/4 of 1% (0.25%) of the face amount of (or of
the increase in the face amount of) such Letter of Credit. Quarterly in
arrears, on the last day of each calendar quarter (commencing on the first of
such dates after the date hereof), the Borrowers shall pay to the Agent, for the
ratable benefit of the Lenders in accordance with their Percentages, a letter of
credit fee at a rate per annum
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equal to the LIBOR Margin in effect during each day of such quarter applied to
the daily average face amount of Letters of Credit outstanding during such
quarter. In addition, the Borrowers shall pay to the Agent for its own use and
benefit the Agent's standard drawing, negotiation, amendment and other
administrative fees for each Letter of Credit (whether a Commercial Letter of
Credit or Standby Letter of Credit). Such standard fees referred to in the
immediately preceding sentence may be established by the Agent from time to
time.
SECTION 3.4. AUDIT FEES;. The Borrowers shall pay to the Agent for its
own use and benefit charges for audits of the Collateral by the Agent in such
amounts as the Agent may from time to time request (the Agent acknowledging and
agreeing that such charges shall be computed in the same manner as it at the
time customarily uses for the assessment of charges for similar collateral
audits actually performed by it); PROVIDED, HOWEVER, that in the absence of any
Default or Event of Default, the Borrowers shall not be required to reimburse
the Agent for more than two such audits per year; FURTHER PROVIDED, HOWEVER,
that if and so long as no Default or Event of Default shall occur or be
continuing and no amount is outstanding under the Revolving Credit, not more
than one such audit may be conducted in any period of twelve consecutive
calendar months.
SECTION 3.5. VOLUNTARY PREPAYMENTS;. Subject to the further provisions of
this Section 3.5, the Borrowers shall have the privilege of prepaying the
Revolving Credit Notes in whole or in part (but, if in part, then in an amount
not less than $1,000,000 or a whole multiple thereof) at any time (except that
each prepayment of a LIBOR Portion must be made on the last day of its Interest
Period) upon three Business Days' prior written notice from the Company (which
need not be joined in by any Borrower) to the Agent (such notices, if received
subsequent to 10:00 a.m. Chicago time on a given day, to be treated as though
received at the opening of business on the next Business Day), which shall
promptly so notify the Lenders, by paying to the Agent for the account of the
Lenders the principal amount to be prepaid and (i) all accrued interest thereon
to the date fixed for prepayment and (ii) if such a prepayment prepays the
Revolving Credit Notes in full, any commitment fees which have accrued and are
unpaid.
SECTION 3.6. MANDATORY PREPAYMENT UPON BORROWING BASE DEFICIENCY;. In the
event that the aggregate amount outstanding on the Revolving Loans to a
Borrower, and the L/C Obligations in respect of Letters of Credit issued for
such Borrower's sole or joint account, shall at any time and for any reason
exceed such Borrower's Available Borrowing Base as then determined and computed,
the Borrowers shall immediately and without notice or demand pay over the amount
of the excess to the Agent as and for a mandatory prepayment on the Revolving
Credit Notes or, if the Revolving Loans have been prepaid in full but L/C
Obligations are outstanding, then and in any such event, such excess shall be
paid over to the Agent to be applied against, or held as
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collateral security for, as applicable, such L/C Obligations. Each such
repayment shall be accompanied by accrued interest on the amount prepaid to the
date of such prepayment together with any amount due the Lenders under Section
2.8 hereof.
SECTION 3.7. VOLUNTARY TERMINATIONS;. The Borrowers shall have the
privilege upon notice from the Company (which need not be joined in by any
Borrower) to the Agent (which shall promptly notify the Lenders) received on or
before 10:00 a.m. Chicago time at least five Business Days before the
Termination Date to ratably terminate the Commitments in whole or in part (but
if in part then in the amount of $5,000,000 or such greater amount which is an
integral multiple of $500,000). All partial terminations of the Commitments
hereunder shall automatically reduce the L/C Commitment hereof in each case as
from time to time in effect hereunder, by the same percentage as the percentage
termination in the Commitments. Not later than the termination date stated in
such notice, there shall be made such payments to the Agent as may be necessary
to reduce the sum of the aggregate outstanding principal amount of the Revolving
Loans and L/C Obligations to the amount to which the Commitments have been
reduced, together with (x) any amount due the Lenders under Section 2.8 hereof
and (y) in the case of a termination in whole, all interest, fees and other
amounts due on the Obligations. The foregoing to the contrary notwithstanding,
(i) no termination of the Revolving Credit may be effected hereunder if as a
result thereof the outstanding aggregate amount of Letters of Credit would
exceed the L/C Commitment as reduced by such termination and (ii) the
Commitments may not be terminated below $100,000 except concurrently with their
termination in whole. No termination of the Commitments may be reinstated.
SECTION 3.8. PLACE AND APPLICATION;. All payments of principal, interest
and fees shall be made to the Agent at its office 111 West Monroe Street,
Chicago, Illinois (or at such other place as the Agent may specify) in
immediately available and freely transferable funds at the place of payment.
All such payments shall be made without setoff or counterclaim and without
reduction for, and free from, any and all present or future taxes, levies,
imposts, duties, fees, charges, deductions, withholdings, restrictions or
conditions of any nature imposed by any government or political subdivision or
taxing authority thereof. Payments received by the Agent after 12:00 Noon
Chicago time shall be deemed received as of the opening of business on the next
Business Day. Except as herein provided, all payments shall be received by the
Agent for the ratable account of the Lenders and shall be promptly distributed
by the Agent to the Lenders in accordance with their Percentages. Unless the
Company otherwise directs, payments shall be deemed first applied to the
Domestic Rate Portion until payment in full thereof, with any balance applied to
the LIBOR Portions in the order in which their Interest Periods expire. Any
amount prepaid on the Revolving Credit Notes may, subject to all of the terms
and conditions
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hereof, be borrowed, repaid and borrowed again. All payments (whether voluntary
or required) shall be accompanied by any amount due the Lenders under Section
2.8 hereof, but no acceptance of such a payment without requiring payment of
amounts due under Section 2.8 shall preclude a later demand by the Lenders for
any amount due them under Section 2.8 in respect of such payment.
Anything contained herein to the contrary notwithstanding, all
payments and collections received in respect of the Obligations and all proceeds
of the Collateral received, in each instance, by the Agent or any of the Lenders
after the occurrence of an Event of Default shall be remitted to the Agent and
distributed as follows:
(a) first, to the payment of any outstanding costs and expenses
incurred by the Agent in monitoring, verifying, protecting, preserving or
enforcing the Liens on the Collateral or by the Agent in protecting,
preserving or enforcing rights under the Loan Documents, and in any event
all costs and expenses of a character which the Borrowers have agreed to
pay under Section 12.5 hereof (such funds to be retained by the Agent for
its own account unless the Agent has previously been reimbursed for such
costs and expenses by the Lenders, in which event such amounts shall be
remitted to the Lenders to reimburse them for payments theretofore made to
the Agent);
(b) second, to the payment of any outstanding interest or other fees
or amounts due under the Revolving Credit Notes and the other Loan
Documents, in each case other than for principal or in reimbursement or
collateralization of L/C Obligations, ratably as among the Agent and the
Lenders in accord with the amount of such interest and other fees or
amounts owing each;
(c) third, to the payment of the principal of the Revolving Credit
Notes and any unpaid Reimbursement Obligations and to the Agent to be held
as collateral security for any other L/C Obligations (until the Agent is
holding an amount of cash equal to the then outstanding amount of all such
L/C Obligations), the aggregate amount paid to or held as collateral
security for the Lenders to be allocated pro rata as among the Lenders in
accordance with the then respective aggregate unpaid principal balances of
their Revolving Loans and interests in the Letters of Credit;
(d) fourth, to the Agent and the Lenders ratably in accordance with
the amounts of any other indebtedness, obligations or liabilities of the
Acme Group owing to each of them and secured by the Collateral Documents
(other than those described in clause (e) below) unless and until all such
indebtedness, obligations and liabilities have been fully paid and
satisfied;
(e) fifth, to the payment of the Hedging Liability (if
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any), pro rata as among the Lenders to whom such Hedging Liability is owed
in accordance with the then respective unpaid amounts of such Liability;
and
(f) sixth, to the Company on behalf of the Acme Group (each Borrower
hereby agreeing that its recourse for its share of such payment shall be to
the Company and not the Agent or any Lender) or whoever else may be
lawfully entitled thereto.
In the event that the amount of any Hedging Liability is not fixed and
determined at the time any funds are to be allocated thereto pursuant to the
above provisions, such funds so allocated shall be held by the Agent as
collateral security until such Hedging Liability is fixed and determined and the
same shall then be applied to the Hedging Liability, with any surplus
reallocated among the Lenders to cover any deficiency which would not have
existed had the exact amount of the Hedging Liability been known at the time
such funds were originally distributed.
SECTION 3.9. NOTATIONS AND REQUESTS;. All Borrowings made against the
Revolving Credit Notes, the Borrower which made such Borrowings, the status of
all amounts evidenced by the Revolving Credit Notes as constituting part of the
Domestic Rate Portion or a LIBOR Portion and the rates of interest and Interest
Periods applicable to such Portions shall be recorded by the Lenders on their
books or, at their option in any instance, endorsed on the reverse side of the
Revolving Credit Notes and the unpaid principal balances and status, rates and
Interest Periods so recorded or endorsed by the Lenders shall be prima facie
evidence in any court or other proceeding brought to enforce the Revolving
Credit Notes of the principal amount remaining unpaid thereon, the Borrower
which made the Borrowings evidenced thereby, the status of such Borrowings and
the interest rates and Interest Periods applicable thereto. Prior to any
negotiation of any Revolving Credit Note, the Lender holding such Revolving
Credit Note shall endorse thereon the status of all amounts evidenced thereby as
constituting part of a Domestic Rate Portion or LIBOR Portion and the rates of
interest and the Interest Periods applicable thereto.
SECTION 4. THE COLLATERAL;.
SECTION 4.1. COLLATERAL;. The Revolving Credit Notes and the other
Obligations shall be secured by valid and perfected first Liens on all inventory
and accounts receivable of the Borrowers, together with all instruments, chattel
paper and intangibles of the Borrowers related thereto, (the foregoing being
hereinafter referred to collectively as the "COLLATERAL") pursuant to a separate
Security Agreement, one from each Borrower, each in substantially the form of
Exhibit C attached hereto (such Security Agreements as the same may be modified
or amended from time to time being herein referred to collectively as the
"SECURITY AGREEMENTS" and individually as a "SECURITY AGREEMENT").
SECTION 4.2. FURTHER ASSURANCES. ; The Acme Group agrees that
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it will from time to time at the request of the Agent or the Required Lenders
execute and deliver such documents and do such acts and things as the Agent or
the Required Lenders may reasonably request in order to provide for or perfect
such Liens on the Collateral.
SECTION 5. REPRESENTATIONS AND WARRANTIES;.
The Acme Group represents and warrants to the Lenders as follows:
SECTION 5.1. ACME GROUP'S ORGANIZATION, LICENSES AND AUTHORIZATIONS;.
Each member of the Acme Group is duly organized and existing under the laws of
the state of its incorporation, and is duly licensed or qualified to do business
in each jurisdiction (a) where it maintains an office, (b) where any of its
Properties subject to the Lien of the Collateral Documents are located, (c)
where a Lien on such Properties is required to be perfected, or (d) where the
failure, either singly or in the aggregate, to be so licensed or qualified would
have a material adverse effect on its business, operations or assets, and has
all corporate power, and material licenses, franchises, permits and other
governmental authorizations and approvals necessary to carry on its present
business.
SECTION 5.2. ACME GROUP'S POWER AND AUTHORITY;. Each member of the Acme
Group has full right, power and authority to enter into this Agreement, to make
the borrowings herein provided for, to issue the Revolving Credit Notes in
evidence thereof, to execute and deliver the Loan Documents executed by it and
to perform each and all of the matters and things herein and therein provided
for. This Agreement, the Revolving Credit Notes (when issued) and the other
Loan Documents have been duly authorized, executed and delivered by each member
of the Acme Group which is a party thereto and constitute valid and binding
obligations of each member of the Acme Group which is a party thereto
enforceable in accordance with their terms. This Agreement and the other Loan
Documents do not, nor will the performance or observance by any member of the
Acme Group of any of the matters and things herein or therein provided for,
contravene any provision of law or any charter or by-law provision of any member
of the Acme Group or contravene in any material respect any covenant, indenture
or agreement of or affecting any member of the Acme Group or any of its
Properties.
SECTION 5.3. SUBSIDIARIES;. Schedule 5.3 (as updated from time to time
pursuant to Sections 7.5(a)(vi) and 7.12(g)) hereto identifies each Subsidiary
of each member of the Acme Group, the jurisdiction of its incorporation or
organization, as the case may be, the percentage of issued and outstanding
shares of each class of its capital stock or other equity interests owned by
such member of the Acme Group and its Subsidiaries and, if such percentage is
not 100% (excluding directors' qualifying shares as required by law), a
description of each class of its authorized capital stock and other equity
interests and the number of shares of each class issued and outstanding. Each
Subsidiary of each
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member of the Acme Group is duly incorporated and existing in good standing as a
corporation under the laws of the jurisdiction of its incorporation, has all
necessary corporate power to carry on its present business, and is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business transacted by it or the nature of the Property owned or leased by
it makes such licensing or qualification necessary and in which the failure to
be so licensed or qualified would have a material adverse effect on the
financial condition, or the Property, business or operations, of such
Subsidiary. All of the issued and outstanding shares of capital stock of each
Subsidiary of each member of the Acme Group are validly issued and outstanding
and fully paid and nonassessable. All such shares owned by a member of the Acme
Group are owned beneficially, and of record, free of any Lien, except for (i)
Liens on the capital stock of the Company's direct Subsidiaries to secure its
obligations in respect of the Senior Notes, (ii) Liens on the capital stock of
the direct subsidiaries of Acme Packaging to secure its obligations in respect
of the Senior Notes and (iii) Liens on the capital stock of the direct
subsidiaries of Acme Steel to secure its obligations in respect of the Senior
Notes.
SECTION 5.4. GOOD TITLE;. Each member of the Acme Group has good and
defensible title to its assets as reflected on the consolidated balance sheet of
the Acme Group dated as of December 26, 1993 (except for sales by members of the
Acme Group in the ordinary course of their respective businesses), subject to no
Liens other than such thereof (i) as are permitted by Section 7.12 hereof and
(ii) as do not materially affect the value of such assets as reflected in such
financial statements and do not materially interfere with the use made and
proposed to be made of such assets by the Acme Group and its Subsidiaries.
SECTION 5.5. REGULATION U;. No member of the Acme Group is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stocks (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System). No member of the Acme Group will use the proceeds of
any Revolving Credit Loan or Letter of Credit in a manner that violates any
provision of Regulation U or X of the Board of Governors of the Federal Reserve
System.
SECTION 5.6. FINANCIAL REPORTS;. The annual report of the Company and its
Subsidiaries for the year ended December 26, 1993, including consolidated
balance sheets as of December 26, 1993 and a consolidated statement of cash
flows for the year then ended, prepared by the Company and certified by Price
Waterhouse, and the interim consolidated and consolidating balance sheets of the
Company and its Subsidiaries as at June 26, 1994 and consolidated and
consolidating statements of cash flows for the six months then ended prepared by
the Company and heretofore furnished to the Lenders, all as heretofore presented
to the Lenders, fairly present the financial condition of the Company and its
Subsidiaries as at said dates and the results of
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operations for the periods covered thereby. Since June 26, 1994, there has been
no material adverse change in the condition, financial or otherwise, or business
prospects of any member of the Acme Group. As of the date hereof, no member of
the Acme Group has any contingent liabilities which are material to it other
than as indicated on said financial statements or in the Registration Statement.
'SECTION 5.7. LITIGATION; NO LABOR CONTROVERSIES';. Except to the extent
set forth in the Registration Statement, as amended from time to time, there is
no litigation or governmental proceeding pending, nor to the best knowledge of
any member of the Acme Group threatened, against any member of the Acme Group or
any of their respective Subsidiaries which if adversely determined would result
in any material adverse change in the financial condition or Properties,
business or operations of any member of the Acme Group. All federal income tax
returns applicable to the Acme Group have been filed when due (after giving
effect to any lawful extensions); and except to the extent set forth in the
Registration Statement, no material objections to or controversies in respect of
the United States federal income tax returns of any member of the Acme Group are
pending or, to the best knowledge of any member of the Acme Group threatened.
(b) There are no labor controversies pending or, to the knowledge of any
member of the Acme Group threatened, against any member of the Acme Group or any
of their respective Subsidiaries which could (insofar as any member of the Acme
Group may reasonably foresee) materially adversely affect the business,
operations, property or financial or other condition of any member of the Acme
Group.
SECTION 5.8. APPROVALS;. No authorization, consent, license, exemption,
filing or registration with any court or governmental department, agency or
instrumentality, is necessary to the valid execution and delivery of, or
presently necessary to the performance by any member of the Acme Group of this
Agreement or any other Loan Document to which it is a party, except for such
thereof as have been obtained and are in full force and effect.
SECTION 5.9. AFFILIATES;. No member of the Acme Group is a party to any
contracts or agreements with any of its Affiliates (excluding other members of
the Acme Group and Wabush) on terms and conditions which are less favorable in
any material respect to such member than would be usual and customary in similar
contracts or agreements between persons, firms or corporations not affiliated
with each other.
SECTION 5.10. ERISA;. Each member of the Acme Group and its ERISA
Affiliates are in compliance in all material respects with the IRC and ERISA to
the extent applicable to them and have received no notice to the contrary from
the Internal Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation ("PBGC"); as of January 1, 1993, the liability of the Acme
Group and its ERISA Affiliates to the PBGC in respect of
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unfunded employee benefit plan liabilities would not have been in excess of
$31,000,000 if all employee benefit plans covering any officers or employees of
the Acme Group and its ERISA Affiliates had been terminated as of such date. No
member of the Acme Group nor any ERISA Affiliate has (i) failed to make a
required contribution or payment of a "MULTIEMPLOYER PLAN" (as defined in
Section 4001(a)(3) of ERISA) or (ii) made a complete or partial withdrawal under
Sections 4203 or 4205 of ERISA from a multiemployer plan. No member of the Acme
Group nor any ERISA Affiliate maintains or contributes to any employee welfare
benefit plan within the meaning of Section 3(1) of ERISA which provides benefits
to employees after termination of employment (other than as required under
Section 601 of ERISA) which could result in a material obligation to pay money,
except such as were recorded as a result of the Acme Group's adoption of
Financial Accounting Standard No. 106 ("Accounting for Postretirement Benefits
Other Than Pensions").
SECTION 5.11. GOVERNMENT REGULATION;;. No member of the Acme Group nor
any of their respective Subsidiaries is an "investment company" nor a company
"controlled" by an "investment company organized or otherwise created under the
laws of the United States or of a State" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
SECTION 5.12. ENVIRONMENTAL REQUIREMENTS;. Except as set forth in the
Registration Statement, the Acme Group and its Subsidiaries are in compliance in
all material respects with all applicable state and federal environmental,
health and safety statutes and regulations, including, without limitation,
regulations promulgated under the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Sections 6901 ET SEQ. and, to the best knowledge of the Acme
Group, have not acquired, incurred or assumed, directly or indirectly, any
material contingent liability in connection with the release of any toxic or
hazardous waste or substance (including petroleum) into the environment. No
member of the Acme Group nor any of their respective Subsidiaries is the subject
of any evaluation, investigation, action or other proceeding under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
Sections 9601 ET SEQ.
SECTION 5.13. RELIANCE;. No written information, exhibit or report
furnished by or on behalf of any member of the Acme Group to the Agent or any
Lender in connection with this Agreement or any other Loan Document contains any
material misstatement of fact or, when taken as a whole, omits to state a
material fact or any fact necessary to make the statements contained therein not
misleading.
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'SECTION 5.14. NO BURDENSOME RESTRICTIONS; COMPLIANCE WITH AGREEMENTS';.
No member of the Acme Group nor any of their respective Subsidiaries is (a)
party or subject to any law, regulation, rule or order, or any Contractual
Obligation that (individually or in the aggregate) materially adversely affects,
or would reasonably be expected to so affect, the business, operations,
Property, condition (financial or otherwise) or prospects of any member of the
Acme Group or (b) in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement to
which it is a party, which default materially adversely affects, or would
reasonably be expected to affect, the business, operations, Property or
financial or other condition of any member of the Acme Group.
SECTION 6. CONDITIONS PRECEDENT;.
SECTION 6.1. ALL ADVANCES;. The obligation of the Lenders to make any
Revolving Loan or other financial accommodation to a Borrower under the
Revolving Credit (including the first such accommodation) shall also be subject
to the conditions precedent that as of the time of the making of each such
accommodation under the Revolving Credit:
(a) each of the representations and warranties set forth herein and
in the other Loan Documents shall be and remain true and correct as of said
time, except to the extent the same expressly relate to an earlier date;
(b) the Acme Group shall be in compliance with all of the terms and
conditions hereof and of the other Loan Documents, and no Default or Event
of Default shall have occurred and be continuing;
(c) after giving effect to such extension of credit to the relevant
Borrower, (i) the aggregate principal amount of all Revolving Loans and L/C
Obligations outstanding under the Revolving Credit shall not exceed the
lesser of (x) the Commitments then in effect and (y) the Available
Borrowing Base of all the Borrowers as then determined and computed and
(ii) the aggregate principal amount of the Revolving Loans made to such
Borrower and L/C Obligations in respect of Letters of Credit issued for
such Borrower's account shall not exceed such Borrower's Available
Borrowing Base as then determined and computed;
(d) such extension of credit shall not violate any order, judgment or
decree of any court or other authority or any provision of law or
regulation applicable to the Agent or any Lender (including, without
limitation, Regulation U of the Board of Governors of the Federal Reserve
System) as then in effect; and
(e) in the case of the issuance of any Letter of Credit, the Agent
shall have received a properly completed Application therefor and, in the
case of an extension or increase in the amount of the Letter of Credit, the
Agent shall have received a written request therefor, in a form
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acceptable to the Agent, with such Application or written request, in each
case to be accompanied by the fees required by this Agreement.
Any request made by the Acme Group to the Agent for credit hereunder shall be
deemed to constitute a representation and warranty that the foregoing statements
are true and correct.
SECTION 6.2. INITIAL ADVANCE;. At or prior to the time of the initial
Revolving Loan or other financial accommodation under the Revolving Credit, the
following conditions precedent shall also have been satisfied:
(a) the Agent shall have received the following for the account of
the Lenders (each to be properly executed and completed) and the same shall
have been approved as to form and substance by all of the Lenders:
(i) the Revolving Credit Notes;
(ii) a Security Agreement for each Borrower and the UCC financing
statements requested by the Agent in connection therewith;
(iii) copies (executed or certified as may be appropriate) of
resolutions of the Board of Directors of each member of the Acme Group
authorizing the execution, delivery and performance of the Loan
Documents to which it is a party and all other documents relating
thereto;
(iv) an incumbency certificate containing the name, title and
genuine signature of each member of the Acme Group's Authorized
Representatives;
(v) a good standing certificate for each member of the Acme
Group, dated as of a date no earlier than thirty days prior to the
date hereof, from the appropriate governmental offices in the
jurisdiction of its incorporation;
(vi) articles of incorporation and by-laws for each member of
the Acme Group certified by such member's corporate Secretary or other
appropriate officer;
(vii) evidence of the maintenance of insurance by the Acme Group
as required hereby or by the Collateral Documents;
(viii) the Intercreditor Agreement; and
(ix) copies of all other instruments and documents evidencing
or setting forth terms and conditions applicable to the Senior Notes;
and
(b) the UCC financing statements requested in connection with the
Security Agreements shall have been duly filed in the manner required by
law so as to reflect the security interest granted by the Security
Agreements, to the extent such perfection can be effected by the filing of
UCC financing statements;
(c) the Lenders shall have received a certificate in substantially
the form of Exhibit E setting forth the
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computation of the Available Borrowing Base of each Borrower as of such
time.
(d) the Agent and the Lenders shall have received evidence in form
and substance satisfactory to them that the Company shall have received
proceeds of the financing described in the Registration Statement (other
than the credit available hereunder);
(e) the Agent and the Lenders shall have received a certificate from
the Company in form and substance satisfactory to them that the Company
shall have entered into a definitive contract with a general contractor
covering engineering, procurement and construction related to the
Modernization Project consistent with the description of such contract in
the Registration Statement;
(f) the indebtedness of the Company evidenced by those certain 9.5%
Senior Notes, Series A of the Company, dated October 16, 1989, as amended
and due October 30, 1999 shall have been paid in full;
(g) the indebtedness of the Company evidenced by those certain 9.35%
Senior Notes, Series B of the Company, dated October 16, 1989, as amended
and due October 30, 1996 shall have been paid in full; and
(h) all legal matters incident to the transactions contemplated
hereby shall be acceptable to the Lenders and their counsel and the Agent
shall have received for the account of the Lenders the favorable written
opinion of counsel to the Acme Group in substantially the form of Exhibit D
hereto and otherwise in form and substance satisfactory to the Lenders and
their counsel.
SECTION 6.3. PRIOR CREDIT FACILITIES. The proceeds of the initial
Borrowing of Revolving Loans shall be used to pay in full all outstanding
"OBLIGATIONS" under the Prior Credit Agreement. The Lenders party to the Prior
Credit Agreement and the Acme Group agree that concurrently with the
effectiveness of this Agreement and any such Revolving Loan hereunder, the Prior
Credit Agreement shall terminate and all "OBLIGATIONS" outstanding thereunder
shall (if any) shall be due and payable.
SECTION 7. COVENANTS;.
The Acme Group agrees that, so long as any credit is available to or
in use by or any amount is owing by the Borrowers hereunder, except to the
extent compliance in any case or cases is waived in writing by the Required
Lenders:
SECTION 7.1. MAINTENANCE OF BUSINESS AND COMPLIANCE WITH LAWS;. The Acme
Group will, and will cause each Subsidiary to, preserve and keep in force and
effect, its corporate existence and all material leases, licenses and permits
necessary to the proper conduct of its and their respective businesses. The
Acme Group shall comply with all laws, orders, regulations and ordinances of any
federal, foreign, state or local governmental authority (including, without
limitation, all laws regarding public health or welfare, environmental
protection, water or air
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pollution, composition of products, underground storage tanks, toxic substances
or chemicals, solid and special wastes, hazardous wastes, substances materials
or chemicals, waste, used, or recycled oil, asbestos, occupational health and
safety, nuisances, trespass and negligence), except for such laws, orders,
regulations and ordinances the violation of which would not, in the aggregate,
have a material adverse effect on any member of the Acme Group's financial
condition, results of operations or business or the Acme Group's ability to
perform its obligations hereunder or in connection herewith. The Lenders shall
not assume or be deemed to assume any responsibility, liability or obligations
with respect to compliance with any federal, state, or local environmental law,
rule, regulation, order, permit, license, ordinance, judgment or decree.
SECTION 7.2. MAINTENANCE OF PROPERTY;. The Acme Group will maintain,
preserve and keep its plant, Properties and equipment in good repair, working
order and condition (ordinary wear and tear excepted), will from time to time
make all needful and proper repairs, renewals, replacements, additions and
betterments thereto so that at all times the overall efficiency thereof shall be
preserved and maintained, and will cause each Subsidiary so to do in respect of
its plant, Properties and equipment.
SECTION 7.3. TAXES AND ASSESSMENTS;. The Acme Group will duly pay and
discharge, and will cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees and governmental charges upon or against the Acme Group
or any Subsidiary or against their respective Properties, in each case before
the same become delinquent and before penalties accrue thereon, unless and to
the extent that the same are being contested in good faith and by appropriate
proceedings which prevent enforcement of the matter under contest and adequate
reserves are provided therefor.
SECTION 7.4. INSURANCE;. The Acme Group will insure and keep insured,
and will cause each Subsidiary to insure and keep insured, with good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by companies similarly situated and in amounts
usually insured by companies similarly situated and operating like Properties;
and the Acme Group will insure, and cause each Subsidiary to insure, such other
hazards and risks (including employers' and public and product liability risks)
with good and responsible insurance companies as and to the extent usually
insured by companies similarly situated and conducting similar businesses. The
Acme Group shall in any event maintain insurance on the Collateral to the extent
required by the Collateral Documents. The Acme Group will upon request of the
Agent furnish a certificate setting forth in summary form the nature and extent
of the insurance maintained pursuant to this Section 7.4.
SECTION 7.5. FINANCIAL REPORTS AND RIGHTS OF INSPECTION;. (a) The Acme
Group will, and will cause each Subsidiary to, maintain internal accounting
controls which provide reasonable
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assurance that (w) transactions are executed in accordance with management's
authorization, (x) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (y)
access to its assets is permitted only in accordance with management's
authorization and (z) the reported accountability for its assets is compared
with existing assets at reasonable intervals with GAAP, and will furnish to the
Agent and each Lender such information respecting the business, financial
condition, assets and liabilities (whether absolute or contingent) of the Acme
Group and its Subsidiaries as the Agent or such Lender may reasonably request;
and without any request, will furnish to the Agent (which shall promptly provide
copies to the Lenders):
(i) within sixty (60) days after the end of each of the first three
quarterly fiscal periods of the Company, a copy of the Company's Form 10-Q
Report filed with the SEC;
(ii) within sixty (60) days after the end of each of the four
quarterly fiscal periods of the Company, the consolidated and consolidating
balance sheet of the Acme Group and its Subsidiaries as of the end of such
quarterly period and a related consolidated and consolidating statements of
income, retained earnings and cash flows of the Acme Group and its
Subsidiaries for such quarterly fiscal period and for the elapsed portion
of the fiscal year ended with the last day of such quarterly period, all of
which shall be prepared by the Company and certified by the Chief Financial
Officer of the Company as being prepared, to the best of his knowledge, in
accordance with GAAP (except for footnotes and other related disclosures);
(iii) within one hundred twenty (120) days after the end of each fiscal
year of the Company, a copy of the Company's Form 10-K Report filed with
the SEC, including a copy of the annual report of the Acme Group and its
Subsidiaries for such year with accompanying financial statements, prepared
by the Company and certified by Price Waterhouse or any other independent
public accountants of recognized standing selected by the Company and
satisfactory to the Required Lenders, in accordance with GAAP;
(iv) as soon as available and in any event within twenty (20) days
after the end of each fiscal month, a Borrowing Base certificate in
substantially the form of Exhibit E hereto showing the computation of the
Available Borrowing Base for each Borrower as of the close of such month
and certified as true and correct by the Chief Financial Officer or
Treasurer of the Company;
(v) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which the Company sends to its
shareholders, and copies of all other regular, periodic and special reports
and all registration statements which the Company files with the SEC or any
successor thereto, or with any national
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securities exchange; and
(vi) an updated Schedule 5.3 along with the financial statements
delivered under subsection (ii) above for any calendar quarter during which
there is a change in any of the facts specified in Schedule 5.3 hereto, as
then most recently updated.
(b) Each Report required by Section 7.5(a)(ii) or (iv) shall be
accompanied by a certificate in the form attached hereto as Exhibit F signed on
behalf of the Acme Group by the Chief Financial Officer or Treasurer of the
Company setting forth compliance in reasonable detail with Sections 7.6, 7.7,
7.8, 7.9 and 7.13 hereof and stating that no Default or Event of Default exists
hereunder as of the date of such certificate, or if such Default or Event of
Default exists the nature thereof shall be specified. Each audit report called
for by Section 7.5(a)(iii) hereof shall be accompanied by a statement of the
accountants certifying such statements to the effect that in the course of their
audit (conducted in accordance with generally accepted auditing standards) they
have obtained no knowledge that a Default or Event of Default has occurred
hereunder or, if they have obtained any such knowledge, describing the same. In
the event the Company is no longer required to file Form 10-Q and 10-K Reports
with the SEC, the Company need not furnish such Reports to the Agent, but shall
nonetheless provide the Agent the financial statements previously contained in
such Reports by the times required by subsections (a)(i) and (iii) above.
(c) The Acme Group will promptly (and in any event within five Business
Days after knowledge thereof shall have come to the attention of any responsible
officer of the Acme Group) give written notice to the Agent:
(i) of the occurrence of any Change of Control,
(ii) of any Default or Event of Default,
(iii) of any threatened or pending litigation, governmental proceeding
or labor dispute against any member of the Acme Group or any of its
respective Subsidiaries which is reasonably likely to be adversely
determined and if so adversely determined, would materially adversely
affect the business, Properties, condition (financial or otherwise) or
prospects of any member of the Acme Group;
(iv) of any material development in any such litigation, proceeding or
dispute of the type described in the immediately preceding clause (iii)
(whether or not previously disclosed to the Lenders pursuant to the terms
hereof) which in any case has a reasonable possibility of an effect with
the result described in such clause;
(v) of any default in the payment of rent due under any lease
necessary to the proper conduct of the business of any member of the Acme
Group or any of their respective Subsidiaries or any action to terminate
any such lease or of the receipt of any notice of any alleged breach of the
terms of any such lease; and
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(vi) of the receipt of any notice of any alleged breach of the terms
of, or default under, any Contractual Obligation and of any notice of
alleged material noncompliance with any laws or regulations of the type
described in Section 5.14 hereof.
(d) Upon reasonable notice from the Agent, the Acme Group will permit the
Agent, the Lenders and their representatives during normal business hours to
visit and inspect any of the Properties of the Acme Group and its Subsidiaries,
to examine all of their books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants (and by this provision the Acme Group authorizes such
accountants to discuss with the Lenders (and such Persons as any Lender may
designate) the finances and affairs of the Acme Group and its Subsidiaries) all
at such reasonable times and as often as may be reasonably requested.
SECTION 7.6. CURRENT RATIO;. The Acme Group will at all times maintain a
Consolidated Current Ratio of not less than 1.5 to 1.0.
SECTION 7.7. CONSOLIDATED TANGIBLE NET WORTH;. The Acme Group will at
all times maintain a Consolidated Tangible Net Worth of not less than a (a)
$220,000,000 through December 31, 1995 and (b) $230,000,000 on January 1, 1996
and at all times thereafter.
SECTION 7.8. LEVERAGE;. The Acme Group will at all times maintain a
Consolidated Leverage Ratio of not more than .65 to 1.0.
SECTION 7.9. CASH FLOW COVERAGE RATIO;. The Acme Group will at the end
of each fiscal quarter maintain its Consolidated Cash Flow Coverage Ratio for
the four most recently completed fiscal quarters (but until June 30, 1995, for
all fiscal quarters completed since the date of this Agreement) at not less than
1.05 to 1.0.
SECTION 7.10. LIENS;. The Acme Group will not, and will not permit any
Subsidiary to, pledge, mortgage or otherwise encumber or subject to, or permit
to exist upon or be subjected to, any Lien upon, any Property of any kind or
character at any time owned by the Acme Group or any Subsidiary; PROVIDED,
HOWEVER, that nothing contained in this Section shall operate to prevent:
(a) the Permitted Liens;
(b) Liens arising out of judgments or awards against the Acme Group
or any Subsidiary with respect to which the Acme Group or such Subsidiary
shall be prosecuting an appeal or proceeding for review and with respect to
which it shall have obtained a stay of execution pending such appeal or
proceeding for review; PROVIDED that the aggregate amount of liabilities
(including interest and penalties, if any) of the Acme Group and its
Subsidiaries secured by such Liens shall not exceed $500,000 at any one
time outstanding; and
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(c) the pledge of cash free of any other Lien or restriction as to
its use for the purpose of securing the obligations permitted by Section
7.11(c) hereof.
SECTION 7.11. INDEBTEDNESS;. The Acme Group will not, and will not permit
any Subsidiary to, issue, incur, assume, create or have outstanding any
Indebtedness for Borrowed Money; PROVIDED, HOWEVER, that the foregoing
provisions shall not restrict nor operate to prevent:
(a) the Permitted Indebtedness;
(b) guarantees permitted by Section 7.12 hereof; and
(c) obligations in respect of letters of credit issued by any Lender
for the account of any member of the Acme Group, provided the aggregate
undrawn face amount of all such letters of credit does not exceed
$15,000,000 at any one time outstanding and such letters of credit are
secured pursuant to Section 7.10(c) hereof.
SECTION 7.12. ACQUISITIONS, INVESTMENTS, LOANS, ADVANCES AND GUARANTIES;.
The Acme Group will not, and will not permit any Subsidiary to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances to, any
other person, firm or corporation or acquire all or any substantial part of the
assets or business of any other person, firm or corporation, or be or become
liable as endorser, guarantor, surety or otherwise for any debt, obligation or
undertaking of any other person, firm or corporation or otherwise agree to
provide funds for payment of the obligations of another, or supply funds thereto
or invest therein or otherwise assure a creditor of another against loss or
apply for or become liable to the issuer of a letter of credit which supports an
obligation of another or subordinate any claim or demand it may have to the
claim or demand of any other person, firm or corporation; PROVIDED, HOWEVER,
that the foregoing provisions shall not apply to nor operate to prevent:
(a) the Permitted Investments;
(b) endorsements for collection or deposit of commercial paper
received in the ordinary course of business;
(c) liabilities in respect of the Letters of Credit;
(d) the guarantees set forth in Section 11 hereof;
(e) guarantees by the Acme Group and its Subsidiaries of the Senior
Notes;
(f) equity investments as of the date hereof in the present
Subsidiaries;
(g) acquisitions of all or substantially all of the assets or
business of any other Person or division thereof, or of all or
substantially all the Voting Stock of a Person, so long as (i) no Default
or Event of Default exists or would exist after giving effect to such
acquisition, (ii) the Board of Directors or other governing body of such
Person whose Property or Voting Stock is being so acquired
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has approved the terms of such acquisition, (iii) the Company shall have
delivered to the Lenders an updated Schedule 5.3 to reflect any new
Subsidiary resulting from such acquisition, (iv) the aggregate amount
expended by the Acme Group and its Subsidiaries as consideration for such
acquisition (and in any event including as such, any Indebtedness for
Borrowed Money assumed or incurred as a result of such acquisition), when
taken together with the aggregate amount expended as consideration for all
other acquisitions permitted under this Section 7.12(g) on a cumulative
basis after the date hereof, does not exceed $15,000,000, and (v) the
Company can demonstrate that on a pro forma basis (including financial
projections prepared by the Company) after giving effect to the subject
acquisition that the Acme Group will continue to comply with the all of the
terms and conditions of the Loan Documents;
(h) equity investments by the Company in, and loans and advances by
the Company to, any Subsidiary (or an entity which, following and as a
result of such investment, loan or advance, becomes a Subsidiary of the
Company), provided that (i) a Subsidiary that only becomes a Subsidiary
through such investment, loan or advance must comply with the provisions of
subsection (g) above and (ii) the obligations of each Subsidiary to the
Company with respect to any such loan or advance by the Company to such
Subsidiary funded directly or indirectly out of the proceeds (net of (i)
costs and expenses directly incurred and payable as a result of the
issuance and sale hereinafter described and (ii) the amount necessary to
fully pay and satisfy the indebtedness described in Sections 6.2(f) and
6.2(g) hereof) from the Company's issuance and sale of the Special Stock
Purchase Warrants are subject to a subordination agreement between the
Company and such Subsidiary providing for the subordination of such
obligations in right of payment from and after such time as the Revolving
Credit Notes issued and outstanding shall become due and payable (whether
at stated maturity, by acceleration or otherwise) to the prior payment and
performance of the Obligations under the Revolving Credit Notes and
otherwise;
(i) loans and advances by Subsidiaries to the Company of their
surplus cash which are repayable on demand and advanced to the Company as
part of the centralized cash management system of the Acme Group in the
ordinary course of its business as presently conducted, the proceeds of
which are used by the Company to make Permitted Investments for the benefit
of such lending Subsidiary;
(j) investments, directly or indirectly, by Acme Steel in Wabush;
(k) investments represented by accounts receivable created or
acquired in the ordinary course of business;
(l) advances to employees, officers and directors in
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the ordinary course of business; and
(m) investments under or pursuant to Interest Protection Agreements.
In determining the amount of investments, loans, advances and guaranties
permitted under this Section 7.12, investments shall always be taken at the
original cost thereof, regardless of any subsequent appreciation or depreciation
therein; loans and advances shall be taken at the principal amount thereof then
remaining unpaid; and guaranties shall be taken at the amount of the obligations
guaranteed thereby.
SECTION 7.13. DIVIDENDS AND CERTAIN OTHER RESTRICTED PAYMENTS;.
(a) RESTRICTED EQUITY PAYMENTS;. Except as set forth in subsection (c)
below, the Acme Group will not, and will not permit any Subsidiary to, (i)
declare or pay any dividends on or make any other distributions in respect of
any series or class of its capital stock (other than dividends payable solely in
its capital stock) or (ii) directly or indirectly or through any Subsidiary
purchase, redeem or otherwise acquire or retire any of its capital stock (other
than redemptions by the Company for not more than $120,000 in the aggregate on a
cumulative basis relating to the preferred share purchase rights declared by the
Company on July 15, 1994 and the Company's currently outstanding Junior
Participating Preferred Stock, Series A) or any warrants, options or other
rights to acquire any such capital stock (all of the foregoing non-excepted
declarations, payments, distributions, purchases, redemptions, acquisitions and
retirements by each member of the Acme Group and each of its Subsidiaries being
referred to collectively herein as "RESTRICTED EQUITY PAYMENTS");
(b) RESTRICTED DEBT PAYMENTS;. Except as set forth in subsection (c)
below, the Borrowers will not, and will not permit any of their respective
subsidiaries to, make any payment or other distribution on or in respect of any
intercompany loans or advances from the Company (in each case whether for
principal or interest or otherwise) or otherwise acquire or retire any of such
loans or advances (all of the foregoing payments, distributions, acquisitions
and retirements by each Borrower and each of its Subsidiaries being referred to
collectively herein as "RESTRICTED DEBT PAYMENTS") (Restricted Equity Payments
and Restricted Debt Payments being referred to collectively herein as
"RESTRICTED PAYMENTS"). The parties hereto acknowledge and agree that this
subsection (b) shall in no event apply to nor operate to prevent any similar
payment, distribution, acquisition or retirement by the Company.
(c) EXCEPTIONS;. Notwithstanding anything in this Section of the
contrary, each Borrower may make Restricted Payments to the Company if at the
time each such Restricted Payment is made and immediately after giving effect
thereto, (i) no Event of Default or Default occurs or is continuing and (ii) the
aggregate amount of Restricted Payments by such Borrower in any single fiscal
year of the Company shall not at any time exceed the
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Maximum Permitted Amount for such Borrower for such year. For purposes hereof,
the term "MAXIMUM PERMITTED AMOUNT" shall mean for any Borrower with respect to
any fiscal year of the Company, (a) that portion of EBITDA for such year derived
from income of such Borrower (b) less Maintenance Capital Expenditures of such
Borrower during the same such year plus (c) (to the extent not already included
in such EBITDA) all amounts received by such Borrower during such year as
liquidated damages under Acme Steel's principal contract with its general
contractor for engineering, procurement and construction related to the
Modernization Project.
SECTION 7.14. MERGERS, CONSOLIDATIONS, LEASES AND SALES;. The Acme Group
will not, and will not permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any
substantial part of its Property, assets or business, or in any event sell or
discount (with or without recourse) any of its notes or accounts receivable (it
being understood that the writedown of accounts receivable in the ordinary
course of settling disputes with respect thereto shall not be considered the
discounting of accounts receivable for purposes hereof); PROVIDED, HOWEVER, that
this Section shall not prohibit:
(a) any Subsidiary (other than any Borrower) from merging into the
Company or any Wholly-Owned Subsidiary if the Company or such Wholly-Owned
Subsidiary is the surviving corporation, PROVIDED that no Subsidiary
incorporated in the United States shall merge into or consolidate with a
foreign Subsidiary unless the United States Subsidiary shall be the
survivor; and
(b) any Subsidiary (other than any Borrower) from selling,
transferring or leasing all or any part of its assets and Properties to the
Company or any Wholly-Owned Subsidiary of such Subsidiary, PROVIDED that no
Subsidiary incorporated in the United States shall sell, lease or transfer
all or substantially all of its assets to a foreign Subsidiary.
The term "SUBSTANTIAL" as used herein shall mean the sale, lease, transfer or
other disposition in any fiscal year of Properties, assets or business having a
value of 5% of more of Consolidated Tangible Net Worth, and for the purpose
hereof the sale, lease or other disposition by any Subsidiary of assets shall be
deemed to have been made by the Company.
SECTION 7.15. MAINTENANCE OF SUBSIDIARIES;. The Acme Group will not
assign, sell or transfer, or permit any Subsidiary to issue, assign, sell or
transfer, any shares of capital stock of a Subsidiary; PROVIDED that the
foregoing shall not operate to prevent:
(a) the sale, assignment or transfer of any shares of stock of a
Subsidiary (other than a Borrower) if (x) simultaneously therewith, the
entire capital stock and all indebtedness of such Subsidiary at the time
owned by the
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Company and all Subsidiaries shall be sold, transferred or disposed of as
an entirety, and (y) such sale shall not constitute a sale of a substantial
part of the Properties and assets of the Company (as the term "SUBSTANTIAL"
is defined in Section 7.14 hereof);
(b) the issuance, sale and transfer to any person of any shares of
capital stock of a Subsidiary solely for the purpose of qualifying, and to
the extent legally necessary to qualify, such person as a Director of such
Subsidiary; and
(c) the pledge of the capital stock of (i) the Company's direct
Subsidiaries, (ii) the subsidiaries of Acme Packaging and (iii) the
subsidiaries of Acme Steel, in each case to secure their respective
obligations in respect of the Senior Notes.
SECTION 7.16. ERISA;. The Acme Group will, and will cause each ERISA
Affiliate to, promptly pay and discharge all obligations and liabilities arising
under ERISA of a character which if unpaid or unperformed would result in the
imposition of a Lien against any of their respective Properties or assets or a
material obligation to pay money (including, but not limited to any liability to
a "MULTIEMPLOYER PLAN" as defined in Section 4001(a)(3) of ERISA), will promptly
notify the Lenders when the Acme Group becomes aware of the occurrence of any
Reportable Event (as defined in Section 4043 of ERISA) which could result in the
termination by the Pension Benefit Guaranty Corporation ("PBGC") of any employee
benefit plan covering any officers or employees of the Acme Group or any ERISA
Affiliate, any benefits of which are, or are required to be, guaranteed by the
PBGC (a "PLAN") or of receipt of any notice from the PBGC of its intention to
seek termination of any such Plan or appointment of a trustee therefor. The
Acme Group will, and will cause each ERISA Affiliate to, notify the Lender of
its or any ERISA Affiliate's intention to terminate any Plan and will not, and
will not permit any ERISA Affiliate to, terminate any such Plan, the termination
of which will result in a material liability to the Acme Group or any ERISA
Affiliate, unless the Acme Group and its ERISA Affiliates shall be in compliance
with all of the terms and conditions of this Agreement after giving effect to
any estimated liability to the PBGC (as determined by the Plan's independent
actuaries) resulting from such termination or withdrawal.
SECTION 7.17. BURDENSOME CONTRACTS WITH AFFILIATES;. The Acme Group will
not, and will not permit any Subsidiary to, enter into any contract, agreement
or business arrangement with any of its Affiliates (excluding other members of
the Acme Group and Wabush) on terms and conditions which are less favorable to
any member of the Acme Group or any of their respective Subsidiaries than would
be usual and customary in similar contracts, agreements or business arrangements
between Persons not affiliated with each other.
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SECTION 7.18 CHANGE IN FISCAL YEAR;. The Acme Group will not change its
fiscal year from its current basis.
SECTION 7.19. CHANGE IN THE NATURE OF BUSINESS;. The Acme Group will not,
and will not permit any Subsidiary to, engage in any business or activity if as
a result the general nature of the business of any member of the Acme Group or
any of their respective Subsidiaries would be changed in any material respect
from the general nature of the business engaged in by such member of the Acme
Group or such Subsidiary on the date of this Agreement.
SECTION 7.20. COMPLIANCE WITH LAWS;. The Acme Group shall, and shall
cause each Subsidiary to, comply in all respects with the requirements of all
federal, state and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to their Properties or business operations,
non-compliance with which could have a material adverse effect on the financial
condition, Properties, business or operations of any member of the Acme Group or
any of their respective Subsidiaries or could result in a Lien upon any of their
Property.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES;.
SECTION 8.1. Any one or more of the following shall constitute an Event
of Default hereunder:
(a) default for a period of five days in the payment when due of all
or any part of the principal of or interest on any Revolving Credit Note
(whether at the stated maturity thereof or at any other time provided for
in this Agreement) or of any Reimbursement Obligation or of any fee or
other amount payable hereunder or under any other Loan Document;
(b) default in the observance or performance of any covenant set
forth in Sections 7.5(c), 7.13, 7.14, 7.15 or 7.16 hereof or of any
provision in any Loan Document dealing with the use, disposition or
remittance of the proceeds of Collateral or requiring the maintenance of
insurance thereon;
(c) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within thirty
days after the earlier of (i) the date on which such failure shall first
become known to any officer of any member of the Acme Group or (ii) written
notice thereof to the Acme Group by the Agent;
(d) any representation or warranty made herein or in any of the other
Loan Document or in any certificate furnished to the Agent or the Lenders
pursuant hereto or thereto or in connection with any transaction
contemplated hereby or thereby proves untrue in any material respect as of
the date of the issuance or making thereof, and shall not be made good
within thirty days after written notice thereof to the Company by the
Agent;
(e) any event occurs or condition exists (other than those described
in subsections (a) through (d) above) which is specified as an event of
default under any of the other
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Loan Documents, or any of the Loan Documents shall for any reason not be or
shall cease to be in full force and effect, or any of the Loan Documents is
declared to be null and void, or any of the Collateral Documents shall for
any reason fail to create a valid and perfected first priority Lien in
favor of the Agent in any Collateral purported to be covered thereby except
as expressly permitted by the terms thereof;
(f) default shall occur under any evidence of Indebtedness for
Borrowed Money aggregating in excess of $5,000,000 issued, assumed or
guaranteed by the Acme Group or any member thereof or any Subsidiary or
under any indenture, agreement or other instrument under which the same may
be issued, and such default shall continue for a period of time sufficient
to permit the acceleration of the maturity of any such Indebtedness for
Borrowed Money (whether or not such maturity is in fact accelerated) or any
such Indebtedness for Borrowed Money shall not be paid when due (whether by
demand, lapse of time, acceleration or otherwise);
(g) any Borrower shall make any payment or other distribution on or
in respect of its guaranty of the Senior Notes or otherwise acquire or
retire any of the Senior Notes;
(h) any judgment or judgments, writ or writs or warrant or warrants
of attachment, or any similar process or processes in an aggregate amount
in excess of $500,000 and which is not fully covered by insurance from any
insurer who has acknowledged its liability thereon shall be entered or
filed against the Acme Group or any Subsidiary or against any of the
Property or assets of either and remains undischarged, unvacated, unbonded
or unstayed for a period of sixty days;
(i) an event occurs or condition exists which is specified as an
event of default in any of the Collateral Documents;
(j) any party obligated on any guarantee of any Obligations shall
purport to disavow, revoke, repudiate or terminate such guarantee;
(k) any party to the Intercreditor Agreement shall purport to
disavow, revoke, repudiate or terminate such Agreement;
(l) a Change of Control occurs;
(m) any member of the Acme Group or any Subsidiary shall (i) have
entered involuntarily against it an order for relief under the United
States Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official
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for it or any substantial part of its Property, (v) institute any
proceeding seeking to have entered against it an order for relief under the
United States Bankruptcy Code, as amended, to adjudicate it insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to
file an answer or other pleading denying the material allegations of any
such proceeding filed against it, or (vi) fail to contest in good faith any
appointment or proceeding described in Section 8.1(n) hereof;
(n) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for any member of the Acme Group or any
Subsidiary or any substantial part of any of their Property, or a
proceeding described in Section 8.1(m)(v) shall be instituted against any
member of the Acme Group or any Subsidiary, and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a
period of sixty days.
SECTION 8.2. When any Event of Default described in subsections 8.1(a) to
8.1(l), both inclusive, has occurred and is continuing, the Agent shall, upon
request of all the Lenders in the case of subsection 8.1(l) and otherwise upon
request of the Required Lenders, and by notice to the Company, take any or all
of the following actions:
(a) terminate the obligation of the Lenders to extend any further
credit hereunder on the date (which may be the date thereof) stated in such
notice; and
(b) declare the principal of and the accrued interest on the
Revolving Credit Notes to be forthwith due and payable and thereupon the
Revolving Credit Notes, including both principal and interest, and all
fees, charges, commissions and other Obligations payable hereunder, shall
be and become immediately due and payable without further demand,
presentment, protest or notice of any kind.
SECTION 8.3. When any Event of Default described in subsection 8.1(m) or
8.1(n) has occurred and is continuing, then the unpaid balance of the Revolving
Credit Notes, including both principal and interest, and all fees, charges,
commissions and other Obligations payable hereunder, shall immediately become
due and payable without presentment, demand, protest or notice of any kind, and
the obligation of the Lenders to extend further credit pursuant to any of the
terms hereof shall immediately terminate.
SECTION 8.4. If and when (x) any Event of Default, other than an Event of
Default described in subsections (m) or (n) of Section 8.1, has occurred and is
continuing, the Acme Group shall, upon demand of the Agent, and (y) any Event of
Default described in subsections (m) or (n) of Section 8.1 has occurred or (z)
any Letter of Credit is outstanding on the Termination
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Date (whether or not any Event of Default has occurred), the Borrowers shall,
without notice or demand from the Agent, immediately pay to the Agent the full
amount of each Letter of Credit, the Borrowers agreeing to immediately make each
such payment and acknowledging and agreeing the Agent would not have an adequate
remedy at law for failure of the Borrowers to honor any such demand and that the
Agent shall have the right to require the Borrowers to specifically perform such
undertaking whether or not any draws had been made under the Letters of Credit.
SECTION 9. DEFINITIONS INTERPRETATIONS;.
SECTION 9.1. DEFINITIONS;. The following terms when used herein have the
following meaning;
"ACME GROUP" shall mean, the Borrowers and the Company, collectively, and,
also, each individually, with all promises and covenants (including promises to
pay) and representations and warranties of and by the Acme Group made in the
Loan Documents or any other instruments or documents delivered pursuant thereto
to be and constitute the joint and several promises, covenants, representations
and warranties of and by each and all of such corporations. The phrase "ANY
MEMBER OF THE ACME GROUP" and derivatives thereof appearing in the Loan
Documents shall be deemed a reference to any or all of the corporations
comprising the Acme Group (as applicable), and without limiting the generality
of the foregoing, the term "ACME GROUP" as used in the Loan Documents shall be
deemed a reference to any one or more of such corporations whether or not such
phrase or any derivative thereof is used in conjunction with such term.
"ACQUIRED INDEBTEDNESS" means (i) with respect to any Person that becomes a
Subsidiary of the Company (or is merged into the Company or any of its
Subsidiaries) after the date hereof, Indebtedness for Borrowed Money of, or
preferred stock issued by, such Person or any of its Subsidiaries existing at
the time such Person becomes a Subsidiary of the Company (or is merged into the
Company or any of its Subsidiaries), whether or not such Indebtedness was
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary of the Company (or being merged into the Company or any of its
Subsidiaries) and (ii) with respect to the Company or any of its Subsidiaries,
any Indebtedness for Borrowed Money assumed by the Company or any of its
Subsidiaries in connection with the acquisition of any assets from another
Person (other than the Company or any of Subsidiaries), whether or not such
Indebtedness was incurred by such Person in connection with, or in contemplation
of, such acquisition.
"ADJUSTED LIBOR RATE" shall mean a rate per annum determined pursuant to
the following formula:
Adjusted LIBOR Rate = LIBOR
--------------------------------------------
100%-Reserve Percentage
"RESERVE PERCENTAGE" SHALL MEAN, FOR THE PURPOSE OF COMPUTING THE ADJUSTED LIBOR
RATE, THE MAXIMUM RATE OF ALL RESERVE REQUIREMENTS
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(INCLUDING, WITHOUT LIMITATION, ANY MARGINAL EMERGENCY, SUPPLEMENTAL OR OTHER
SPECIAL RESERVES) IMPOSED BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM (OR ANY SUCCESSOR) UNDER REGULATION D ON EUROCURRENCY LIABILITIES (AS
SUCH TERM IS DEFINED IN REGULATION D) FOR THE APPLICABLE INTEREST PERIOD AS OF
THE FIRST DAY OF SUCH INTEREST PERIOD, BUT SUBJECT TO ANY AMENDMENTS TO SUCH
RESERVE REQUIREMENT BY SUCH BOARD OR ITS SUCCESSOR, AND TAKING INTO ACCOUNT ANY
TRANSITIONAL ADJUSTMENTS THERETO BECOMING EFFECTIVE DURING SUCH INTEREST PERIOD.
"LIBOR" means, for each Interest Period, (a) the LIBOR Index Rate for such
Interest Period, if such rate is available, and (b) if the LIBOR Index Rate
cannot be determined, the arithmetic average of the rate of interest per annum
(rounded upwards, if necessary, to nearest 1/100 of 1%) at which deposits in
U.S. dollars in immediately available funds are offered to the Agent at 11:00
a.m. (London, England time) two (2) Business Days before the beginning of such
Interest Period by major banks in the interbank eurodollar market for a period
equal to such Interest Period and in an amount equal or comparable to the
principal amount of the Eurodollar Loan scheduled to be made by the Agent as
part of such Borrowing. "LIBOR INDEX RATE" means, for any Interest Period, the
rate per annum (rounded upwards, if necessary, to the next higher one
hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a
period equal to such Interest Period, which appears on the Telerate Page 3750 as
of 11:00 a.m. (London, England time) on the day two Business Days before the
commencement of such Interest Period. "TELERATE PAGE 3750" means the display
designated as "PAGE 3750" on the Telerate Service (or such other page as may
replace Page 3750 on that service or such other service as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for U.S.
Dollar deposits).
"AFFILIATE" shall mean any person, firm, corporation or entity (herein
collectively called a "PERSON") directly or indirectly controlling or controlled
by, or under direct or indirect common control with, another Person. A Person
shall be deemed to control another Person for the purposes of this definition if
such first Person possesses, directly or indirectly, the power to direct, or
cause the direction of, the management and policies of the second Person,
whether through the ownership of voting securities, common directors, trustees
or officers, by contract or otherwise.
"AGENT" shall mean Harris Trust and Savings Bank and any successor thereto
appointed pursuant to Section 10.1 hereof.
"ASSIGNMENT AGREEMENT" means an Assignment and Acceptance entered into by a
Lender and an assignee in accordance with Section 12.18 hereof substantially in
the form of Exhibit G hereto.
"AUTHORIZED REPRESENTATIVE" means those persons shown on the list of
individuals provided by the Company pursuant to Section
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6.2(a) hereof or on any update of any such list provided by any member of the
Acme Group to the Agent, or any further or different individuals so named by the
Chief Financial Officer or the Treasurer of the Company in a written notice to
the Agent.
"AVAILABLE BORROWING BASE" shall mean, as of any time and for any Borrower
for which the same is to be determined, the amount (if any) by which such
Borrower's Borrowing Base exceeds such Borrower's Hedging Liability.
"BORROWERS" is defined in the introductory paragraph hereof, with (i) the
term "BORROWERS" to mean the Borrowers, collectively, and, also, each
individually, and (ii) all promises and covenants (including promises to pay)
and representations and warranties of and by the Borrowers made in the Loan
Documents or any instruments or documents delivered pursuant thereto to be and
constitute the joint and several promises, covenants, representations and
warranties of and by each and all of such corporations. The term "BORROWER"
appearing in such singular form shall be deemed a reference to any of the
Borrowers unless the context in which such term is used shall otherwise require.
"BORROWING" shall mean the total of Revolving Loans of a single type of
Portion made to a given Borrower by all the Lenders on a single date, and if
such Loans are to be part of a LIBOR Portion, for a single Interest Period.
Borrowings of Revolving Loans are made and maintained ratably from each of the
Lenders according to their Percentages.
"BORROWING BASE" shall mean, as of any time and for any Borrower for which
the same is to be determined, the sum of the following values or amounts, as the
case may be:
(a) 85% of the unpaid amount of Eligible Receivables of such
Borrower; plus
(b) 50% of the loan value (determined as set forth in the definition
of Eligible Inventory in this Section 9) of Eligible Inventory of such
Borrower; PROVIDED, HOWEVER, that the Eligible Inventory of the Borrowers
shall be ratably reduced so that at no time shall more than 40% of the
Borrowing Base be attributable to their Eligible Inventory.
The Borrowing Base shall be computed only as against and on so much of the
Eligible Receivables and Eligible Inventory as are included in the applicable
Borrowing Base certificate submitted pursuant to Section 7.5(a)(iv) hereof.
"BUSINESS DAY" SHALL MEAN ANY DAY (OTHER THAN A SATURDAY OR SUNDAY) ON
WHICH BANKS ARE GENERALLY OPEN FOR BUSINESS IN CHICAGO, ILLINOIS AND, WHEN USED
WITH RESPECT TO LIBOR PORTIONS, A DAY ON WHICH BANKS ARE ALSO DEALING IN UNITED
STATES DOLLAR DEPOSITS IN LONDON, ENGLAND AND NASSAU, BAHAMAS.
"CAPITAL LEASE" means any lease of Property (whether real or personal)
which in accordance with GAAP is required to be capitalized on the balance sheet
of the lessee.
"CAPITALIZED LEASE OBLIGATION" means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
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"CASH INTEREST EXPENSE" shall mean with reference to any period, all
accrued and currently payable interest charges (including imputed interest on
Capitalized Lease Obligations) with respect to all Indebtedness for Borrowed
Money during such period.
"CHANGE OF CONTROL" means (i) any sale, lease or other transfer (in one
transaction or a series of related transactions) by the Company or any of its
Subsidiaries of all or substantially all of the consolidated assets of the
Company to any Person (other than a Borrower); (ii) a "Person" or "Group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (other than the Company)) becomes the "Beneficial Owner"
(as defined in Rule 13d-3 under such Act) of Voting Stock of the Company
representing 40% or more of the voting power of such Voting Stock; (iii)
Continuing Directors cease to constitute at least a majority of the Board of
Directors of any member of the Acme Group; (iv) the stockholders of any member
of the Acme Group approve any plan or proposal for the liquidation or
dissolution of any member of the Acme Group; or (v) any Borrower shall cease to
constitute a Wholly-Owned Subsidiary. For purposes hereof, the term "CONTINUING
DIRECTOR" means with respect to any member of the Acme Group, a director who
either was a member of the Board of Directors of such member on the date hereof
or who became a director of such member subsequent to such date and whose
election, or nomination for election by such member's stockholders, was duly
approved by a majority of the Continuing Directors then on the Board of
Directors of such member, either by a specific vote or by approval of the proxy
statement issued by such member on behalf of the entire Board of Directors of
such member in which such individual is named as nominee for director.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means all Properties, rights, interests and privileges from
time to time subject to the Liens granted to the Agent by the Collateral
Documents.
"COLLATERAL DOCUMENTS" shall mean the Security Agreements and other
security agreements, pledge agreements, assignments, financing statements and
other documents as shall from time to time secure or relate to the Revolving
Credit Notes or any other Obligations.
"COMMERCIAL LETTER OF CREDIT" means a Letter of Credit that finances a
commercial transaction by paying part or all of the purchase price for goods
against delivery of a document of title covering such goods and any other
required documentation.
"COMMITMENTS" shall mean the commitments of the Lenders to make financial
accommodations under the Revolving Credit in the amounts set forth opposite
their signatures hereto under the heading "Revolving Credit Commitment" and
opposite their signatures on Assignment Agreements delivered pursuant to Section
12.18 hereof under the heading "Commitment", as such amounts may be reduced
pursuant hereto.
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"COMMODITY AGREEMENT" means any option or futures contract or similar
agreement or arrangement designed to protect a Person against fluctuations in
commodity prices.
"CONSOLIDATED CASH FLOW COVERAGE RATIO" means, with respect to any period
for which the same is to be determined, the ratio of (x) the sum of (i) EBITDA
for such period plus (ii) the lesser of (x) (to the extent deducted in computing
such EBITDA) Modernization Project Expenses paid during such period or (y)
$15,000,000 plus (iii) cash of the Acme Group and its Subsidiaries free of any
Lien or other restriction as to its use on hand as of the first day of such
period plus (iv) cash securing Letters of Credit in accordance with Section
7.10(c) hereof as of the first day of such period to (y) the sum of (i) Cash
Interest Expense during such period plus (ii) 30% of the average daily principal
amount outstanding on the Revolving Credit (both in the form of Revolving Loans
and L/C Obligations) during such period.
"CONSOLIDATED CURRENT RATIO" shall mean the ratio, computed on a
consolidated basis for the Acme Group and its Subsidiaries, of current assets
(including, without limitation, cash for the Modernization Project) to current
liabilities, all as determined and computed in accordance with GAAP consistently
applied, except with respect to cash for the Modernization Project.
"CONSOLIDATED LEVERAGE RATIO" means, as of any time the same is to be
computed, the ratio of (i) Indebtedness for Borrowed Money to (ii) Total
Capitalization.
"CONSOLIDATED NET INCOME" for any period shall mean the net income of the
Acme Group for such period as computed on a consolidated basis in accordance
with GAAP, but in any event excluding (i) any extraordinary gain or loss,
together with any related provision for taxes on any such extraordinary gain or
loss, realized during such period and (ii) any non-cash item of non-operating
income or non-operating expense during such period.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean, as of any time the same is to
be determined, (a) Shareholder's Equity less (b) the aggregate book value of all
assets which would be classified as intangible assets under GAAP, including,
without limitation, goodwill, patents, trademarks, trade names, copyrights and
franchises plus (c) (to the extent otherwise deducted in computing such
Consolidated Tangible Net Worth) deferred charges (including, without
limitation, unamortized debt discount and expense, deferred taxes, organization
costs and deferred research and development expense); PROVIDED, HOWEVER, that
the effects on retained earnings arising from the application of Financial
Accounting Standard Number 87 ("Accounting for Pensions") shall be excluded from
such determination.
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any
security issued by such Person or any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its Property is bound.
"CURRENCY AGREEMENT" means any foreign exchange contract,
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currency swap agreement or other similar agreement or arrangement designed to
protect a Person against fluctuations in currency values.
"DOMESTIC RATE" means a fluctuating interest rate per annum equal at all
times to the greater of:
(a) the rate of interest announced by the Agent from time to time as
its prime commercial rate as in effect on such day, with any change in such
rate resulting from a change in said prime commercial rate to be effective
as to the Acme Group as of the date of the relevant change in said prime
commercial rate; or
(b) the sum of (x) the rate determined by the Agent to be the average
(rounded upwards, if necessary, to the next higher 1/100 of 1% of the rates
per annum quoted to the Agent at approximately 10:00 a.m. Chicago time (or
as soon thereafter as is practicable) on such day (or, if such day is not a
Business Day, on the immediately preceding Business Day) by two or more
Federal funds brokers selected by the Agent for the sale to the Agent at
face value of Federal funds in the secondary market in an amount equal or
comparable to the principal amount owed to the Lenders for which such rate
is being determined, plus (y) 1/2 of 1%.
"DOMESTIC RATE MARGIN" means 0% percent; PROVIDED, HOWEVER, that in
the event the Utilization Ratio shall at any time exceed 50%, the applicable
Domestic Rate Margin shall on and at all times after the date of such event be
1/2 of 1% (0.50%).
"EBITDA" shall mean, with reference to any period, Consolidated Net Income
for such period plus (without duplication) all amounts to the extent (if any)
deducted in arriving at such Consolidated Net Income in respect of (i) Net
Interest Expense, (ii) income taxes as defined and classified in accordance with
GAAP for such period, (iii) depreciation of fixed assets, (iv) amortization of
intangibles (other than debt issuance costs such as financing fees and
expenses), (v) amortization of financing fees and expenses of the financing for
the Modernization Project and (vi) (a) non-recurring expenses from the shutdown
of facilities, (b) non-recurring losses resulting from any writedown of assets
and (c) any prepayment penalties incurred as a result of the payment of the
indebtedness referred to in Sections 6.2(f) and 6.2(g) hereof, to the extent
such expenses, losses and penalties are incurred as part of, or are attributable
to, the Modernization Project.
"ELIGIBLE INVENTORY" shall mean, with respect to any Borrower, all
inventory as to which such Borrower has title, PROVIDED that such inventory:
(a) is not obsolete and is of merchantable quality;
(b) is finished product inventory in respect of which no further
manufacturing, processing or other work has to be done thereon (other than
packaging or crating for shipment or distribution) or raw material
inventory or work in process inventory consisting of ingots, slabs,
billets,
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bands and coils;
(c) has been identified to the Agent on the Borrowing Base
certificate submitted by the Company pursuant to Section 7.5(a)(iv) hereof;
and
(d) is subject to a perfected, first priority Lien in favor of the
Agent and is free and clear of any other Lien.
Any inventory which is at any time Eligible Inventory and which subsequently
fails to meet any of the foregoing requirements shall forthwith cease to be
Eligible Inventory. The loan value of any Eligible Inventory shall be the
lesser of (i) the greater of (x) the amount thereof stated on the books of the
relevant Borrower or (y) the amount thereof computed using the
first-in-first-out method of valuation in accordance with GAAP or (ii) the price
or prices for such Eligible Inventory which the relevant Borrower is then
receiving for or on account of the most recent bona fide sales thereof by such
Borrower.
"ELIGIBLE RECEIVABLES" SHALL MEAN WITH REFERENCE TO ANY BORROWER,
THOSE ACCOUNTS RECEIVABLE OF SUCH BORROWER REPRESENTING SUMS DUE FOR GOODS WHICH
HAVE BEEN SOLD AND SHIPPED WHICH, WHEN SCHEDULED TO THE AGENT ON ANY BORROWING
BASE CERTIFICATE SUBMITTED BY THE COMPANY PURSUANT TO SECTION 7.5(A)(IV) HEREOF
AND AT ALL TIMES THEREAFTER, THE AGENT, IN ITS REASONABLE CREDIT JUDGMENT, DEEMS
TO BE ELIGIBLE RECEIVABLES. NO ACCOUNT RECEIVABLE SHALL IN ANY EVENT BE AN
ELIGIBLE RECEIVABLE IF:
(a) IT IS EITHER (a) DUE OR UNPAID MORE THAN NINETY DAYS AFTER THE
EARLIER OF (X) THE DATE OF THE ORIGINAL INVOICE ISSUED BY OR ON BEHALF OF
SUCH BORROWER WITH RESPECT TO THE SALE GIVING RISE THERETO OR (y) THE DATE
OF SHIPMENT OF THE GOODS SUBJECT TO SUCH INVOICE OR (b) WITH RESPECT TO
ACCOUNT DEBTORS TO WHOM SUCH BORROWER IN THE NORMAL COURSE OF ITS BUSINESS
EXTENDS SIXTY DAY TERMS, IT IS DUE OR UNPAID MORE THAN SIXTY DAYS AFTER THE
DUE DATE OF THE ORIGINAL INVOICE ISSUED BY SUCH BORROWER WITH RESPECT TO
THE SALE GIVING RISE THERETO; OR
(b) IT ARISES OUT OF A SALE NOT MADE IN THE ORDINARY COURSE OF SUCH
BORROWER'S BUSINESS OR MADE TO ANY MEMBER OF THE ACME GROUP OR TO A PERSON,
FIRM OR CORPORATION WHICH IS AN AFFILIATE OF ANY SUCH MEMBER; OR
(c) ANY WARRANTY CONTAINED IN THIS AGREEMENT OR IN ANY BORROWING BASE
CERTIFICATE WITH RESPECT TO SUCH ACCOUNT RECEIVABLE HAS BEEN BREACHED IN
ANY MATERIAL RESPECT; OR
(d) IT IS SUBJECT TO ANY KNOWN OFFSET, COUNTERCLAIM OR OTHER DEFENSE
WITH RESPECT THERETO; OR
(e) THE ACCOUNT DEBTOR HAS FILED A PETITION FOR BANKRUPTCY OR ANY
OTHER PETITION FOR RELIEF UNDER THE BANKRUPTCY CODE OF 1978 AS AMENDED FROM
TIME TO TIME OR ANY SUCCESSOR STATUTE THERETO, MADE AN ASSIGNMENT FOR THE
BENEFIT OF CREDITORS, OR IF ANY PETITION OF OTHER APPLICATION FOR RELIEF
UNDER THE BANKRUPTCY CODE HAS BEEN FILED AGAINST THE ACCOUNT DEBTOR, OR IF
THE ACCOUNT DEBTOR HAS FAILED, SUSPENDED ITS BUSINESS OPERATIONS, BECOME
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INSOLVENT, OR SUFFERED A RECEIVER OR A TRUSTEE TO BE APPOINTED FOR ANY OF
ITS ASSETS OR AFFAIRS; OR
(f) IT IS OWING FROM AN ACCOUNT DEBTOR WHO IS ALSO A CREDITOR OR
SUPPLIER OF ANY MEMBER OF THE ACME GROUP, IN WHICH CASE SUCH ACCOUNT
RECEIVABLE SHALL BE INELIGIBLE TO THE EXTENT OF THE ACME GROUP'S
INDEBTEDNESS TO SUCH CREDITOR OR SUPPLIER;
(g) THE SALE IS TO AN ACCOUNT DEBTOR OUTSIDE THE UNITED STATES OR
CANADA;
(h) THE SALE IS ON A BILL-AND-HOLD, GUARANTEED SALE, SALE-AND-RETURN,
SALE ON APPROVAL, CONSIGNMENT OR ANY OTHER REPURCHASE OR RETURN BASIS; OR
(i) THE AGENT REASONABLY BELIEVES THAT COLLECTION OF SUCH ACCOUNT
RECEIVABLE MAY NOT BE PAID BY REASON OF THE ACCOUNT DEBTOR'S FINANCIAL
INABILITY TO PAY; OR
(j) THE ACCOUNT DEBTOR IS THE UNITED STATES OF AMERICA OR ANY
DEPARTMENT, AGENCY OR INSTRUMENTALITY THEREOF, UNLESS SUCH BORROWER ASSIGNS
ITS RIGHT TO PAYMENT OF SUCH ACCOUNTS RECEIVABLE TO THE AGENT ON BEHALF OF
THE LENDERS PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, AS AMENDED,
(31 U.S.C. SECTIONS 3727 ET SEQ.); or
(k) the goods, the sale of which have given rise to such account
receivable, have not been shipped and delivered to and accepted by the
account debtor or the services, the performance of which has given rise to
such account receivable, have not been performed by such borrower and
accepted by the account debtor; or
(l) it is owing by an account debtor who shall have failed to pay in
full any invoices evidencing any accounts receivable prior to the times
specified in subpart (a) above of this definition, if the aggregate of all
such amounts remaining unpaid at any time shall exceed an amount equal to
fifteen percent (15%) of the aggregate of all accounts receivable of such
account debtor owing to such Borrower at such time; or
(m) it is not subject to a perfected, first priority Lien in favor of
the agent or is subject to any other Lien.
Any account receivable which is at any time an Eligible Account and which
subsequently fails to meet any of the foregoing requirements shall forthwith
cease to be an Eligible Account.
"ERISA" SHALL MEAN THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED FROM TIME TO TIME, AND ANY SUCCESSOR STATUTE.
"ERISA AFFILIATE" shall mean any (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the IRC) as any member of the Acme Group, (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the IRC) with any member of the Acme Group, and (iii)
member of the same affiliated service group (within the meaning of Section
414(m) of the IRC) as any member of the Acme
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Group, any corporation described in clause (i) above or any partnership or trade
or business described in clause (ii) above.
"EVENT OF DEFAULT" shall mean any event or condition specified as such in
Section 8.1 hereof and "DEFAULT" shall mean any event or condition which with
the lapse of time, the giving of notice or both would constitute an Event of
Default.
"FEDERAL FUNDS RATE" means the fluctuating interest rate per annum
described in part (x) of clause (b) of the definition of Domestic Rate.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Acme Group and its Subsidiaries on a basis
consistent with the preparation of the Company's most recent financial
statements furnished to the Lenders pursuant to Section 7.5 hereof.
"GUARANTORS" shall mean each member of the Acme Group and "GUARANTOR" shall
mean any of the Guarantors.
"HEDGING ARRANGEMENTS" shall mean Currency Agreements, Commodity Agreements
and Interest Protection Agreements.
"HEDGING LIABILITY" shall mean the liability of the Borrowers to the
Lenders or any of them in respect of the Hedging Arrangements. Unless and until
the amount of the Hedging Liability is fixed and determined, the Hedging
Liability shall be deemed to be 4% per annum of the notional amount of the hedge
from the date of computation to the date the hedge expires.
"INDEBTEDNESS FOR BORROWED MONEY" shall mean for the Acme Group and its
Subsidiaries the sum of (i) all indebtedness of each member of the Acme Group
and each of its Subsidiaries for borrowed money, whether current or funded, or
secured or unsecured, (ii) all indebtedness for the deferred purchase price of
Property or services represented by a note or other security, (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to Property acquired by any member of the Acme
Group or any of their respective Subsidiaries (even though the rights and
remedies of the seller or lender under such agreement in the event of a default
are limited to repossession or sale of such Property), (iv) all indebtedness
secured by a purchase money mortgage or other Lien to secure all or part of the
purchase price of Property subject to such mortgage or Lien, (v) all obligations
under leases which shall have been or must be, in accordance with GAAP, recorded
as Capital Leases in respect of which any member of the Acme Group or any of
their respective Subsidiaries is liable as lessee, (vi) any liability in respect
of banker's acceptances or letters of credit, (vii) any indebtedness whether or
not assumed, secured by Liens on Property acquired by any member of the Acme
Group or any of their respective Subsidiaries at the time of acquisition thereof
and (viii) all indebtedness referred to in clause (i), (ii), (iii), (iv), (v),
(vi) or (vii) above which is directly or indirectly guaranteed by any member of
the Acme Group or any of their Subsidiaries or which any of the foregoing have
agreed (contingently or otherwise) to purchase or
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otherwise acquire or in respect of which any of them have otherwise assured a
creditor against loss, it being understood that the term "Indebtedness for
Borrowed Money" shall not include ordinary trade payables.
"INDENTURES" shall mean, collectively, the indenture under which the Senior
Secured Notes are issued and the indenture under which the Senior Secured
Discount Notes are issued.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement by and
between the Agent, Shawmut Bank Connecticut, National Association, the Company
and Acme Steel as the same may from time to time be amended or modified.
"INTEREST PERIOD" shall mean with respect to any LIBOR Portion:
(a) initially, the period commencing on, as the case may be, the
creation or conversion date with respect to such LIBOR Portion and ending
one, two, three or six months thereafter as selected by the Company in its
notice as provided herein; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBOR Portion and ending one,
two, three or six months thereafter as selected by the Company in its
notice as provided herein;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be
to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) no Interest Period may extend beyond the final maturity date
of the Revolving Credit Notes; and
(iii) the interest rate to be applicable to each Portion for
each Interest Period shall apply from and including the first day of
such Interest Period to but excluding the last day thereof.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, PROVIDED, HOWEVER, if there is no numerically
corresponding day in the month in which an Interest Period is to end, then such
Interest Period shall end on the last Business Day of such month.
"INTEREST PROTECTION AGREEMENT" means any interest rate swap
agreement, interest rate collar agreement, option or future contract or other
similar agreement or arrangement designed to protect a Person against
fluctuations in interest rates.
"IRC" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"L/C COMMITMENT" shall mean $10,000,000 as reduced pursuant
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to Section 3.7 hereof.
"L/C DOCUMENTS" means the Letters of Credit, any draft or other document
presented in connection with a drawing thereunder, the Applications and this
Agreement.
"L/C OBLIGATIONS" means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"LENDERS" shall mean Harris Trust and Savings Bank, Lehman Commercial Paper
Inc. and all other lenders becoming parties hereto pursuant to Section 12.18)
hereof.
"LIBOR MARGIN" means 2.0%; PROVIDED, HOWEVER, that in the event the
Utilization Ratio shall at any time exceed 50%, the applicable LIBOR Margin
shall on and at all times after the date of such event be 2.50%.
"LIEN" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind or nature in respect of any Property, including the
interest of a vendor or lessor under any conditional sale, Capital Lease or
other title retention arrangement.
"LOAN DOCUMENTS" shall mean this Agreement, the Revolving Credit Notes, the
L/C Documents and the Collateral Documents and each other instrument or document
to be delivered hereunder or thereunder or otherwise in connection therewith.
"MAINTENANCE CAPITAL EXPENDITURES" for any Person and for any period, shall
mean capital expenditures of such Person during such period as defined and
classified in accordance with GAAP consistently applied to the extent expended
for maintenance or repair of existing plant, Properties and equipment.
"MODERNIZATION PROJECT" shall mean the construction of a new continuous
thin slab caster/hot strip mill complex at Acme Steel's Riverdale, Illinois
facility as more particularly described in the Registration Statement.
"MODERNIZATION PROJECT EXPENSES" shall mean non-capitalized expenses
related to the engineering, procurement, construction and financing of the
Modernization Project.
"NET INTEREST EXPENSE" shall mean with reference to any period, all
interest charges net of interest income in accordance with GAAP plus (without
duplication) imputed interest on Capitalized Lease Obligations during such
period.
"OBLIGATIONS" shall mean any and all indebtedness, obligations and
liabilities of the Acme Group and any of them to the Lenders and any of them or
the Agent now or hereafter arising hereunder or under any of the other Loan
Documents or in connection with Hedging Arrangements.
"PERCENTAGE" means, for each Lender, the percentage of the Commitments
represented by such Lender's Commitment or, if the Commitments have been
terminated, the percentage held by such Lender (including through participation
interests in L/C Obligations) of the aggregate principal amount of all
outstanding Obligations.
"PERMITTED INDEBTEDNESS" means (i) Indebtedness for Borrowed
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Money outstanding as of the date hereof to the extent appropriately disclosed in
the most recent financial statements referred to in Section 5.6 hereof; (ii)
indebtedness of the Borrowers on the Revolving Credit Notes; (iii) indebtedness
of the Company on the Senior Notes and Refinancing Indebtedness in respect of
the Senior Notes; (iv) guarantees by Subsidiaries of the Company of the Senior
Notes and Refinancing Indebtedness in respect of the Senior Notes; (v)
indebtedness in respect of obligations of the Company and its Subsidiaries to
the trustees under the Indentures, to the agent under the "Term Loan Agreement"
identified and defined in the Indentures and to the collateral agent under the
"Security Documents" identified and defined in the Indentures; (vi) intercompany
debt obligations (including intercompany notes) of Subsidiaries to the Company;
(vii) intercompany debt obligations (including intercompany notes) of the
Company to its Subsidiaries arising from loans and advances in connection with
its centralized cash management system permitted by Section 7.12(i) hereof; and
(viii) indebtedness of the Company and its Subsidiaries under any Hedging
Arrangements.
"PERMITTED INVESTMENTS" means (i) obligations of or guaranteed by the
United States government, its agencies or government-sponsored enterprises; (ii)
short-term commercial bank and corporate obligations that have received the
highest short-term rating from two of the following rating organizations:
Standard & Poor's Corporation ("S&P"), Moody's Investors Service, Inc.
("MOODY'S"), Duff & Phelps Credit Rating Co., Fitch Investor Service, Inc., IBCA
Ltd. and Thomson Bankwatch Inc.; (iii) money market preferred stocks which, at
the date of acquisition and at all times thereafter, are accorded ratings of at
least AA- or Aa3 by S&P or Moody's, respectively; (iv) tax-exempt obligations
that are accorded the highest short-term rating by S&P or Moody's or a
long-term rating of at least A- or A3 by S&P or Moody's, respectively, at the
time of purchase; (v) master repurchase agreements with foreign or domestic
banks having a capital and surplus of not less than $250,000,000 or primary
dealers so long as such agreements are collateralized with obligations of the
United States government or its agencies at a ratio of 102%, or with other
collateral rated at least AA or Aa2 by S&P or Moody's, respectively, at a ratio
of 103% and, in either case, marked-to-market weekly and so long as such
securities shall be held by a third-party agent; (vi) guaranteed investment
contracts and/or agreements of a bank, insurance company or other institution
whose unsecured, uninsured and unguaranteed obligations (or claims-paying
ability) have at the time of purchase ratings of AAA or Aaa by S&P or Moody's,
respectively; (vii) time deposits with, and certificates of deposit and banker's
acceptances issued by, any bank having capital surplus and undivided profits
aggregating at least $500,000,000 and maturing not more than one year from the
date of creation thereof; and (viii) money market funds, the portfolio of which
is
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limited to investments described in clauses (i) through (vii) above. In no
event shall any of the Permitted Investments described in clauses (i) through
(vi) above have a final maturity more than two years from the date of purchase.
"PERMITTED LIENS" means (i)(x) with respect to Property other than
Collateral, Liens existing on the date hereof to the extent permitted by the
Indentures as of the date hereof and (y) with respect to Collateral, Liens
existing on the date hereof to the extent specifically permitted in the
appropriate Collateral Documents; (ii) Liens on (w) the capital stock of the
direct Subsidiaries of the Company, (x) the capital stock of the direct
subsidiaries of Acme Packaging, (y) the capital stock of the direct subsidiaries
of Acme Steel and (z) the real property, equipment, intellectual property and
related intangibles of Acme Steel, in each case to secure such entity's
obligations in respect of the Senior Notes; (iii) Liens securing Refinancing
Indebtedness used to refund, refinance or extend indebtedness referred to in the
preceding clause (ii), PROVIDED that any such Lien does not extend to or cover
any Property, shares or debt other than the Property, shares or debt securing
the indebtedness so refunded, refinanced or extended and PROVIDED FURTHER that
the holder of such Lien agrees in form and substance reasonably satisfactory to
the Required Lenders to be bound by the Intercreditor Agreement to the same
extent as if such holder were originally a party thereto; (iv) Liens securing
indebtedness collateralized by Property of, or any shares of stock of or debt
of, any corporation existing at the time such corporation becomes a Subsidiary
of the Company or at the time such corporation is merged into the Company or any
of its Subsidiaries, PROVIDED that such Liens are not created in connection
with, or in contemplation of, such corporation becoming a Subsidiary of the
Company or merging into the Company or any of its Subsidiaries, PROVIDED FURTHER
that at the time such Acquired Indebtedness is incurred by the Company or such
Subsidiary, as the case may be, no Default or Event of Default shall have
occurred or be continuing and that the Acquired Indebtedness could have been
incurred pursuant to Section 7.11 hereof; (v) Liens securing Refinancing
Indebtedness used to refund, refinance or extend indebtedness referred to in the
preceding clause (iv), PROVIDED that any such Lien does not extend to or cover
any Property, shares or debt other than the Property, shares or debt securing
the indebtedness so refunded, refinanced or extended; (vi) Liens other than on
Collateral in favor of the Company or any of its Subsidiaries; (vii) Liens on
Property (other than Collateral) of the Company or any of its Subsidiaries
acquired after the date hereof in favor of governmental bodies to secure
progress or advance payments relating to such Property; (viii) Liens on Property
(other than the Collateral) of the Company or any of its Subsidiaries acquired
after the date hereof securing industrial revenue or pollution control or other
tax exempt bonds issued in connection with the acquisition or refinancing of
such Property
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to the extent the incurrence of such indebtedness is permitted pursuant to
Section 7.11 hereof; (ix) Liens to secure certain indebtedness that is otherwise
permitted under this Agreement and that is used to finance the cost of Property
of the Company or any of its Subsidiaries acquired after the date hereof,
PROVIDED that (a) any such Lien is created solely for the purpose of securing
the indebtedness representing, or incurred to finance, refinance or refund, the
cost (including sales and excise taxes, installation and delivery charges and
other direct costs of, and other direct expenses paid or charged in connection
with, such purchase or construction) of such Property, (b) the principal amount
of the indebtedness secured by such Lien does not exceed 100% of such cost, (c)
the indebtedness secured by such Lien is incurred by the Company or its
Subsidiary within ninety days of the acquisition of such Property by the Company
or its Subsidiary, as the case may be and (d) such Lien does not extend to or
cover any Property other than such item of Property and any improvements on such
item; (x) statutory liens or landlords', carriers', warehousemen's, mechanics',
suppliers', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business and with respect to amounts not yet delinquent or
being contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor and, with respect to any such Liens arising in
respect of any of the Collateral, only to the extent specifically permitted
under the provisions of the relevant Collateral Document; (xi) Liens on the
Collateral securing the Obligations; (xii) easements, restrictions, reservations
or rights of others for right-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes and other similar charges or
encumbrances not interfering in any material respect with the conduct of the
business of the Company or any of its Subsidiaries or, in the case of such Liens
which affect the Collateral, to the extent permitted by the relevant Collateral
Document; and (xiii) Liens on assets (other than accounts receivable and
inventory) as securing obligations otherwise permitted under this Agreement the
aggregate principal amount of which does not exceed $2,000,000 outstanding at
any one time.
"PERSON" shall mean any person, firm, corporation or other entity.
"PRIOR CREDIT AGREEMENT" shall mean that certain Credit Agreement dated
June 26, 1992 by and between the Company and Harris Trust and Savings Bank, NBD
Bank, N.A. and National City Bank, as amended.
"PROPERTY" shall mean, as to any Person, all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent balance sheet of such Person and its subsidiaries
under GAAP.
"REFINANCING INDEBTEDNESS" means indebtedness that refunds, refinances or
extends any Indebtedness for Borrowed Money of the
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Acme Group outstanding on the date hereof or other such Indebtedness permitted
to be incurred by the Acme Group pursuant to the terms of this Agreement, but
only to the extent that (i) the Refinancing Indebtedness is subordinated to the
Obligations to the same extent as such Indebtedness being refunded, refinanced
or extended, if at all, (ii) the Refinancing Indebtedness is scheduled to mature
no earlier than such Indebtedness being refunded, refinanced or extended, (iii)
the portion, if any, of the Refinancing Indebtedness that is scheduled to mature
on or prior to the Termination Date has a weighted average life to maturity at
the time such Refinancing Indebtedness is incurred that is equal to or greater
than the weighted average life to maturity of the portion of such Indebtedness
being refunded, refinanced or extended that is scheduled to mature on or prior
to the Termination Date, (iv) such Refinancing Indebtedness is in an aggregate
principal amount that is equal to or less than the sum of (a) the aggregate
principal amount then outstanding under such Indebtedness being refunded,
refinanced or extended, (b) the amount of accrued and unpaid interest, if any,
on such Indebtedness being refunded, refinanced or extended and (c) the amount
of customary fees, expenses and costs related to the incurrence of such
Refinancing Indebtedness, and (v) in addition to the foregoing, Refinancing
Indebtedness in respect of the Senior Notes is permitted by, and governed by the
terms and conditions no more burdensome on the Acme Group and its Subsidiaries
than the terms and conditions contained in, the Indentures.
"REGISTRATION STATEMENT" means the Form S-1 Registration Statement filed by
the Company with the SEC on June 10, 1994 for its offering of the Senior Notes
as amended by Amendment No. 1 filed by the Company with the SEC on July 14,
1994, Amendment No. 2 filed by the Company with the SEC on July 26, 1994 and
Amendment No. 3 filed by the Company with the SEC on August 4, 1994.
"REQUIRED LENDERS" shall mean at any time Lenders whose Commitments
aggregate 66-2/3% or more of the total Commitments or if at the time no
Commitments are outstanding, Lenders holding 66-2/3% or more of the aggregate
outstanding principal balance of the Revolving Credit Notes and the credit risk
with respect to the Letters of Credit.
"RESTRICTED PAYMENTS" is defined in Section 7.13 hereof.
"REVOLVING CREDIT NOTES" shall mean the Revolving Credit Notes (including
notes issued pursuant to Section 12.18 hereof) and "REVOLVING CREDIT NOTE" shall
mean any of the Revolving Credit Notes.
"SEC" means the Securities and Exchange Commission.
"SECURITY AGREEMENT" is defined in Section 4.1 hereof.
"SENIOR NOTES" shall mean the Senior Secured Notes and the Senior Secured
Discount Notes and the $50,000,000 in "TERM LOANS" made under the "TERM LOAN
FACILITY" identified and defined in the Registration Statement. The use of the
term "SENIOR" in
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describing any aspect of the Senior Notes is for convenience of reference only
and is not intended to have any substantive effect.
"SENIOR SECURED DISCOUNT NOTES" shall mean the 13-1/2% Senior Secured
Discount Notes due 2004 issued by the Company as described in the Registration
Statement.
"SENIOR SECURED NOTES" shall mean the 12-1/2% Senior Secured Notes due 2002
issued in an original aggregate principal amount of $125,000,000 by the Company
as described in the Registration Statement.
"SHAREHOLDER'S EQUITY" means, as of any date the same is to be determined,
the total shareholder's equity (including capital stock, additional
paid-in-capital and retained earnings after deducting treasury stock, but
excluding minority interests in Subsidiaries) which would appear on a balance
sheet of the Acme Group and its Subsidiaries determined on a consolidated basis
in accordance with GAAP.
"SPECIAL STOCK PURCHASE WARRANTS" means the 5,600,000 special stock
purchase warrants issued and sold by the Company in March 1994 and the capital
stock of the Company for which they can be exercised.
"STANDBY LETTER OF CREDIT" shall mean any letter of credit which is not a
Commercial Letter of Credit.
"TERMINATION DATE" shall mean August 11, 1997 or such earlier date on which
the Commitments are terminated in whole pursuant to Sections 3.7, 8.2 or 8.3
hereof or such later date to which the Commitments are extended pursuant to
Section 12.16 hereof.
The term "SUBSIDIARY" shall mean, as to any particular parent corporation,
any other corporation at least 51% of the outstanding Voting Stock of which is
at the time directly or indirectly owned by such parent corporation or by any
one or more other corporations or other entities which are themselves
subsidiaries of such parent corporation. The term "SUBSIDIARY" shall mean, when
used with reference to the Company or the Acme Group, a subsidiary of,
respectively, the Company or any member of the Acme Group.
"TOTAL CAPITALIZATION" means, as of any time the same is to be determined,
the sum of (i) Indebtedness for Borrowed Money and (ii) Shareholder's Equity.
"UTILIZATION RATIO" shall mean as of any time, the ratio of (a) the average
daily principal amount outstanding on the Revolving Credit (both in the form of
Revolving Loans and L/C Obligations) during the most recently completed calendar
month to (b) the average daily amount of Revolving Credit Commitments in effect
during the same such month.
"VOTING STOCK" of any Person means capital stock of any class or classes
(however designated) having ordinary power for the election of directors of such
Person, other than stock having such power only by reason of the happening of a
contingency.
"WABUSH" means the entity called Wabush Mines, a Canadian
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joint venture, including Wabush Iron Co. Ltd., an Ohio corporation and one of
the joint venturers of Wabush Mines, which is engaged in the mining,
beneficiation and pelletizing of iron ore or any successor to either such
entity, any entity of approximate equivalent value substituted therefor or any
investment of approximately equivalent value and purpose.
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors' qualifying shares as
required by law) or other equity interests are owned by the Company and/or one
or more wholly-owned subsidiaries within the meaning of this definition.
SECTION 9.2. INTERPRETATION.; The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The
words "HEREOF", "HEREIN", and "HEREUNDER" and words of like import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All references to time of day herein
are references to Chicago, Illinois time unless otherwise specifically provided.
Where the character or amount of any asset or liability or item of income or
expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, it shall
be done in accordance with GAAP except where such principles are inconsistent
with the specific provisions of this Agreement.
Section 10. The Agent;.
SECTION 10.1. APPOINTMENT AND AUTHORIZATION;. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers hereunder and under the other Loan Documents as are
designated to the Agent by the terms hereof and thereof together with such
powers as are reasonably incidental thereto. The Agent may resign at any time
by sending twenty (20) days prior written notice to the Acme Group and the
Lenders and may be removed by the Required Lenders upon twenty (20) days prior
written notice to the Acme Group and the Lenders. In the event of any such
resignation or removal, the Required Lenders may appoint a new agent after
consultation with the Acme Group (which nonetheless shall be bound by the
decision of the Required Lenders in their sole discretion), which shall succeed
to all the rights, powers and duties of the Agent hereunder and under the other
Loan Documents. Any resigning or removed Agent shall be entitled to the benefit
of all the protective provisions hereof with respect to its acts as an agent
hereunder, but no successor Agent shall in any event be liable or responsible
for any actions of its predecessor. If the Agent resigns or is removed and no
successor is appointed, the rights and obligations of such Agent shall be
automatically assumed by the Required Lenders and (i) the Acme Group shall be
directed to make all payments due each Lender hereunder directly to such Lender
and (ii) the Agent's rights in the Collateral Documents shall be assigned
without representation, recourse or warranty to
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the Lenders as their interests may appear.
SECTION 10.2. RIGHTS AS A LENDER;. The Agent has and reserves all of the
rights, powers and duties hereunder and under its Revolving Credit Notes and the
Applications and Collateral Documents as any Lender may have and may exercise
the same as though it was not the Agent and the terms "LENDER" or "LENDERS" as
used herein and in all of such documents shall, unless the context otherwise
expressly indicates, include the Agent in its individual capacity as Lender.
SECTION 10.3. STANDARD OF CARE;. The Lenders acknowledge that they have
received and approved copies of the Collateral Documents and such other
information and documents concerning the transactions contemplated and financed
hereby as they have requested to receive and/or review. The Agent makes no
representations or warranties of any kind or character to the Lenders with
respect to the validity, enforceability, genuineness, perfection, value, worth
or collectibility hereof or of the Revolving Credit Notes, the Applications, the
Letters of Credit or the Collateral Documents or of the Liens provided for
thereby or of any other documents called for hereby or thereby or of the
Collateral. The Agent shall not incur any liability under or in respect of this
Agreement, the Applications, the Letters of Credit or the Collateral Documents
by acting upon any notice, certificate, warranty, instruction or statement (oral
or written) of anyone (including anyone in good faith believed by it to be
authorized to act on behalf of the Acme Group), unless it has actual knowledge
of the untruthfulness of same. The Agent may execute any of its duties
hereunder by or through representatives, employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders for the default or
misconduct of any such representatives, employees, agents or attorneys-in-fact
selected with reasonable care. The Agent shall be entitled to advice of counsel
concerning all matters pertaining to the agency hereby created and its duties
hereunder, and shall incur no liability to anyone and be fully protected in
acting upon the advice of such counsel. The Agent shall be entitled to assume
that no Default or Event of Default exists unless notified to the contrary by a
Lender and if the Agent is notified by any Lender of the occurrence of a Default
or an Event of Default it shall promptly notify all of the Lenders. The Agent
shall in all events be fully protected in acting or failing to act in accord
with the instructions of the Required Lenders. Upon the occurrence of an Event
of Default hereunder, the Agent shall take such action with respect to the
enforcement of its Liens on the Collateral and the preservation and protection
thereof as it shall be directed to take by the Required Lenders but, unless and
until the Required Lenders have given such direction, the Agent shall take or
refrain from taking such actions as the Agent directs it to take or refrain from
taking as being appropriate and in the best interest of all Lenders and the
Agent shall take or refrain from taking such actions as the
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Agent determines are appropriate and in the best interest of all Lenders.
Notwithstanding anything to the contrary contained herein or in any Collateral
Document, unless and until all Lenders otherwise agree in writing, the Agent
shall not enforce its Lien on any of the Collateral constituting real property
and the Agent shall not give the Acme Group the notice specified in the first
sentence of Section 5(a) of the Security Agreement unless and until all of the
Lenders have instructed it to enforce such Lien or give such notice, as the case
may be. The Agent shall in all cases be fully justified in failing or refusing
to act hereunder unless it shall be indemnified to its reasonable satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. The Agent may
treat the owner of any Revolving Credit Note as the holder thereof until written
notice of transfer shall have been filed with it signed by such owner in form
satisfactory to the Agent. Each Lender acknowledges that it has independently
and without reliance on the Agent or any other Lender and based upon such
information, investigations and inquiries as it deems appropriate made its own
credit analysis and decision to extend credit to the Acme Group. It shall be
the responsibility of each Lender to keep itself informed as to the
creditworthiness of the Acme Group and the Subsidiaries and the Agent shall have
no liability to any Lender with respect thereto, provided, however, that the
Agent shall deliver to any Lender copies of any document hereunder required to
be delivered to the Agent upon request by such Lender. The Agent need not
verify the worth or existence of the Collateral and may rely exclusively on
reports of the Acme Group in computing the Borrowing Base. The Agent shall
handle all matters concerning the Obligations, including the Collateral
Documents and the Collateral, in accordance with the usual practices of each in
managing similar affairs in the ordinary course of business, but neither the
Agent nor any director, officer, employee, agent or representative thereof
(including any security trustee therefor) shall in any event be liable for any
clerical errors or errors in judgment, inadvertence or oversight, or for action
taken or omitted to be taken by it or them hereunder or under the Collateral
Documents or in connection herewith or therewith except for its or their own
gross negligence or willful misconduct.
SECTION 10.4. COSTS AND EXPENSES;. Each Lender agrees to reimburse the
Agent for all field audits conducted by the Agent (unless promptly reimbursed
for same by the Acme Group after making the request of the Acme Group for the
payment thereof), and agrees to reimburse the Agent for all other reasonable
out-of-pocket costs and expenses (including without limitation attorneys' fees)
suffered or incurred by the Agent or any security trustee in performing its
duties hereunder and under the Applications, the Letters of Credit and the
Collateral Documents, or in the exercise of any right or power imposed or
conferred
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upon the Agent hereby or thereby, to the extent that the Agent is not promptly
reimbursed for same by the Acme Group after making request of the Acme Group for
payment thereof, or out of the Collateral and promptly notifies the Lenders as
to the existence of such costs and expenses, all such costs and expenses to be
borne by the Lenders ratably in accordance with the amounts of their respective
Commitments. If any Lender fails to reimburse the Agent for its share of any
such costs and expenses, such costs and expenses shall be paid pro rata by the
remaining Lenders, but without in any manner releasing the defaulting Lender
from its liability hereunder.
SECTION 10.5. INDEMNITY;. The Lenders shall ratably indemnify and hold
the Agent, and its directors, officers, employees, agents, representatives or
attorneys-in-fact (including as such any security trustee therefor), harmless
from and against any liabilities, losses, costs or expenses suffered or incurred
by it hereunder or under the Applications, the Letters of Credit or the
Collateral Documents or in connection with the transactions contemplated hereby
or thereby, regardless of when asserted or arising, except to the extent it is
promptly reimbursed for the same by the Acme Group or out of the Collateral and
except to the extent that any event giving rise to a claim was caused by the
gross negligence or willful misconduct of the party seeking to be indemnified.
If any Lender defaults in its obligations hereunder, its share of the
obligations shall be paid pro rata by the remaining Lenders, but without in any
manner releasing the defaulting Lender from its liability hereunder.
SECTION 10.6. CONFLICT;. In the event of a conflict between the
provisions of this Section 10 and the provisions of any Collateral Document
regarding the rights, duties and obligations of the Agent, the provisions of
this Section 10 shall govern.
Section 11. The Guarantees;.
SECTION 11.1. THE GUARANTEES;. To induce the Lenders to provide the
credits described herein and in consideration of benefits expected to accrue to
each Guarantor by reason of the Commitments and for other good and valuable
consideration, receipt of which is hereby acknowledged, the Company and each
Borrower (individually a "GUARANTOR" and collectively the "GUARANTORS") hereby
unconditionally and irrevocably guarantee jointly and severally to the Agent,
the Lenders, and each other holder of any of the Obligations, the due and
punctual payment of all present and future indebtedness of the Borrowers
evidenced by or arising out of the Loan Documents, including, but not limited
to, the due and punctual payment of principal of and interest on the Revolving
Credit Note and the due and punctual payment of all other Obligations now or
hereafter owed by the Borrowers under the Loan Documents as and when the same
shall become due and payable, whether at stated maturity, by acceleration or
otherwise, according to the terms hereof and thereof. In case of failure by the
Borrowers punctually to pay any indebtedness or other Obligations guaranteed
hereby, each Guarantor hereby
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unconditionally agrees jointly and severally to make such payment or to cause
such payment to be made punctually as and when the same shall become due and
payable, whether at stated maturity, by acceleration or otherwise, and as if
such payment were made by the Borrowers.
SECTION 11.2. GUARANTEE UNCONDITIONAL;. The obligations of each Guarantor
as a guarantor under this Section 11 shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of any Borrower or of any other Guarantor
under this Agreement or any other Loan Document or by operation of law or
otherwise;
(b) any modification or amendment of or supplement to this Agreement
or any other Loan Document;
(c) any change in the corporate existence, structure or ownership of,
or any insolvency, bankruptcy, reorganization or other similar proceeding
affecting, the Borrowers, any other Guarantor, or any of their respective
assets, or any resulting release or discharge of any obligation of any
Borrower or of any other Guarantor contained in any Loan Document;
(d) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Agent, any Lender or any other
Person, whether or not arising in connection herewith;
(e) any failure to assert, or any assertion of, any claim or demand
or any exercise of, or failure to exercise, any rights or remedies against
any Borrower, any other Guarantor or any other Person or Property;
(f) any application of any sums by whomsoever paid or howsoever
realized to any obligation of any Borrower, regardless of what obligations
of the Borrowers remain unpaid;
(g) any invalidity or unenforceability relating to or against any
Borrower or any other Guarantor for any reason of this Agreement or of any
other Loan Document or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrowers or any other Guarantor
of the principal of or interest on any Revolving Credit Note or any other
amount payable by them under the Loan Documents; or
(h) any other act or omission to act or delay of any kind by the
Agent, any Lender or any other Person or any other circumstance whatsoever
that might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of the obligations of the Guarantors under this Section
11.
'SECTION 11.3. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES';. Each Guarantor's
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obligations under this Section 11 shall remain in full force and effect until
the Commitments are terminated and the principal of and interest on the
Revolving Credit Note and all other amounts payable by the Borrowers under this
Agreement and all other Loan Documents shall have been paid in full. If at any
time any payment of the principal of or interest on any Revolving Credit Note or
any other amount payable by the Borrowers under the Loan Documents is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any Borrower or of any Guarantor, or otherwise, each
Guarantor's obligations under this Section 11 with respect to such payment shall
be reinstated at such time as though such payment had become due but had not
been made at such time.
SECTION 11.4. WAIVERS;. (a) GENERAL. Each Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by the
Agent, any Lender or any other Person against the Borrowers, another Guarantor
or any other Person.
(b) SUBROGATION AND CONTRIBUTION. Each Guarantor hereby irrevocably
waives any claim or other right it may now or hereafter acquire against the
Borrowers or any other Guarantor that arises from the existence, payment,
performance or enforcement of such Guarantor's obligations under this Section 11
or any other Loan Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, or any
right to participate in any claim or remedy of the Agent, any Lender or any
other holder of any of the Obligations against the Borrowers or any other
Guarantor whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Borrowers or any other Guarantor directly or
indirectly, in cash or other Property or by set-off or in any other manner,
payment or security on account of such claim or other right.
SECTION 11.5. LIMIT ON RECOVERY;. Notwithstanding any other provision
hereof, the right of recovery against each Guarantor under this Section 11 shall
not exceed $1.00 less than the amount which would render such Guarantor's
obligations under this Section 11 void or voidable under applicable law,
including without limitation fraudulent conveyance law.
SECTION 11.6. STAY OF ACCELERATION;. If acceleration of the time for
payment of any amount payable by the Borrowers under this Agreement or any other
Loan Document is stayed upon the insolvency, bankruptcy or reorganization of any
of the Borrowers, all such amounts otherwise subject to acceleration under the
terms of this Agreement or the other Loan Documents shall nonetheless be payable
jointly and severally by the Guarantors hereunder forthwith on demand by the
Agent made at the request of the Required Lenders.
SECTION 12. MISCELLANEOUS;.
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SECTION 12.1. WITHHOLDING TAXES;. (a) PAYMENTS FREE OF WITHHOLDING.
Except as otherwise required by law and subject to Section 12.1(b) hereof, each
payment by each Borrower and each Guarantor under this Agreement or the other
Loan Documents shall be made without withholding for or on account of any
present or future taxes (other than overall net income taxes on the recipient)
imposed by or within the jurisdiction in which such Borrower or such Guarantor
is domiciled, any jurisdiction from which such Borrower or such Guarantor makes
any payment, or (in each case) any political subdivision or taxing authority
thereof or therein. If any such withholding is so required, the Borrower or
relevant Guarantor shall make the withholding, pay the amount withheld to the
appropriate governmental authority before penalties attach thereto or interest
accrues thereon and forthwith pay such additional amount as may be necessary to
ensure that the net amount actually received by each Lender and the Agent free
and clear of such taxes (including such taxes on such additional amount) is
equal to the amount which that Lender or the Agent (as the case may be) would
have received had such withholding not been made. If the Agent or any Lender
pays any amount in respect of any such taxes, penalties or interest the
Borrowers shall reimburse the Agent or that Lender for that payment on demand in
the currency in which such payment was made. If the Borrowers or any Guarantor
pays any such taxes, penalties or interest, it shall deliver official tax
receipts evidencing that payment or certified copies thereof to the Lender or
Agent on whose account such withholding was made (with a copy to the Agent if
not the recipient of the original) on or before the thirtieth day after payment.
If any Lender or the Agent determines it has received or been granted a credit
against or relief or remission for, or repayment of, any taxes paid or payable
by it because of any taxes, penalties or interest paid by the Borrowers or any
Guarantor and evidenced by such a tax receipt, such Lender or Agent shall, to
the extent it can do so without prejudice to the retention of the amount of such
credit, relief, remission or repayment, pay to the Borrowers or such Guarantor
as applicable, such amount as such Lender or Agent determines is attributable to
such deduction or withholding and which will leave such Lender or Agent (after
such payment) in no better or worse position than it would have been in if the
Borrower had not been required to make such deduction or withholding. Nothing
in this Agreement shall interfere with the right of each Lender and the Agent to
arrange its tax affairs in whatever manner it thinks fit nor oblige any Lender
or the Agent to disclose any information relating to its tax affairs or any
computations in connection with such taxes.
(b) U.S. WITHHOLDING TAX EXEMPTIONS. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrowers and the Agent on or before the earlier of the date the
initial Borrowing is made hereunder and thirty (30) days after the date hereof,
two
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duly completed and signed copies of either Form 1001 (relating to such Lender
and entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Lender, including fees, pursuant to the Loan
Documents and the Loans) or Form 4224 (relating to all amounts to be received by
such Lender, including fees, pursuant to the Loan Documents and the Loans) of
the United States Internal Revenue Service. Thereafter and from time to time,
each Lender shall submit to the Company and the Agent such additional duly
completed and signed copies of one or the other of such Forms (or such successor
forms as shall be adopted from time to time by the relevant United States taxing
authorities) as may be (i) requested by the Company in a written notice,
directly or through the Agent, to such Lender and (ii) required under
then-current United States law or regulations to avoid or reduce United States
withholding taxes on payments in respect of all amounts to be received by such
Lender, including fees, pursuant to the Loan Documents or the Loans.
(c) INABILITY OF LENDER TO SUBMIT FORMS. If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrowers or Agent any form or certificate that such Lender is obligated to
submit pursuant to subsection (b) of this Section 12.1. or that such Lender is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise becomes ineffective or inaccurate,
such Lender shall promptly notify the Company and the Agent of such fact and the
Lender shall to that extent not be obligated to provide any such form or
certificate and will be entitled to withdraw or cancel any affected form or
certificate, as applicable.
SECTION 12.2. HOLIDAYS;. If any payment of principal or interest on any
of the Revolving Credit Notes or any fees shall fall due on a Saturday, Sunday
or on another day which is a legal holiday for lenders in the States of
Illinois, (i) interest at the rates such Notes bear for the period prior to
maturity shall continue to accrue on such principal from the stated due date
thereof to and including the next succeeding Business Day and (ii) such
principal, interest and fees shall be payable on such succeeding Business Day.
SECTION 12.3. NO WAIVER, CUMULATIVE REMEDIES;. No delay or failure on the
part of any Lender in the exercise of any power or right shall operate as a
waiver thereof, nor as an acquiescence in any default nor preclude any other or
further exercise of any power or right, or the exercise of any other power or
right, and the rights and remedies hereunder of the Lenders are cumulative to,
and not exclusive of, any rights or remedies which any of them would otherwise
have.
SECTION 12.4. WAIVERS, MODIFICATIONS AND AMENDMENTS;. Any provision
hereof or of the Revolving Credit Notes or the Collateral Documents may be
amended, modified, waived or released
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and any Default or Event of Default and its consequences may be rescinded and
annulled upon the written consent of the Required Lenders; PROVIDED, HOWEVER,
that without the written consent of each Lender no such amendment, modification
or waiver shall increase the amount or extend the terms of such Lender's
Commitment or reduce the interest rate applicable to or extend the maturity of
its Revolving Credit Note or reduce the amount of the principal, interest, fees
or other amounts to which it is entitled hereunder or release any guaranty of
any Obligations or release all or any substantial (in value) part of the
collateral security afforded by the Collateral Documents (except in connection
0with a sale or other disposition required to be effected by the provisions
hereof or of the Collateral Documents) or change this Section or change the
definition of "REQUIRED LENDERS" or change the number of Lenders required to
take any action hereunder or under the Collateral Documents. No amendment,
modification or waiver of the Agents' protective provisions shall be effective
without the prior written consent of the Agent. The Agent shall not modify
reserves against the Borrowing Base or the eligibility of any Collateral for
inclusion in the Borrowing Base in each case if such action would increase the
Borrowing Base unless such action is taken with the consent of the Required
Lenders.
SECTION 12.5. COSTS AND EXPENSES;. The Acme Group agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Agent and Lehman
Commercial Paper Inc. in connection with the negotiation, preparation,
execution, delivery, recording or filing or release of the Loan Documents or in
connection with any consents hereunder or thereunder or waivers or amendments
hereto or thereto, including the reasonable fees and the out-of-pocket expenses
of counsel for the Agent with respect to all of the foregoing, and all
recording, filing, title insurance or other fees, costs and taxes incident to
perfecting a Lien upon the collateral security for the Revolving Credit Notes
and the other Obligations, and all reasonable costs and expenses (including
reasonable attorneys' fees) incurred by the Agent, the Lenders or any other
holders of a Revolving Credit Note in connection with a default or the
enforcement of the Loan Documents, and all costs, fees and taxes of the types
enumerated above incurred in supplementing (and recording or filing supplements
to) the Collateral Documents in connection with assignments contemplated by
Section 12.18 hereof (collectively, "SECURITY ASSIGNMENT COSTS") if counsel to
the Agent believes such supplements to be appropriate or desirable. The
Borrowers agree to indemnify and save the Lenders, the Agent and any security
trustee for the Agent or the Lenders harmless from any and all liabilities,
losses, costs and expenses incurred by the Lenders or the Agent in connection
with any action, suit or proceeding brought against the Agent, any security
trustee or any Lender by any person which arises out of the transactions
contemplated or financed by any of the Loan Documents or out of any action or
inaction by the Agent,
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any security trustee or any Lender thereunder, including without limitation
those caused by the negligence of any party but except for such thereof as is
caused by the gross negligence or willful misconduct of the party indemnified
and except for costs or liabilities incurred in suits which are exclusively
among the Lenders or the Lenders and the Agent. The provisions of this Section
12.5 and the protective provisions of Section 2 hereof shall survive payment of
the Revolving Credit Notes.
SECTION 12.6. STAMP TAXES;. The Borrowers agree that they will pay any
documentary, stamp or similar taxes payable in respect to any Loan Document or
any Letter of Credit, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit to it is then in use or available.
SECTION 12.7. SURVIVAL OF REPRESENTATIONS;. All representations and
warranties made herein or in the Applications or the other Loan Documents or in
certificates given pursuant hereto or thereto shall survive the execution and
delivery of this Agreement and the other Loan Documents, and shall continue in
full force and effect with respect to the date as of which they were made as
long as any credit is in use or available hereunder.
SECTION 12.8. CONSTRUCTION;. The parties hereto acknowledge and agree
that this Agreement shall not be construed more favorably in favor of one than
the other based upon which party drafted the same, it being acknowledged that
all parties hereto contributed substantially to the negotiation and preparation
of this Agreement.
SECTION 12.9. ADDRESSES FOR NOTICES;. Unless specifically provided
otherwise hereunder, all communications provided for herein shall be in writing
and shall be deemed to have been given or made when served personally or three
days after being deposited in the United States mail addressed, if to the Acme
Group, at c/o Acme Metals Incorporated, 13500 South Perry Avenue, Riverdale,
Illinois 60627, Attention: Treasurer, if to the Agent at 111 West Monroe Street,
Chicago, Illinois, 60690, Attention: Mr. Richard H. Robb, if to the Lenders at
their addresses as shown on the signature pages hereof or on any Assignment
Agreement, or at such other address as shall be designated by any party hereto
in a written notice given to each party pursuant to this Section 12.9.
SECTION 12.10. OBLIGATIONS SEVERAL;. The obligations of the Lenders
hereunder are several and not joint. Nothing contained in this Agreement and no
action taken by the Lenders pursuant hereto shall be deemed to constitute the
Lenders a partnership, association, joint venture or other entity.
SECTION 12.11. HEADINGS;. Article and Section headings used in this
Agreement are for convenience of reference only and are not a part of this
Agreement for any other purpose.
SECTION 12.12. SEVERABILITY OF PROVISIONS;. Any provision of this
Agreement which is unenforceable in any jurisdiction shall,
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as to such jurisdiction, be ineffective to the extent of such unenforceability
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction. All rights,
remedies and powers provided in this Agreement and other Loan Documents may be
exercised only to the extent that the exercise thereof does not violate any
applicable mandatory provisions of law, and all the provisions of this Agreement
and other Loan Documents are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement or other Loan Documents
invalid or unenforceable.
SECTION 12.13. COUNTERPARTS;. This Agreement may be executed in any
number of counterparts, and by different parties hereto on separate
counterparts, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
SECTION 12.14. BINDING NATURE AND GOVERNING LAW;. This Agreement shall be
binding upon the Acme Group and its successors and assigns, and shall inure to
the benefit of the Lenders and the benefit of their successors and assigns,
including any subsequent holder of an interest of the Revolving Credit Notes.
This Agreement and the rights and duties of the parties hereto shall be
construed and determined in accordance with, and shall be governed by the
internal laws of the State of Illinois without regard to principles of conflicts
of law. The Acme Group may not assign its rights hereunder without the written
consent of the Lenders.
SECTION 12.15. ENTIRE UNDERSTANDING;. This Agreement, together with the
other Loan Documents, constitute the entire understanding of the parties with
respect to the subject matter hereof and any prior agreements, whether written
or oral, with respect thereto are superseded hereby.
SECTION 12.16. EXTENSIONS OF THE COMMITMENTS;. Not less than 60 days or
more than 120 days prior to the one-year, two-year and three-year anniversaries
of the date hereof, the Company (acting on behalf of the Borrowers pursuant to
Section 1.5 hereof) may advise the Agent in writing of its desire to extend the
Termination Date for an additional 12 months (but not beyond August 11, 1999)
and the Agent shall promptly notify the Lenders of each such request; PROVIDED
not more than one such request for the extension of the Termination Date may be
made in any one calendar year. In the event that the Lenders are agreeable to
such extension (it being understood that any Lender may accept or decline such a
request in its sole discretion), the Acme Group, the Lenders and the Agent shall
enter into such documents as the Agent may reasonably deem necessary or
appropriate to reflect such extension and to assure that all extensions of
credit pursuant to the Commitments as so extended are secured by the Liens of
the Collateral Documents and the Agent, all costs and expenses incurred by the
Agent in connection therewith to be paid by the Borrowers. In the event that
some, but not all, of the
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Lenders are agreeable to an extension, the Company may (provided that no Default
or Event of Default has occurred and is then continuing) terminate the
Commitment of the Lender or Lenders declining to extend and repay all borrowings
outstanding against the Revolving Credit Note held by such Lender or Lenders and
upon such repayment the Commitment of such Lender or Lenders shall be cancelled
or, at the option of the Company, the Acme Group may obtain a new Lender or
Lenders reasonably acceptable to the Agent and the Required Lenders to replace
the Commitment of the Lender or Lenders declining to extend and in such event
the Commitment of the Lender or Lenders not desiring to extend shall be
cancelled. In the event a Lender elects not to extend, all amounts outstanding
under its Revolving Credit Note shall be paid to it no later than the then
current Termination Date to which it has agreed. The Acme Group, the Agent and
the new Lender shall thereupon execute such instruments and documents as shall
in the opinion of the Agent be reasonably necessary or appropriate to substitute
the new approved Lender under the Revolving Credit (including without limitation
the issuance of a new Revolving Credit Note to the substitute Lender, the
execution of an amendment making the new Lender a party hereto and such
amendments to the Collateral Documents as may be necessary or appropriate to
assure the credit extended by the new Lender is secured and/or supported by the
Collateral Documents). The new Lender shall make an initial Revolving Loan
under its Revolving Credit Note in the amount necessary to retire the
indebtedness evidenced by the Revolving Credit Note held by the declining Lender
and all reasonable expenses of the Agent incurred in connection with the
foregoing shall be paid by the Acme Group.
SECTION 12.17. PARTICIPATIONS;. Any Lender may grant participations in
its extensions of credit hereunder to any other bank or other lending
institution (a "PARTICIPANT") provided that (i) no Participant shall thereby
acquire any direct rights under this Agreement, (ii) no Lender shall agree with
a Participant not to exercise any of its rights hereunder without the consent of
such Participant except for rights which under the terms hereof may only be
exercised by all Lenders, (iii) no sale of a participation in extensions of
credit shall in any manner relieve the selling Lender of its obligations
hereunder and (iv) the Acme Group shall not be responsible for the costs
incurred by any Lender in connection with such participations.
SECTION 12.18. ASSIGNMENT AGREEMENTS;. Each Lender may, from time to time
upon at least five Business Days' notice to the Agent, assign to other financial
institutions all or part of its rights and obligations under this Agreement
(including without limitation the indebtedness evidenced by the Revolving Credit
Note then owned by such assigning Lender, together with an equivalent proportion
of its obligation to make loans and advances and participate in Letters of
Credit hereunder) pursuant to an Assignment Agreement; PROVIDED, HOWEVER, that
(i) each such assignment shall be of a constant, and not a varying, percentage
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of the assigning Lender's rights and obligations under this Agreement and the
assignment shall cover the same percentage of such Lender's Commitment,
Revolving Loans, Revolving Credit Note and interests in Letters of Credit; (ii)
unless the Agent otherwise consents, the assigning Lender shall assign all of
its Commitment, Revolving Loans, Revolving Credit Note and interests in the
Letters of Credit or the aggregate amount thereof being assigned pursuant to
each such assignment (determined as of the effective date of the relevant
Assignment Agreement) shall in no event be less than $5,000,000 and shall be an
integral multiple of $1,000,000; (iii) unless the Company otherwise consents,
each Lender (other than the Lenders party hereto as of the date hereof) shall
maintain for its own account at least 50% of its original Commitment; (iv) the
Agent and the Company (which is acting on its own behalf and pursuant to Section
1.5 hereof on behalf of the Borrowers as well) must each consent, which consent
shall not be unreasonably withheld and shall be evidenced by execution of a
counterpart of the relevant Assignment Agreement in the space provided thereon
for such acceptance, to each such assignment to a party which was not an
original signatory of this Agreement (it being understood and agreed the Company
may condition its acceptance of an assignment on payment by the assigning or
assignee Lender of the Security Assignment Costs referred to in Section 12.5
hereof) and (v) the assigning Lender (other than the Lenders party hereto as of
the date hereof) must pay to the Agent a processing and recordation fee of
$3,000 and any reasonable out-of-pocket attorney's fees incurred by the Agent in
connection with such Assignment Agreement. Upon the execution of each
Assignment Agreement by the assigning Lender thereunder, the assignee lender
thereunder, the Company and the Agent and payment to such assigning Lender by
such assignee lender of the purchase price for the portion of the indebtedness
of the Acme Group being acquired by it, (i) such assignee lender shall thereupon
become a "LENDER" for all purposes of this Agreement with a Commitment in the
amount set forth in such Assignment Agreement and with all the rights, powers
and obligations afforded a Lender hereunder, (ii) such assigning Lender shall
have no further liability for funding the portion of its Commitment assumed by
such other Lender and (iii) the address for notices to such assignee Lender
shall be as specified in the Assignment Agreement executed by it. Concurrently
with the execution and delivery of such Assignment Agreement, the Borrowers
shall execute and deliver a Revolving Credit Note to the assignee Lender in the
amount of its Commitment and a new Revolving Credit Note to the assigning Lender
in the amount of its Commitment after giving effect to the reduction occasioned
by such assignment, all such Revolving Credit Notes to constitute "REVOLVING
CREDIT NOTES" for all purposes of the Loan Documents. Upon completion of the
foregoing, the assigning Lender shall surrender to the Company its old Revolving
Credit Note.
SECTION 12.19. CONFIDENTIALITY;. The Agent and each Lender
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shall hold in confidence any material nonpublic information delivered or made
available to them by the Company or any Subsidiary. The foregoing to the
contrary notwithstanding, nothing herein shall prevent any Lender from
disclosing any information delivered or made available to it by the Company or
any Subsidiary (i) to any other Lender, (ii) to any other Person if reasonably
incidental to the administration of the credit contemplated hereby, (iii) upon
the order of any court or administrative agency, (iv) upon the request or demand
of any regulatory agency or authority, (v) which has been publicly disclosed
other than as a result of a disclosure by the Agent or any Lender which is not
permitted by this Agreement, (vi) in connection with any litigation to which the
Agent, any Lender, or any of their respective Affiliates may be a party, along
with the Company, any Subsidiary or any of their respective Affiliates, (vii) to
the extent reasonably required in connection with the exercise of any right or
remedy under this Agreement, the other Loan Documents or otherwise, (viii) to
such Lender's legal counsel and financial consultants and independent auditors,
and (ix) to any actual or proposed participant or assignee of all or part of its
rights under the credit contemplated hereby provided such participant or
assignee agrees in writing to be bound by the duty of confidentiality under this
Section to the same extent as if it were a Lender hereunder.
SECTION 12.20. TERMS OF COLLATERAL DOCUMENTS NOT SUPERSEDED;. Nothing
contained herein shall be deemed or construed to permit any act or omission
which is prohibited by the terms of any Collateral Document, the covenants and
agreements contained herein being in addition to and not in substitution for the
covenants and agreements contained in the Collateral Documents.
SECTION 12.21. PERSONAL JURISDICTION;.
(a) EXCLUSIVE JURISDICTION;. EXCEPT AS PROVIDED IN SUBSECTION (b),
THE AGENT, THE LENDERS AND THE ACME GROUP AGREE THAT ALL DISPUTES AMONG
THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
ONLY BY STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, ILLINOIS, BUT EACH
OF THE AGENT, THE LENDERS AND THE ACME GROUP ACKNOWLEDGE THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF COOK
COUNTY, ILLINOIS. THE ACME GROUP WAIVES IN ALL DISPUTES ANY OBJECTION THAT
IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(b) OTHER JURISDICTIONS;. THE ACME GROUP AGREES THAT THE AGENT, AND
EACH OF THE LENDERS SHALL HAVE THE RIGHT TO PROCEED AGAINST THE ACME GROUP
OR ITS PROPERTY ("PROPERTY") IN A COURT IN ANY LOCATION TO ENABLE THE AGENT
OR ANY LENDER TO REALIZE ON PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF THE AGENT OR ANY LENDER.
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Upon your acceptance hereof in the manner hereinafter set forth, this Agreement
shall be a contract between us for the purposes hereinabove set forth.
Dated as of this 11th day of August, 1994.
Signature Page; ACME STEEL COMPANY
By /s/ S.D. Bennett
Stephen D. Bennett
Its President
ACME STEEL COMPANY
By /s/ J.F. Williams
Jerry F. Williams
Its Treasurer
ACME PACKAGING CORPORATION
By /s/ J.F. Williams
Jerry F. Williams
Its Treasurer
ALPHA TUBE CORPORATION
By /s/ J.F. Williams
Jerry F. Williams
Its Treasurer
UNIVERSAL TOOL & STAMPING COMPANY,
INC.
By /s/ J.F. Williams
Jerry F. Williams
Its Treasurer
ACME METALS INCORPORATED
By /s/ J.F. Williams
Jerry F. Williams
Its Vice President -
Finance
and Administration
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Accepted and Agreed to at Chicago, Illinois as of the day and year last above
written.
Each of the Lenders hereby agrees with each other Lender that if it should
receive or obtain any payment (whether by voluntary payment, by realization upon
collateral, by the exercise of rights of setoff or banker's lien, by
counterclaim or cross action, or by the enforcement of any rights under the
Credit Agreement, the Revolving Credit Notes or the Collateral Documents or
otherwise) in respect of the Obligations, in a greater amount than such Lender
would have received had such payment been made to the Agent and been distributed
among the Lenders as contemplated by Section 3.8 hereof, then in that event the
Lender receiving such disproportionate payment shall purchase for cash without
recourse from the other Lenders an interest in the Obligations owed to such
Lenders in such amount as shall result in a distribution of such payment as
contemplated by Section 3.8 hereof. In the event any payment made to a Lender
and shared with the other Lenders pursuant to the provisions hereof is ever
recovered from such Lender, the Lenders receiving a portion of such payment
hereunder shall restore the same to the payor Lender, but without interest. In
the event any amount paid to the Agent under the Applications shall ever be
recovered from the Agent, each Lender shall reimburse the Agent for its pro rata
share of the amount so recovered.
Amount and Percentage of Commitment:
HARRIS TRUST AND SAVINGS BANK
$40,000,000
(50%)
By /s/ Richard H. Robb
Its Vice President
111 West Monroe Street
Chicago, Illinois 60690
Attention: Richard H. Robb
LIBOR Funding Office:
Nassau Branch
c/o 111 West Monroe Street
Chicago, Illinois 60690
Amount and Percentage of Commitment:
LEHMAN COMMERCIAL PAPER INC.
$40,000,000
(50%)
By /s/ Jorde M. Nathan
Its Authorized Signatory
3 WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10285
ATTENTION: MR. NEIL ULLMAN
LIBOR FUNDING OFFICE:
3 WORLD FINANCIAL CENTER
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NEW YORK, NEW YORK 10285
ATTENTION: MR. NEIL ULLMAN
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EXHIBIT A
ACME GROUP
REVOLVING CREDIT NOTE
Chicago, Illinois
$_________________________, 1994
On the Termination Date, for value received, the undersigned, Acme Steel
Company, a Delaware corporation ("ACME STEEL"), Acme Packaging Corporation, a
Delaware corporation ("ACME PACKAGING"), Alpha Tube Corporation, an Indiana
corporation, ("ALPHA TUBE"), and Universal Tool & Stamping Company, Inc., an
Indiana corporation ("UNIVERSAL TOOL") (Acme Steel, Acme Packaging, Alpha Tube
and Universal Tool are being hereinafter referred to collectively as the
"BORROWERS") hereby jointly and severally promise to pay to the order of
________________________________________________ (the "LENDER"), at the
principal office of Harris Trust and Savings Bank in Chicago, Illinois, the
principal sum of (i) _________________________________________ Dollars
($_________), or (ii) such lesser amount as may at the time of the maturity
hereof, whether by acceleration or otherwise, be the aggregate unpaid principal
amount of all loans owing from the Acme Group to the Lender under the Revolving
Credit provided for in the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "DOMESTIC RATE PORTION"
and "LIBOR PORTIONS" as such terms are defined in that certain Credit Agreement
dated as of August 11, 1994 by and among the Borrowers, Acme Metals
Incorporated, Harris Trust and Savings Bank individually and as Agent and the
other Lenders which are now or may from time to time hereafter become parties
thereto (said Credit Agreement, as the same may from time to time be modified,
amended or restated being referred to herein as the "CREDIT AGREEMENT") made and
to be made to the Borrowers by the Lender under the Revolving Credit provided
for under the Credit Agreement, and the Borrowers hereby jointly and severally
promise to pay interest at the office specified above on each loan evidenced
hereby at the rates and times specified therefor in the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Borrowers against this Note, the Borrower to
which such loan was made, any repayment of principal hereon, the status of each
such loan from time to time as part of the Domestic Rate Portion or a LIBOR
Portion and the interest rates and interest periods applicable thereto shall be
endorsed by the holder hereof on the reverse side of this Note or recorded on
the books and records of the holder hereof (PROVIDED that such entries shall be
endorsed on the reverse side hereof prior to any negotiation hereof) and the
Borrowers agree that in any action or proceeding instituted to collect or
enforce collection of this Note, the entries so endorsed on the reverse side
hereof or recorded on the books and records of the Lender
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shall be prima facie evidence of the unpaid balance of this Note, the Borrower
to which such loan was made, the status of each loan from time to time as part
of a Domestic Rate Portion or a LIBOR Portion and the interest rates and
interest periods applicable thereto.
This Note is issued by the Borrowers under the terms and provisions of the
Credit Agreement and is secured by the Collateral Documents, and this Note and
the holder hereof are entitled to all of the benefits and security provided for
thereby or referred to therein, to which reference is hereby made for a
statement thereof. This Note may be declared to be, or be and become, due prior
to its expressed maturity, voluntary prepayments may be made hereon, and certain
prepayments are required to be made hereon, all in the events, on the terms and
with the effects provided in the Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings herein as such terms have
in the Credit Agreement.
This Note shall be construed in accordance with, and governed by, the
internal laws of the State of Illinois without regard to principles of conflicts
of law.
The Borrowers hereby jointly and severally promise to pay all costs and
expenses (including attorneys' fees) suffered or incurred by the holder hereof
in collecting this Note or enforcing any rights in any collateral therefor. The
Borrowers hereby waive presentment for payment and demand.
ACME STEEL COMPANY
By
ITS
ACME PACKAGING CORPORATION
By
Its
ALPHA TUBE CORPORATION
By
Its
UNIVERSAL TOOL & STAMPING COMPANY, INC.
By
Its
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EXHIBIT B
NOTICE OF PAYMENT REQUEST
[Date]
[Name of Lender]
[Address]
Attention:
Reference is made to the Credit Agreement, dated as of August 11, 1994
among Acme Group, the Lenders named therein, and Harris Trust and Savings Bank,
as Agent (the "CREDIT AGREEMENT"). Capitalized terms used herein and not
defined herein have the meanings assigned to them in the Credit Agreement. [THE
BORROWER HAS FAILED TO PAY ITS REIMBURSEMENT OBLIGATION IN THE AMOUNT OF
$__________. YOUR PERCENTAGE OF THE UNPAID REIMBURSEMENT OBLIGATION IS
$___________] OR [HARRIS TRUST AND SAVINGS BANK HAS BEEN REQUIRED TO RETURN A
PAYMENT BY THE BORROWER OF A REIMBURSEMENT OBLIGATION IN THE AMOUNT OF
$__________. YOUR PERCENTAGE OF THE RETURNED REIMBURSEMENT OBLIGATIONS IS
$____________].
Very truly yours,
HARRIS TRUST AND SAVINGS BANK
By
Its
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EXHIBIT C
[FILL IN NAME OF DEBTOR]
SECURITY AGREEMENT
This Security Agreement (the "AGREEMENT") dated as of August ______, 1994
by and between ________________________, a(n) __________________ corporation
with its principal place of business and mailing address at
_____________________________ (the "DEBTOR"), and Harris Trust and Savings Bank,
an Illinois banking corporation ("HARRIS BANK") with its mailing address 111
West Monroe Street, Chicago, Illinois 60690, acting as agent hereunder for the
Lenders hereinafter identified and defined (Harris Bank acting as such agent and
any successor or successors to Harris Bank acting in such capacity being
hereinafter referred to as the "AGENT");
WITNESSETH THAT:
WHEREAS, THE DEBTOR, [INSERT NAMES OF OTHER BORROWERS] (THE DEBTOR,
__________, __________ AND __________ BEING HEREINAFTER REFERRED TO COLLECTIVELY
AS THE "BORROWERS" AND INDIVIDUALLY AS A "BORROWER"), HARRIS BANK, INDIVIDUALLY
AND AS AGENT AND LEHMAN COMMERCIAL PAPER INC. HAVE ENTERED INTO A CREDIT
AGREEMENT DATED AS AUGUST 11, 1994 (SUCH CREDIT AGREEMENT AS THE SAME MAY BE
AMENDED, MODIFIED OR RESTATED FROM TIME TO TIME BEING HEREINAFTER REFERRED TO AS
THE "CREDIT AGREEMENT"), PURSUANT TO WHICH SUCH LENDERS (SUCH LENDERS WHICH ARE
NOW OR WHICH FROM TIME TO TIME HEREAFTER BECOME PARTY TO THE CREDIT AGREEMENT
BEING HEREINAFTER REFERRED TO COLLECTIVELY AS THE "LENDERS" AND INDIVIDUALLY AS
A "LENDER") HAVE AGREED, SUBJECT TO CERTAIN TERMS AND CONDITIONS, TO EXTEND A
REVOLVING CREDIT FACILITY TO THE BORROWERS WHICH WILL BE AVAILABLE TO THE
BORROWERS IN THE FORM OF LOANS AND LETTERS OF CREDIT;
WHEREAS, the Borrowers or any of them, may from time to time for the
purpose of hedging or otherwise protecting the Borrowers against changes in
exchange rates or interest rates or commodity prices, enter into one or more
forward currency exchange agreements, forward rate currency or interest options,
interest rate or currency swaps, interest rate caps, interest rate collars,
interest rate floors or other recognized interest rate or exchange rate or
commodity price hedging arrangements with one or more of the Lenders (the
liability of the Borrowers in respect of such agreements with such Lenders being
hereinafter referred to as the "HEDGING LIABILITY"); and
WHEREAS, as a condition precedent to extending the credit facilities to the
Borrowers under the Credit Agreement, the Lenders have required, among other
things, that the Debtor grant to the Agent a lien on and security interest in
certain personal properties of the Debtor as collateral security for such credit
facilities and related obligations pursuant to this Agreement and various other
instruments and documents (this Agreement and such other instruments and
documents being hereinafter referred to as the "COLLATERAL DOCUMENTS");
NOW, THEREFORE, for and in consideration of the execution and delivery by
the Lenders of the Credit Agreement, and other good
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and valuable consideration, receipt whereof is hereby acknowledged, the parties
hereto hereby agree as follows:
SECTION 1. GRANT OF SECURITY INTEREST IN THE COLLATERAL; OBLIGATIONS
SECURED.
(a) The Debtor hereby grants to the Agent for the ratable benefit of the
Lenders a security interest in and right of set-off against, and acknowledges
and agrees that the Agent has and shall continue to have for the ratable benefit
of the Lenders a continuing security interest in and right of set-off against,
any and all right, title and interest of the Debtor, whether now owned or
existing or hereafter created, acquired or arising, in and to the following:
(i) ACCOUNTS. Accounts, whether now owned or existing or hereafter
created, acquired or arising, and however evidenced or acquired, or
in which the Debtor now has or hereafter acquires any rights (the
term "ACCOUNTS" shall mean all of the Debtor's presently existing
and hereafter arising or acquired accounts, accounts receivable,
margin accounts, future positions, book debts, instruments,
documents, contracts, contract rights, choses-in-action, notes,
drafts, acceptances, chattel paper, and other forms of obligations
and receivables now or hereafter owned or held by or payable to the
Debtor relating in any way to Inventory or arising from the sale of
Inventory or the rendering of services by the Debtor, including the
right to payment of any interest or finance charge with respect
thereto, together with all merchandise represented by any of the
accounts; all such merchandise that may be reclaimed or repossessed
or returned to the Debtor; all of the Debtor's rights as an unpaid
vendor, including stoppage in transit, reclamation, replevin and
sequestration; all pledged assets and all letters of credit,
guaranty claims, liens, and security interests held by or granted
to the Debtor to secure payment of any accounts and which are
delivered for or on behalf of any account debtor; all guarantees,
endorsements and indemnifications on, or of, any of the foregoing);
(ii) INVENTORY. Inventory, whether now owned or existing or
hereafter created, acquired or arising, or in which the Debtor now
has or hereafter acquires any rights and all documents of title at
any time evidencing or representing any part thereof (the term
"INVENTORY" shall mean all now owned or hereafter acquired
inventory of the Debtor including, without limitation, all goods,
merchandise, raw materials, work-in-process and finished goods
intended for sale or lease, of every kind and description now or at
any time hereafter owned by the Debtor, together with all the
containers, packing, packaging, shipping and similar materials
related thereto, and including such inventory as is temporarily out
of the Debtor's custody or possession and
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<PAGE>
items in transit and including any returns and repossessions upon
any accounts, documents, instruments or chattel paper relating to
or arising from the sale of inventory (as such documents,
instruments or chattel paper relate to the sale of such inventory)
and including, without limitation, all other classes of
merchandise, materials, parts, supplies, work-in-process,
inventories and finished products intended for sale by the Debtor
and all substitutions therefor or replacements thereof, and all
additions and accessions thereto, and all invoices, ledgers, books
of account, records, files (whether in printed form or stored
electronically), computer programs, computer disks or tape files,
computer printouts, computer runs and other computer-prepared
information relating to any of the foregoing);
(iii) INTANGIBLES. Intangibles, whether now owned or existing or
hereafter created, acquired or arising, or in which the Debtor now
has or hereafter acquires any rights (the term "INTANGIBLES" shall
mean all of the Debtor's now owned or hereafter acquired contract
rights relating to Collateral described in the immediately
preceding clauses (i) and (ii) (the "CURRENT ASSET COLLATERAL"),
goodwill, descriptions, name plates, choses-in-action, causes of
action, catalogs, confidential information, consulting agreements,
engineering contracts, and such other assets which relate to the
goodwill of the business of the Debtor (to the extent relating to
the Current Asset Collateral) and rights to refunds or
indemnification to the extent the foregoing relate to Current Asset
Collateral, deposit accounts, letters of credit, documents,
instruments, chattel paper, and income tax refunds to the extent
relating to Current Asset Collateral, claims for tax or other
refunds against any city, county, state, or federal government, or
any agency or authority or other subdivision thereof relating to
Current Asset Collateral, lease agreements relating to Current
Asset Collateral, corporate or other business records relating to
Current Asset Collateral and all other general intangibles of every
kind and description relating to Current Asset Collateral;
PROVIDED, HOWEVER, that Intangibles shall in no event include
copyrights, patents, trademarks, licenses therefor, or licenses
under patents, trademarks, copyrights and trade secrets of third
parties to the Debtor);
(iv) RECORDS. Supporting evidence and documents relating to any of
the above-described property, including, without limitation, all
customer lists, invoices, ledgers, books of account, records, files
(whether in printed form or stored electronically), computer
programs, computer disks or tape files, computer printouts,
computer runs and other computer-prepared information relating to
any of the
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foregoing;
(v) ACCESSIONS AND ADDITIONS. All accessions and additions to and
substitutions and replacements of any and all of the foregoing,
whether now existing or hereafter arising; and
(vi) PROCEEDS AND PRODUCTS. All proceeds and products of the
foregoing and all insurance of the foregoing and proceeds thereof,
whether now existing or hereafter arising;
all of the foregoing being herein sometimes referred to as the "COLLATERAL".
(b) This Agreement is made and given to secure, and shall secure, the
payment and performance of (i) any and all indebtedness, obligations and
liabilities of the Borrowers and any of them under or in connection with or
evidenced by (w) the Credit Agreement or (x) the Notes of the Borrowers
heretofore or hereafter issued under the Credit Agreement and the obligations of
the Borrowers to reimburse the Lenders for the amount of all drawings on all
Letters of Credit issued for the account of any one or more of the Borrowers
pursuant to the Credit Agreement, and all other obligations of the Borrowers or
any of them under any and all applications for such Letters of Credit or (y) any
of the Collateral Documents or (z) any agreements with any one or more of the
Lenders with respect to any Hedging Liability, in each case whether now existing
or hereafter arising (and whether arising before or after the filing of a
petition in bankruptcy), due or to become due (including, without limitation,
the payment of interest and other amounts which would accrue and become due but
for the filing of a petition in bankruptcy or the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)),
direct or indirect, absolute or contingent, and howsoever evidenced, held or
acquired and (ii) any and all expenses and charges, legal or otherwise, suffered
or incurred by the Agent and the Lenders in collecting or enforcing any of such
indebtedness, obligations and liabilities or in realizing on or protecting or
preserving any security therefor, including, without limitation, the lien and
security interest granted hereby (all of the indebtedness, obligations,
liabilities, expenses and charges described in clauses (i) and (ii) above being
hereinafter referred to as the "SECURED OBLIGATIONS").
SECTION 2. TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms
used herein without definition shall have the same meanings herein as such terms
have in the Credit Agreement.
SECTION 3. COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES. The
Debtor hereby covenants and agrees with, and represents and warrants to, the
Agent and the Lenders that:
(a) The Debtor is a corporation duly organized, validly existing and
in good standing under the laws of the State ________________, is the sole
and lawful owner of the Collateral and has full right, power and authority
to enter into this Agreement and to perform each and all of the
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matters and things herein provided for; and the execution and delivery of
this Agreement, and the observance and performance of any of the matters
and things herein set forth, will not contravene or constitute a default
under any provision of law or any judgment, injunction, order or decree
binding upon the Debtor or any provision of the Debtor's charter, articles
of incorporation or by-laws or of any covenant, indenture or agreement of
or affecting the Debtor or any of its properties, or result in the creation
or imposition of any lien or encumbrance on any property of the Debtor.
The Debtor's Federal tax identification number is ____________.
(b) The Collateral is and will remain in the Debtor's possession or
control at the locations listed under Item 1 on Schedule A attached hereto
(collectively, the "PERMITTED COLLATERAL LOCATIONS"), except for Collateral
which in the ordinary course of the Debtor's business is in transit between
the Permitted Collateral Locations. If for any reason Collateral is at any
time kept or located at locations other than the Permitted Collateral
Locations, the Agent shall nevertheless have and retain a security interest
therein. The Debtor owns and will at all times own all Permitted
Collateral Locations, except to the extent otherwise indicated on Schedule
A. The Debtor's chief executive office and principal place of business is
at, and the Debtor keeps and shall keep all of its books and records
relating to Receivables only at, ___________________; and the Debtor has no
other executive offices or places of business other than those listed under
Item 2 on Schedule A. The Debtor will not maintain an executive office or
place of business at a location other than those specified pursuant to the
immediately preceding sentence without first providing the Agent thirty
(30) days' prior written notice of the Debtor's intent to do so; PROVIDED,
HOWEVER, that the Debtor will at all times maintain its chief executive
office in the contiguous continental United States of America.
(c) The Collateral and every part thereof is and will be free and
clear of all security interests, liens (including, without limitation,
mechanics', laborers' and statutory liens), attachments, levies and
encumbrances of every kind, nature and description and whether voluntary or
involuntary, except for the security interest of the Agent therein and as
otherwise permitted by Section 7.10 of the Credit Agreement. The Debtor
will warrant and defend the Collateral against any claims and demands of
all persons or entities at any time claiming the same or any interest in
the Collateral adverse to the Agent or any Lender.
(d) The Debtor will promptly pay when due all taxes, assessments and
governmental charges and levies upon or against the Collateral, in each
case before the same become
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delinquent and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith by appropriate proceedings
which prevent foreclosure on or other realization upon any Collateral and
preclude interference with the operation of the Debtor's business in the
ordinary course and the Debtor shall have established adequate reserves
therefor.
(e) The Debtor will not waste or destroy the Collateral or any part
thereof and will not be negligent in the care or use of any Collateral.
The Debtor will not use, manufacture, sell or distribute any Collateral in
violation of any statute, ordinance or other governmental requirement. The
Debtor will perform in all material respects its obligations under any
contract or other agreement constituting part of the Collateral, it being
understood and agreed that the Agent and the Lenders have no responsibility
to perform such obligations.
(f) Subject to Sections 4(b), 5(a) and 6(b) hereof, the Debtor will
not, without the Agent's prior written consent, sell, assign, mortgage,
lease or otherwise dispose of the Collateral or any interest therein.
(g) The Debtor will insure the Collateral which is insurable against
such risks and hazards as other companies similarly situated insure
against, and including in any event loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as the Agent
may reasonably specify, in amounts and under policies containing loss
payable clauses to the Agent as its interest may appear (and, if the Agent
requests, naming the Agent and the Lenders as additional insureds therein)
by insurers reasonably acceptable to the Agent. Notwithstanding anything
in the foregoing to the contrary, the Debtor may self insure through
deductibles or otherwise with respect to each type of insurance required
hereunder; PROVIDED, HOWEVER, that such self insurance does not exceed
$______________ per occurrence. All premiums on such insurance shall be
paid by the Debtor and the policies of such insurance (or certificates
therefor) delivered to the Agent. All insurance required hereby shall
provide that any loss shall be payable notwithstanding any act or
negligence of the Debtor, shall provide that no cancellation thereof shall
be effective until at least thirty (30) days after receipt by the Debtor
and the Agent of written notice thereof, and shall be satisfactory to the
Agent in all other respects. In case of any material loss, damage to or
destruction of the Collateral or any part thereof, the Debtor shall
promptly give written notice thereof to the Agent and the Lenders generally
describing the nature and extent of such damage or destruction. In case of
any loss, damage to or destruction of the Collateral or any part thereof,
the
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Debtor, whether or not the insurance proceeds, if any, received on account
of such damage or destruction shall be sufficient for that purpose, at the
Debtor's cost and expense, will promptly repair or replace the Collateral
so lost, damaged or destroyed, except to the extent (i) such Collateral,
prior to its loss, damage or destruction, had become uneconomical, obsolete
or worn out or (ii) such Collateral is not necessary for or of importance
to the proper conduct of the Debtor's business in the ordinary course and
such Collateral and all other Collateral lost, damaged or destroyed during
the immediately preceding twelve (12) calendar months had an aggregate fair
market value, prior to its loss, damage or destruction, of less than
$__________________. In the event the Debtor shall receive any proceeds of
such insurance, the Debtor will immediately pay over such proceeds to the
Agent. The Debtor hereby authorizes the Agent, at the Agent's option, to
adjust, compromise and settle any losses under any insurance afforded at
any time after the occurrence and during the continuation of any Default or
Event of Default, and the Debtor does hereby irrevocably constitute the
Agent, its officers, agents and attorneys, as the Debtor's
attorneys-in-fact, with full power and authority to effect such adjustment,
compromise and/or settlement and to endorse any drafts drawn by an insurer
of the Collateral or any part thereof and to do everything necessary to
carry out such purposes and to receive and receipt for any unearned
premiums due under policies of such insurance. Unless the Agent elects to
adjust, compromise or settle losses as aforesaid, any adjustment,
compromise and/or settlement of any losses under any insurance shall be
made by the Debtor subject to final approval of the Agent (regardless of
whether or not a Default or an Event of Default shall have occurred) in the
case of losses exceeding $_____________. Net insurance proceeds received
by the Agent under the provisions hereof or under any policy or policies of
insurance covering the Collateral or any part thereof shall be applied to
the reduction of the Secured Obligations (whether or not then due);
PROVIDED, HOWEVER, that the Agent agrees to release such insurance proceeds
to the Debtor for replacement or restoration of the portion of the
Collateral lost, damaged or destroyed required by this Agreement to be so
replaced or restored if, but only if, (i) at the time of release no Default
or Event of Default exists hereunder, (ii) written application for such
release is received from the Debtor within thirty (30) days of receipt of
such proceeds and (iii) the Agent has received evidence reasonably
satisfactory to it that the Collateral lost, damaged or destroyed has been
or will be replaced or restored to its condition immediately prior to the
loss,
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destruction or other event giving rise to the payment of such insurance
proceeds. All insurance proceeds shall be subject to the lien and security
interest of the Agent hereunder.
(h) The Debtor will at all times allow the Agent, any Lender and
their respective representatives free access to and right of inspection of
the Collateral; PROVIDED, HOWEVER, that prior to the occurrence of any
Default or Event of Default hereunder (whichever is earlier) any such
access or inspection shall only be required during the Debtor's normal
business hours and to the extent permitted by Sections 3.4 and 7.5 of the
Credit Agreement.
(i) If any Collateral is in the possession or control of any of the
Debtor's agents or processors and the Agent so requests, the Debtor agrees
to notify such agents or processors in writing of the Agent's security
interest therein and instruct them to hold all such Collateral for the
Agent's account and subject to the Agent's instructions. The Debtor will,
upon request of the Agent, authorize and instruct all bailees and any other
parties, if any, at any time processing, labeling, packaging, holding,
storing, shipping or transferring all or any part of the Collateral to
permit the Agent, any Lender and their respective representatives to
examine and inspect any of the Collateral then in such party's possession
and to verify from such party's own books and records any information
concerning the Collateral or any part thereof which the Agent, any Lender
or their respective representatives may seek to verify. As to any premises
not owned by the Debtor wherein any of the Collateral is located, if any,
the Debtor shall, unless the Agent requests otherwise, cause each party
having any right, title or interest in, or lien on, any of such premises to
enter into an agreement (any such agreement to contain a legal description
of such premises) whereby such party disclaims any right, title and
interest in, and lien on, the Collateral, allowing the removal of such
Collateral by the Agent or by the Lenders and otherwise in form and
substance acceptable to the Agent; PROVIDED, HOWEVER, that no such
agreement need be obtained with respect to any one location wherein the
value of the Collateral as to which such agreement has not been obtained
aggregates less than $_______________.
(j) The Debtor agrees from time to time to deliver to the Agent and
any Lender such evidence of the existence, identity and location of the
Collateral and of its availability as collateral security pursuant hereto
(including, without limitation, schedules describing all Receivables
created or acquired by the Debtor, copies of customer invoices or the
equivalent and original shipping or delivery receipts for all merchandise
and other goods sold
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or leased or services rendered, together with the Debtor's warranty of the
genuineness thereof, and reports stating the book value of Inventory by
major category and location), in each case as the Agent or such Lender may
request. The Agent shall have the right to verify all or any part of the
Collateral in any manner, and through any medium, which the Agent or the
Lenders consider appropriate (including, without limitation, the
verification of Collateral by use of a fictitious name), and the Debtor
agrees to furnish all assistance and information, and perform any acts,
which the Agent may reasonably require in connection therewith. The Debtor
will promptly notify the Agent and each Lender of any Collateral which the
Debtor has determined to have been rendered obsolete stating the prior book
value of such Collateral, its type and location.
(k) The Debtor will comply in all material respects with the terms
and conditions of any and all leases, easements, right-of-way agreements
and other agreements binding upon the Debtor or affecting the Collateral,
in each case which cover the premises wherein the Collateral is located,
and any orders, ordinances, laws or statutes of any city, state or other
governmental entity, department or agency having jurisdiction with respect
to such premises or the conduct of business thereon.
(l) The Debtor has not invoiced Receivables or otherwise transacted
business, and does not invoice Receivables or otherwise transact business,
under any trade names other than the Debtor's name set forth in the
introductory paragraph of this Agreement. The Debtor will not change its
name or transact business under any other trade name, in each case without
first giving the Agent thirty (30) days' prior written notice of its intent
to do so.
(m) The Debtor agrees to execute and deliver to the Agent such
further agreements and assignments or other instruments and documents and
to do all such other things as the Agent may deem necessary or appropriate
to assure the Agent its security interest hereunder, including such
financing statement or statements or amendments thereof or supplements
thereto or other instruments and documents as the Agent may from time to
time require in order to comply with the Uniform Commercial Code as enacted
in the State of Illinois and any successor statute(s) thereto (the "CODE").
The Debtor hereby agrees that a carbon, photographic or other reproduction
of this Agreement or any such financing statement is sufficient for filing
as a financing statement by the Agent without notice thereof to the Debtor
wherever the Agent in its sole discretion desires to file the same. In the
event for any reason the law of any jurisdiction other than Illinois
becomes or is applicable to the Collateral or any part thereof, or to any
of the Secured
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Obligations, the Debtor agrees to execute and deliver all such instruments
and documents and to do all such other things as the Agent in its sole
discretion deems necessary or appropriate to preserve, protect and enforce
the security interest of the Agent under the law of such other
jurisdiction. The Debtor agrees to mark its books and records to reflect
the security interest of the Agent in the Collateral.
(n) On failure of the Debtor to perform any of the covenants and
agreements herein contained, the Agent may at its option perform the same
and in so doing may expend such sums as the Agent may deem advisable in the
performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, liens and encumbrances,
expenditures made in defending against any adverse claims, and all other
expenditures which the Agent may be compelled to make by operation of law
or which the Agent may make by agreement or otherwise for the protection of
the security hereof. All such sums and amounts so expended shall be
repayable by the Debtor immediately without notice or demand, shall
constitute additional Secured Obligations hereunder and shall bear interest
from the date said amounts are expended at the rate per annum (computed on
the basis of a 360-day year for the actual number of days elapsed)
determined by adding 2 1/2% to the rate per annum from time to time
announced by Harris Trust and Savings Bank as its prime commercial rate
with any change in such rate per annum as so determined by reason of a
change in such prime commercial rate to be effective on the date of such
change in said prime commercial rate (such rate per annum as so determined
being hereinafter referred to as the "DEFAULT RATE"). No such performance
of any covenant or agreement by the Agent on behalf of the Debtor, and no
such advancement or expenditure therefor, shall relieve the Debtor of any
default under the terms of this Agreement or in any way obligate the Agent
or any Lender to take any further or future action with respect thereto.
The Agent in making any payment hereby authorized may do so according to
any bill, statement or estimate procured from the appropriate public office
or holder of the claim to be discharged without inquiry into the accuracy
of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien or title or claim. The Agent in
performing any act hereunder shall be the sole judge of whether the Debtor
is required to perform the same under the terms of this Agreement. The
Agent is hereby authorized to charge any depository or other account of the
Debtor maintained with the Agent for the amount of such sums and amounts so
expended.
SECTION 4. SPECIAL PROVISIONS RE: RECEIVABLES.
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(a) As of the time any Receivable becomes subject to the security
interest provided for hereby and at all times thereafter, the Debtor shall
be deemed to have warranted as to each and all of such Receivables that all
warranties of the Debtor set forth in this Agreement are true and correct
with respect to each such Receivable; that each Receivable and all papers
and documents relating thereto are genuine and in all respects what they
purport to be; that each Receivable is valid and subsisting and, if such
Receivable is an account, arises out of a bona fide sale of goods sold and
delivered by the Debtor to, or in the process of being delivered to, or out
of and for services theretofore actually rendered by the Debtor to, the
account debtor named therein; that no such Receivable is evidenced by any
instrument or chattel paper unless such instrument or chattel paper has
theretofore been endorsed by the Debtor and delivered to the Agent; that no
surety bond was required or given in connection with such Receivable or the
contracts or purchase orders out of which the same arose; and that if said
Receivable is scheduled, listed or referred to on any certificate
evidencing the Borrowing Base or is otherwise a Receivable which the Debtor
wants the Lenders to consider as an Eligible Receivable, that said
Receivable qualifies as an Eligible Receivable. Without limiting the
foregoing, if any Receivable which the Debtor desires to qualify as an
Eligible Receivable arises out of a contract with the United States of
America or any of its departments, agencies or instrumentalities, the
Debtor agrees to notify the Agent and execute whatever instruments and
documents are required by the Agent in order that such Receivable shall be
assigned to the Agent and that proper notice of such assignment shall be
given under the federal Assignment of Claims Act (or any successor
statute).
(b) Unless and until an Event of Default hereunder occurs, any
merchandise or other goods which are returned by a customer or account
debtor or otherwise recovered may be resold by the Debtor in the ordinary
course of its business as presently conducted in accordance with Section
6(b) hereof; upon the occurrence and during the continuation of any Event
of Default hereunder, such merchandise and other goods shall be set aside
at the request of the Agent and held by the Debtor as trustee for the Agent
and the Lenders and shall remain part of the Collateral. Unless and until
an Event of Default hereunder occurs, the Debtor may settle and adjust
disputes and claims with its customers and account debtors, handle returns
and recoveries and grant discounts, credits and allowances in the ordinary
course of its business as presently conducted for amounts and on terms
which the Debtor in good faith considers advisable. Upon the occurrence
and during the continuation of any Event of Default hereunder, unless the
Agent requests otherwise, the Debtor shall notify the Agent promptly of all
returns and recoveries and, on the Agent's request, deliver any such
merchandise or other goods to the
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Agent. Upon the occurrence and during the continuation of any Event of
Default hereunder, unless the Agent requests otherwise, the Debtor shall
also notify the Agent promptly of all disputes and claims and settle or
adjust them at no expense to the Agent or the Lenders hereunder, but no
discount, credit or allowance other than on normal trade terms in the
ordinary course of business as presently conducted shall be granted to any
customer or account debtor and no returns of merchandise or other goods
shall be accepted by the Debtor without the Agent's consent. The Agent
may, at all times upon the occurrence and during the continuation of any
Event of Default hereunder, settle or adjust disputes and claims directly
with customers or account debtors for amounts and upon terms which the
Agent considers advisable.
SECTION 5. COLLECTION OF RECEIVABLES.
(a) Except as otherwise provided in this Agreement, the Debtor shall
make collection of all Receivables and may use the same to carry on its
business in accordance with sound business practice and otherwise subject
to the terms hereof.
(b) Upon the occurrence and during the continuation of any Event of
Default hereunder, whether or not the Agent has exercised any or all of its
rights under other provisions of this Section 5, in the event the Agent
requests the Debtor to do so:
(i) all instruments and chattel paper at any time constituting
part of the Receivables (including any postdated checks) shall,
upon receipt by the Debtor, be immediately endorsed to and
deposited with Agent; and/or
(ii) the Debtor shall instruct all customers and account debtors
to remit all payments in respect of Receivables to a lockbox or
lockboxes under the sole custody and control of Agent and which are
maintained at post offices selected by the Agent.
(c) Upon the occurrence and during the continuation of any Event of
Default hereunder, whether or not the Agent has exercised any or all of its
rights under other provisions of this Section 5, the Agent or its designee
may notify the Debtor's customers and account debtors at any time that
Receivables have been assigned to the Agent or of the Agent's security
interest therein, and either in its own name, or the Debtor's name, or
both, demand, collect (including, without limitation, through a lockbox
analogous to that described in Section 5(b)(ii) hereof), receive, receipt
for, sue for, compound and give acquittance for any or all amounts due or
to become due on Receivables, and in the Agent's discretion file any claim
or take any other action or proceeding which the Agent may deem reasonably
necessary or appropriate to protect and realize upon the security interest
of the Agent in the Receivables.
(d) Any proceeds of Receivables or other Collateral transmitted to or
otherwise received by the Agent pursuant to any of the provisions of
Sections 5(b) or 5(c) hereof may be handled and administered by the Agent
in and through a remittance account or
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accounts maintained at the Agent or by the Agent at a commercial bank or
banks selected by the Agent (collectively the "DEPOSITARY BANKS" and
individually a "DEPOSITARY BANK"), and the Debtor acknowledges that the
maintenance of such remittance accounts by the Agent is solely for the
Agent's convenience and that the Debtor does not have any right, title or
interest in such remittance accounts or any amounts at any time standing to
the credit thereof. The Agent may apply all or any part of any proceeds of
Receivables or other Collateral received by it from any source to the
payment of the Secured Obligations (whether or not then due and payable),
such applications to be made in such amounts, in such manner and order and
at such intervals as the Agent may from time to time in its discretion
determine, but not less often than once each week. The Agent need not
apply or give credit for any item included in proceeds of Receivables or
other Collateral until the Depositary Bank has received final payment
therefor at its office in cash or final solvent credits current at the site
of deposit acceptable to the Agent and the Depositary Bank as such.
However, if the Agent does permit credit to be given for any item prior to
a Depositary Bank receiving final payment therefor and such Depositary Bank
fails to receive such final payment or an item is charged back to the Agent
or any Depositary Bank for any reason, the Agent may at its election in
either instance charge the amount of such item back against any such
remittance accounts or any depository account of the Debtor maintained with
the Agent, together with interest thereon at the Default Rate.
Concurrently with each transmission of any proceeds of Receivables or other
Collateral to any remittance account, the Debtor shall furnish the Agent
with a report in such form as Agent shall reasonably require identifying
the particular Receivable or such other Collateral from which the same
arises or relates. The Debtor hereby indemnifies the Agent and the Lenders
from and against all liabilities, damages, losses, actions, claims,
judgments, costs, expenses, charges and attorneys' fees suffered or
incurred by the Agent or any Lender because of the maintenance of the
foregoing arrangements; PROVIDED, HOWEVER, that the Debtor shall not be
required to indemnify the Agent or any Lender for any of the foregoing to
the extent they arise solely from the gross negligence or willful
misconduct of the person seeking to be indemnified. The Agent and the
Lenders shall have no liability or responsibility to the Debtor for the
Agent or any other Depositary Bank accepting any check, draft or other
order for payment of money bearing the legend "payment in full" or words of
similar import or any other restrictive legend or endorsement whatsoever or
be responsible for determining the correctness of any remittance.
SECTION 6. SPECIAL PROVISIONS RE: INVENTORY.
(a) THE DEBTOR WILL AT ITS OWN COST AND EXPENSE MAINTAIN, KEEP AND
PRESERVE THE INVENTORY IN GOOD AND MERCHANTABLE CONDITION.
(b) THE DEBTOR MAY, UNTIL AN EVENT OF DEFAULT HAS OCCURRED AND IS
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CONTINUING AND THEREAFTER UNTIL OTHERWISE NOTIFIED BY THE AGENT, USE,
CONSUME AND SELL THE INVENTORY IN THE ORDINARY COURSE OF ITS BUSINESS, BUT
A SALE IN THE ORDINARY COURSE OF BUSINESS SHALL NOT UNDER ANY CIRCUMSTANCE
INCLUDE ANY TRANSFER OR SALE IN SATISFACTION, PARTIAL OR COMPLETE, OF A
DEBT OWING BY THE DEBTOR.
(c) AS OF THE TIME ANY INVENTORY BECOMES SUBJECT TO THE SECURITY
INTEREST PROVIDED FOR HEREBY AND AT ALL TIMES THEREAFTER, THE DEBTOR SHALL
BE DEEMED TO HAVE WARRANTED AS TO ANY AND ALL OF SUCH INVENTORY THAT ALL
WARRANTIES OF THE DEBTOR SET FORTH IN THIS AGREEMENT ARE TRUE AND CORRECT
WITH RESPECT TO SUCH INVENTORY; THAT ALL OF SUCH INVENTORY IS LOCATED AT A
LOCATION SET FORTH PURSUANT TO SECTION 3(b) HEREOF; AND IF SUCH INVENTORY
IS SCHEDULED, LISTED OR REFERRED TO IN ANY CERTIFICATE EVIDENCING THE
BORROWING BASE OR IS INVENTORY WHICH THE DEBTOR WANTS THE LENDERS TO
CONSIDER AS ELIGIBLE INVENTORY, SUCH INVENTORY QUALIFIES AS ELIGIBLE
INVENTORY. THE DEBTOR WARRANTS AND AGREES THAT NO INVENTORY IS OR WILL BE
CONSIGNED TO ANY OTHER PERSON OR ENTITY WITHOUT THE AGENT'S PRIOR WRITTEN
CONSENT.
(d) UPON THE AGENT'S REQUEST, THE DEBTOR SHALL AT ITS OWN COST AND
EXPENSE CAUSE THE LIEN OF THE AGENT IN AND TO ANY PORTION OF THE COLLATERAL
SUBJECT TO A CERTIFICATE OF TITLE LAW TO BE DULY NOTED ON SUCH CERTIFICATE
OF TITLE OR TO BE OTHERWISE FILED IN SUCH MANNER AS IS PRESCRIBED BY LAW IN
ORDER TO PERFECT SUCH LIEN AND WILL CAUSE ALL SUCH CERTIFICATES OF TITLE
AND EVIDENCES OF LIEN TO BE DEPOSITED WITH THE AGENT.
(e) IF ANY OF THE INVENTORY IS AT ANY TIME EVIDENCED BY A DOCUMENT OF
TITLE, SUCH DOCUMENT SHALL BE PROMPTLY DELIVERED BY THE DEBTOR TO THE
AGENT.
SECTION 7. POWER OF ATTORNEY. In addition to any other powers of
attorney contained herein, the Debtor hereby appoints the Agent, its nominee, or
any other person whom the Agent may designate as the Debtor's attorney in fact,
with full power upon the occurrence and during the continuation of an Event of
Default hereunder to sign the Debtor's name on verifications of accounts, to
send requests for verification of Receivables to the Debtor's customers and
account debtors, to endorse the Debtor's name on any checks, notes, acceptances,
money orders, drafts and any other forms of payment or security that may come
into the Agent's possession, to sign the Debtor's name on any invoice or bill of
lading relating to any Receivables, on claims to enforce collection of any
Receivable, on notices to and drafts against customers and account debtors, on
schedules and assignments of Receivables, on notices of assignment and on public
records, to notify the post office authorities to change the address for
delivery of the Debtor's mail to an address designated by the Agent, to receive,
open and dispose of all mail addressed to the Debtor and to do all things
necessary to carry out this Agreement. The Debtor hereby ratifies and approves
all acts of any such attorney and agrees that neither the Agent nor any such
attorney will be liable for any acts or omissions nor for any
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error of judgment or mistake of fact or law other than their gross negligence or
willful misconduct. The foregoing power of attorney, being coupled with an
interest, is irrevocable until the Secured Obligations have been fully paid and
satisfied and the commitments of the Lenders to extend credit to or for the
account of the Debtor have terminated. The Agent may file one or more financing
statements disclosing its security interest in any or all of the Collateral
without the Debtor's signature appearing thereon. The Debtor also hereby grants
the Agent a power of attorney to execute any such financing statements, or
amendments and supplements to financing statements, on behalf of the Debtor
without notice thereof to the Debtor, which power of attorney is coupled with an
interest and is irrevocable until the Secured Obligations have been fully paid
and satisfied and the commitments of the Lenders to extend credit to or for the
account of the Borrowers or any of them have terminated.
SECTION 8. DEFAULTS AND REMEDIES.
(a) The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT" hereunder:
(i) default in the payment when due (whether by lapse of time,
acceleration or otherwise) of the Secured Obligations or any part
thereof; or
(ii) the occurrence of any event or the existence of any condition
which is specified as an "Event of Default" under the Credit Agreement.
(b) Upon the occurrence and during the continuation of any Event of
Default hereunder, the Agent shall have, in addition to all other rights
provided herein or by law, the rights and remedies of a secured party under
the Code (regardless of whether the Code is the law of the jurisdiction
where the rights or remedies are asserted and regardless of whether the
Code applies to the affected Collateral), and further the Agent may,
without demand and without advertisement, notice, hearing or process of
law, all of which the Debtor hereby waives, at any time or times, sell and
deliver any or all Collateral held by or for it at public or private sale,
for cash, upon credit or otherwise, at such prices and upon such terms as
the Agent deems advisable, in its sole discretion. In addition to all
other sums due the Agent or any Lender hereunder, the Debtor shall pay the
Agent and any Lender all costs and expenses incurred by the Agent or such
Lender, including attorneys' fees and court costs, in obtaining,
liquidating or enforcing payment of Collateral or the Secured Obligations
or in the prosecution or defense of any action or proceeding by or against
the Agent, such Lender or the Debtor concerning any matter arising out of
or connected with this Agreement or the Collateral or the Secured
Obligations, including, without limitation, any of the foregoing arising
in, arising under or related to a case under the United States Bankruptcy
Code (or any successor statute). Any requirement of reasonable notice
shall be met if such notice is personally
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served on or mailed, postage prepaid, to the Debtor in accordance with
Section 12(b) hereof at least ten (10) days before the time of sale or
other event giving rise to the requirement of such notice; PROVIDED
HOWEVER, no notification need be given to the Debtor if the Debtor has
signed, after an Event of Default hereunder has occurred, a statement
renouncing any right to notification of sale or other intended disposition.
The Agent shall not be obligated to make any sale or other disposition of
the Collateral regardless of notice having been given. The Agent or any
Lender may be the purchaser at any such sale. The Debtor hereby waives all
of its rights of redemption from any such sale. Subject to the provisions
of applicable law, the Agent may postpone or cause the postponement of the
sale of all or any portion of the Collateral by announcement at the time
and place of such sale, and such sale may, without further notice, be made
at the time and place to which the sale was postponed or the Agent may
further postpone such sale by announcement made at such time and place.
(c) Without in any way limiting the foregoing, upon the occurrence
and during the continuation of any Event of Default hereunder, the Agent
shall have the right, in addition to all other rights provided herein or by
law, to take physical possession of any and all of the Collateral and
anything found therein, the right for that purpose to enter without legal
process any premises where the Collateral may be found (provided such entry
be done lawfully), and the right to maintain such possession on the
Debtor's premises or to remove the Collateral or any part thereof to such
other places as the Agent may desire. Upon the occurrence and during the
continuation of any Event of Default hereunder, the Debtor shall, upon the
Agent's demand, assemble the Collateral and make it available to the Agent
at a place designated by the Agent. If the Agent exercises its right to
take possession of the Collateral, the Debtor shall also at its expense
perform any and all other steps requested by the Agent to preserve and
protect the security interest hereby granted in the Collateral, such as
placing and maintaining signs indicating the security interest of the
Agent, appointing overseers for the Collateral and maintaining Collateral
records.
(d) Failure by the Agent to exercise any right, remedy or option
under this Agreement or any other agreement between the Debtor and the
Agent or provided by law, or delay by the Agent in exercising the same,
shall not operate as a waiver; and no waiver shall be effective unless it
is in writing, signed by the party against whom such waiver is sought to be
enforced and then only to the extent specifically stated. Neither the
Agent, nor any Lender, nor any party acting as attorney for the Agent or
any Lender, shall be liable hereunder for any acts or omissions or for any
error of judgment or mistake of fact or law other than their gross
negligence or willful misconduct. The rights and remedies of the Agent and
the Lenders under this Agreement shall
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be cumulative and not exclusive of any other right or remedy which the
Agent or the Lenders may have. For purposes of this Agreement, a Default
or Event of Default shall be construed as continuing after its occurrence
until the same is waived in writing by the Lenders or the Required Lenders,
as the case may be, in accordance with the Credit Agreement or, in the case
of a Default, the same is cured by the Debtor within any applicable cure
period.
Section 9. APPLICATION OF PROCEEDS. The proceeds and avails of the
Collateral at any time received by the Agent upon the occurrence and during the
continuation of any Event of Default hereunder shall, when received by the Agent
in cash or its equivalent, be applied by the Agent in reduction of the Secured
Obligations as set forth in Section 3.8 of the Credit Agreement. The Debtor
shall remain liable to the Agent and the Lenders for any deficiency. Any
surplus remaining after the full payment and satisfaction of the Secured
Obligations shall be returned to the Debtor or to whomsoever the Agent
reasonably determines is lawfully entitled thereto.
SECTION 10. CONTINUING AGREEMENT. This Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect until all
of the Secured Obligations, both for principal and interest, have been fully
paid and satisfied and the commitments of the Lenders to extend credit to or for
the account of the Borrowers or any of them under the Credit Agreement have
terminated. Upon such termination of this Agreement, the Agent shall, upon the
request and at the expense of the Debtor, forthwith release its security
interest hereunder.
SECTION 11. THE AGENT. In acting under or by virtue of this Agreement,
the Agent shall be entitled to all the rights, authority, privileges and
immunities provided in Section 10 of the Credit Agreement, all of which
provisions of said Section 10 are incorporated by reference herein with the same
force and effect as if set forth herein in their entirety. The Agent hereby
disclaims any representation or warranty to the Lenders concerning the
perfection of the security interest granted hereunder or in the value of any of
the Collateral.
SECTION 12. MISCELLANEOUS.
(a) This Agreement cannot be changed or terminated orally. This
Agreement shall create a continuing security interest in the Collateral and
shall be binding upon the Debtor, its successors and assigns and shall
inure, together with the rights and remedies of the Agent and the Lenders
hereunder, to the benefit of the Agent, the Lenders and their successors
and assigns; PROVIDED, HOWEVER, that the Debtor may not assign its rights
or delegate its duties hereunder without the Agent's prior written consent.
Without limiting the generality of the foregoing, and subject to the
provisions of Sections 12.17 and 12.18 of the Credit Agreement, any Lender
may assign or otherwise transfer any indebtedness held by it secured by
this Agreement to any other
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person or entity, and such other person or entity shall thereupon become
vested with all the benefits in respect thereof granted to such Lender
herein or otherwise, subject, however, to the provisions of the Credit
Agreement. The Debtor hereby release the Agent from any liability for any
act or omission relating to the Collateral or this Agreement, except for
the Agent's gross negligence or willful misconduct.
(b) Except as otherwise specified herein, all notices hereunder shall
be in writing (including, without limitation, notice by telecopy) and shall
be given to the relevant party, and shall be deemed to have been made when
given to the relevant party, in accordance with Section 12.9 of the Credit
Agreement.
(c) No Lender shall have the right to institute any suit, action or
proceeding in equity or at law for the foreclosure against any Collateral
subject to this Agreement or for the execution of any trust or power hereof
or for the appointment of a receiver, or for the enforcement of any other
remedy under or upon this Agreement; it being understood and intended that
no one or more of the Lenders shall have any right in any manner whatsoever
to affect, disturb or prejudice the lien and security interest of this
Agreement by its or their action or to enforce any right hereunder, and
that all proceedings at law or in equity shall be instituted, had and
maintained by the Agent in the manner herein provided for the ratable
benefit of the Lenders.
(d) Notwithstanding anything herein to the contrary, the right of
recovery hereunder against the Debtor with respect to the Secured
Obligations shall be limited to $1 less than the amount of the lowest claim
hereunder against the Collateral which would render this Agreement void or
voidable under applicable law.
(e) The lien and security herein created and provided for stand as
direct and primary security for the Notes as well as for all other Secured
Obligations. No application of any sums received by the Agent or the
Lenders in respect of the Collateral or any disposition thereof to the
reduction of the Secured Obligations or any part thereof shall in any
manner entitle the Debtor to any right, title or interest in or to the
Secured Obligations or any collateral security therefor, whether by
subrogation or otherwise, unless and until all Secured Obligations have
been fully paid and satisfied and the commitments of the Lenders to extend
credit to or for the account of the Borrowers or any of them under the
Credit Agreement have terminated.
(f) All obligations of the Debtor hereunder shall be absolute and
unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Debtor;
(ii) any lack of validity or enforceability of any Loan Document
or any other agreement or instrument relating thereto;
(iii) any change in the time, manner or place of payment of,
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or in any other term of, all or any part of the Secured
Obligations, or any other amendment or waiver of or any consent to
any departure from any Loan Document or any other agreement or
instrument relating thereto;
(iv) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
any departure from any guarantee, for all or any part of the
Secured Obligations;
(v) any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect of this Agreement or
any other Loan Document; or
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Debtor;
and without limiting the generality of the foregoing, the Lenders may at their
discretion at any time grant credit to the Borrowers or any of them without
notice to the Debtor in such amounts and on such terms as the Lenders may elect
(all of such to constitute so much additional Secured Obligations) without in
any manner impairing the lien and security hereof.
(g) In the event that any provision hereof shall be deemed to be
invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Agreement shall be
construed as not containing such provision, but only as to such
jurisdictions where such law or interpretation is operative, and the
invalidity of such provision shall not affect the validity of any remaining
provisions hereof, and any and all other provisions hereof which are
otherwise lawful and valid shall remain in full force and effect.
(h) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by, and construed in accordance with, the
laws of the State of Illinois. All terms which are used in this Agreement
which are defined in the Code shall have the same meanings herein as said
terms do in the Code unless this Agreement shall otherwise specifically
provide. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning of any provision
hereof.
(i) This Agreement may be executed in any number of counterparts and
by different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same agreement.
-19-
<PAGE>
IN WITNESS WHEREOF, the Debtor has caused this Agreement to be duly
executed as of the date first above written.
[DEBTOR]
By
Its
Accepted and agreed to as of the date first above written.
HARRIS TRUST AND SAVINGS BANK,
AS AGENT AS AFORESAID FOR THE LENDERS
BY
ITS VICE PRESIDENT
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<PAGE>
SCHEDULE A
LOCATIONS
Item 1. Permitted Collateral Locations (including Debtor's chief financial
office and principal place of business):
ADDRESS OWNER OF PREMISES
[DEBTOR TO COMPLETE]
ITEM 2. ADDITIONAL PLACES OF BUSINESS:
[DEBTOR TO COMPLETE]
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<PAGE>
EXHIBIT D
FORM OF OPINION OF COUNSEL
__________________, 199__
Harris Trust and Savings Bank
Chicago, Illinois
Lehman Commercial Paper Inc.
New York, New York
Gentlemen:
We have served as counsel to Acme Steel Company, a Delaware corporation
("ACME STEEL"), Acme Packaging Corporation, a Delaware corporation ("ACME
PACKAGING"), Alpha Tube Corporation, a Delaware corporation ("ALPHA TUBE"),
Universal Tool & Stamping Company, Inc., an Indiana corporation ("UNIVERSAL
TOOL") (Acme Steel, Acme Packaging, Alpha Tube and Universal Tool being herein
referred to collectively as the "BORROWERS") and Acme Metals Incorporated, a
Delaware corporation (the "COMPANY") (the Borrowers and the Company being herein
referred to collectively as the "ACME GROUP"), in connection with a revolving
credit facility being made available by you to the Borrowers. This opinion is
delivered to you at the request of the Company and the Borrowers pursuant to
Section 6.2(h) of the Credit Agreement referred to below.
As such counsel, we have supervised the taking of the corporate proceedings
necessary to authorize the execution and delivery of, and have examined executed
originals of, the Loan Documents described on Exhibit A attached hereto. We
have also examined and are familiar with:
(i) A copy of the articles of incorporation of each member of the
Acme Group, each certified as of ______________, 19___ by the Secretary of
the State of incorporation of such member;
(ii) Certificates dated as of a date no earlier than ___ days prior
to the date hereof from the Secretary of the States of incorporation of
each member of the Acme Group and in each other state where any member of
the Acme Group is licensed or qualified to do business, as to the good
standing of such member in those states;
(iii) A copy of the by-laws of each member of the Acme Group
certified by the Secretary of such member as being the by-laws of such
member in effect at all times since ____________, 19___;
(iv) Copies of certain resolutions adopted by the board of directors
[AND THE STOCKHOLDERS] of each member of the Acme Group, certified by the
Secretary of such member of the
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<PAGE>
Acme Group; and
(v) [IDENTIFY ANY OTHER MATTERS OR ITEMS PERTAINING TO ORGANIZATION,
AUTHORITY AND GOOD STANDING;]
and we have also examined such other instruments and records and inquired into
such other factual matters and matters of law as we deem necessary or pertinent
to the formulation of the opinions hereinafter expressed. As to questions of
fact relevant to the opinions stated herein, we have relied upon information
obtained from the officers of the members of the Acme Group and other sources
believed by us responsible, and, with your permission, we have assumed, without
independent investigation, the accuracy of such information.
In rendering the opinions expressed below, we have examined originals,
or copies of originals certified to our satisfaction, of such agreements,
documents, certificates and other statements of government officials and
corporate officers and such other papers and evidence as we have deemed relevant
and necessary as a basis for these opinions. We have assumed the genuineness of
all signatures (other than those of the members of the Acme Group), the
authenticity of all documents submitted to us as originals and the conformity
with the original documents of any copies thereof submitted to us for our
examination.
Based upon the foregoing, we are of the opinion that:
1. Each member of the Acme Group is a corporation duly organized and
validly existing and in good standing under the laws of its state of
incorporation with full and adequate corporate power and authority to carry on
its business as now conducted and is duly licensed or qualified and in good
standing in each jurisdiction wherein the conduct of its business or the assets
and Properties owned or leased by it require such licensing or qualification.
2. Each Borrower has full right, power and authority to borrow from you,
to mortgage, pledge, assign and otherwise encumber its assets and properties as
collateral security for such borrowings, to execute and deliver the Loan
Documents executed by it and to observe and perform all the matters and things
therein provided for. The execution and delivery of the Loan Documents executed
by the Borrowers does not, nor will the observance or performance of any of the
matters or things therein provided for, contravene any provision of law or of
the articles of incorporation, charter or by-laws of any of the Borrowers (there
being no other agreements under which any of the Borrowers are organized) or, to
the best of our knowledge after due inquiry, of any covenant, indenture or
agreement binding upon or affecting any of the Borrowers or any of their
respective properties or assets.
3. The Company has full right, power and authority to guarantee all of
the indebtedness, obligations and liabilities of the Borrowers to you, to
execute and deliver the Loan Documents executed by it and to observe and perform
all the matters and
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<PAGE>
things therein provided for. The execution and delivery of the Loan Documents
executed by the Company does not, nor will the observance or performance of any
of the matters or things therein provided for, contravene any provision of law
or of the articles of incorporation, charter or by-laws of the Company (there
being no other agreements under which the Company is organized) or, to the best
of our knowledge after due inquiry, of any covenant, indenture or agreement
binding upon or affecting the Company o any of its properties or assets.
4. The Loan Documents executed by the Acme Group have been duly
authorized by all necessary corporate action (no stockholder approval being
required), have been executed and delivered by the proper officers of each
member of the Acme Group and constitute valid and binding agreements of each
member of the Acme Group enforceable against them in accordance with their
respective terms, except as such terms may be limited by bankruptcy, insolvency
or similar laws and legal or equitable principles affecting or limiting the
enforcement of creditors' rights generally.
5. No order, authorization, consent, license or exemption of, or filing
or registration with, any court or governmental department, agency,
instrumentality or regulatory body, whether local, state or federal, is or will
be required in connection with the lawful execution and delivery of the Loan
Documents or the observance and performance by each member of the Acme Group of
any of the terms thereof.
5. To the best of our knowledge after due inquiry, there is no action,
suit, proceeding or investigation at law or in equity before or by any court or
public body pending or threatened against or affecting any member of the Acme
Group or any of their respective assets and properties which, if adversely
determined, could result in any material adverse change in the properties,
business, operations or financial condition of any member of the Acme Group or
in the value of the collateral security for your loans and other credit
accommodations to the Borrowers.
Our opinions expressed above are limited to the laws of the State of
Illinois, the corporate laws of the States of Delaware and Indiana and the
federal laws of the United States of America.
Respectfully submitted,
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<PAGE>
EXHIBIT A
(a) Credit Agreement by and between the Acme Group, Harris Trust and
Savings Bank ("HARRIS"), individually and as agent (Harris acting in its
capacity as agent being herein referred to as the "AGENT") and Lehman Commercial
Paper Inc. ("LEHMAN");
(b) Revolving Credit Note of the Borrowers payable to the order of
Harris in the principal sum of $________________;
(c) Revolving Credit Note of the Borrowers payable to the order of
Lehman in the principal sum of $______________;
(d) Security Agreement from Acme Steel to the Agent;
(e) ________ (__________) UCC Financing Statements executed by Acme
Steel, as debtor, in favor of the Agent, as secured party, and to be filed in
the office of the ____________ Secretary of State and to be recorded as a
fixture filing in the mortgage records of the Recorder's Office of _____________
County, __________________, respectively;
(f) Security Agreement from Acme Packaging to the Agent;
(g) ________ (__________) UCC Financing Statements executed by Acme
Packaging, as debtor, in favor of the Agent, as secured party, and to be filed
in the office of the ____________ Secretary of State and to be recorded as a
fixture filing in the mortgage records of the Recorder's Office of _____________
County, __________________, respectively;
(h) Security Agreement from Alpha Tube to the Agent;
(i) ________ (__________) UCC Financing Statements executed by Alpha
Tube, as debtor, in favor of the Agent, as secured party, and to be filed in the
office of the ____________ Secretary of State and to be recorded as a fixture
filing in the mortgage records of the Recorder's Office of _____________ County,
__________________, respectively;
(j) Security Agreement from Universal Tool to the Agent;
(k) ________ (__________) UCC Financing Statements executed by
Universal Tool, as debtor, in favor of the Agent, as secured party, and to be
filed in the office of the ____________ Secretary of State and to be recorded as
a fixture filing in the mortgage records of the Recorder's Office of
_____________ County, __________________, respectively.
The foregoing documents are herein collectively referred to as the "LOAN
DOCUMENTS".
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<PAGE>
EXHIBIT E
ACME GROUP
BORROWING BASE CERTIFICATE
To: Harris Trust and Savings Bank as Agent under, and the Lenders party to, the
Credit Agreement described below
Pursuant to the terms of the Credit Agreement dated as of August 11,
1994 among us (the "CREDIT AGREEMENT"), we submit this Borrowing Base
Certificate to you and certify that the information set forth below and on any
attachments to this Certificate is true, correct and complete as of the date of
this Certificate. Any capitalized terms used herein without definition shall
have the same meanings as such terms have in the Credit Agreement.
I. BORROWING BASE - ACME STEEL COMPANY
A. ACCOUNTS IN BORROWING BASE
1. Gross accounts
A1
2. Ineligible accounts identified
in Credit Agreement
A2
3. Eligible Receivables
(line A1 minus line A2)
A3
4. Eligible Receivable in Borrowing
Base (line A3 x .85) _______
___
A4
B. INVENTORY IN BORROWING BASE
1. Gross Inventory
B1
2. Ineligible inventory identified
in Credit Agreement
B2
3. Eligible Inventory*
(line B1 minus line B2)
B3
4. Eligible Inventory in Borrowing
Base (line B3 x .50) _______
___
B4
C. BORROWING BASE - ACME STEEL COMPANY
1. Borrowing Base
(sum of lines A4 and B4)
C1
2. Hedging Liability as defined
C2
3. Available Borrowing Base
(line C1 minus line C2)) _______
___
C3
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<PAGE>
D. ADVANCES/AVAILABILITY (SHORTFALL) - ACME STEEL COMPANY
1. Revolving Loans . . . .
D1
2. Letters of Credit . . . .
D2
3. Total Advances (sum of
line D1 and D2)
D3
4. Availability (Shortfall)
(line C3 minus line D3) _______
___
D4
II. BORROWING BASE - ACME PACKAGING CORPORATION
A. ACCOUNTS IN BORROWING BASE
1. Gross accounts
A1
2. Ineligible accounts identified
in Credit Agreement
A2
3. Eligible Receivables
(line A1 minus line A2)
A3
4. Eligible Receivable in Borrowing
Base (line A3 x .85) _______
___
A4
B. INVENTORY IN BORROWING BASE
1. Gross Inventory
B1
2. Ineligible inventory identified
in Credit Agreement
B2
3. Eligible Inventory*
(line B1 minus line B2)
B3
4. Eligible Inventory in Borrowing
Base (line B3 x .50) _______
___
B4
C. BORROWING BASE - ACME PACKAGING CORPORATION
1. Borrowing Base
(sum of lines A4 and B4)
C1
2. Hedging Liability as defined
C2
3. Available Borrowing Base
(line C1 minus line C2)) _______
___
C3
D. ADVANCES/AVAILABILITY (SHORTFALL) - ACME PACKAGING CORPORATION
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<PAGE>
1. Revolving Loans . . . .
D1
2. Letters of Credit . . . .
D2
3. Total Advances (sum of
line D1 and D2)
D3
4. Availability (Shortfall)
(line C3 minus line D3) _______
___
D4
III. BORROWING BASE - ALPHA TUBE CORPORATION
A. ACCOUNTS IN BORROWING BASE
1. Gross accounts
A1
2. Ineligible accounts identified
in Credit Agreement
A2
3. Eligible Receivables
(line A1 minus line A2)
A3
4. Eligible Receivable in Borrowing
Base (line A3 x .85) _______
___
A4
B. INVENTORY IN BORROWING BASE
1. Gross Inventory
B1
2. Ineligible inventory identified
in Credit Agreement
B2
3. Eligible Inventory*
(line B1 minus line B2)
B3
4. Eligible Inventory in Borrowing
Base (line B3 x .50) _______
____
B4
C. BORROWING BASE - ALPHA TUBE CORPORATION
1. Borrowing Base
(sum of lines A4 and B4)
C1
2. Hedging Liability as defined
C2
3. Available Borrowing Base
(line C1 minus line C2)) _______
___
C3
D. ADVANCES/AVAILABILITY (SHORTFALL) - ALPHA TUBE CORPORATION
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<PAGE>
1. Revolving Loans . . . .
D1
2. Letters of Credit . . . .
D2
3. Total Advances (sum of
line D1 and D2)
D3
4. Availability (Shortfall)
(line C3 minus line D3) _______
___
D4
IV. BORROWING BASE - UNIVERSAL TOOL & STAMPING COMPANY, INC.
A. ACCOUNTS IN BORROWING BASE
1. Gross accounts
A1
2. Ineligible accounts identified
in Credit Agreement
A2
3. Eligible Receivables
(line A1 minus line A2)
A3
4. Eligible Receivable in Borrowing
Base (line A3 x .85) _______
___
A4
B. INVENTORY IN BORROWING BASE
1. Gross Inventory
B1
2. Ineligible inventory identified
in Credit Agreement
B2
3. Eligible Inventory*
(line B1 minus line B2)
B3
4. Eligible Inventory in Borrowing
Base (line B3 x .50) _______
___
B4
C. BORROWING BASE - UNIVERSAL TOOL & STAMPING COMPANY, INC.
1. Borrowing Base
(sum of lines A4 and B4)
C1
2. Hedging Liability as defined
C2
3. Available Borrowing Base
(line C1 minus line C2)) _______
___
C3
D. ADVANCES/AVAILABILITY (SHORTFALL)-UNIVERSAL TOOL & STAMPING
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<PAGE>
COMPANY, INC.
1. Revolving Loans . . . .
D1
2. Letters of Credit . . . .
D2
3. Total Advances (sum of
line D1 and D2)
D3
4. Availability (Shortfall)
(line C3 minus line D3) _______
___
D4
V. INVENTORY CAP ADJUSTMENT
A. AGGREGATE BORROWING BASE
1. Acme Steel Company
(line IC1) . . . .
A1
2. Acme Packaging Corporation
(line IIC1) . . . .
A2
3. Alpha Tube Corporation
(line IIIC1) . . . .
A3
4. Universal Tool & Stamping
Company, Inc. (line IVC1) . . . .
A4
5. Aggregate Borrowing Base
(sum of lines A1, A2, A3 and A4)
A5
B. AGGREGATE ELIGIBLE INVENTORY
1. Acme Steel Company
(line IB3) . . . .
B1
2. Acme Packaging Corporation
(line IIB3) . . . .
B2
3. Alpha Tube Corporation
(line IIB3) . . . .
B3
4. Universal Tool & Stamping
Company, Inc. (line IVB3) . . . .
B4
5. Aggregate Eligible Inventory
(sum of lines B1, B2, B3 and B4) . . . .
B5
C. DEDUCTION FOR INVENTORY CAP (IF ANY)
1. Inventory Cap (line A5 x .40)
C1
2. Aggregate Eligible Inventory less
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<PAGE>
Inventory Cap (line B5 minus line C1)
C2
*If the amount shown on Line VC2 is positive, deduct a pro rata share of the
amount shown one line VC2 from each Borrower's Eligible Inventory
Dated as of this ____ day of ______________, 19___.
ACME METALS INCORPORATED
BY
ITS
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<PAGE>
EXHIBIT F
ACME GROUP
COMPLIANCE CERTIFICATE
For the Month Ending __________
To:Harris Trust and Savings Bank
as Agent under, and the Lenders
party to the Credit Agreement
described below
This Compliance Certificate is furnished to the Lenders pursuant to the
requirements of Section 7.5 of the Credit Agreement dated as of August 11, 1994,
by and between Acme Steel Company, a Delaware corporation ("ACME STEEL"), Acme
Packaging Corporation, a Delaware corporation ("ACME PACKAGING"), Alpha Tube
Corporation, an Indiana corporation, ("ALPHA TUBE"), and Universal Tool &
Stamping Company, Inc., an Indiana corporation ("UNIVERSAL TOOL") (Acme Steel,
Acme Packaging, Alpha Tube and Universal Tool are being hereinafter referred to
collectively as the "BORROWERS") and Acme Metals Incorporated (the "COMPANY",
the Borrowers and the Company being referred to collectively as the "ACME
GROUP"), Harris Trust and Savings Bank as agent thereunder (the "AGENT") and the
Lenders named therein (the "CREDIT AGREEMENT"). Unless otherwise defined
herein, the terms used in this Compliance Certificate have the meanings ascribed
thereto in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ______________ of the Company;
2. We have reviewed the terms of the Credit Agreement and we have made,
or have caused to be made under our supervision, a detailed review of the
transactions and conditions of the Acme Group during the accounting period
covered by the financial statements being furnished concurrently with this
Certificate;
3. The examinations described in paragraph 2 did not disclose, and we
have no knowledge of, the existence of any condition or the occurrence of any
event which constitutes a Default or an Event of Default at any time during or
at the end of the accounting period covered by the accompanying financial
statements or as of the date of this Certificate, except as set forth
immediately below;
4. The financial statements required by Section 7.5 of the Credit
Agreement and being furnished to you concurrently with this Certificate are
true, correct and complete as of the dates and for the periods covered thereby;
and
5. Schedule I attached hereto sets forth financial data and computations
evidencing the Acme Group's compliance with certain covenants of the Credit
Agreement, all of which data and computations are true, complete and correct and
have been made in accordance with the relevant Sections of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Acme
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<PAGE>
Group has taken, is taking, or proposes to take with respect to each such
condition or event:
The foregoing certifications, together with the computations set forth in
Schedule I attached hereto and the financial statements furnished concurrently
with this Certificate in support hereof, are made and delivered as of this
______ day of _______________, 19___.
By:
Title:
(Type or Print Name)
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<PAGE>
SCHEDULE I
ACME GROUP
COMPLIANCE CALCULATIONS
FOR AUGUST 11, 1994 CREDIT
AGREEMENT
Calculations as of
_______________, 19__
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
A. Consolidated Current Ratio (Section 7.6)
1. Consolidated current assets
(including cash
held for
Modernization Project) ________
2. Consolidated current liabilities ________
3. Ratio of Line 1 to Line 2
("CONSOLIDATED CURRENT RATIO") :1
--------
--------
4. Consolidated Current Ratio must
be in an amount not less than 1.5:1
--------
--------
5. Acme Group is in compliance?
(Circle yes or no) Yes/No
--------
--------
B. Consolidated Tangible Net Worth (Section 7.7)
1. Shareholder's Equity ________
2. Intangible Assets (enter total on
Line 2 and show break-down below) ________
(a) Goodwill ___________
(b) Deferred charges ___________
(c) Other intangible assets ___________
3. Amortization of financing fees
and expenses
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<PAGE>
associated with the
financing for the Modernization
Project ________
<PAGE>
4. Line 1 minus Line 2 plus Line 3
(to the extent otherwise
deducted above)
("CONSOLIDATED TANGIBLE NET WORTH") ________
5. As listed in Section 7.7, for the date
of this Certificate, Consolidated Tangible
Net Worth must not be less than $________
6. Acme Group is in compliance?
(Circle yes or no) Yes/No
--------
--------
C. LEVERAGE RATIO (SECTION 7.8)
1. Indebtedness for Borrowed Money (enter total on
Line 1 and show breakdown below) $________
________
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
(e) Acme Metal ___________
2. Shareholder's Equity
as defined __________
3. Sum of Lines 1 and Line 2
("TOTAL CAPITALIZATION") $________
________
4. Ratio of Indebtedness for Borrowed
Money (Line 1) to Total Capitalization
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<PAGE>
(Line 3) ("LEVERAGE RATIO") :1
--------
--------
5. As listed in Section 7.8,
the Leverage Ratio shall not
be greater than 0.65:1
--------
--------
6. Acme Group is in compliance?
(Circle yes or no) Yes/No
-------
-------
D. CASH FLOW COVERAGE RATIO (SECTION 7.9)
1. Consolidated Net Income
as defined __________
2. Amounts deducted in arriving
at Consolidated Net Income
in respect of
(a) Net Interest Expense __________
(b) Income taxes as defined and
classified in accordance
with GAAP __________
(c) Depreciation of fixed assets __________
(d) Amortization of
intangibles (other than
debt issuance costs) __________
(e) Amortization of
financing fees and
expenses of the financing
for the Modernization
Project __________
(f) (i) Non-recurring expenses
from the shutdown of
facilities, (ii) non-recurring
losses resulting from any
writedown of assets and
(iii) prepayment penalties
incurred as a result of pre-
payment of indebtedness
referred to in Sections 6.2(f)
and 6.2(g) hereof, all to
the extent incurred as part
of, or attributable to the
Modernization Project __________
3. Sum of Lines 1, 2(a),
2(b), 2(c), 2(d), 2(e) and
2(f) ("EBITDA") _________
4. Modernization Project Expenses
(to the extent deducted in
computing EBITDA) or, if
lesser, $15,000,000 __________
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<PAGE>
5. Cash on hand (free of
any Lien or use restriction) __________
6. Sum of Lines 3, 4 and 5 __________
7. Cash Interest Expense __________
8. Average daily principal amount
outstanding on the Revolving
Credit __________
9. 30% of Line 8 amount __________
10. Sum of Lines 7 and 9 _________
11. Ratio of Line 6 to Line 10
("CASH FLOW COVERAGE RATIO") :1
---------
---------
12. As listed in Section 7.9
the Consolidated Cash Flow Coverage Ratio
must not be less than 1.05:1
---------
---------
13. Acme Group is in compliance?
(Circle yes or no) Yes/No
---------
---------
E. Dividends and Certain Other Restricted Payments (Section 7.13)
1. Check either (a) or (b)
(a) The Acme Group has not made any
Restricted Equity Payments (as
defined in Section 7.13) during
the period covered by this
Certificate _________
1(a)
(b) The Acme Group has made Restricted
Equity Payments during the period
covered by this Certificate _________
1(b)
(i) Enter the aggregate amount of
such Restricted Equity Payments _________
made by each Borrower 1(b)(i)
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
2. Check either (a) or (b)
(a) The Borrowers have not made any
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<PAGE>
Restricted Debt Payments (as
defined in Section 7.13) during
the period covered by this
Certificate _________
2(a)
(b) The Borrowers have made Restricted
Debt Payments during the period
covered by this Certificate __________
2(b)
(i) Enter the aggregate amount of
such Restricted Debt Payments $_________
made by each Borrower
2(b)(i)
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
3. If Line 1(b) or Line 2(b) is checked, complete the following:
(a) At the time such Restricted
Equity or Debt Payments
were made and after giving effect
thereto, no Default or Event
of Default had occurred or is continuing
(Check either True or False) __________ _________
True *False
(b) The portion of EBITDA for the
subject fiscal year derived from
income of the Borrowers
(enter total on Line 3(b) and
show break-down below)
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
(c) Maintenance Capital Expenditures
and construction contract liquidated
damages of the Borrowers during such
year (enter total on Line 3(c) and show
break-down below)
(a) Acme Steel ___________
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(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
(d) Sum of Lines 3(b) and 3(c)
for each Borrower
(for each Borrower, the
"MAXIMUM PERMITTED AMOUNT")
(a) Acme Steel ___________
(b) Acme Packaging ___________
(c) Alpha Tube ___________
(d) Universal Tool ___________
(e) Aggregate amount of the
Restricted Payments for each
Borrower (Line 1(b)(i) plus
Line 2(b)(i) for each Borrower)
does not exceed the Maximum
Permitted Amount for such
Borrower (shown on Line 3(d)).
(Check either True or False) ___________ ___________
True *False
* If this item is checked, the Acme Group has defaulted in its observance of
the covenant set forth in Section 7.13 and triggered an Event of Default
under Section 10.1(b).
-8-
<PAGE>
EXHIBIT G
ASSIGNMENT AND ACCEPTANCE
Dated _____________, 19_____
Reference is made to the Credit Agreement dated as of August 11, 1994 (the
"CREDIT AGREEMENT") among the Acme Group, the Lenders (as defined in the Credit
Agreement) and Harris Trust and Savings Bank, as Agent for the Lenders (the
"AGENT"). Terms defined in the Credit Agreement are used herein with the same
meaning.
_____________________________________________________ (the "ASSIGNOR") and
_________________________ (the "ASSIGNEE") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a _______% interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor's Commitment as in effect on the Effective
Date and the Revolving Loans, if any, owing to the Assignor on the Effective
Date and the Assignor's Percentage of any outstanding L/C Obligations, if any.
2. The Assignor (i) represents and warrants that as of the date hereof
(A) its Commitment is $____________, (B) the aggregate outstanding principal
amount of Revolving Loans made by it under the Credit Agreement that have not
been repaid is $____________ and a description of the interest rates and
interest periods for such Revolving Loans is attached as Schedule 1 hereto, and
(C) the aggregate principal amount of Assignor's outstanding L/C Obligations is
$___________; (ii) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim, lien, or encumbrance of any kind; (iii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (iv) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower, the Company, or any Guarantor or the
performance or observance by any Borrower, the Company, or any Guarantor of any
of their respective obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to in
-1-
<PAGE>
Sections 7.5(a)(i) and (ii) thereof and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) appoints and authorizes the Agent to take such
action as Agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender; and (v)
specifies as its lending offices (and address for notices) the offices set forth
beneath its name on the signature pages hereof.
4. As consideration for the assignment and sale contemplated in Section 1
hereof, the Assignee shall pay to the Assignor on the date hereof in Federal
funds an amount equal to $________________(1)*. It is understood that
commitment and/or Letter of Credit fees accrued to the date hereof with respect
to the interest assigned hereby are for the account of the Assignor and such
fees accruing from and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the account of such other
party to the extent of such other party's interest therein and shall promptly
pay the same to such other party.
5. The effective date for this Assignment and Acceptance shall be
_____________, 19___(the "EFFECTIVE DATE"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Company for its
acceptance and to the Agent for acceptance and recording by the Agent.
6. Upon such acceptance and recording, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
_______________________
(1)* Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify those amounts generically or by
formula rather than as a fixed sum.
-2-
<PAGE>
obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments under the Credit Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
8. In accordance with Section 12.18 of the Credit Agreement, the Assignor
and the Assignee request and direct that the Agent prepare and cause the
Borrowers to execute and deliver to the Assignee a Revolving Credit Note payable
to the Assignee in the amount of its Commitment and a new Revolving Credit Note
to the Assignor in the amount of its Commitment after giving effect to the
assignment hereunder.
9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
[Assignor Lender]
By:
Title:
ASSIGNEE LENDER]
By:
Title:
Lending Office (and
address for notices):
LIBOR Funding Office:
Accepted and consented this
____ day of ___________, 19__
ACME METALS INCORPORATED
By:
Title:
-3-
<PAGE>
Accepted and consented to by the Agent this
_______ day of ___________, 19__
[AGENT]
By
Title:
-4-
<PAGE>
SCHEDULE I
Type of Last day of
Principal Amount Revolving Loan Interest Rate Interest Period
---------------- -------------- ------------- ---------------
-5-
<PAGE>
SCHEDULE 1.3 (STANDBY)
APPLICATION AND AGREEMENT FOR IRREVOCABLE
STANDBY LETTER OF CREDIT
Date---------------------------
International Operations Division SPL----------------------------
Harris Trust and Savings Bank
P.O. Box 755
111 West Monroe Street
Chicago, Illinois 60690
Gentlemen:
We request you to open and transmit by cable/airmail your Irrevocable Letter of
Credit in favor of:
available by their drafts, drawn at sight on: Harris Trust and Savings Bank, or
not exceeding a total of:
accompanied by the following document(s):
Drafts drawn under this Letter of Credit must be drawn and presented together
with accompanying documentation at your principal office in Chicago, Illinois
not later than:
In consideration of your issuing at our request your Irrevocable Letter of
Credit (hereinafter called "Credit") on the terms mentioned above:
1. We hereby agree to pay you in immediately available and freely transferable
funds the amount of each draft or acceptance drawn under, or purporting to
be drawn under, the Credit, such payment to be made at the maturity of each
respective draft or acceptance, or if so demanded by you, on demand in
advance of any drawing or maturity.
2. Payment shall be made by us at your office in Chicago, Illinois, in lawful
money of the United States and as to drafts or acceptances which are
payable in currency other than United States currency, the amount to be
paid by us shall be at the rate of exchange then current in Chicago for
cable transfers to the place of payment in the currency in which such draft
is drawn.
3. We also agree to pay you, on demand, a commission at the rate of:
of the Credit through December 31, 1991 and thereafter at a rate of:
of the Credit or such other rate as you and we may agree, and all charges
and expenses legal and/or otherwise (including court costs and attorneys'
fees), paid or incurred by you in connection therewith or in your
endeavoring to collect any liability of us or any one or more of us
hereunder, including all costs and expenses arising out of any reserve
requirements for, or any assessment of deposit insurance premiums on, the
Credit. In addition, if you shall determine that any existing or future
law, rule or regulation regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by you (or any of
your branches) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of requiring you to
maintain capital to support your obligations hereunder or under the Credit,
then from time to time, within 15 days after demand by you, we shall pay to
you such additional amount or amounts reasonably determined by you as will
compensate you for such requirement.
4. Any amounts not paid when due hereunder shall bear interest (computed on
the basis of a 360 day year and actual days elapsed) from the due date
thereof until paid in full at a rate per annum determined by adding 1% to
the rate from time to time announced by you as your prime commercial rate,
with any change in such interest rate resulting from a change in such prime
commercial rate to be and become effective as of and on the day of the
relevant change in such prime commercial rate, payable on demand.
<PAGE>
5. We agree that in the event of any extension of the maturity or time for
presentation of drafts, acceptances or documents, or any other modification
of the terms of the Credit, at the request of any of us, with or without
notification to the others, or in the event of any increase in the amount
of the Credit at our request, this agreement shall be binding upon us
with regard to the credit extended, increased or otherwise modified, to
drafts, documents and property covered thereby, and to any action taken by
you or any of your correspondents, in accordance with such extension,
increase or other modification.
6. The users of the Credit shall be deemed our agents and we assume all risks
of their acts, omissions, or misrepresentations. Neither you nor your
correspondents shall be responsible for the validity, sufficiency,
truthfulness, or genuineness of the documents even if such documents should
in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged; for failure of any draft to bear any reference or
adequate reference to the Credit, or failure of any person to note the
amount of any draft on the reverse of the Credit, or to surrender or to
take up the Credit as required by the terms of the Credit; each of which
provisions, if contained in the Credit itself, it is agreed may be waived
by you, or for errors, omissions, interruptions or delays in transmission
or delivery of any message, by mail, cable, telegraph, wireless, or
otherwise, whether or not they be in cipher; nor shall you be responsible
for any error, neglect or default of any of your correspondents; and none
of the above shall affect, impair or prevent the vesting of any of your
rights or powers hereunder. In furtherance and extension and not in
limitation of the specific provisions hereinbefore set forth, we agree that
any action taken by you or by any correspondent of yours under or in
connection with the Credit or the relative drafts, documents or property,
if taken in good faith, shall be binding on us and shall not put you or
your correspondent under any resulting liability to us; and we make like
agreement as to any inaction or omission, unless in breach of good faith.
7. We agree, at any time and from time to time, on demand, to deliver, convey,
transfer or assign to you, as security for any and all obligations and
liabilities of us or any one or more of us hereunder, and also for any and
all other obligations and liabilities, absolute or contingent, due or to
become due, which are now or may at any time hereafter be owing by us or
any one or more of us to you, additional security of a value and character
satisfactory to you, or to make such payment as you may require.
8. You shall not be deemed to have waived any of your rights hereunder, unless
you or your authorized agent shall have signed such waiver in writing. No
such waiver, unless expressly as stated therein, shall be effective as to
any transaction which occurs subsequent to the date of such waiver, or as
to any continuance of a breach after such waiver.
9. The word "property", as used in this agreement, includes goods,
merchandise, securities, funds, choses in action, and any and all other
forms of property, whether real, personal or mixed, and any right or
interest therein.
10. Without limiting the foregoing and in addition to the provisions of
paragraph numbered 7 hereof, we agree that all property belonging to any of
us, now or at any time hereafter delivered, deposited, conveyed,
transferred, assigned or paid to you, or coming into your possession or
into the possession of any one for you in any manner whatsoever, whether
expressly as security for any obligations or liabilities of us to you or
otherwise, are hereby made and shall be and constitute collateral security
for any and all obligations and liabilities, absolute or contingent, due or
to become due, which are now or may at any time hereafter be owing by us or
any one or more of us to you.
11. Without limiting the foregoing and in addition to the provisions of
paragraph numbered 6 hereof, you are hereby expressly authorized and
directed to honor any request for payment which is made under and in
compliance with the terms of said Credit without regard to, and without any
duty on your part to inquire into, the existence of any disputes or
controversies between any of the undersigned, the beneficiary of the Credit
or any other person, firm or corporation, or the respective rights, duties
or liabilities of any of them or whether any facts or occurrences
represented in any of the documents presented under the Credit are true or
correct. Furthermore, we fully understand and agree that your sole
obligation to us shall be limited to honoring requests for payment made
under and in compliance with the terms of the Credit and this application
and your obligation remains so limited even if you may have assisted us in
the preparation of the wording of the Credit or any documents required to
be presented thereunder or you may otherwise be aware of the underlying
transaction giving rise to the Credit and this application.
12. If this agreement is signed by one party, the terms "we," "our," "us,"
shall be read throughout as "I," "my," "me," as the case may be. If this
agreement is signed by two or more parties, it shall constitute the joint
and several agreement of such parties. This agreement shall be deemed to
be made under and shall in all respects be governed by the law of the State
of Illinois. This Credit will be subject to the Uniform Customs and
Practice for Documentary Credits (1983 Revision) International Chamber of
Commerce Publication No. 400, except for Article 45 thereof.
THIS APPLICATION IS SUBJECT TO THE TERMS OF A Very truly yours,
CREDIT AGREEMENT (THE "CREDIT AGREEMENT")
DATED AS OF AUGUST 11, 1994 AMONG
THE APPLICANT, CERTAIN LENDERS PARTY THERETO, _____________________________
AND HARRIS TRUST AND SAVINGS BANK, AS AGENT. (FIRM'S NAME, IF APPLICABLE)
IN THE EVENT OF ANY CONFLICT OR OTHER
INCONSISTENCY BETWEEN THE TERMS OF THIS BY___________________________
APPLICATION AND THE CREDIT AGREEMENT, AS IT TITLE________________________
MAY BE AMENDED FROM TIME TO TIME, THE TERMS
OF THE CREDIT AGREEMENT SHALL PREVAIL.
By___________________________
TITLE________________________
<PAGE>
SCHEDULE 1.3 (COMMERCIAL)
APPLICATION AND AGREEMENT FOR IRREVOCABLE COMMERCIAL LETTER OF CREDIT
[HARRIS BANK LOGO] P. 0. Box 755 L/C No.___________________
Chicago, Illinois 60690 (For Bank use only)
Telephone: (312) 461-5072
Cable address: HARRISBANK
Telex: 25-3417 (HARISINT CGO) Date______________________
Please issue an irrevocable Letter of Credit as set forth below and forward same
to your correspondent for delivery to the beneficiary by
/ / Airmail / / Airmail, with short preliminary cable advice / / Full Cable
-------------------------------------------------------------------------------
ADVISING BANK FOR ACCOUNT OF (APPLICANT)
(optional)
----------------------------------------------------- Amount ------------------
IN FAVOR OF (BENEFICIARY) In Figures
In Words
-----------------------------------------
Expiry Date Latest date for shipment
(Optional)
In the country of the beneficiary
unless otherwise indicated
-------------------------------------------------------------------------------
Available by drafts at ______________________________________________
"at sight", "30 day sight", etc.)
For _________________________Invoice amount of merchandise drawn on
(full or percentage)
/ / Harris Bank or / / Advising Bank* (*Payment will be effected prior to
receipt of documents at Harris Bank).
DRAFTS MUST BE ACCOMPANIED BY THE FOLLOWING DOCUMENTS (in DUPLICATE unless
otherwise specified)
/ / Commercial Invoice
/ / Packing List
/ / Special U.S. Customs invoice
/ / Certificate of origin Form A
/ / Negotiable Marine/Air Insurance Policy or Certificate covering: Coverage
of invoice_________(110% unless otherwise specified)
PERCENT
/ / All Risks / / War Risks / / Other Risks (please specify)_____________
/ / Other documents, if any:________________________________________________
/ / Full set of at least two ORIGINAL clean on board ocean bills of Lading
issued to order of shipper, endorsed in blank, marked "Freight
/ / Collect / / Prepaid
/ / Clean airway bill in________ consigned____________________________________
____________________________ Marked Freight / / Collect / / Prepaid
/ / Other Transport Document__________________________________________________
____________________________ Marked Freight / / Collect / / Prepaid
/ / Notify ___________________________________________________________________
__________________________________________________________________________
Merchandise Description___________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(Please mention commodity only, omitting details as to grade, quality, etc.)
Check one: / / FOB / / C&I / / C&F / / CIF / / OTHER_______________________
(Name of city, Port or Airport)
--------------------------------------------------------------------------------
Shipment from: Partial Shipments / / Permitted / / Prohibited
-------------------------------------------------------
To: Transshipments / / Permitted / / Prohibited
--------------------------------------------------------------------------------
/ / Documents must be presented to the negotiating or paying bank within ______
days after the issuance of documents evidencing shipment or dispatch or
taken in charge (shipping documents). Documents presented within this
period and within the validity of the letter of credit will be negotiated.
/ / Insurance effected by ourselves. We agree to keep insurance coverage in
force until this transaction is completed.
Discount charges (if the tenor is other than sight) are for the account of the:
/ / Applicant/ / Beneficiary
All banking charges, other than those of Harris bank:
/ / Applicant / / Beneficiary
Other Instructions______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Unless otherwise instructed, documents will be forwarded to us in one airmail by
the negotiating bank. The credit will be subject to the Uniform Customs and
Practice for the Documentary Credits (1993 revision) the International Chamber
of Commerce Publication No. 500
PLEASE DATE AND OFFICIALLY SIGN THE AGREEMENT ON THE REVERSE SIDE OF THIS
APPLICATION.
<PAGE>
In consideration of your opening your Commercial Letter of Credit (hereinafter
called "Credit") substantially in accordance with the foregoing application, we
hereby agree with you as follows:
1. We agree to pay you in cash the amount of each draft or acceptance
drawn under, or purporting to be drawn under the Credit, such payment to be made
at the maturity of each respective draft or acceptance, or on demand prior
thereto.
2. Payment shall be made by us at your office in Chicago, Illinois, in
lawful money of the United States. As to drafts or acceptances which are
payable in currency other than United States currency, the amount to be paid by
us shall be the equivalent of the amount paid by you at the rate of exchange
then current in Chicago for cable transfers to the place of payment in the
currency in which such draft is drawn. If there is then no rate of exchange
generally current in Chicago for effective cable transfers, we agree on demand
to pay you an amount which you then deem necessary to pay or provide for the
payment of our obligations hereunder; but in any such event we shall remain
liable for any deficiency which may result if the actual cost to you of
settlement of your obligations under the Credit proves to be in excess of the
amount so paid by us, and we shall be entitled to a refund, without interest, of
any excess payment made by us.
3. We also agree to pay you, on demand, a commission fee for issuance
and payment of the Credit according to your schedule of fees in effect at the
time of issuance/payment, and all charges and expenses paid or incurred by you
in connection with the Credit including costs of complying with any and all
applicable governmental exchange regulations, including all costs and
expenses arising out of any reserve requirements for, or any assessment of
deposit insurance premiums on, the Credit, and interest on any such amount(s)
not paid when due at the rate per annum equal to your prime commercial rate from
time to time in effect.
4. We hereby recognize and admit your ownership in and unqualified
right to the possession and disposal of all property shipped, warehoused or
otherwise delivered or allocated under or pursuant to or in connection with the
Credit, or in any way relative thereto or to the drafts drawn thereunder,
whether or not released to us on trust or bailee receipt, and also in and to all
shipping documents, warehouse receipts, policies or certificates of insurance
and other documents accompanying or relative to drafts drawn under the Credit,
and in and to the proceeds of each and all of the foregoing, until such time as
all the obligations and liabilities of us or any of us to you at any time
existing under or with reference to the Credit, or this agreement, or any other
credit or any other obligation or liability to you, have been fully paid and
discharged, all as security for such obligations and liabilities; and that all
or any of such property and documents and the proceeds of any thereof, coming
into the possession of you or any of your correspondents, may be held and
disposed of by you as herein above provided; and the receipt by your, or any of
your correspondents, at any time of other security, of whatsoever nature,
including cash, shall not be deemed a waiver of any of your rights or powers
herein recognized.
5. Except insofar as otherwise expressly stated in the Credit to the
contrary, we agree that you and any of your correspondents may receive and
accept as "Bills of Lading" under the Credit and documents issued or purporting
to be issued by or on behalf of any carrier which acknowledges receipt of
property for transportation, whatever the specific provisions of such documents,
and any such Bill of Lading issued by or on behalf of an ocean carrier may be
accepted by you as an "Ocean Bill of Lading" whether or not the entire
transportation is by water. If the Credit states that except so far as
otherwise expressly stated it is subject to the Uniform Customs and Practice for
Documentary Credits, 1993 Revision (Publication No. 500), fixed by the
international Chamber of Commerce the Credit shall, except so far as otherwise
expressly stated, be so subject in all respects and you and any of your
correspondents may, except so far as otherwise expressly stated, accept
documents of any character which comply with such Uniform Customs and Practice;
and if the Credit does not so state, you and any of your correspondents may,
without limiting the type of document acceptable according to any other
provisions of the Credit, accept documents of any character which comply with
the said Uniform Customs and Practice or which comply with the laws or
regulations in force and customs and usages of the place of negotiation or
payment.
In the event that, at our request, some of the documents required
under the Credit are forwarded directly to us or any other party designated by
us, or you, at our request, release or consent to the release of some or all of
the property shipped under the Credit prior to the presentation of the relative
item, we agree to pay you on demand the amount of any claim made against you by
reason thereof and authorize you to honor such item when it is presented
regardless of whether or not such item or any documents which may accompany it
complies with the terms of the Credit. In case of your issuance of steamship
indemnity for our account, you are authorized to retain original bills of lading
for delivery to the shipping company to secure the release of your indemnity.
We agree to indemnify and hold you harmless from each and every claim,
demand liability, loss, cost or expense (including, but not limited to,
reasonable attorney's fees and legal costs) which may arise or be created by
your acceptance of telecommunication instructions in connection with the Credit,
including, but not limited to, telephone instructions in connection with any
waiver of discrepancies.
6. Except insofar as otherwise expressly stated in the Credit, we
agree that partial shipments may be made under the Credit and you may honor the
relative drafts, and that if the Credit specifies drawings and/or shipments by
installments within stated periods, and the shipper fails to ship or drafts are
not drawn in any designated period, the Credit shall cease to be available for
that and any subsequent installments unless otherwise stipulated in the Credit.
<PAGE>
7. Any modification of the terms of the Credit other than an increase
in the amount of the Credit or an extension of the maturity or time for
presentation of drafts, acceptances or documents, may with your consent be made
by any of us with or without notification to the others, but any increase in the
amount of the credit or extension of the maturity or time for presentation of
drafts, acceptances or documents shall be only at the request of all of us, and
in any such event this agreement shall be binding upon us with regard to the
Credit so increased or otherwise modified, to drafts, documents and property
covered thereby, and to any action taken by you or any of your correspondents,
in accordance with any such extension, increase or other modification.
8. The users of the Credit shall be deemed our agents and we assume
all risks of their acts or omissions. Neither you nor your correspondents shall
be responsible for the existence, character, quality, quantity, condition,
packing, value or delivery of the property purporting to be represented by
documents; for any difference in character, quality, quantity, condition,
packing, value or delivery of the property from that expressed in documents; for
general and/or particular conditions stipulated in the documents; for the
validity, sufficiency or genuineness or legal effect of documents, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; for the time, place, manner or order in
which shipment is made; for partial or incomplete shipment, or failure or
omission to ship any or all of the property referred to in the Credit; for the
character, adequacy, validity or genuineness of any insurance; for the solvency
or responsibility of any insurer,or for any other risk connected with insurance;
for any deviation from instructions, delay, default or fraud by the shipper or
any one else in connection with the property or the shipping thereof; for the
solvency, responsibility or relationship to the property of any party issuing
any documents in connection with the property; for any variance between
invoices, bills of lading, warehouse receipts or other documents; for delay in
arrival or failure to arrive of either the property or any of the documents
relating thereto; for delay in giving or failure to give notice of arrival, or
any other notice; for any breach of contract between the shippers or vendors and
ourselves or any of us; for the validity or sufficiency of any instrument
assigning or purporting to assign the Credit or the rights or benefits
thereunder or the proceeds thereof; for failure of any draft to bear any
reference or adequate reference to the Credit, or failure of documents to
accompany any draft at negotiation, or failure of any person to note the amount
of any draft on the reverse of the Credit, or to surrender or to take up the
Credit or to send forward documents apart from drafts, as required by the terms
of the Credit, each of which provisions, if contained in the Credit itself, it
is agreed may be waived by you; or for errors, omissions, interruptions or
delays in transmission or delivery of any message by mail, cable, telegraph,
wireless or otherwise, whether or not they be in cipher; or for any error,
neglect or default of any of your correspondents; and none of the above shall
affect, impair or prevent the vesting of any of your rights or powers hereunder.
We agree that you or any of your correspondents may accept or pay any draft
dated on or before the expiration of any time limit expressed in the Credit,
regardless of when drawn and when or whether negotiated, provided the other
required documents are dated prior to the expiration of any time limit relating
thereto. In furtherance and extension and not in limitation of the specific
provisions hereinbefore set forth, we agree that any action taken by you or by
any correspondent of yours under or in connection with the Credit or the
relative drafts, documents or property, if taken in good faith, shall be binding
on us and shall not put you or your correspondent under any resulting liability
to us; and we make like agreement as to any inaction or omission, unless in
breach of good faith.
9. We agree to procure promptly and necessary import and export or
other licenses for the import or export or shipping of the property and to
comply with all foreign and domestic governmental regulations in regard to the
shipment of the property or the financing thereof, and to furnish such
certificates in that respect as you may at any time require, and to keep the
property adequately covered by insurance satisfactory to you, in companies
satisfactory to you, and to assign the policies or certificates of insurance to
you, or to make the loss or adjustment, if any, payable to you, at your option,
and to furnish you, if demanded, with evidence of acceptance by the insurers of
such assignment.
10. Each of us agrees, at any time and from time to time, on your
demand to deliver, transfer or assign to you as security for (i) any and all
obligations and liabilities of us or any one or more of us hereunder, including
the amount of this Credit, and (ii) any and all other obligations and
liabilities to you of us or any one or more of us, now existing or hereafter
arising direct or contingent, due or to become due, property in addition to that
referred to in paragraph numbered 4 hereof of a value and character satisfactory
to you. Without limiting the foregoing and in addition to the provisions of
paragraph numbered 4 hereof,each of us agrees that all property belonging to any
of us of every name and nature whatsoever, now or at any time hereafter
delivered, conveyed, transferred, assigned or paid to you, or coming into your
possession or into the possession of anyone for you in any manner whatsoever,
whether expressly as security for any such obligations or liabilities of us or
any of us to you or for safekeeping or otherwise, including any items received
for collection or transmission, and the proceeds thereof, whether or not such
property is in whole or in part released to us or any of us on trust or bailee
receipt, are hereby made security for each and all such obligations and
liabilities referred to in this paragraph 10. We further agree that any
indebtedness due or owing from you to any of us may at any time, as well before
as after the maturity of any obligation or liability hereunder of us or any of
us to you, be set off and applied against any liability or obligation of us or
any of us hereunder including the amount of this Credit.
11. Upon failure of payment of any sum required to be paid by us or
any of us pursuant to the terms hereof at the time or times when such payment is
due, whether by lapse of time, demand or otherwise, or upon failure of us or any
of us at all times to keep a margin of security with you satisfactory to you, or
upon the making by any of us of any assignments for the benefit of creditors, or
upon the filing of any voluntary or involuntary petition in bankruptcy by or
against any of us or upon the application for the appointment of a receiver of
any property of any of us, or upon any act of bankruptcy or state of insolvency
or suspension of business of or by any of us, or upon any proceeding being
commenced by or against us or any of us under any bankruptcy, reorganization,
arrangement, readjustment of debt, receivership, liquidation, dissolution or
conservation law or statute of any jurisdiction, or upon the service of any
warrant of attachment or garnishment or the existence or making or issuance of
any tax lien, levy or similar process on or with respect to any property of any
of us, all of our obligations and liabilities hereunder including the amount of
this Credit (and all other liabilities and obligations of any of us to you)
shall become and be immediately due and payable without demand or notice. Also
in any such event you shall have full power and authority at any time or times
thereafter to sell and assign and deliver the whole of the property, or any part
thereof, then constituting security pursuant to any of the terms hereof, at any
broker's board or at public or private sale, in such parcel or parcels and at
such time or times and at such place or places and for such price or prices as
you may deem proper, and with the right in yourself to be purchaser at such
brokers' board or public sale; and each of us hereby waives all
<PAGE>
advertisement or notice of sale or intention to sell and of the time and place
thereof; and after deducting all legal and other costs and expenses of any such
sale and delivery of the property sold, the residue of the proceeds of such sale
or sales shall be applied to pay any or all of the liabilities for which the
property so sold constitutes security under the terms hereof. The residue, if
any, of the proceeds of sale and any other property constituting security
remaining after satisfaction of our liabilities to you shall be returned to us.
Nothing in this paragraph 11 contained shall be deemed to limit or restrict your
rights under paragraph numbered 4 hereof.
12. You shall not be deemed to have waived any of your rights
hereunder unless you or your authorized agent shall have signed such waiver in
writing. No such waiver, unless expressly as stated therein, shall be effective
as to any transaction except the specific transaction described in the waiver.
13. The word "property" as used in this agreement includes goods,
merchandise, securities, funds, choses in action and any and all other forms of
property, whether real, personal or mixed, and any right or interest therein.
14. If this agreement is signed by one party, the terms "we," "our,"
"us," shall be read throughout as "I," "my," "me," as the case may be. If this
agreement is signed by two or more parties, it shall constitute the joint and
several agreement of such parties. This agreement shall be deemed to be made
under and shall in all respects be governed by the law of the State of Illinois.
THIS APPLICATION IS SUBJECT TO THE TERMS OF A _____________________________
CREDIT AGREEMENT (THE "CREDIT AGREEMENT") (Firm's Name)
DATED AS OF AUGUST 11, 1994 AMONG _____________________________
THE APPLICANT, CERTAIN LENDERS PARTY THERETO
AND HARRIS TRUST AND SAVINGS BANK, AS AGENT. Account Number:
IN THE EVENT OF ANY CONFLICT OR OTHER -----------------------------
INCONSISTENCY BETWEEN THE TERMS OF THIS BY___________________________
APPLICATION AND THE CREDIT AGREEMENT, AS IT
MAY BE AMENDED FROM TIME TO TIME, THE TERMS
OF THE CREDIT AGREEMENT SHALL PREVAIL. By___________________________
<PAGE>
SCHEDULE 5.3
<TABLE>
<CAPTION>
THE SUBSIDIARIES
JURISDICTION OF PERCENTAGE OWNER
NAME INCORPORATION OWNERSHIP
<S> <C> <C> <C>
ALABAMA METALLURGICAL WASHINGTON 100% ACME STEEL
CORPORATION
ALTA SLITTING DELAWARE 100% ACME PACKAGING
CORPORATION
ACME STEEL COMPANY WEST INDIES 100% ACME PACKAGING
INTERNATIONAL, INC.
</TABLE>
-1-
<PAGE>
EXHIBIT 10.4
ASSIGNMENT AND ACCEPTANCE
Dated August 24, 1994
Reference is made to the Credit Agreement dated as of August 11, 1994 (the
"CREDIT AGREEMENT") among the Acme Group, the Lenders (as defined in the Credit
Agreement) and Harris Trust and Savings Bank, as Agent for the Lenders (the
"AGENT"). Terms defined in the Credit Agreement are used herein with the same
meaning.
Harris Trust and Savings Bank (the "ASSIGNOR") and National City
Bank (the "ASSIGNEE ") agree as follows:
1 . The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a 37.5% interest in and
to all of the Assignor's rights and obligations under the Credit Agreement as of
the Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor's Commitment as in effect on the Effective
Date and the Revolving Loans, if any, owing to the Assignor on the Effective
Date and the Assignor's Percentage of any outstanding L/C Obligations, if any.
2. The Assignor (i) represents and warrants that as of the date hereof
(A) its Commitment is $40,000,000, (B) the aggregate outstanding principal
amount of Revolving Loans made by it under the Credit Agreement that have not
been repaid is $0 and a description of the interest rates and interest periods
for such Revolving Loans is attached as Schedule 1 hereto, and (C) the aggregate
principal amount of Assignor's outstanding uc Obligations is $O; (ii) represents
and warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim, lien, or encumbrance of any kind; (iii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; and (iv) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Borrower, the
Company, or any Guarantor or the performance or observance by any Borrower, the
Company, or any Guarantor of any of their respective obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to in Sections 7.5(a)(i) and (ii) thereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking
<PAGE>
or not taking action under the Credit Agreement; (iii) appoints and authorizes
the Agent to take such action as Agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (iv) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; and (v) specifies as its lending offices (and address for notices) the
offices set forth beneath its name on the signature pages hereof.
4. It is understood that commitment and/or Letter of Credit fees accrued
to the date hereof with respect to the interest assigned hereby are for the
account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
5. The effective date for this Assignment and Acceptance shall be August
24, 1994 (THE "EFFECTIVE DATE"). Following the execution of this Assignment and
Acceptance, it will be delivered to the Company for its acceptance and to the
Agent for acceptance and recording by the Agent.
6. Upon such acceptance and recording, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments under the Credit Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
8. In accordance with Section 12.18 of the Credit Agreement, the Assignor
and the Assignee request and direct that the Agent prepare and cause the
Borrowers to execute and deliver to the Assignee a Revolving Credit Note payable
to the Assignee in the amount of its Commitment and a new Revolving Credit Note
to the Assignor in the amount of its Commitment after giving effect to the
assignment hereunder.
-2-
<PAGE>
9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
HARRIS TRUST AND SAVINGS BANK
By: /s/ Susan D. Olt
--------------------------------
Title: Vice President
NATIONAL CITY BANK
By:
--------------------------------
Title:
Lending Office (and address for
notices):
-----------------------------------
-----------------------------------
-----------------------------------
LIBOR Funding Office:
-----------------------------------
-----------------------------------
-----------------------------------
Accepted and consented this
24th day of August, 1994
ACME METALS INCORPORATED
By:
--------------------------------
Title:
Accepted and consented to by the Agent this
24th day of August, 1994
HARRIS TRUST AND SAVINGS BANK
By /s/ Kristen E. Seyfarth
---------------------------------
Title: Asst Vice President
-3-
<PAGE>
9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
HARRIS TRUST AND SAVINGS BANK
By:
--------------------------------
Title: Vice President
NATIONAL CITY BANK
By: /s/ Frank F. Pagura, Jr.
--------------------------------
Title: Account Officer
Lending Office (and address for
notices):
1900 E. 9th Street
-----------------------------------
Cleveland, OH 44114-3484
-----------------------------------
-----------------------------------
LIBOR Funding Office:
1900 E. 9th Street
-----------------------------------
Cleveland, OH 44114-3484
-----------------------------------
-----------------------------------
Accepted and consented this
24th day of August, 1994
ACME METALS INCORPORATED
By:
--------------------------------
Title:
Accepted and consented to by the Agent this
24th day of August, 1994
HARRIS TRUST AND SAVINGS BANK
By
---------------------------------
Title: Vice President
-3-
<PAGE>
9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
HARRIS TRUST AND SAVINGS BANK
By:
--------------------------------
Title: Vice President
NATIONAL CITY BANK
By:
--------------------------------
Title:
Lending Office (and address for
notices):
-----------------------------------
-----------------------------------
-----------------------------------
LIBOR Funding Office:
-----------------------------------
-----------------------------------
-----------------------------------
Accepted and consented this
24th day of August, 1994
ACME METALS INCORPORATED
By: /s/ James W. Hoekwater
--------------------------------
Title: Treasurer
Accepted and consented to by the Agent this
24th day of August, 1994
HARRIS TRUST AND SAVINGS BANK
By
---------------------------------
Title: Vice President
-3-
<PAGE>
SCHEDULE I
Type of Last day of
Principal Amount Revolving Loan Interest Rate Interest Period
---------------- -------------- ------------- ---------------
$0 N/A N/A N/A
<PAGE>
EXHIBIT 10.5
ASSIGNMENT AND ACCEPTANCE
Dated August 24, 1994
Reference is made to the Credit Agreement dated as of August 11, 1994 (the
"CREDIT AGREEMENT") among the Acme Group, the Lenders (as defined in the Credit
Agreement) and Harris Trust and Savings Bank, as Agent for the Lenders (the
"AGENT"). Terms defined in the Credit Agreement are used herein with the same
meaning.
Lehman Commercial Paper, Inc. (the "ASSIGNOR) and NBD Bank, N.A. (the
"ASSIGNEE") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a 50% interest in and
to all of the Assignor's rights and obligations under the Credit Agreement as of
the Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor's Commitment as in effect on the Effective
Date and the Revolving Loans, if any, owing to the Assignor on the Effective
Date and the Assignor's Percentage of any outstanding L/C Obligations, if any.
2. The Assignor (i) represents and warrants that as of the date hereof
(A) its Commitment is $40,000,000, (B) the aggregate outstanding principal
amount of Revolving Loans made by it under the Credit Agreement that have not
been repaid is $0 and a description of the interest rates and interest periods
for such Revolving Loans is attached as Schedule 1 hereto, and (C) the aggregate
principal amount of Assignor's outstanding L/C Obligations is $0; (ii)
represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear
of any adverse claim, lien, or encumbrance of any kind; (iii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (iv) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower, the Company, or any Guarantor or the
performance or observance by any Borrower, the Company, or any Guarantor of
any of their respective obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to in Sections 7.5(a)(i) and (ii) thereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking
<PAGE>
or not taking action under the Credit Agreement; (iii) appoints and authorizes
the Agent to take such action as Agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (iv) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; and (v) specifies as its lending offices (and address for notices) the
offices set forth beneath its name on the signature pages hereof.
4. It is understood that commitment and/or Letter of Credit fees accrued
to the date hereof with respect to the interest assigned hereby are for the
account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
5. The effective date for this Assignment and Acceptance shall be August
24, 1994 (the "EFFECTIVE DATE"). Following the execution of this Assignment and
Acceptance, it will be delivered to the Company for its acceptance and to the
Agent for acceptance and recording by the Agent.
6. Upon such acceptance and recording, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments under the Credit Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
8. In accordance with Section 12.18 of the Credit Agreement, the Assignor
and the Assignee request and direct that the Agent prepare and cause the
Borrowers to execute and deliver to the Assignee a Revolving Credit Note payable
to the Assignee in the amount of its Commitment and a new Revolving Credit Note
to the Assignor in the amount of its Commitment after giving effect to the
assigned hereunder.
-2-
<PAGE>
9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Jorde M. Nathan
-------------------------------------
Title:
NBD BANK, N.A.
By: /s/ Steven K. Wagner
-------------------------------------
Title: Second Vice President
Lending Office (and address for notices):
611 Woodward Avenue
----------------------------------------
Detroit, Michigan 48226
----------------------------------------
LIBOR Funding Office:
611 Woodward Avenue
----------------------------------------
Detroit, Michigan 48226
----------------------------------------
__________________________________________
Accepted and consented this
24th day of August, 1994
ACME METALS INCORPORATED
By: /s/ James W. Hoekwater
--------------------------------
Title: Treasurer
Accepted and consented to by the Agent this
24th day of August, 1994
HARRIS TRUST AND SAVINGS BANK
By: /s/ Susan D. Olt
--------------------------------
Title: Vice President
<PAGE>
SCHEDULE I
----------
Type of Last Day of
Principal Amount Revolving Loan Interest Rate Interest Period
---------------- -------------- ------------- ---------------
$0 N/A N/A N/A
<PAGE>
EXHIBIT 10.6
ASSIGNMENT AND ACCEPTANCE
Dated August 24, 1994
Reference is made to the Credit Agreement dated as of August 11, 1994 (the
"CREDIT AGREEMENT") among the Acme Group, the Lenders (as defined in the Credit
Agreement) and Harris Trust and Savings Bank, as Agent for the Lenders (the
"AGENT"). Terms defined in the Credit Agreement are used herein with the same
meaning.
Lehman Commercial Paper Inc. (the "ASSIGNOR") and Mercantile Bank of
St. Louis National Association (the "ASSIGNEE") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a 25% interest in and
to all of the Assignor's rights and obligations under the Credit Agreement as of
the Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor's Commitment as in effect on the Effective
Date and the Revolving Loans, if any, owing to the Assignor on the Effective
Date and the Assignor's Percentage of any outstanding L/C Obligations, if any.
2. The Assignor (i) represents and warrants that as of the date hereof
(A) its Commitment is $40,000,000, (B) the aggregate outstanding principal
amount of Revolving Loans made by it under the Credit Agreement that have not
been repaid is $0 and a description of the interest rates and interest periods
for such Revolving Loans is attached as Schedule 1 hereto, and (C) the aggregate
principal amount of Assignor's outstanding L/C Obligations is $0; (ii)
represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear
of any adverse claim, lien, or encumbrance of any kind; (iii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (iv) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower, the Company, or any Guarantor or the
performance or observance by any Borrower, the Company, or any Guarantor of
any of their respective obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to in Sections 7.5(a)(i) and (ii) thereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking
<PAGE>
or not taking action under the Credit Agreement; (iii) appoints and authorizes
the Agent to take such action as Agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (iv) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; and (v) specifies as its lending offices (and address for notices) the
offices set forth beneath its name on the signature pages hereof.
4. It is understood that commitment and/or Letter of Credit fees accrued
to the date hereof with respect to the interest assigned hereby are for the
account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
5. The effective date for this Assignment and Acceptance shall be August
24, 1994 (the "EFFECTIVE DATE"). Following the execution of this Assignment and
Acceptance, it will be delivered to the Company for its acceptance and to the
Agent for acceptance and recording by the Agent.
6. Upon such acceptance and recording, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments under the Credit Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
8. In accordance with Section 12.18 of the Credit Agreement, the Assignor
and the Assignee request and direct that the Agent prepare and cause the
Borrowers to execute and deliver to the Assignee a Revolving Credit Note payable
to the Assignee in the amount of its Commitment and a new Revolving Credit Note
to the Assignor in the amount of its Commitment after giving effect to the
assignment hereunder.
-2-
<PAGE>
9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Jorde M. Nathan
-------------------------------
Title:
MERCANTILE BANK OF ST. LOUIS NATIONAL
ASSOCIATION
By: /s/ Timothy W. Hassler
--------------------------------
Title: Banking Officer
Lending Office (and address for notices):
Mercantile Bank of St. Louis
__________________________________________
8th and Locust Streets
__________________________________________
St. Louis, MO 63101
__________________________________________
LIBOR Funding Office:
Mercantile Bank of St. Louis
__________________________________________
8th and Locust Streets
__________________________________________
St. Louis, MO 63101
__________________________________________
Accepted and consented this
24th day of August, 1994
ACME METALS INCORPORATED
By: /s/ James W. Hoekwater
________________________________
Title: Treasurer
Accepted and consented to by the Agent
this 24th day of August, 1994
HARRIS TRUST AND SAVINGS BANK
By: /s/ Susan D. Olt
__________________________________
Title: Vice President
-3-
<PAGE>
SCHEDULE I
Type of Last Day of
Principal Amount Revolving Loan Interest Rate Interest Period
---------------- -------------- ------------- ---------------
$0 N/A N/A N/A
<PAGE>
EXHIBIT 10.7
ASSIGNMENT AND ACCEPTANCE
Dated September 1, 1994
Reference is made to the Credit Agreement dated as of August 11, 1994 (the
"CREDIT AGREEMENT") among the Acme Group, the Lenders (as defined in the Credit
Agreement) and Harris Trust and Savings Bank, as Agent for the Lenders (the
"AGENT"). Terms defined in the Credit Agreement are used herein with the same
meaning.
Lehman Commercial Paper Inc. (the "ASSIGNOR") and General Electric Capital
Corporation (the "ASSIGNEE") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a 100% interest in and
to all of the Assignor's rights and obligations under the Credit Agreement as of
the Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor's Commitment as in effect on the Effective
Date and the Revolving Loans, if any, owing to the Assignor on the Effective
Date and the Assignor's Percentage of any outstanding L/C Obligations, if any.
2. The Assignor (i) represents and warrants that as of the date hereof
(A) its Commitment is $10,000,000, (B) the aggregate outstanding principal
amount of Revolving Loans made by it under the Credit Agreement that have not
been repaid is $0 and a description of the interest rates and interest periods
for such Revolving Loans is attached as Schedule I hereto, and (C) the aggregate
principal amount of Assignor's outstanding L/C Obligations is $O; (ii)
represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear
of any adverse claim, lien, or encumbrance of any kind; (iii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (iv) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower, the Company, or any Guarantor or the
performance or observance by any Borrower, the Company, or any Guarantor of any
of their respective obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to in Sections 7.5(a)(i) and (ii) thereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking
<PAGE>
or not taking action under the Credit Agreement; (iii) appoints and authorizes
the Agent to take such action as Agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (iv) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; and (v) specifies as its lending offices (and address for notices) the
offices set forth beneath its name on the signature pages hereof.
4. It is understood that commitment and/or Letter of Credit fees accrued
to the date hereof with respect to the interest assigned hereby are for the
account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
5. The effective date for this Assignment and Acceptance shall be
September 1, 1994 (the "EFFECTIVE DATE"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Company for its
acceptance and to the Agent for acceptance and recording by the Agent.
6. Upon such acceptance and recording, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments under the Credit Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make an appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
8. In accordance with Section 12.18 of the Credit Agreement, the
Assignor and the Assignee request and direct that the Agent prepare and cause
the Borrowers to execute and deliver to the Assignee a Revolving Credit Note
payable to the Assignee in the amount of its Commitment and a new Revolving
Credit Note to the Assignor in the amount of its Commitment after giving effect
to the assignment hereunder.
-2-
<PAGE>
9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Jorde M. Nathan
--------------------------
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Shaun Pettit
--------------------------
Title: Region Operations Manager
Lending Office (and address for
notices):
190 S. LASALLE SUITE 1200
------------------------------
CHICAGO, IL 60603
------------------------------
------------------------------
LIBOR Funding Office:
------------------------------
------------------------------
------------------------------
Accepted and consented this
lst day of September, 1994
ACME METALS INCORPORATED
By: /s/ James W. Hoekwater
-------------------------------
Title: Treasurer
Accepted and consented to by the Agent this
1st day of September, 1994
HARRIS TRUST AND SAVINGS BANK
By /s/ Susan D. Olt
--------------------------------
Title: Vice President
-3-
<PAGE>
SCHEDULE I
Type of Last day of
Principal Amount Revolving Loan Interest Rate Interest Period
---------------- -------------- ------------- ---------------
$0 N/A N/A N/A
<PAGE>
EXHIBIT 10.9
AMENDMENT (the "Amendment") dated as of December 15, 1994 between Acme
Metals Incorporated, a Delaware corporation (the "Company"), Lehman Commercial
Paper Inc., as agent and lender, and Harris Trust and Savings Bank, as successor
agent.
The Company and Lehman Commercial Paper Inc., in its capacities as
lender (the "Lender") and agent (the "Agent") are party to a Term Loan Agreement
dated as of August 4, 1994, the "Agreement"). All terms not otherwise defined
in this Amendment shall have the meanings provided therefor in the Agreement.
Section 1. REGISTRATION OF OBLIGATIONS. In consideration of the mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree that, anything in the Agreement to the contrary notwithstanding:
(a) Any Lender that is not a citizen or resident of the United States
of America, a corporation, partnership or other entity created or organized
in or under any laws of the United States of America, or any estate or
trust that is subject to Federal income taxation regardless of the source
of its income (a "non-U.S. Lender") and that could become completely exempt
from withholding of any tax, assessment or other charge or levy imposed by
or on behalf of the United States of America or any taxing authority
thereof ("U.S. Taxes") in respect of payment of any Obligations due to such
non-U.S. Lender under the Agreement if the Obligations were in registered
form for U.S. Federal income tax purposes may request the Company (through
the Agent), and the Company agrees thereupon, to exchange any promissory
note(s) evidencing such Obligations for promissory note(s) registered as
provided in paragraph (c) below (each, a "Registered Note"). Registered
Notes may not be exchanged for promissory notes that are not Registered
Notes.
(b) Each non-U.S. Lender holding Registered Note(s) (a "Registered
Noteholder") (or, if such Registered Noteholder is not the beneficial owner
thereof, such beneficial owner) shall deliver to the Company and the Agent
prior to or at the time such non-U.S. Lender becomes a Registered
Noteholder the forms described in Section 9.1(b) and, if a Form W-8 is
provided, an annual certificate stating that (i) such Registered Noteholder
or
<PAGE>
-2-
beneficial owner, as the case may be, is not a "bank" within the meaning of
section 881(c)(3)(A) of the U.S. Internal Revenue Code and (ii) such Registered
Noteholder or beneficial owner, as the case may be, shall promptly notify the
Company if at any time such Registered Noteholder or beneficial owner, as the
case may be, determines that it is no longer in a position to provide such
certification to the Company (or any other form of certification adopted by the
U.S. taxing authorities for such purposes).
(c) The Company shall maintain, or cause to be maintained, a register (the
"Register") (which, at the request of the Company, shall be kept by the Agent on
behalf of the Company at no extra charge to the Company at the address to which
notices to the Agent are to be sent under the Agreement) on which it enters the
name of the registered owner of the Obligation(s) evidenced by a Registered
Note. A Registered Note and the Obligation(s) evidenced hereby may be assigned
or otherwise transferred in whole or in part only by registration of such
assignment or transfer of such Registered Note and the Obligation(s) evidenced
thereby on the Register (and each Registered Note shall expressly so provide).
Any assignment or transfer of all or part of such Obligation(s) and the Reg-
istered Note(s) evidencing the same shall be registered on the Register only
upon surrender for registration of assignment or transfer of the Registered
Note(s) evidencing such Obligation(s), duly endorsed by the Registered
Noteholder thereof and accompanied by a duly completed Assignment and Assumption
Agreement, and thereupon one or more new Registered Note(s) in the same
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s). Prior to the due presentment for registration of assignment or
transfer of any Registered Note, the Company and the Agent shall treat the
Person in whose name such Obligation(s) and the Registered Note(s) evidencing
the same is registered as the owner thereof for the purpose of receiving all
payments thereon and for all other purposes, notwithstanding any notice to the
contrary.
(d) The Register shall be available for inspection by the Company at any
time upon reasonable prior notice and any Lender at any reasonable time upon
reasonable prior notice.
<PAGE>
-3-
Section 2. RESIGNATION OF AGENT; APPOINTMENT OF SUCCESSOR.
(a) Lehman Commercial Paper Inc. hereby resigns as Agent under
Section 8.6(a) of the Agreement and, in its capacity as sole Lender and
pursuant to Section 8.6(b), appoints Harris Trust and Savings Bank ("HTSB")
as successor Agent. HTSB accepts appointment as successor Agent pursuant
to Section 8.7 of the Agreement. The parties hereto hereby waive the 30
Business Day notice period required under Section 8.6(a) and accept the
appointment of HTSB as successor Agent with all the rights, powers,
privileges and duties of the retiring Agent and discharge the retiring
Agent from all its duties and obligations (in its capacity as Agent) under
the Agreement pursuant to Section 8.6(b) of the Agreement.
(b) The Agent has previously supplied HTSB, in connection with its
agreement to accept appointment as successor Agent, (i) an original
executed copy of the Agreement and the Guarantee and (ii) true and correct
copies of the Security Documents as such documents are in existence on the
date hereof.
(c) The Agent represents and warrants to HTSB, as successor Agent,
that all conditions to funding set forth in Section 3.1 of the Agreement
were met on the Funding Date.
(d) The Agent and HTSB, as successor Agent, hereby agree that the
administrative fee set forth in Section 2.3A shall be allocated among them
PRO RATA based upon the actual elapsed days for which Lehman Commercial
Paper, Inc. acted as Agent. HTSB hereby acknowledges receipt of their
portion of such administrative fee representing such fee applicable through
the year ending August 10, 1995.
Section 3. ADDITIONAL PROVISIONS.
Section 9.2 shall be modified by deleting clause (ii) of such section
and substituting in its stead the following:
"(ii) all reasonable costs and expenses (including fees and
expenses of counsel) incurred or made by the Agent in addition to
<PAGE>
-4-
the administrative fees set forth in Section 2.3A hereof. Such
expenses shall include the reasonable compensation, disbursements
and expenses of the Agent's agents, accountants, experts and
counsel."
Section 4. DEFINITIONS.
(a) The definition of "Interest Rate Determination Date" shall be
amended by deleting the word "third" immediately preceding the words
"Business Day" and substituting therefore the word "second".
(b) The following definition shall be added to Section 1 of the
Agreement after the definition of "Quarterly Interest Payment Date":
"QUARTERLY PERIOD" means the period from February 2 through and
including the next May 1, May 2 through and including the next
August 1, August 2 through and including the next November 1 and
November 2 through and including the next February 1, but shall not
include the Initial Quarterly Period.
Section 5. CONDITIONS TO EFFECTIVENESS. This amendments to the
Agreement shall become effective, as of the date hereof, upon the due execution
and delivery by the Company, the Agent and the Lender under the terms of the
Agreement.
Section 6. DOCUMENTS OTHERWISE UNCHANGED. Except as herein provided,
the Agreement shall remain unchanged and in full force and effect, and each
reference in the Agreement and related documentation to (i) the Agreement shall
be deemed to be a reference to the Agreement as amended hereby (and as the same
may be further amended, supplemented and otherwise modified and in effect from
time to time) and (ii) the promissory note(s) for which any Registered Note(s)
are exchanged shall be deemed to be a reference to such Registered Note(s). In
particular, nothing herein shall be deemed to permit any assignment or transfer
that is otherwise prohibited by the Agreement.
Section 7. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, each of which shall be identical and all of which, when taken
together, shall constitute one and the same instrument, and any of the parties
hereto may execute this Amendment by signing any such counterpart.
<PAGE>
-5-
Section 8. BINDING EFFECT. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 9. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the law governing the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.
ACME METALS INCORPORATED
By: /s/ J.F. Williams
-------------------------------
Title:
LEHMAN COMMERCIAL PAPER, INC.,
as Lender and resigning Agent
By:
-------------------------------
Title:
HARRIS TRUST AND SAVINGS BANK
as successor Agent
By:
-------------------------------
Title:
<PAGE>
-5-
Section 8. BINDING EFFECT. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 9. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the law governing the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.
ACME METALS INCORPORATED
By:
-------------------------------
Title:
LEHMAN COMMERCIAL PAPER, INC.,
as Lender and resigning Agent
By: /s/ Jorde H. Nathan
-------------------------------
Title:
HARRIS TRUST AND SAVINGS BANK
as successor Agent
By:
-------------------------------
Title:
<PAGE>
-5-
Section 8. BINDING EFFECT. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 9. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the law governing the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.
ACME METALS INCORPORATED
By:
-------------------------------
Title:
LEHMAN COMMERCIAL PAPER, INC.,
as Lender and resigning Agent
By:
-------------------------------
Title:
HARRIS TRUST AND SAVINGS BANK
as successor Agent
By: /s/ Susan D. Olt
-------------------------------
Title: Vice President
<PAGE>
-6-
EACH LOAN PARTY OTHER THAN THE COMPANY HEREBY (1) AGREES THAT EACH
REFERENCE TO THE AGREEMENT AND WORDS OF SIMILAR IMPORT IN EACH SECURITY
DOCUMENT AND THE GUARANTEE (AS EACH IS DEFINED IN THE AGREEMENT AS
AMENDED BY THIS AMENDMENT) TO WHICH SUCH LOAN PARTY IS PARTY SHALL BE A
REFERENCE TO THE AGREEMENT AS AMENDED BY THIS AMENDMENT AND (2) CONFIRMS
ITS OBLIGATIONS UNDER EACH SECURITY DOCUMENT AND GUARANTEE TO WHICH IT
IS PARTY AFTER GIVING EFFECT TO THE AMENDMENT OF THE AGREEMENT BY THIS
AMENDMENT:
ACME STEEL COMPANY
By /s/ S.D. Bennett
-------------------------------------
Title: President
ACME PACKAGING CORPORATION
ALTA SLITTING CORPORATION
ALPHA TUBE CORPORATION
UNIVERSAL TOOL & STAMPING COMPANY, INC.
By /s/ J.F. Williams
--------------------------------------
Title: Vice President
ALABAMA METALLURGICAL CORPORATION
By /s/ J.F. Williams
--------------------------------------
Title: President
ACME STEEL COMPANY INTERNATIONAL, INC.
By /s/ J.F. Williams
--------------------------------------
Title: Chairman
<PAGE>
EXHIBIT 10.11
AMENDMENT 1 TO
ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
BETWEEN
ACME STEEL COMPANY
AND
RAYTHEON ENGINEERS & CONSTRUCTORS, INC.
DATED AS OF JULY 28, 1994
-----------------------------------------------------------------------
-----------------------------------------------------------------------
THIS AMENDMENT, made as of the 30th day of September, 1994, between ACME
STEEL COMPANY, a Delaware corporation (hereinafter called "Company"), and
RAYTHEON ENGINEERS & CONSTRUCTORS, INC., a Delaware corporation
(hereinafter called "Contractor").
WHEREAS, Contractor and Company have identified certain terms of the
Agreement which require modification; and
WHEREAS, Contractor and Company both desire to make the modifications to the
Agreement through this Amendment 1 to the Agreement,
NOW, THEREFORE, for good and valuable consideration, the parties hereby agree
as follows:
1. Delete the first line of Article 7.1.1 and replace with: "Contractor
hereby guarantees
that on the Guaranteed Completion Date the Project, including ..."
2. Change the balance of Article 9.1, a), I) starting on line seven, to:
"Coil; provided, however, that in the event Contractor shall fail to
successfully produce the First Hot Coil by the date which is seven (7) months
after the initial guaranteed Preliminary Acceptance Date: then in such event,
for each day after the date which is seven (7) months after the initial
guaranteed Preliminary Acceptance Date, Contractor shall pay to Company the sum
of Two Hundred Twenty Thousand Dollars ($220,000) per day until such time as
the first to occur of: 1) Contractor shall successfully produce the First Hot
Coil; 2) Contractor's total payments to Company under this Section 9.1 a)(1)
shall equal twenty percent (20%) of the total Contract Price."
3. In Exhibit A, Section 29(a), change line four:
From: "( ILCS et seq.,..."
--- ----------
To: "(65 ILCS 11/74.4-1 et seq.,..."
1
<PAGE>
4. Change Section 34(c) of Exhibit A to read as follows:
" (c) If the delay results from Force Majeure causes described in
Section 35 hereof, which excuse Contractor from performance within the
time specified, and if Contractor complies with the notice provisions of
this paragraph, Contractor's time for completion shall be extended to the
extent
of such delay, as follows:
(i) If a delay resulting from Force Majeure is for a
period of thirty (30) consecutive days or less for a
single occurrence, Company may, at its option, elect
to
continue the Agreement in force with no liability for
any
costs incurred by Contractor which arise out of, or
result
from such period of delay, or to terminate the
Agreement
in accordance with Section 40(a)(ii) below.
(ii) Except as otherwise provided in subsection (iii)
below, if a delay resulting from the effect of a
single
occurrence or series of occurrences of Force Majeure
is greater than thirty (30) consecutive days, but not
in excess of sixty (60) consecutive days, Contractor
and Company shall share equally in any direct costs
incurred by Contractor which arise out of, or result
from, such period of time exceeding thirty (30)
consecutive days, or Company may elect to terminate
the Agreement in accordance with Section 40(a)(ii)
below.
(iii) If a delay resulting from the effect of a single
occurrence or series of occurrences of Force Majeure
is greater than sixty (60) consecutive days, Company
shall reimburse Contractor for its additional direct
costs (all costs
excluding profits) which arise out of, or result from,
such period of time
exceeding sixty (60) cumulative days, or Company may
elect to terminate the
agreement in accordance with Section 40(a)(ii) below.
(iv) If a delay resulting from the effect of a single
occurrence or series of occurrences of Force Majeure
is for a period in excess of (90) consecutive days,
then Company and Contractor shall diligently seek a
method of correcting the situation. The Company shall
reimburse Contractor for its additional direct
costs (all costs excluding profits) during such period.
If no mutually satisfactory agreement can be reached,
Company may elect to terminate the Agreement, in which
case Contractor shall be entitled to compensation for
its costs in accordance with Section 40(a)(ii) below.
In the event the Agreement remains in force, the
additional or increased costs or expense occasioned
by Force Majeure shall be borne by the Company."
2
<PAGE>
5. Change Item 8 of Exhibit J to read as follows:
" 8. In the event Contractor, its Equipment Vendors, Material
Suppliers or Subcontractors, believe any part or portion of the Project
Supplies acquired from Retail Subsidiary may be subject to the Illinois
Sales Tax and/or Use Tax, Contractor, its Equipment Vendors, Material
Suppliers or Subcontractors, shall cooperated with the Company to attempt
to acquire such Project Supplies on an exempt basis from Illinois Sales
Tax and Use Tax."
IN WITNESS WHEREOF, the parties have caused these presents to be signed by
their duly authorized representatives as of the day and your first written
above.
ACME STEEL COMPANY RAYTHEON ENGINEERS &
CONSTRUCTORS, INC.
By: /s/ S.D. Bennett By: L. Bhima Reddy
---------------- --------------
Title: PRESIDENT Title: VICE PRESIDENT
--------- --------------
<PAGE>
EXHIBIT 10.12
AMENDMENT NO. 2
This Amendment is made as of March 21, 1995, between Acme Steel Company, a
Delaware corporation (the "Company"), and Raytheon Engineers & Constructors,
Inc., a Delaware corporation (the "Contractor").
WHEREAS, the Company and the Contractor are parties to an Engineering,
Procurement and Construction Contract dated as of July 28, 1994, as
previously amended (as so amended, the "Agreement"); and
WHEREAS, the Company and the Contractor desire to amend the Agreement under
the terms and conditions stated herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
agreements herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
agree as follows:
1. Article 5 of the Agreement shall be amended to add a new Section
5.4 which shall read as follows:
"5.4 Accelerated Completion Date: Notwithstanding Section 5.1
hereof, the Contractor shall successfully complete the last of the
Cold Tests no later than twenty-five and one-half (25 1/2) months
after the Release Date (the "Accelerated Completion Date")."
2. Article 9 of the Agreement shall be amended by adding a new
Section 9.2, as follows:
"9.2 Liquidated Damages. Liquidated damages applicable to the
Contractor's failure to meet the Accelerated Completion Date
shall be as follows:
In the event of a delay for any reasons which are not excused
under Section 35 of Exhibit A or which are not attributable to
SMS or to any third party, the Contractor shall pay the Company as
liquidated damages the following amounts:
$3,000 per day for each of the first fourteen (14) days; and
$4,500 per day for each of the next fourteen (14) days; and
$7,500 per day for each of the next fourteen (14) days."
3. Exhibit D to the Agreement shall be amended by adding a new clause
8 to Section B of Exhibit D which shall state the following:
"8. Costs Associated with Deutsche Mark Payment. The
Company-approved Equipment Vendor ("SMS") requires payment in U.S.
Dollars ("US$") and Deutsche Marks ("DM"). The conversion rate for
these payments is based on a DM 1.60 to US$1.00 ratio. The Company
shall
<PAGE>
reimburse the Contractor for the DM conversion costs on all
progress payments made to SMS to the date hereof and the costs
associated with spot or forward contracts made in connection with
the Contractor's obligation under its contract with SMS.
The Contractor undertakes to use its best efforts to hedge such
obligations at the lowest cost and shall consult with the Company
on such matters and execute such contracts as mutually agreed to
by the parties. In addition, the Company shall be credited with
the benefit of a conversion ratio of DM to US$ greater than DM
1.60 to US$1.00."
4. No Other Changes. Except as provided by this Amendment, the
Agreement shall remain unchanged and in full force and effect.
5. Governing Law. This Amendment shall be governed by and construed
in accordance with the law governing the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date and year first written above.
RAYTHEON ENGINEERS & CONSTRUCTORS, INC.
By: /s/ L BHIMA REDDY
-----------------------------------
Name: L BHIMA REDDY
----------------------------------
Title: VICE PRESIDENT
---------------------------------
ACME STEEL COMPANY
By: /s/ STEPHEN D. BENNETT
------------------------------------
Name: STEPHEN D. BENNETT
----------------------------------
Title: VICE CHAIRMAN, ACME STEEL COMPANY
----------------------------------
<PAGE>
EXHIBIT 10.13
JOINT DEVELOPMENT PROGRAM AGREEMENT
This Agreement made effective as of the 28th day of July, 1994, between
Acme Steel Company ("Acme") and SMS Schloemann-Siemag, AG ("SMS").
WHEREAS, Acme has entered into an agreement of even date herewith with
Raytheon Engineers & Constructors, Inc. ("Raytheon") for the construction of a
Compact Strip Production Line ("CSP Plant"), Ladle Metallurgy Furnaces and
Related Support and Ancillary Facilities (the "EPC Agreement"); and
WHEREAS, SMS has entered into a contract of even date herewith with
Raytheon to be the supplier of the CSP Plant (as defined in the CSP Plant Supply
Agreement); and
WHEREAS, Acme and SMS acknowledge that SMS (the inventor, designer,
developer and manufacturer of the continuous thin-slab casting machine which is
a part of SMS's CSP Plant) does not have casting, reheating and rolling
experience with all of the grades and chemistries of steel products which Acme
requires be produced on the CSP Plant; and
WHEREAS, Acme has identified all of the grades and chemistries of steel
products which Acme needs to produce on the CSP Plant in Acme's "Melt/Caster
Grade Layout from Marketing Plan of 1/18/1993," a copy of which has previously
been furnished to SMS and is annexed hereto and made a part hereof as Annex JDP-
1; and
WHEREAS, SMS has advised Acme that, based upon its current knowledge and
experience, SMS expects all of the grades and chemistries of steel products
referred to in Annex JDP-1 to be castable, reheatable and capable of being
rolled on its continuous thin-slab casting machine; and
<PAGE>
WHEREAS, SMS has agreed to undertake, in cooperation with Acme, a program
to demonstrate the ability to cast, reheat and roll all of the grades and
chemistries of steel products which Acme requires to be produced on the CSP
Plant, and
WHEREAS, Acme and SMS have identified the representative grades and
chemistries of steel products which the parties agree shall be subject to the
cooperative program to demonstrate the capability to cast, reheat and roll said
steel products on the CSP Plant.
NOW THEREFORE, the parties agree as follows:
1. DEFINITIONS.
1.1 "Completion Date" shall have the meaning set forth in Section 3
hereof.
1.2. "Improvement Patents" shall have the meaning set forth in Section 7
hereof.
1.3 "Joint Development Program" shall mean a program pursuant to which
Acme and SMS shall jointly participate to demonstrate the successful casting,
reheating and rolling practices for the grades and chemistries of Acme steel
products referred to as the "Representative Grades" in Annex JDP-2 which is
attached hereto and by this reference made a part hereof.
1.4 "Licensing Revenues" shall mean all payments in cash or in kind
received by either Acme or SMS which are the result of the licensing and/or
sale of Improvement Patents or Process Know-How developed during the Joint
Development Program.
1.5 "Process Know-How" shall have the meaning set forth in Section 8
hereof.
1.6 Other Terms. Unless otherwise defined herein, capitalized terms which
are not defined herein shall have the meanings given thereto in the EPC
Agreement.
2
<PAGE>
2. JOINT DEVELOPMENT PROGRAM OBLIGATIONS.
Acme and SMS shall cooperate with each other and each shall use their best
efforts to perform and complete the Joint Development Program on or before the
Completion Date.
3. COMPLETION DATE.
3.1 The date for completion of the Joint Development Program for each
"Representative Grade" identified in Annex JDP-2 shall be the earliest to occur
of:
a) a demonstration that such Representative Grade can be
successfully cast, reheated and rolled on the CSP Plant to meet
all of the surface, subsurface and macro (C/Co LESS THAN OR EQUAL
TO 1.15) requirements applicable to such Representative Grade; or
b) when Acme and SMS shall mutually agree that further joint efforts
to develop casting/reheating/rolling practices for such
Representative Grade would not be successful and should be
terminated.
3.2 The final Completion Date for the Joint Development Program shall be
the earliest to occur of:
a) upon demonstration that all Representative Grades can be
successfully cast, reheated and rolled on the CSP Plant and
achieve the Performance Guarantee in Exhibit K of the EPC
Agreement;
b) when Acme and SMS shall mutually agree that further efforts to
develop casting/reheating/rolling practices for all remaining
Representative Grades for which the same have not been
demonstrated would not be successful and should be terminated; or
c) eighteen (18) months following the Preliminary Acceptance Test
(i.e., First Hot Coil date) of the CSP Plant as set forth in
Article 7, Section 7.4 of the EPC Agreement, unless mutually
extended by the parties.
4. PAYMENTS AND ROYALTIES.
In consideration of the amounts paid by Acme to Raytheon, the
acknowledgement that Raytheon has undertaken to pay consideration to SMS in
connection with the EPC contract, and in consideration of the undertaking and
license granted to Acme hereunder, the parties agree that
3
<PAGE>
SMS shall receive no additional compensation for its participation, undertakings
and performance of its obligation under this Agreement, except as otherwise
provided for herein.
5. JOINT DEVELOPMENT PROGRAM.
5.1 It is agreed between Acme and SMS that the grades and chemistries of
steel products referred to and identified as the "Representative Grades" in
Annex JDP-2 shall be subject to the Joint Development Program pursuant to which
Acme and SMS shall jointly participate to demonstrate that all of the grades and
chemistries of steel products manufactured by Acme and identified as "Melted
Grades (AISI)" and "LMF Grades" on Annex JDP-2 are capable of successful
casting, reheating and rolling on the CSP Plant and will meet the Performance
Guarantees set forth in Exhibit K of the EPC Agreement.
5.2. The objective of this Joint Development Program shall be to achieve
the Macro (C/Co LESS THAN OR EQUAL TO 1.15) and Surface and Subsurface results
of the Reroller quality level specified in Appendix B of the Technical Report of
said Exhibit K at a casting speed of at least 4 meters per minute with breakouts
not exceeding 0.9% for all of the Representative Grades. A test and evaluation
of each Representative Grade shall be conducted on a single heat basis. If this
preliminary test provides reasonable indications of castability, reheating and
rolling performance, then a final demonstration test of performance and
acceptance for each Representative Grade shall be conducted for a string of
three (3) consecutive heats of steel of approximately 100 tons per heat for each
Representative Grade (excluding head and tail). Castability shall be
maintainable within a 20DEG. C superheat window (tolerance) from a mutually
agreed minimum value with no increase in required maintenance of segment 1 and 2
rolls and bearings. The practices must prevent formation of bridges ("deckels")
in the upper half of the mold, and corner cracking during bending and unbending.
4
<PAGE>
5.3. The procedures for conducting the Joint Development Program are as
follows:
a) A recommended starting practice shall be provided by SMS for
Acme's review three months prior to first cast of each
Representative Grade. The recommended starting practice shall be
reviewed and agreed upon by the parties prior to ordering
necessary consumables. Acme shall provide SMS with a proposed
schedule for conducting Representative Grade qualification test
casting, reheating and rolling procedures. Acme shall give SMS
as much advance notice thereof as is reasonably practicable;
however, Acme's proposed schedule may be modified by Acme as
necessary to accommodate Acme's production requirements.
b) The casting of each Representative Grade shall be performed with
a representative(s) of Acme and SMS, when SMS desires, present to
observe the melting, casting, reheating and rolling practices and
the performance of any metallurgical analysis or inspection of
the finished product.
c) The demonstration of the successful casting, reheating and
rolling of each Representative Grade shall be conducted in
accordance with the flowchart annexed hereto and made a part
hereof as Annex JDP-3.
d) Acme and/or SMS may, at their option, use the services of such
consultants and suppliers as they, in their sole determination,
shall deem necessary or desirable to assist in the performance of
their functions under the Joint Development Program. These
consultants or any third party must sign a confidentiality
agreement with the parties.
5.4. Acme and SMS shall each bear their own costs associated with their
participation in the Joint Development Program.
6. CONFIDENTIALITY.
6.1 Acme and SMS acknowledge that during the Joint Development Program and
their respective performances under this Agreement that each party will provide
the other party with access to confidential, proprietary business, operating
data, know-how and other trade data and information which is not a matter of
public knowledge ("Proprietary Information"). Each party is willing to disclose
their respective Proprietary Information to the other party, in confidence, for
the purpose of carrying out the Joint Development Program. Each party agrees
that it will
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not use the Proprietary Information of the other party for any other purpose, or
disclose it to others without the prior written approval of the disclosing
party; provided however, that Acme shall be entitled to use or disclose such
Proprietary Information to third parties for the purpose of operating,
maintaining or repairing the CSP Plant or any part thereof. Each party agrees
to take the same precautions to prevent unauthorized disclosures of Proprietary
Information of the other party as it does with respect to Proprietary
Information of its own which it deems confidential. The provisions of this
Section 6 shall survive the termination of this Agreement.
6.2 Each party covenants and agrees that it will, until a date ten (10)
years from the final Completion Date take all reasonable steps to keep secret
and confidential and not to use, except as licensed hereunder, all Proprietary
Information and Process Know-How transmitted to it by the other party or
developed by the parties, or any one of the parties, under this Agreement and
will not divulge any of such information to any person or persons, firms or
corporations without the express written consent of the other party.
The provisions of this section shall not apply to any of the following:
1. Information which either before or after the time its disclosure
hereunder becomes a part of the public literature without violation of
the provisions hereof.
2. Information which was in the other party's possession at the time of
its disclosure to the other party by the disclosing party hereunder
and was not acquired directly or indirectly from the disclosing party.
3. Information which was received by the other party after the time of
its disclosure by the disclosing party hereunder, but from a third
party who did not require the recipient to hold it in secrecy or
confidence and who did not acquire it, directly or indirectly, from
the disclosing party, its employees, agents or representatives.
For the purposes of the provisions of this section, information
disclosed by either party under this Agreement, shall not be deemed to
be in the public literature or in the prior possession of the other
party received from a third party merely because it is embraced by
more general information in the public literature or more general
information in the prior possession of the other party.
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7. IMPROVEMENT PATENTS.
7.1 The parties acknowledge that in their respective performance of the
Joint Development Program the parties, individually or jointly, may develop
improvements which may be deemed to be an extension of, or an improvement to,
existing patents covering the CSP Plant and currently owned by SMS ("Improvement
Patents").
7.2 The parties agree that SMS shall be responsible for the preparation,
filing and prosecution of all applications for and/or Letters Patent in the
United States and all other countries for which the same may be obtained which
are developed during the Term of this Agreement, whether as a result of the
individual or joint efforts of the parties.
7.3 Acme agrees that it will: i) execute and deliver an assignment of the
entire right, title and interest in, to and under any and all such inventions
and improvements, all applications for or Letters Patent therefore; ii) execute
and deliver application papers for Letters Patent in any and all countries for
any and all such inventions and improvements; iii) execute and deliver any and
all other papers and documents, including assignments, affidavits and oaths of
facts within its knowledge, as may be reasonably necessary to convey or to vest
in SMS the rights, titles, benefits, interests and privileges intended to be
conveyed; and iv) aid and assist SMS in the prosecution or defense of any
interference or litigation involving any and all of said Improvement Patents;
provided, however, that all of the foregoing services of Acme and/or its
employees shall be rendered without cost or expense to Acme and/or its
employees.
7.4 SMS shall retain ownership rights to all Improvement Patents.
7.5 SMS shall have the right to license the Improvement Patents developed
by the parties during the Joint Development Program to customers of SMS subject
to the following terms and conditions:
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a) North America (i.e., Canada, Mexico and United States of
America):
i) SMS agrees that it shall not offer to license, license, sell
or otherwise authorize the use of Improvement Patents to any
entity in North America which purchased a CSP Plant from SMS
prior to the effective date on which Acme and SMS entered
into this Agreement for a period of five (5) years following
the final Completion Date provided in Section 3.2 herein;
ii) SMS agrees that it shall not offer to license, license,
sell, or otherwise authorize the use of said Improvement
Patents to any entity which shall purchase a CSP Plant from
SMS for a two (2) year period following the Completion Date
of the Joint Development Program; and
iii) Acme shall have no right to license, or sell, the
Improvement Patents.
iv) A target pricing, licensing or sales and marketing strategy
shall be jointly developed by SMS and Acme within six (6)
months prior to the Completion Date.
v) SMS shall license, or sell, the Improvement Patents
developed pursuant to and during the Joint Development
Program to customers of SMS using forms of licensing, or
sales agreements as it deems reasonable from time to time.
vi) SMS shall pay Acme fifty percent (50%) of the Licensing
Revenues it receives from the licensing or sale of
Improvement Patents for a period of five (5) years after the
final Completion Date.
vii) During the Term of this Agreement, Acme will, as reasonably
requested by SMS, cooperate with efforts by SMS to market
and promote the Improvement Patents, provided, however, that
SMS shall reimburse Acme for all reasonable expenses
incurred by Acme in connection with such efforts.
viii) Five (5) years after the Completion Date, SMS shall be
entitled to market, promote, offer to license, license,
sell, or otherwise authorize the use of the Improvement
Patents to any entity in North America free and clear of all
restrictions and obligations, including the sharing of
Licensing Revenues, under this Agreement.
b) All countries other than countries in North America:
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i) SMS agrees that it shall not offer to license, license,
sell, or otherwise authorize the use of Improvement Patents
to any entity outside of North America for a period of six
(6) months after the Completion Date.
ii) Six (6) months after the Completion Date, SMS shall be
entitled to market, promote, offer to license, license, sell
or otherwise authorize the use of the Improvement Patents to
any entity outside of North America free and clear of all
restrictions and obligations, including the sharing of
Licensing Revenues, under this Agreement.
8. GRANTS BY SMS.
8.1 SMS hereby grants to Acme a non-exclusive, non-cancellable, perpetual,
irrevocable, royalty-free, paid-up, non-transferable license under SMS Patents
and Rights (including Improvement Patents) to manufacture steel products of the
types currently manufactured by Acme (the "Products") in the United States and
to use SMS Patents and Rights in the United States in the manufacture, use and
sale of Products.
8.2 SMS hereby agrees that it will not assert any patent relating to the
manufacture of Products, in such a manner as to interfere with Acme's use and
sale of Products produced in the United States.
9. PROCESS KNOW-HOW.
9.1 The parties acknowledge that in the execution of the Joint Development
Program the parties, individually or jointly, may develop new, proprietary and
secret adaptations, concepts, ideas, improvements, methods, processes and or
technologies which are unpatentable or unpatented, or practices, procedures or
processes relating to the successful casting, heating and rolling of the
Representative Grades of steel products ("Process Know-How").
9.2 Acme and SMS shall jointly own the rights to the Process Know-How
developed during the Joint Development Program. For this reason, the rights to
the Process Know-How
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may not be disclosed, licensed, or otherwise transferred except as permitted
under this Agreement.
9.3 SMS shall have the right to license Process Know-How developed by the
parties during the Joint Development Program to customers of SMS subject to the
following terms and conditions:
a) North America (i.e., Canada, Mexico and United States of
America):
i) SMS shall not disclose, offer to license, license, sell or
otherwise authorize the use of Process Know-How to any
entity in North America for a period of five (5) years
following the final Completion Date provided for in Section
3.2 herein.
ii) At the end of the five (5) year period provided for in
Section 9.3(a)(i) above, SMS shall be entitled to promote,
market, offer to license, license, sell, disclose or
otherwise authorize the use of Process Know-How to any
entity in North America free and clear of all restrictions
and obligations, including the sharing of Licensing
Revenues, under this Agreement.
b) All countries other than countries in North America:
i) SMS shall not disclose, offer to license, license, sell or
otherwise authorize the use of Process Know-How to any
entity in any country outside of North America for a period
of six (6) months following the Completion Date provided for
herein.
ii) Following the six (6) month period referred to in Section
9.3(b)(i) above, SMS shall be entitled to promote, market,
offer to license, license, sell, disclose or otherwise
authorize the use of Process Know-How to any entity outside
of North America.
iii) SMS shall pay Acme fifty percent (50%) of the Licensing
Revenues it receives from the disclosure, licensing and/or
sale of Process Know-How in all countries other than North
America for a period of five (5) years commencing six (6)
months after the final Completion Date.
iv) Acme will, as reasonably requested by SMS, cooperate with
efforts by SMS to market and promote the licensing and sale
of Process Know-How during the Term of this Agreement,
provided
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however, that SMS shall reimburse Acme for all reasonable
expenses incurred by Acme in connection with such efforts.
v) Following the five (5) year period referred to in Section
9.3(b)(iii) above, SMS shall be entitled to market, promote,
offer to license, license, sell or otherwise authorize the
use of Process Know-How to any entity free and clear of all
restrictions and obligations, including the sharing of
Licensing Revenues, under this Agreement.
vi) A target pricing, licensing or sales and marketing strategy
shall be jointly developed by SMS and Acme within six (6)
months prior to the Completion Date.
9.4 Acme shall have the right to promote, market, offer to license,
license, sell or otherwise authorize the use of Process Know-How anywhere in the
world, subject to the following terms and conditions: i) Acme shall pay SMS
fifty percent (50%) of the Licensing Revenues it receives from the disclosure,
licensing and/or sale of Process Know-How to any entity, worldwide, for a period
of five (5) years commencing after the final Completion Date.
10. TERM OF AGREEMENT.
10.1 This Agreement shall commence as of the effective date first stated
above and shall terminate six (6) months after the final Completion Date for the
Joint Development Program, provided, however, that obligations and rights with
respect to Licensing Revenues in Sections 7 and 9 and the Confidentiality
obligations in Section 6 shall survive the Term of this Agreement.
10.2 Acme and SMS acknowledge that Acme's purchase of the CSP Plant is
based on SMS's determination that all of Acme's steel product grades and
chemistries identified in Annex JDP-1 are capable of being cast, reheated and
rolled on the CSP Plant; therefore, SMS shall not abandon or terminate its
participation in the Joint Development Program prior to the end of the Term of
this Agreement without Acme's prior written consent.
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11. GAIN SHARING.
The parties acknowledge they have entered into this cooperative Joint
Development Program with reasonable expectations, but with recognized risks,
that the Representative Grades of steel products can be cast, reheated and
rolled on the CSP Plant and achieve the Performance Guarantees set forth in
Exhibit K of the EPC Contract. In recognition of the foregoing and to provide
both parties with additional incentives to successfully complete the Joint
Development Program, the parties agree as set forth below.
11.1 JOINT DEVELOPMENT PROGRAM BONUS. For each Representative Grade of
steel products which SMS can successfully demonstrate is capable of being cast,
reheated and rolled on the CSP Plant and achieves the Performance Guarantees in
said Exhibit K, Acme shall pay SMS the Gain Sharing bonus specified in Annex
JDP-4, attached hereto and made a part hereof.
11.2 JOINT DEVELOPMENT PROGRAM PENALTY. For each Representative Grade of
steel products which SMS shall fail to successfully demonstrate as capable of
being cast, reheated and rolled on the CSP Plant to achieve the Performance
Guarantees in said Exhibit K, SMS shall pay Acme the Gain Sharing Penalty
specified in Annex JDP-4.
11.3 GAIN SHARING PAYMENT SCHEDULE. The payments of Gain Sharing Bonus and
Penalty incentives shall be netted and the balance due and owing to either
party, if any, shall be paid to the party entitled to such net amount within
sixty (60) days after the Completion Date.
12. MISCELLANEOUS.
12.1 COMPLETE UNDERSTANDING; AMENDMENT; GOVERNING LAW. This Agreement
constitutes the entire agreement between the parties; no amendment shall be
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binding upon the parties unless made in a writing executed by both parties; and,
it shall be governed by the laws of the State of Illinois, United States of
America.
12.2 ASSIGNMENT. The rights and obligations of SMS under this Agreement
may not be assigned or delegated without the prior written consent of Acme.
Acme may assign its rights and obligations under this Agreement, subject to
SMS's prior written consent, which consent shall not be unreasonably withheld.
12.3 INDEMNIFICATION. SMS agrees to indemnify and hold Acme harmless from
any loss, cost or expense claimed by third parties for property damage and/or
bodily injury, including death, caused by the negligence of SMS, its agents or
employees, in connection with its performance under this Agreement.
12.4 INSURANCE. SMS shall, at its own expense, procure and maintain in
full force and effect during the Term of this Agreement the following policies
of insurance, satisfactory to Acme as to form and limits of liability, as
follows:
i) WORKER'S COMPENSATION AND ALL OTHER SOCIAL INSURANCE. In
accordance with the statutory requirements of the State having
jurisdiction over SMS's employees engaged in performance of Work,
Employer's Liability Insurance with a limit of not less than
$1,000,000.
ii) COMPREHENSIVE GENERAL LIABILITY AND AUTOMOTIVE LIABILITY
INSURANCE. Comprehensive general bodily injury and property
damage liability and automotive liability insurance with a
combined single limit of $10,000,000 for each occurrence and in
the aggregate. This policy shall include Contractual Liability
Coverage. Acme shall be named as an additional insured (or co-
insured) party under such insurance policy but only to the extent
of, arising out of or in any way connected with SMS's performance
under this Agreement.
12.5 FORCE MAJEURE. The fulfillment by the parties of the terms and
conditions of this Agreement is subject to force majeure. Neither SMS nor Acme
shall incur any liability to the other for any failure or delay in fulfilling
any of the terms and conditions hereunder which
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it is obligated to perform due to any cause beyond such party's control,
including, but not limited to, acts of God, war, fire, floods, strikes,
sabotage, civil commotion or riots.
12.6 TERMINATION DEFAULT.
i) In the event of failure or default by SMS or Acme to perform any
of the terms covenants or provisions of this Agreement to be done
and performed by either of them, then, the other shall have
thirty (30) days after the giving of written notice of such
default within which to correct such default. If such default is
not corrected within such thirty (30) day period after notice as
aforesaid, the non defaulting party shall have the right, at its
option, to cancel and terminate this Agreement and the licenses
granted hereunder; provided, however, that such termination shall
not constitute a waiver of the right of SMS to any sums due and
payable by Acme at the time of such termination.
ii) Either party shall have the right, at its option, to cancel and
terminate this Agreement and the licenses granted hereunder in
the event the other party shall become involved in insolvency,
dissolution, bankruptcy or receivership proceedings affecting the
operation of its business.
iii) Termination of this Agreement shall not affect the rights or
obligations of either party arising out of the provisions of
Sections 4, 6, 7, 8, 9 and 12.
IN WITNESS WHEREOF, the parties have duly executed this Agreement effective
as of the day and year first written above.
ACME STEEL COMPANY SMS SCHLOEMANN-SIEMAG, A.G.
/s/ Wolfgang Hennig
By: /s/ Gary S. Lucenti By: /s/ Reinhard A. Leuker
---------------------------- -------------------------------------
Wolfgang Hennig
Name: Gary S. Lucenti Name: Reinhard A. Leuker
-------------------------- -----------------------------------
Title: Head of Department-Sales Manager
Title: President CSP Plants
---------------------------- ----------------------------------
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Annex JDP-1
This exhibit is a chart of steel mill products by chemistry, grade, tons and
quality specifications.
<PAGE>
Annex JDP-2
This exhibit is a chart of the Joint Development grades of steel products by
industry and Ladle Metallurgy furnace grade specifications.
<PAGE>
Annex JDP-3
The flowchart shows the sequence and milestones that are passed in the
development process. The scope of the CSP Grade Development flowchart begins
after the decision to develop the next grade has been made. It continues until
that grade's development is completed. The steps in the process are:
1. Selection of the operating and liquid steel process targets.
2. Selection of allowed variation of process variables
3. Selection of target products from the order book
4. Selection of required test sand pass\fail criteria
5. Selection of downstream processing
6. Logic for optimization and anomaly resolution
<PAGE>
Annex JDP-4
This exhibit is a chart depicting the maximum bonus and penalty amounts, by
Joint Development Program grades, tons and percentage of total tons under the
Joint Development Programs Gainsharing provisions.
<PAGE>
EXHIBIT 10.16
ACME METALS INCORPORATED
NON-EMPLOYEE DIRECTORS' STOCK COMPENSATION PLAN
1. PURPOSE. The purpose of the Non-Employee Directors' Stock
Compensation Plan (the "Plan") of Acme Metals Incorporated, a Delaware
corporation (the "Company"), is to (a) provide an incentive to directors of the
Company who are not also employees of the Company or any of its subsidiaries
(the "Non-Employee Directors") to concentrate their efforts in a manner that
will provide for the long-term growth and profitability of the Company;
(b) encourage stock ownership by Non-Employee Directors in order to promote an
identity of interests with the Company's shareholders; and (c) provide a means
of attracting and retaining qualified Non-Employee Directors.
2. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective
upon approval of the Board of Directors of the Company. The Plan shall remain
in effect until terminated by action of the Board of Directors or until all of
the shares issuable under the Plan have been issued, whichever occurs first
("Termination"). No issuance of shares of the Company's Common Stock, $1.00 par
value per share (the "Common Stock") shall be made after Termination of the Plan
and any issuance of shares pursuant to this Plan which are outstanding at the
time of Termination shall remain unaffected by the Termination.
3. ADMINISTRATION. The Plan shall be administered by the Nominating
Committee of the Board of Directors, subject to the restrictions set forth in
the Plan. The Nominating Committee shall have the full power, discretion and
authority to interpret and administer the Plan in a manner which is consistent
with the Plan's provisions. The Nominating Committee, however, shall have no
authority, discretion or power to select the participants in the Plan or
determine the amount, price or timing of issuances of shares of Common Stock
pursuant hereto.
4. SHARES ISSUABLE UNDER THE PLAN. Subject to adjustment as provided in
Section 9, the total number of shares of Common Stock which may be issued to
Non-Employee Directors under the Plan shall not exceed 25,000. Shares to be
issued under the Plan may be authorized and unissued shares or authorized and
issued shares of Common Stock which have been reacquired by the Company.
5. COMPENSATION AND ISSUANCE OF SHARES.
5.1 COMPENSATION. Subject to the approval of the Board of Directors
of the Company, each year the Nominating Committee of the Board of
Directors shall determine the compensation payable to Non-Employee
Directors for the forthcoming year. 50% of the annual retainer
payable to Non-Employee Directors shall be paid in cash in such
installments and at such times as the Nominating Committee shall
determine. The balance of the annual retainer
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payable to Non-Employee Directors shall be paid in shares of Common
Stock pursuant to this Plan (the "Compensation Shares").
5.2 INITIAL ISSUANCE OF COMPENSATION SHARES. Each Non-Employee
Director on the date this Plan is approved by the Board of Directors
shall be awarded that number of Compensation Shares which is the
quotient obtained by dividing (x) $9,000 (which, on the date this Plan
is approved by the Board of Directors, is 50% of the annual retainer
fee payable by the Company to each Non-Employee Director) by (y) the
Fair Market Value of a share of Common Stock on the date of Board of
Directors' approval. Any resulting fractional shares shall be
rounded, up or down, to the nearest whole share. "Fair Market Value"
of the Common Stock shall be determined using the mean between the
highest and lowest sales price of a share of Common Stock on the date
of issuance (or, if there are no sales on that date, on the last
preceding date on which there was a reported sale) on NASDAQ Over-the-
Counter Markets, National Market Issues, or The New York Stock
Exchange Composite Transactions, as reported in THE WALL STREET
JOURNAL (corrected for reporting errors), whichever is applicable on
such date.
5.3 ANNUAL ISSUANCE. Commencing in calendar year 1996 and in each
year thereafter until Termination, each Non-Employee Director will
receive on the fifth (5th) business day following the release to the
public of the Company's fourth quarter and year-end financial results
(the "Issue Date") that number of Compensation Shares equal to the
quotient obtained by dividing (x) fifty percent (50%) of that year's
annual retainer fee payable to Non-Employee Directors by (y) the Fair
Market Value of a share of Common Stock on the Issue Date.
5.4 RESTRICTIONS; RETENTION OF SHARES; TERMINATION. No Compensation
Shares may be assigned, sold, transferred, pledged or otherwise
encumbered prior to the date on which the restrictions herein set
forth lapse. The transfer restrictions relating to each issuance of
Compensation Shares shall lapse two years after the Issue Date, unless
a Non-Employee Director ceases to serve on the Board of Directors by
reason of death, disability or retirement in which case the transfer
restrictions shall cease immediately.
6. WITHHOLDING OF TAXES. The Company shall have the right, but not the
obligation, in connection with any issuance of Compensation Shares, to deduct
from the amount of any payment of other compensation payable to the recipient,
taxes required by law to be withheld from such payment or other compensation
payable to the recipient or to require the recipient to pay to the Company an
amount sufficient to provide for any such taxes so required to be withheld by
law.
7. TERMINATION OF SERVICE AS A DIRECTOR. Nothing in the Plan or in any
issuance of Compensation Shares pursuant to the Plan shall confer upon any
individual any right to continue in the service of the Company as a Director or
to interfere in any way with the rights of the Company or its shareholders to
terminate his or her service as a Director at any time.
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Notwithstanding any other provision of the Plan, no issuance of Compensation
Shares shall be made hereunder to any person who is not a Non-Employee Director
on the Issue Date.
8. RIGHTS OF A SHAREHOLDER. Except as provided in Section 5, Non-
Employee Directors shall have all rights of a shareholder with respect to all
Compensation Shares (including voting and dividend rights) commencing on the
Issue Date. In the case of stock dividends, the dividend shares of Common Stock
shall be subject to the same restrictions on transferability as the Compensation
Shares on which such stock dividend was paid.
9. CAPITAL ADJUSTMENT. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, or other change in corporate
structure affecting the Common Stock, the number and kind of Compensation Shares
to be issued prospectively under the Plan shall be equitably adjusted (provided
that the number of Compensation Shares issuable at any time shall always be a
whole number) so as to preserve, but neither increase or decrease, the benefits
available thereunder.
10. AMENDMENT OF THE PLAN. The Board of Directors may terminate, amend
or modify the Plan at any time and from time to time; provided, however, that
the provisions set forth in the Plan regarding the amount, price or timing of
issuance of Compensation Shares may not be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code or the
rules thereunder.
11. SECURITIES LAW RESTRICTIONS. The Company may impose such other
restrictions on any Compensation Shares issued pursuant to this Plan as it may
deem advisable including, but not limited to, restrictions intended to achieve
compliance with the Securities Act of 1933, as amended, with the requirements of
any stock exchange upon which the Common Stock is then listed, and with any Blue
Sky or state securities laws applicable to such Common Stock. If at any time
the Nominating Committee, subject to ratification by the Board of Directors,
shall determine, in its discretion, that the listing, registration or
qualification of any of the shares to be issued under the Plan upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, is necessary or desirable as a
condition of or in connection with the issuance of shares hereunder, then no
issuance of Compensation Shares may be made unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Nominating Committee. The Nominating
Committee, subject to ratification by the Board of Directors, may require any
person receiving any Compensation Shares under the Plan to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of any shares in compliance with
applicable law and shall have the authority to cause the Company at its expense
to take any action related to the Plan which may be required in connection with
such listing, registration, qualification, consent or approval.
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12. NON-ALIENATION OF BENEFITS. The right to receive Compensation Shares
pursuant to the Plan shall not be transferable by any participant in the Plan,
either voluntarily or involuntarily, except by will or the laws of descent and
distribution.
13. GOVERNING LAW. All determinations made and actions taken pursuant to
the Plan shall be governed by the laws of the State of Delaware and construed in
accordance therewith.
4
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EXHIBIT 10.19
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made and entered into this 28th day of
April, 1994 by and between ACME METALS INCORPORATED, a Delaware Corporation
(hereinafter the "Company"), and Carol O'Cleireacain, who as of the execution
date hereof is serving as a Director of the Company (hereinafter the
"Indemnitee").
W I T N E S S E T H:
WHEREAS, the Indemnitee is rendering valuable services to the Company; and
WHEREAS, the Company desires to receive and continue to receive the
benefits of the Indemnitee's advice, experience, knowledge, counsel, dedication,
service to the Company and to maintain and preserve the continuity in the
management of the affairs and business of the Company for the benefit of the
Company's stockholders; and
WHEREAS, Section 145 of the General Corporation Law of the State of
Delaware ("Corporation Law") providing for the indemnification of directors,
officers, employees and agents of the Company specifically provides that the
Corporation Law is not exclusive and authorizes any corporation formed
thereunder to enter into an agreement or agreements to indemnify directors,
officers, employees, agents and former directors, officers, employees and
agents, both as to actions in their official capacity and as to actions in
another capacity while holding such office, and as to persons who have ceased to
be a director, officer, employee or agent and that such indemnification shall
inure to the benefit of the heirs, executors and administrators of such persons;
and
WHEREAS, in accordance with the authorization provided by said Corporation
Law, the Company has purchased and presently maintains a policy or policies of
Directors and Officers Liability Insurance ("D & O Insurance") covering certain
liabilities which may be incurred by its directors, officers and employees in
the performance of their duties for the Company; and
WHEREAS, recent developments with respect to the terms and availability of
D & O Insurance and with respect to the application, amendment and enforcement
of statutory and by-law indemnification provisions generally have raised
questions concerning the adequacy and reliability of the protection afforded to
directors, officers and employees thereby; and
WHEREAS, the Company wishes to insure that the Indemnitee will be in a
position to exercise her best good-faith and independent judgment for the
benefit for the Company's stockholders in the management of the business and
affairs of the Company without undue cause or concern for her personal financial
liability and secure in the knowledge that the costs, expenses, liability and
loss which may be incurred by her in her good-faith performance of her duties
and service to the Company will be borne by the Company or its successors and
assignees in accordance with applicable law and the terms of this
Indemnification Agreement; and
WHEREAS, the Company desires the Indemnitee to contest all unjustified
investigations, claims, actions, suits and proceedings which have or may arise
in the future as a result of the Indemnitee's service to the Company; and
<PAGE>
WHEREAS, in order to resolve such questions and accomplish the foregoing
purposes and thereby induce the Indemnitee to continue to render said services
to the Company, the parties believe it appropriate and desirable to enter into
this Indemnification Agreement and memorialize and affirm the Company's
indemnification obligations to the Indemnitee, as authorized by the resolution
adopted by the Board of Directors on May 16, 1992;
NOW THEREFORE, in consideration of the mutual agreements set forth herein,
the parties hereto agree as follows:
1. DEFINITIONS
A. "Indemnitee" means any person who is, was or has agreed to become
a director, officer, employee or agent of the Company or of any
constituent corporation absorbed by the Company in a
consolidation, merger or acquisition and any person who is, was
or has agreed to become a director, officer, trustee, employee or
agent of any other enterprise and serving as such at the request
of the Company or of any such constituent corporation, or the
legal representative of any of the foregoing persons;
B. "Other Enterprise" means any domestic or foreign corporation,
other than the Company, and any partnership, joint venture, sole
proprietorship, trust or other legal entity, whether for profit
or non-profit.
C. "Indemnifiable Litigation" means, collectively, any present or
future threatened, pending or contemplated investigation, claim,
action, suit or proceeding, whether civil, criminal,
administrative or investigative;
D. "Indemnifiable Expenses" means the cost, expense, liability and
loss, including, but not limited to, attorney's fees and
disbursements and amounts of judgments, fines, penalties and
amounts actually paid or to be paid in any settlement approved in
advance by the Company (which approval shall not be unreasonably
withheld); PROVIDED, HOWEVER, that the same shall not in any
event, include any cost, expense, liability or loss on account of
profits realized in the purchase or sale of securities of the
Company.
2. INDEMNITY
Pursuant to its authority under Section l45 of the General Corporation
Law of the State of Delaware, its Certificate of Incorporation and its by-laws:
A. PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE COMPANY:
The Company hereby agrees to indemnify and hold Indemnitee
harmless from and against any and all Indemnifiable Expenses, to
the extent that the Indemnitee has not previously been reimbursed
by insurance, that may be reasonably incurred by or imposed upon
her in connection with, resulting from, or arising out of any
Indemnifiable Litigation (other than an
-2-
<PAGE>
action by or in the right of the Company) to which the Indemnitee
is, or may become, a party, or otherwise, by reason of her being
or having been:
(a) a director, officer, employee or agent of this Company; or
(b) a director, officer, employee or agent of any enterprise
when serving or having served as the same at the request of
this Company, whether or not she continues to be such at the
time the Indemnifiable Expenses shall be or have been
incurred or imposed, if she acted in good faith and in a
manner she reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe her conduct was unlawful.
B. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY:
The Company hereby agrees to indemnify and hold Indemnitee
harmless from and against any and all Indemnifiable Expenses, to
the extent that the Indemnitee has not previously been reimbursed
by insurance, that may be reasonably incurred by or imposed upon
her in connection with, resulting from, or arising out of any
Indemnifiable Litigation by or in the right of the Company to
procure a judgment in its favor to which the Indemnitee is, or
may become, a party, or otherwise, by reason of her being or
having been:
(a) a director, officer, employee or agent of this Company; or
(b) a director, officer, employee or agent of any other
enterprise when serving or having served as the same at the
request of the Company, whether or not she continues to be
such at the time the Indemnifiable Expenses shall be or have
been incurred or imposed, if she acted in good faith and in
a manner she reasonably believed to be in or not opposed to
the best interests of the Company and except that no
indemnification shall be made in respect of any claim, issue
or matter as to which the Indemnitee shall have been
adjudged to be liable for negligence or misconduct in the
performance of her duty to the Company unless and only to
the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon
application that, despite the adjudication of liability but
in view of all the circumstances of the case, the Indemnitee
is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court
shall deem proper.
C. TERMINATION OF PROCEEDINGS:
The termination of any Indemnifiable Litigation by judgment,
-3-
<PAGE>
order, settlement, conviction, or upon a plea nolo contendere or
its equivalent shall not, of itself, create a presumption that
the Indemnitee did not act in good faith and in a manner which
she reasonably believed to be in, or not opposed to, the best
interests of this Company, and with respect to any criminal
action or proceeding, the Indemnitee had no reasonable cause to
believe her conduct was unlawful.
D. CONTINUATION OF INDEMNITY:
All agreements and obligations of the Company contained herein
shall continue during the period Indemnitee is a director,
officer, employee or agent of the Company (or is or was serving
at the request of the Company as a director, officer, employee,
trustee or agent of another enterprise) and shall continue
thereafter so long as the Indemnitee shall be subject to any
Indemnifiable Litigation or Indemnifiable Expense.
3. MAINTENANCE OF INSURANCE AND SELF INSURANCE:
A. The Company represents that as of the date hereof it presently
has in force and effect a policy or policies of D & O Insurance
with an aggregate coverage in the amount of $50,000,000. Subject
only to the provisions of Section 3B hereof, the Company agrees,
so long as the Indemnitee shall be subject to any possible
Indemnifiable Litigation or Indemnifiable Expenses arising out of
or resulting therefrom, the Company will employ its best efforts
to purchase and maintain in effect for the benefit of Indemnitee
one or more valid, binding and enforceable policy or policies of
D & O Insurance providing, in all respects, coverage at least as
comparable to that presently provided pursuant to the existing
policy or policies of insurance.
B. Notwithstanding Section 3A above, the Company shall not be
required to maintain or to obtain in substitution thereof, said
policy or policies of D & O Insurance in effect if said
insurance, in the reasonable business judgment of the then
directors of the Company, is not reasonably available or if
either:
(a) the premium cost for such insurance is substantially
disproportionate to the amount of coverage; or
(b) the coverage provided by such insurance is so limited by
exclusions that there is insufficient benefit from such
insurance.
C. In the event the Company does not purchase and maintain said
policy or policies of D & O Insurance pursuant to the provisions
of Section 3B hereof, the Company agrees to indemnify and hold
Indemnitee harmless to the full extent of the coverage which
would otherwise have been provided for the benefit of Indemnitee
pursuant to said insurance.
-4-
<PAGE>
4. REPAYMENT OF INDEMNIFIABLE EXPENSES:
Indemnifiable Expenses incurred by the Indemnitee with respect to any
Indemnifiable Litigation shall be advanced by the Company to the
Indemnitee prior to the final disposition thereof upon receipt by the
Company of the undertaking by, or on behalf of, the Indemnitee,
substantially in the form attached hereto as Exhibit "A", to repay all
amounts so advanced should it ultimately be determined that the
Indemnitee is not entitled to indemnification by the Company pursuant
to this Indemnification Agreement or otherwise.
5. LEGAL COUNSEL:
The Indemnitee shall have the right to retain independent legal
counsel to represent her in connection with any Indemnifiable
Litigation or may designate the Company as her agent for the retention
of counsel.
6. NOTIFICATION:
The Indemnitee shall promptly advise the Company, in writing, of the
institution of any Indemnifiable Litigation which is or may be subject
to this Indemnification Agreement and keep the Company informed of and
consult with the Company with respect to the status of any such
Indemnifiable Litigation.
7. RIGHTS NOT EXCLUSIVE - OTHER RIGHTS:
The rights of indemnification provided in this Indemnification
Agreement shall not be deemed exclusive of any other rights to which
the Indemnitee may be entitled to indemnification by reason of any
statute, contract, agreement, by-law, vote of stockholders or
disinterested directors, as a matter of law, or otherwise.
8. BINDING EFFECT:
This Indemnification Agreement establishes contract rights which shall
be binding upon and shall inure to the benefit of the successors,
assignees, heirs, and legal representatives to the parties hereto.
9. SEPARABILITY:
Each of the provisions of this Indemnification Agreement is a separate
and distinct agreement and independent of the others, so that if any
provision or paragraph of this Indemnification Agreement, or any
clause thereof, be held to be invalid, illegal or unenforceable in
whole or in part, the remaining provisions, paragraphs and clauses of
this Indemnification Agreement shall remain fully valid, enforceable
and binding on the parties hereto.
10. AMENDMENT AND TERMINATION:
No amendment, modification, termination or cancellation of this
Indemnification Agreement shall be effective unless in writing and
-5-
<PAGE>
signed by both parties hereto.
11. GOVERNING LAW:
The validity, interpretation, performance and enforcement of this
Indemnification Agreement shall be governed by the laws of the State
of Delaware.
IN WITNESS WHEREOF, the Company has caused this Indemnification Agreement
to be duly executed on its behalf and the Indemnitee has duly executed this
Indemnification Agreement on the day and year first above written.
(CORPORATE SEAL) ACME METALS INCORPORATED
ATTEST:
/s/ Edward P. Weber, Jr. /s/ B. W. H. Marsden
------------------------- By: ------------------------------------
Edward P. Weber, Jr. Brian W. H. Marsden
Secretary Chairman and Chief Executive Officer
INDEMNITEE:
/s/ Carol O'Cleireacain
------------------------------------
Carol O'Cleireacain
-6-
<PAGE>
EXHIBIT A
UNDERTAKING AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of__________) l99_,
between ACME METALS INCORPORATED, a Delaware corporation ("the Company"), and
__________________________________, who as of the execution date hereof is
serving as _________________________________________________ of ACME METALS
INCORPORATED ("the Indemnitee").
WITNESSETH:
WHEREAS, the Indemnitee may become involved in investigations, claims,
actions, suits or proceedings which have arisen or may arise in the future as a
result of the Indemnitee's service to the Company; and
WHEREAS, the Indemnitee desires that the Company pay any and all expenses
(including, but not limited to, attorney's fees and court costs) actually and
reasonably incurred by the Indemnitee or on her behalf in defending or
investigating any such matters and that such payment be made in advance of the
final disposition of such investigations, claims, actions, suits or proceedings
to the extent that the Indemnitee has not previously been reimbursed for the
same by insurance; and
WHEREAS, the Company is willing to make such advance payments but, in
accordance with Section l45 of the General Corporation Law of the State of
Delaware and Article VIII of the by-laws of the Company, the Company may make
such payments only if it receives an undertaking from the Indemnitee to repay
the same if it is determined that the Indemnitee is not entitled to
indemnification; and
WHEREAS, the Indemnitee is willing to give such an undertaking;
NOW THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. In regard to any payments made either directly by the Company to the
Indemnitee, or on her behalf, pursuant to the terms of the
Indemnification Agreement made this same day between the parties, the
Indemnitee hereby undertakes and agrees to repay to the Company any
and all amounts so paid promptly and in any event within thirty (30)
days after the disposition, including any appeals, of any litigation
or threatened litigation on account of which payments were made,
PROVIDED, HOWEVER, to the extent that the Indemnitee is entitled to be
indemnified under the terms of said Indemnification Agreement, Section
l45 of the General Corporation Law of the State of Delaware, Article
VIII of the by-laws of the Company, or other applicable law,
Indemnitee shall not be required to repay the amounts as to which she
is determined to be entitled to indemnification.
2. This Agreement shall not affect in any manner any rights which the
Indemnitee may have against the Company, any insurer, or any other
<PAGE>
person to seek indemnification for or reimbursement of any expenses
referred to herein or any judgment which may be rendered in any
litigation or proceeding.
IN WITNESS WHEREOF, the Company has caused this Undertaking Agreement to be
duly executed on its behalf and the Indemnitee has duly executed this
Undertaking Agreement on the day and year first above written.
(CORPORATE SEAL) ACME METALS INCORPORATED
ATTEST:
By:
------------------------ -----------------------------------
Edward P. Weber, Jr. Brian W. H. Marsden
Secretary Chairman and Chief Executive Officer
INDEMNITEE:
-------------------------------------
-2-
<PAGE>
UNDERTAKING AGREEMENT
THIS AGREEMENT is made and entered into this 28th day of April, l994,
between ACME METALS INCORPORATED, a Delaware corporation ("the Company"), and
Carol O'Cleircain, who as of the execution date hereof is serving as a Director
of ACME METALS INCORPORATED ("the Indemnitee").
WITNESSETH:
WHEREAS, the Indemnitee may become involved in investigations, claims,
actions, suits or proceedings which have arisen or may arise in the future as a
result of the Indemnitee's service to the Company; and
WHEREAS, the Indemnitee desires that the Company pay any and all expenses
(including, but not limited to, attorney's fees and court costs) actually and
reasonably incurred by the Indemnitee or on her behalf in defending or
investigating any such matters and that such payment be made in advance of the
final disposition of such investigations, claims, actions, suits or proceedings
to the extent that the Indemnitee has not previously been reimbursed for the
same by insurance; and
WHEREAS, the Company is willing to make such advance payments but, in
accordance with Section l45 of the General Corporation Law of the State of
Delaware and Article VIII of the by-laws of the Company, the Company may make
such payments only if it receives an undertaking from the Indemnitee to repay
the same if it is determined that the Indemnitee is not entitled to
indemnification; and
WHEREAS, the Indemnitee is willing to give such an undertaking;
NOW THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. In regard to any payments made either directly by the Company to the
Indemnitee, or on her behalf, pursuant to the terms of the
Indemnification Agreement made this same day between the parties, the
Indemnitee hereby undertakes and agrees to repay to the Company any
and all amounts so paid promptly and in any event within thirty (30)
days after the disposition, including any appeals, of any litigation
or threatened litigation on account of which payments were made,
PROVIDED, HOWEVER, to the extent that the Indemnitee is entitled to be
indemnified under the terms of said Indemnification Agreement, Section
l45 of the General Corporation Law of the State of Delaware, Article
VIII of the by-laws of the Company, or other applicable law,
Indemnitee shall not be required to repay the amounts as to which she
is determined to be entitled to indemnification.
2. This Agreement shall not affect in any manner any rights which the
Indemnitee may have against the Company, any insurer, or any other
<PAGE>
person to seek indemnification for or reimbursement of any expenses
referred to herein or any judgment which may be rendered in any
litigation or proceeding.
IN WITNESS WHEREOF, the Company has caused this Undertaking Agreement to be
duly executed on its behalf and the Indemnitee has duly executed this
Undertaking Agreement on the day and year first above written.
(CORPORATE SEAL) ACME METALS INCORPORATED
ATTEST:
/s/ Edward P. Weber, Jr. /s/ B. W. H. Marsden
------------------------- ------------------------------------
Edward P. Weber, Jr. Brian W. H. Marsden
Secretary Chairman and Chief Executive Officer
INDEMNITEE:
/s/ Carol O'Cleireacain
------------------------------------
Carol O'Cleireacain
-2-
<PAGE>
EXHIBIT 10.20
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made and entered into this 26th day of
January 1995 by and between ACME METALS INCORPORATED, a Delaware Corporation
(hereinafter the "Company"), and L. Frederick Sutherland, who as of the
execution date hereof is serving as a Director of the Company (hereinafter the
"Indemnitee").
W I T N E S S E T H:
WHEREAS, the Indemnitee is rendering valuable services to the Company; and
WHEREAS, the Company desires to receive and continue to receive the
benefits of the Indemnitee's advice, experience, knowledge, counsel, dedication,
service to the Company and to maintain and preserve the continuity in the
management of the affairs and business of the Company for the benefit of the
Company's stockholders; and
WHEREAS, Section 145 of the General Corporation Law of the State of
Delaware ("Corporation Law") providing for the indemnification of directors,
officers, employees and agents of the Company specifically provides that the
Corporation Law is not exclusive and authorizes any corporation formed
thereunder to enter into an agreement or agreements to indemnify directors,
officers, employees, agents and former directors, officers, employees and
agents, both as to actions in their official capacity and as to actions in
another capacity while holding such office, and as to persons who have ceased to
be a director, officer, employee or agent and that such indemnification shall
inure to the benefit of the heirs, executors and administrators of such persons;
and
WHEREAS, in accordance with the authorization provided by said Corporation
Law, the Company has purchased and presently maintains a policy or policies of
Directors and Officers Liability Insurance ("D & O Insurance") covering certain
liabilities which may be incurred by its directors, officers and employees in
the performance of their duties for the Company; and
WHEREAS, recent developments with respect to the terms and availability of
D & O Insurance and with respect to the application, amendment and enforcement
of statutory and by-law indemnification provisions generally have raised
questions concerning the adequacy and reliability of the protection afforded to
directors, officers and employees thereby; and
WHEREAS, the Company wishes to insure that the Indemnitee will be in a
position to exercise his best good-faith and independent judgment for the
benefit for the Company's stockholders in the management of the business and
affairs of the Company without undue cause or concern for his personal financial
liability and secure in the knowledge that the costs, expenses, liability and
loss which may be incurred by him in his good-faith performance of his duties
and service to the Company will be borne by the Company or its successors and
assignees in accordance with applicable law and the terms of this
Indemnification Agreement; and
WHEREAS, the Company desires the Indemnitee to contest all unjustified
<PAGE>
investigations, claims, actions, suits and proceedings which have or may arise
in the future as a result of the Indemnitee's service to the Company; and
WHEREAS, in order to resolve such questions and accomplish the foregoing
purposes and thereby induce the Indemnitee to continue to render said services
to the Company, the parties believe it appropriate and desirable to enter into
this Indemnification Agreement and memorialize and affirm the Company's
indemnification obligations to the Indemnitee, as authorized by the resolution
adopted by the Board of Directors on May 16, 1992;
NOW THEREFORE, in consideration of the mutual agreements set forth herein,
the parties hereto agree as follows:
1. DEFINITIONS
A. "Indemnitee" means any person who is, was or has agreed to become
a director, officer, employee or agent of the Company or of any
constituent corporation absorbed by the Company in a
consolidation, merger or acquisition and any person who is, was
or has agreed to become a director, officer, trustee, employee or
agent of any other enterprise and serving as such at the request
of the Company or of any such constituent corporation, or the
legal representative of any of the foregoing persons;
B. "Other Enterprise" means any domestic or foreign corporation,
other than the Company, and any partnership, joint venture, sole
proprietorship, trust or other legal entity, whether for profit
or non-profit.
C. "Indemnifiable Litigation" means, collectively, any present or
future threatened, pending or contemplated investigation, claim,
action, suit or proceeding, whether civil, criminal,
administrative or investigative;
D. "Indemnifiable Expenses" means the cost, expense, liability and
loss, including, but not limited to, attorney's fees and
disbursements and amounts of judgments, fines, penalties and
amounts actually paid or to be paid in any settlement approved in
advance by the Company (which approval shall not be unreasonably
withheld); PROVIDED, HOWEVER, that the same shall not in any
event, include any cost, expense, liability or loss on account of
profits realized in the purchase or sale of securities of the
Company.
2. INDEMNITY
Pursuant to its authority under Section l45 of the General Corporation
Law of the State of Delaware, its Certificate of Incorporation and its by-laws:
A. PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE COMPANY:
The Company hereby agrees to indemnify and hold Indemnitee
harmless from and against any and all Indemnifiable Expenses,
to the extent that the Indemnitee has not previously been
-2-
<PAGE>
reimbursed by insurance, that may be reasonably incurred by or
imposed upon him in connection with, resulting from, or arising
out of any Indemnifiable Litigation (other than an action by or
in the right of the Company) to which the Indemnitee is, or may
become, a party, or otherwise, by reason of him being or having
been:
(a) a director, officer, employee or agent of this Company; or
(b) a director, officer, employee or agent of any enterprise
when serving or having served as the same at the request of
this Company, whether or not he continues to be such at the
time the Indemnifiable Expenses shall be or have been
incurred or imposed, if she acted in good faith and in a
manner he reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
B. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY:
The Company hereby agrees to indemnify and hold Indemnitee
harmless from and against any and all Indemnifiable Expenses, to
the extent that the Indemnitee has not previously been reimbursed
by insurance, that may be reasonably incurred by or imposed upon
him in connection with, resulting from, or arising out of any
Indemnifiable Litigation by or in the right of the Company to
procure a judgment in its favor to which the Indemnitee is, or
may become, a party, or otherwise, by reason of him being or
having been:
(a) a director, officer, employee or agent of this Company; or
(b) a director, officer, employee or agent of any other
enterprise when serving or having served as the same at the
request of the Company, whether or not he continues to be
such at the time the Indemnifiable Expenses shall be or have
been incurred or imposed, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the
best interests of the Company and except that no
indemnification shall be made in respect of any claim, issue
or matter as to which the Indemnitee shall have been
adjudged to be liable for negligence or misconduct in the
performance of his duty to the Company unless and only to
the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon
application that, despite the adjudication of liability but
in view of all the circumstances of the case, the Indemnitee
is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court
shall deem proper.
-3-
<PAGE>
C. TERMINATION OF PROCEEDINGS:
The termination of any Indemnifiable Litigation by judgment,
order, settlement, conviction, or upon a plea nolo contendere or
its equivalent shall not, of itself, create a presumption that
the Indemnitee did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best
interests of this Company, and with respect to any criminal
action or proceeding, the Indemnitee had no reasonable cause to
believe his conduct was unlawful.
D. CONTINUATION OF INDEMNITY:
All agreements and obligations of the Company contained herein
shall continue during the period Indemnitee is a director,
officer, employee or agent of the Company (or is or was serving
at the request of the Company as a director, officer, employee,
trustee or agent of another enterprise) and shall continue
thereafter so long as the Indemnitee shall be subject to any
Indemnifiable Litigation or Indemnifiable Expense.
3. MAINTENANCE OF INSURANCE AND SELF INSURANCE:
A. The Company represents that as of the date hereof it presently
has in force and effect a policy or policies of D & O Insurance
with an aggregate coverage in the amount of $50,000,000. Subject
only to the provisions of Section 3B hereof, the Company agrees,
so long as the Indemnitee shall be subject to any possible
Indemnifiable Litigation or Indemnifiable Expenses arising out of
or resulting therefrom, the Company will employ its best efforts
to purchase and maintain in effect for the benefit of Indemnitee
one or more valid, binding and enforceable policy or policies of
D & O Insurance providing, in all respects, coverage at least as
comparable to that presently provided pursuant to the existing
policy or policies of insurance.
B. Notwithstanding Section 3A above, the Company shall not be
required to maintain or to obtain in substitution thereof, said
policy or policies of D & O Insurance in effect if said
insurance, in the reasonable business judgment of the then
directors of the Company, is not reasonably available or if
either:
(a) the premium cost for such insurance is substantially
disproportionate to the amount of coverage; or
(b) the coverage provided by such insurance is so limited by
exclusions that there is insufficient benefit from such
insurance.
C. In the event the Company does not purchase and maintain said
policy or policies of D & O Insurance pursuant to the provisions
of Section 3B hereof, the Company agrees to indemnify and hold
Indemnitee harmless to the full extent of
-4-
<PAGE>
the coverage which would otherwise have been provided for the
benefit of Indemnitee pursuant to said insurance.
4. REPAYMENT OF INDEMNIFIABLE EXPENSES:
Indemnifiable Expenses incurred by the Indemnitee with respect to any
Indemnifiable Litigation shall be advanced by the Company to the
Indemnitee prior to the final disposition thereof upon receipt by the
Company of the undertaking by, or on behalf of, the Indemnitee,
substantially in the form attached hereto as Exhibit "A", to repay all
amounts so advanced should it ultimately be determined that the
Indemnitee is not entitled to indemnification by the Company pursuant
to this Indemnification Agreement or otherwise.
5. LEGAL COUNSEL:
The Indemnitee shall have the right to retain independent legal
counsel to represent him in connection with any Indemnifiable
Litigation or may designate the Company as his agent for the retention
of counsel.
6. NOTIFICATION:
The Indemnitee shall promptly advise the Company, in writing, of the
institution of any Indemnifiable Litigation which is or may be subject
to this Indemnification Agreement and keep the Company informed of and
consult with the Company with respect to the status of any such
Indemnifiable Litigation.
7. RIGHTS NOT EXCLUSIVE - OTHER RIGHTS:
The rights of indemnification provided in this Indemnification
Agreement shall not be deemed exclusive of any other rights to which
the Indemnitee may be entitled to indemnification by reason of any
statute, contract, agreement, by-law, vote of stockholders or
disinterested directors, as a matter of law, or otherwise.
8. BINDING EFFECT:
This Indemnification Agreement establishes contract rights which shall
be binding upon and shall inure to the benefit of the successors,
assignees, heirs, and legal representatives to the parties hereto.
9. SEPARABILITY:
Each of the provisions of this Indemnification Agreement is a separate
and distinct agreement and independent of the others, so that if any
provision or paragraph of this Indemnification Agreement, or any
clause thereof, be held to be invalid, illegal or unenforceable in
whole or in part, the remaining provisions, paragraphs and clauses of
this Indemnification Agreement shall remain fully valid, enforceable
and binding on the parties hereto.
-5-
<PAGE>
10. AMENDMENT AND TERMINATION:
No amendment, modification, termination or cancellation of this
Indemnification Agreement shall be effective unless in writing and
signed by both parties hereto.
11. GOVERNING LAW:
The validity, interpretation, performance and enforcement of this
Indemnification Agreement shall be governed by the laws of the State
of Delaware.
IN WITNESS WHEREOF, the Company has caused this Indemnification Agreement
to be duly executed on its behalf and the Indemnitee has duly executed this
Indemnification Agreement on the day and year first above written.
(CORPORATE SEAL) ACME METALS INCORPORATED
ATTEST:
/s/ Edward P. Weber, Jr. /s/ B. W. H. Marsden
-------------------------- By: ------------------------------------
Edward P. Weber, Jr. Brian W. H. Marsden
Secretary Chairman and Chief Executive Officer
INDEMNITEE:
/s/ L. F. Sutherland
------------------------------------
L. Frederick Sutherland
-6-
<PAGE>
EXHIBIT A
UNDERTAKING AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of ________) l99_,
between ACME METALS INCORPORATED, a Delaware corporation ("the Company"), and
__________________________________, who as of the execution date hereof is
serving as _________________________________________________ of ACME METALS
INCORPORATED ("the Indemnitee").
WITNESSETH:
WHEREAS, the Indemnitee may become involved in investigations, claims,
actions, suits or proceedings which have arisen or may arise in the future as a
result of the Indemnitee's service to the Company; and
WHEREAS, the Indemnitee desires that the Company pay any and all expenses
(including, but not limited to, attorney's fees and court costs) actually and
reasonably incurred by the Indemnitee or on his behalf in defending or
investigating any such matters and that such payment be made in advance of the
final disposition of such investigations, claims, actions, suits or proceedings
to the extent that the Indemnitee has not previously been reimbursed for the
same by insurance; and
WHEREAS, the Company is willing to make such advance payments but, in
accordance with Section l45 of the General Corporation Law of the State of
Delaware and Article VIII of the by-laws of the Company, the Company may make
such payments only if it receives an undertaking from the Indemnitee to repay
the same if it is determined that the Indemnitee is not entitled to
indemnification; and
WHEREAS, the Indemnitee is willing to give such an undertaking;
NOW THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. In regard to any payments made either directly by the Company to the
Indemnitee, or on his behalf, pursuant to the terms of the
Indemnification Agreement made this same day between the parties, the
Indemnitee hereby undertakes and agrees to repay to the Company any
and all amounts so paid promptly and in any event within thirty (30)
days after the disposition, including any appeals, of any litigation
or threatened litigation on account of which payments were made,
PROVIDED, HOWEVER, to the extent that the Indemnitee is entitled to be
indemnified under the terms of said Indemnification Agreement, Section
l45 of the General Corporation Law of the State of Delaware, Article
VIII of the by-laws of the Company, or other applicable law,
Indemnitee shall not be required to repay the amounts as to which he
is determined to be entitled to indemnification.
<PAGE>
2. This Agreement shall not affect in any manner any rights which the
Indemnitee may have against the Company, any insurer, or any other
person to seek indemnification for or reimbursement of any expenses
referred to herein or any judgment which may be rendered in any
litigation or proceeding.
IN WITNESS WHEREOF, the Company has caused this Undertaking Agreement to be
duly executed on its behalf and the Indemnitee has duly executed this
Undertaking Agreement on the day and year first above written.
(CORPORATE SEAL) ACME METALS INCORPORATED
ATTEST:
By:
------------------------- ------------------------------------
Edward P. Weber, Jr. Brian W. H. Marsden
Secretary Chairman and Chief Executive Officer
INDEMNITEE:
------------------------------------
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<PAGE>
UNDERTAKING AGREEMENT
THIS AGREEMENT is made and entered into this 26th day of January 1995,
between ACME METALS INCORPORATED, a Delaware corporation ("the Company"), and
L. Frederick Sutherland who as of the execution date hereof is serving as a
Director of ACME METALS INCORPORATED ("the Indemnitee").
WITNESSETH:
WHEREAS, the Indemnitee may become involved in investigations, claims,
actions, suits or proceedings which have arisen or may arise in the future as a
result of the Indemnitee's service to the Company; and
WHEREAS, the Indemnitee desires that the Company pay any and all expenses
(including, but not limited to, attorney's fees and court costs) actually and
reasonably incurred by the Indemnitee or on his behalf in defending or
investigating any such matters and that such payment be made in advance of the
final disposition of such investigations, claims, actions, suits or proceedings
to the extent that the Indemnitee has not previously been reimbursed for the
same by insurance; and
WHEREAS, the Company is willing to make such advance payments but, in
accordance with Section l45 of the General Corporation Law of the State of
Delaware and Article VIII of the by-laws of the Company, the Company may make
such payments only if it receives an undertaking from the Indemnitee to repay
the same if it is determined that the Indemnitee is not entitled to
indemnification; and
WHEREAS, the Indemnitee is willing to give such an undertaking;
NOW THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. In regard to any payments made either directly by the Company to the
Indemnitee, or on his behalf, pursuant to the terms of the
Indemnification Agreement made this same day between the parties, the
Indemnitee hereby undertakes and agrees to repay to the Company any
and all amounts so paid promptly and in any event within thirty (30)
days after the disposition, including any appeals, of any litigation
or threatened litigation on account of which payments were made,
PROVIDED, HOWEVER, to the extent that the Indemnitee is entitled to be
indemnified under the terms of said Indemnification Agreement, Section
l45 of the General Corporation Law of the State of Delaware, Article
VIII of the by-laws of the Company, or other applicable law,
Indemnitee shall not be required to repay the amounts as to which he
is determined to be entitled to indemnification.
<PAGE>
2. This Agreement shall not affect in any manner any rights which the
Indemnitee may have against the Company, any insurer, or any other
person to seek indemnification for or reimbursement of any expenses
referred to herein or any judgment which may be rendered in any
litigation or proceeding.
IN WITNESS WHEREOF, the Company has caused this Undertaking Agreement to be
duly executed on its behalf and the Indemnitee has duly executed this
Undertaking Agreement on the day and year first above written.
(CORPORATE SEAL) ACME METALS INCORPORATED
ATTEST:
/s/ Edward P. Weber, Jr. /s/ B. W. H. Marsden
---------------------------- -------------------------------------
Edward P. Weber, Jr. Brian W. H. Marsden
Secretary Chairman and Chief Executive Officer
INDEMNITEE:
/s/ L. F. Sutherland
------------------------------------
L. Frederick Sutherland
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<PAGE>
EXHIBIT 10.21
ACME METALS INCORPORATED
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
ARTICLE I
PURPOSE
The Acme Metals Incorporated 1994 Executive Incentive Compensation Plan
(the "Plan") is designed to (i) provide for awards to officers and key salaried
employees of the Company who, individually or as members of a group, contribute
in a substantial manner to the achievement of objectives and goals established
by the Board of Directors which contribute to the success of the Company, thus
providing a means for their participation in such success; and, (ii) to afford
an incentive to such persons to continue to contribute their best efforts to
promote the success of the Company.
ARTICLE II
DEFINITIONS
The following words and phrases shall have the meaning set forth below
whenever used herein:
1) "Base Salary" shall mean, for the Chief Executive Officer and
Incentive Group A, the regular salary, exclusive of bonuses, incentive
pay, overtime pay, special awards or awards made under the Plan, as
established prior to the first day of the Year in question; and, for
all other employees, the regular salary, exclusive of bonuses,
incentive pay, overtime pay, special awards or awards made under the
Plan, for the period of each Year during which an Employee has been
designated as a Participant.
2) "Board of Directors" or "Board" shall mean those members of the Board
of Directors of the Company who are Disinterested Persons.
3) "Company" shall mean Acme Metals Incorporated, a Delaware corporation.
4) "Cash Flow" shall mean cash flow as defined in FASB 95, other than
cash receipts and payments from financing activities, for the Year in
question, excluding however, credits and debits in such Year which are
extraordinary items, determined in accordance with generally accepted
accounting principles.
5) "Committee" shall mean the Compensation Committee of the Board of
Directors of the Company consisting of members who are Disinterested
Persons.
6) "Disinterested Persons" shall mean persons who are "disinterested
persons" as the term is defined in Rule 16 b-3 under Section 16 of the
Securities Exchange Act of 1934, as amended; and/or, are "outside
directors" as defined in Section 162(m) of the Internal Revenue Code
of 1986 and Regulations promulgated thereunder.
7) "Employee" shall mean any person, including an officer, who is
employed by the Company on a full-time basis and is compensated for
such employment by a regular salary.
<PAGE>
8) "Increase in Shareholder Value" shall mean a formula, determined by
the Committee prior to the Year in question, utilizing one or more of
the following factors, either standing alone or as compared to
competitors or other classes of entities:
i) Net After Tax Earnings per share, in accordance with generally
accepted accounting principles;
ii) trading price of the Company's stock coupled with dividends paid;
iii) book value per share, in accordance with generally accepted
accounting principles; and
iv) other factors could include market share, decrease in leverage,
or improvements in productivity pursuant to an objective formula.
9) "Net After Tax Earnings" shall mean the consolidated net income of the
Company for the Year in question as set forth in its financial
statements before any accrual pursuant to the Plan with respect to
such Year, and excluding gains and charges in such Year which are
extraordinary items, determined in accordance with generally accepted
accounting principles.
10) "Participant" shall mean an Employee of the Company described in
Article III.
11) "Return on Equity" shall mean the percentage obtained by dividing
a) the Net After Tax Earnings of the Company for the Year in
question BY
b) the average shareholders' equity amount for the Year in question
(the average shareholders' equity amount shall be determined in
accordance with generally accepted accounting principles,
consistently applied); PROVIDED, HOWEVER, that the Committee may
adjust said average equity amount for such items and/or
transactions in such Year which are extraordinary items,
determined in accordance with generally accepted accounting
principles.
12) "Return on Investment" shall mean Net After Tax Earnings divided by
Net Operating Assets reduced by Intangible Assets, as appearing on the
Company's audited financial statements for the Year in question.
13) "Year" shall mean the fiscal Year of the Company.
ARTICLE III
PARTICIPANTS
A. Prior to the first day of the Year in question, the Committee shall
designate which of the Employees the Committee has assigned to the Incentive
Groups identified as Chief Executive Officer and Group A in Paragraph D of
Article IV, who shall be Plan Participants for the Year in question. Not later
than January 31 of each Year, the Committee shall designate all other Employees
who shall be Plan Participants for that Year and shall assign each Participant
to one of the other incentive groups (i.e., B,
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<PAGE>
C or D) designated in Paragraph D of Article IV. The Committee shall cause
these determinations, as well as information regarding the various factors to be
taken into account in determining awards hereunder, to be communicated to each
Participant.
B. A person may become a Participant contemporaneously with becoming an
Employee if the Employee is so designated by the Committee; or, by the Chief
Executive Officer of the Company and such designation is ratified by the
Committee, provided, however, that a new Chief Executive Officer of the Company
and a new Employee in Incentive Group A may only be designated a Plan
Participant for the balance of the Year, on a pro-rated basis, in which they are
first so designated.
C. Contemporaneously with the promotion, demotion or reassignment of a
Participant in Incentive Group B, C or D, the Committee or the Chief Executive
Officer of the Company may make one or more of the following changes: (i)
change the incentive group to which the Committee had heretofore assigned said
Participant, provided, however, that said Participant does not become the Chief
Executive Officer or a Participant in Incentive Group A; or (ii) terminate an
Employee's participation in the Plan for the remainder of the Year without
otherwise affecting the employment status of such Employee.
D. Contemporaneous with the demotion or reassignment of the Chief
Executive Officer of the Company or a participant in Incentive Group A, the
Committee may (i) change the incentive group to which the Committee had
heretofore assigned said Participants, or (ii) terminate an Employee's
participation in the Plan for the remainder of the Year without otherwise
affecting the employment status of such Employee.
ARTICLE IV
COMPUTATION OF INCENTIVE PAYMENTS
A. GENERAL: Prior to the beginning of the Year in question, the Committee
shall, for such Year, determine whether the computation of incentive payments
under the Plan for the Year shall be based upon (as such terms are defined
herein): (a) Net After Tax Earnings; (b) Return on Equity; (c) Return on
Investment; (d) Increase in Shareholder Value; (e) Cash Flow; or (f) A
combination of any of the foregoing items.
B. ANNUAL CORPORATE GOALS: Prior to the beginning of the Year in
question, the Committee shall, for such Year, determine the minimum, target and
maximum performance goals to be achieved by the Company during such Year for the
purposes of this Plan. Such goals shall be established as follows:
1) NET AFTER TAX EARNINGS: For any Year, in which Net After Tax
Earnings is utilized, the Committee shall determine the minimum,
target and maximum goals for Net After Tax Earnings to be
applicable in respect of that Year.
2) RETURN ON EQUITY: For any Year in which Return on Equity is
utilized, the Committee shall determine the minimum, target and
maximum Return on Equity percentages (hereinafter respectively
called "Minimum Return on Equity Percentage", "Target Return on
Equity Percentage" and "Maximum Return on Equity Percentage"), to
be applicable in respect of that Year.
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<PAGE>
3) INCREASE IN SHAREHOLDER VALUE: For any Year in which Increase in
Shareholder Value is utilized, the Committee shall determine the
minimum, target and maximum Increase in Shareholder Value
percentages (hereinafter respectively called "Minimum Increase in
Shareholder Value Percentage", "Target Increase in Shareholder
Value Percentage" and "Maximum Increase in Shareholder Value
Percentage") to be applicable in respect of that Year.
4) RETURN ON INVESTMENT: For any Year in which Return on Investment
is utilized, the Committee shall determine the minimum, target
and maximum Return on Investment percentages (hereinafter
respectively called "Minimum Return on Investment Percentage,"
"Target Return on Investment Percentage" and "Maximum Return on
Investment Percentage," to be applicable in respect of that Year.
5) CASH FLOW: For any Year in which Cash Flow is utilized, the
Committee shall determine the minimum, target and maximum Cash
Flow goals to be applicable in respect of that Year.
C. FACTORS IN ESTABLISHING CORPORATE GOALS: In establishing the
annual corporate goals for each Year, the Committee shall take into
consideration the Company's Profit Plan objectives for such Year, the Company's
Long Term Strategic Plan, the Company's historical performance, the projected
performance of selected companies in like industries, the historical performance
of selected companies in like industries, the average performance of selected
companies in like industries in recent years, the short-term and long-term
economic forecasts for the Year in question and future Years and such other
factors as the Committee shall consider relevant to its determinations for the
Year, or Years, in question.
D. INCENTIVE COMPENSATION PAYMENT LEVELS: Until modified by action of the
Committee, the incentive group designations and the maximum, target and minimum
Incentive Compensation Payment Levels applicable to the several incentive groups
shall be as follows:
INCENTIVE GROUP MAXIMUM TARGET MINIMUM
Chief Executive Officer 60.0% 40.0% 20.0%
Group A 45.0% 30.0% 15.0%
Group B 37.5% 25.0% 12.5%
Group C 30.0% 20.0% 10.0%
Group D 22.5% 15.0% 7.5%
E. CORPORATE PERFORMANCE INCENTIVE FUND: A Corporate Performance
Incentive Compensation Fund shall be established for each Participant, the
amount of which shall be the result obtained by multiplying such Participant's
Base Salary by a percentage which is derived from the Group Incentive
Compensation Payment Level applicable to such Participant for the Year in
question. Examples of the computations of the applicable incentive payment
levels to any individual Participant under the Plan are subject to the following
conditions and limitations.
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<PAGE>
1) CHIEF EXECUTIVE OFFICER AND INCENTIVE GROUP A.
Awards to Participants in the Chief Executive Office and
Incentive Group A designations, as a percentage of Base Salary, may
not exceed the maximum Incentive Compensation Payment Level specified
in Paragraph D of Article IV above; provided however, such awards may
be reduced or eliminated for any such individual Participant in such
manner or amount as the Committee in its sole discretion may
determine.
2) INCENTIVE GROUP B, C AND D PARTICIPANTS.
Incentive Compensation Payment Level awards to Participants in
Incentive Groups B, C and D may be adjusted as follows:
i) A personal performance determination shall be made by management
as to each such Participant's performance during the Year in
question on a scale of 1 through 3. The criteria for each of
the three ratings are described in Appendix 2 attached hereto.
ii) The amount of incentive compensation, computed in accordance with
Paragraphs D and E of Article IV hereof, awarded to such
Participant who receives a rating of 3 may be reduced by amounts
up to 25%.
iii) The amount of incentive compensation, computed in accordance with
paragraphs D and E of Article IV hereof, awarded to such
Participant who receives a rating of 1 may be increased by amounts
up to 25%.
iv) The amount of incentive compensation, computed in accordance with
Paragraphs D and E of Article IV hereof, awarded to such
Participant who receives a rating of 2 may not be increased or
decreased.
ARTICLE V
PAYMENT, DEFERRAL, PRO-RATION AND FORFEITURE OF AWARDS
A. Promptly after the individual Participant's Incentive Compensation
Payment Level awards for the Year in question shall have been determined, such
awards shall be reviewed by the Committee, and, if the Committee shall approve
the same, the Company shall cause such awards to be distributed to each
respective Participant.
The Committee may, in is discretion, cause to be transferred all or any
part of a Participant's Incentive Compensation Payment Level award to his
Deferred Compensation Account under the Deferred Compensation Plan of the
Company, and, to the extent not so transferred, the award of a Participant shall
be distributed to him. All amounts transferred to Deferred Compensation
Accounts shall be held, invested, reinvested and distributed as provided in the
Deferred Compensation Plan of the Company.
B. If, during a Year, a Participant's participation in the Plan shall be
terminated as provided in Paragraph C of Article V hereof, such person's award
for that Year shall be pro-rated based upon that portion of the Year during
which he was a Participant.
-5-
<PAGE>
C. If, during a Year, a Participant ceases to be an Employee by reason of
illness or injury, death, retirement, or leave of absence having the approval of
management, his award shall be computed on the basis of Base Salary for that
portion of the Year in which he was an Employee. Payment of such award shall be
made pursuant to the terms of paragraph A of Article V.
D. If the employment of a Participant ceases by reason of resignation or
dismissal (whether or not for cause) no award for such Year shall be made to
such Participant.
E. If, prior to the time an award is granted, the Committee determines
that a Participant has intentionally committed an act materially inimical to the
interests of the Company, the Committee may direct that the award of such
Participant be reduced to zero or such other amount as the Committee in its sole
discretion deems appropriate.
F. No award shall be paid to the Chief Executive Officer or a Participant
in Incentive Group A unless the Committee certifies that the goals and other
material terms have been satisfied.
ARTICLE VI
GENERAL
Neither the establishment of this Plan nor the selection of any employee as
a Participant shall give any Participant any right to be retained in the employ
of the Company, or a subsidiary thereof; no Participant or Employee and no
person claiming under or through a Participant or Employee shall have any vested
right or interest in the Plan or in the funds determined to be payable
thereunder; and, there shall be no obligation upon the Committee to designate
any Employee as a Participant. The Committee may adjust, and from time to time
change, such rules and policies as it deems appropriate for the administration
of the Plan and may give to the participants such notice relative thereto, or
statement thereof, as it deems desirable. No member of the Committee who is
also an Employee shall vote as to any action taken by the Committee (i) with
respect to awards to be made to him under the Plan or (ii) with respect to his
designation as a Participant.
ARTICLE VII
AMENDMENTS AND TERMINATION
The Committee, subject to ratification by the Board of Directors, may from
time to time amend, suspend or terminate, in whole or in part, any or all of the
provisions of this Plan; provided, however, with respect to the Chief Executive
Officer of the Company and Employees in Incentive Group A, any such action shall
not cause or result in an increase in the amount of any award to said
Participants.
Anything in this Plan to the contrary notwithstanding, the Committee,
subject to ratification by the Board of Directors, shall have the right, if in
the sole judgment of the Committee, economic conditions or any other factors
affecting the Company, one or more subsidiaries, one or more divisions, or the
businesses of any of them, so warrant, to reduce or eliminate the amount of the
Incentive Compensation Payment Level award to any Participant, or the amount of
all awards to all Participants, in the case of any such award prior to the time
of payment of said awards pursuant to Article V of this Plan.
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<PAGE>
APPENDIX I
TO
ACME METALS INCORPORATED
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
The following computations shall serve as examples of the application of
the Plan to any individual Participant:
1) If the Company's actual results for the Year in question equals the
minimum performance goal(s)* level established by the Committee for
such Year, the percentage to be applied against the Participant's Base
Salary shall be equal to the minimum Incentive Compensation Payment
Level (expressed as a percentage of Base Salary) for the Participant's
Incentive Group under Paragraph D of Article IV of the Plan for such
Year.
2) If the Company's actual results for the Year in question is less than
the minimum performance goal(s) established by the Committee for such
Year, the percentage applied against the Participant's Base Salary
shall be equal to zero for such Year.
3) If the Company's actual results for the Year in question is greater
than the minimum but less than the target goal(s), or is greater than
the target but less than the maximum goal(s) established by the
Committee for such Year, the percentage to be applied against the
Participant's Base Salary for such Year shall be
determined by interpolation based on the differences, as the case may
be, between the minimum and target, or between the target and maximum
goal(s) as applied to the Incentive Compensation Payment Level for the
Participant's Incentive Group for such Year under Paragraph D of
Article IV of the Plan.
Thus, for example:
EXAMPLE X: If a Participant is assigned to Incentive Group C,
minimum, target and maximum Net After Tax Earnings goal(s) for the
Year in question are $2.0 million, $4.0 million and $6.0 million,
respectively, actual Net After Tax Earnings for such Year is $3.0
million and the Participant's Base Salary is $40,000 for such Year,
his Performance Incentive Compensation Fund for such Year would be
$6,000, determined as follows:
1) APPLICABLE PERCENTAGE.
a) The difference between target and minimum goals for Net
After Tax Earnings are:
$4.0 million - $2.0 million = $2.0 million
____________________
*Performance goals for each Year may be based upon (i) Net After Earnings,
(ii) Return on Equity, (iii) Increase in Shareholder Value, (iv) Return on
Investment, (v) Cash Flow, or (vi) a combination of any of the foregoing.
<PAGE>
b) The difference between actual Net After Tax Earnings and
minimum Net After Tax Earnings is:
$3.0 million - $2.0 million = $1.0 million
c) the proportion of (b) = $1.0 million = 50.0%
--- ------------
(a) $2.0 million
d) The difference between the percentage of Base Salary
allocable to a Participant in Incentive Group C for target
and minimum Net After Tax Earnings (under Paragraph D of
Article IV of the Plan is:
20.0% - 10.0% = 10.0%
e) The percentage of Base Salary to be allocated to a
Participant in Incentive Group C, based on actual Net After
Tax Earnings of $3.0 million:
For achieving minimum Net After Tax Earnings = 10.0%
Plus: (c) x (d) [50% x 10%] = 5.0%
------
Applicable percentage: 15.0%
2) BASE SALARY: $40,000.00
3) PARTICIPANT'S PERFORMANCE INCENTIVE COMPENSATION FUND:
$40,000.00 x 15.0% = $6,000.00
EXAMPLE Y: Same as Example X, except actual Net After Tax
Earnings for the Year in question is $5.0 million. The
Participant's Performance Incentive Compensation Fund would be
$10,000, determined as follows:
1) APPLICABLE PERCENTAGE.
a) The difference between maximum and target Net After Tax
Earnings is:
$6.0 million - $4.0 million = $2.0 million
b) The difference between actual Net After Tax Earnings
and target Net After Tax Earnings is:
$5.0 million - $4.0 million = $1.0 million
c) The proportion of (b) = $1.0 million = 50.0%
---
(a) $2.0 million
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<PAGE>
d) The difference between percentage of Base Salary
allocable to a Participant in Incentive Group C at a
maximum and at target Net After Tax Earnings is:
30% - 20% = 10.0%
e) The percentage of Base Salary to be allocated to a
Participant in Incentive Group C based on actual Net
After Tax Earnings of $5.0 million:
For achieving target Net After Tax Earnings: 20.0%
Plus: (c) x (d), or 50.0% x 10.0% 5.0%
-----
Applicable percentage 25.0%
2) BASE SALARY: $40,000
3) CORPORATE PERFORMANCE INCENTIVE COMPENSATION FUND:
$40,000 x 25.0% = $10,000.00
4) If the Company's actual results for the Year in question
equals or exceeds the maximum goal(s) established by the
Committee for such Year, the percentage to be applied
against the Participant's Base Salary shall be equal to the
maximum Incentive Compensation Payment Level for the
Participant's Incentive Group for such Year.
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<PAGE>
APPENDIX 2
INTEROFFICE
CORRESPONDENCE Copy to:
Date: November 18, 1993
To:
From:
Subject:
Reference:
As you are aware, the extent of an individual's EIC payment is
dependent upon an evaluation of his or her personal performance. The
letter received by 1993 participants contained the following
statement: "... the amount you are eligible to receive may be
adjusted based on your personal performance."
All personal ratings must be approved by the Chairman and Chief
Executive Officer and each of us is expected to recommend a rating
for those participants in our organizations. The following
performance criteria should be used in developing your
recommendations:
OUTSTANDING Employee is performing all requirements of the
(Rating 1) responsibility areas in a highly exceptional manner.
Has accomplished all of personal annual objectives.
Performance exceeds the desired level of performance in
all responsibility areas by a wide margin. Would be
unrealistic to expect better performance in
responsibility areas.
EFFECTIVE Employee is performing most or all requirements of the
(Rating 2) responsibility areas. Has accomplished most of
personal annual objectives. Performance on work
requirements is at an acceptable level, but certain
requirements are performed above that level and
occasionally exceptionally well. Improved performance
can be expected in some areas.
MARGINAL Employee is performing some or most of the requirements
(Rating 3) of the responsibility areas, but is not performing all
key requirements. Has not satisfied any significant
personal annual objectives. Performance meets desired
level of performance for few of the key responsibility
areas and improved performance is expected.
By way of explanation, participants who achieve Rating 1 shall have
their awards increased by up to 25%. Participants who achieve Rating
2 shall be considered "full incentive" and shall receive payments in
keeping with the formula for their Group. Finally, participants who
achieve Rating 3 shall have their awards decreased by up to 25%.
<PAGE>
Recommendations for a participant to receive a Rating 1 or Rating 3
must be thoroughly documented. Recommendations and necessary
supporting documentation should be returned to my attention prior to
December 15. If you have a question or wish to discuss your ratings,
please call me.
Any recommended deletions or additions to the EIC participation list
should also be submitted at this time, with full documentation and
justifications. Please call me before submitting your
recommendations.
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<PAGE>
EXHIBIT 10.23
ACME METALS INCORPORATED
------------------------
DEFERRED COMPENSATION PLAN
--------------------------
As Amended and Restated
Effective January 1, 1994
<PAGE>
ACME METALS INCORPORATED
------------------------
DEFERRED COMPENSATION PLAN
--------------------------
TABLE OF CONTENTS
ARTICLE PAGE
------- ----
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
I. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III. Deferred Compensation Accounts . . . . . . . . . . . . . . . . . . . 2
Deferred Compensation Accounts. . . . . . . . . . . . . . . . . . 2
Deferred Compensation Account Benefit . . . . . . . . . . . . . . 2
Vesting and Forfeiture. . . . . . . . . . . . . . . . . . . . . . 3
IV. Investments of Deferred Compensation Accounts. . . . . . . . . . . . 3
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Reporting to Participants . . . . . . . . . . . . . . . . . . . . 3
Actual Investment Not Required. . . . . . . . . . . . . . . . . . 3
Establishment of Trust Permitted. . . . . . . . . . . . . . . . . 3
V. Distribution of Deferred Compensation Accounts . . . . . . . . . . . 4
Source of Payment . . . . . . . . . . . . . . . . . . . . . . . . 4
Time and Manner of Payment. . . . . . . . . . . . . . . . . . . . 4
Designation of Beneficiaries. . . . . . . . . . . . . . . . . . . 5
Emergency Payments. . . . . . . . . . . . . . . . . . . . . . . . 5
VI. Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Administration. . . . . . . . . . . . . . . . . . . . . . . . . . 5
General Creditor. . . . . . . . . . . . . . . . . . . . . . . . . 5
Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . 5
Non-Alienation of Benefits. . . . . . . . . . . . . . . . . . . . 6
Withholding for Taxes . . . . . . . . . . . . . . . . . . . . . . 6
Employment Rights . . . . . . . . . . . . . . . . . . . . . . . . 6
Payment of Base Salaries. . . . . . . . . . . . . . . . . . . . . 6
Committee Determination Final . . . . . . . . . . . . . . . . . . 6
Amendment or Termination. . . . . . . . . . . . . . . . . . . . . 6
VII. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . 6
Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . 6
Committee Liability . . . . . . . . . . . . . . . . . . . . . . . 6
<PAGE>
ACME METALS INCORPORATED DEFERRED COMPENSATION PLAN
---------------------------------------------------
AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1994
PREAMBLE
--------
Acme Metals Incorporated, a Delaware corporation, has previously
established a deferred compensation plan for certain of its employees. The
following shall constitute the terms and conditions of the Acme Metals
Incorporated Deferred Compensation Plan, as amended and restated effective
January 1, 1994:
ARTICLE I
---------
DEFINITIONS
-----------
The following words and phrases as used herein shall have the meanings set
forth below:
1.1 "Company" shall mean Acme Metals Incorporated, a Delaware corporation.
1.2 "Base Salary" shall mean the annual base salary rate of a Participant
as from time to time fixed by the Company or one of its subsidiaries and
exclusive of all incentive bonuses and fringe benefits.
1.3 "Savings Plan" shall mean the Acme Metals Incorporated Salaried
Employees Retirement Savings Plan effective as of May 29, 1986, and restated as
of January 1, 1990, as the same has been or may hereafter be amended.
1.4 "ESOP" shall mean the Acme Metals Incorporated Employee Stock
Ownership Plan effective as of January 1, 1989, as the same has been or may
hereafter be amended.
1.5 "Other Qualified Plan" shall mean such other qualified plan, under
section 401(a) of the Internal Revenue Code of 1986 as amended from time to time
or any substitution therefor (the "Code"), of the Company, or any of its
subsidiaries, as is designated by the Committee from time to time in its
discretion for the purposes of this Plan.
1.6 "Diverted Savings Plan Contribution" shall mean a sum equal to the
"Savings Plan Deficiency Amount." "Savings Plan Deficiency Amount" shall mean
the sum equal to the amount of underpayment of a Company contribution to an
Employee's account under the Savings Plan which for any Employee for any
particular period (disregarding voluntary Employee contributions) is caused by
limitations imposed upon such Company contributions by law, such as by sections
401(a)(17) and 415 of the Code.
1.7 "Diverted ESOP Contribution" shall mean a sum equal to the "ESOP
Deficiency Amount." "ESOP Deficiency Amount" shall mean the sum equal to the
amount of underpayment of a Company contribution to an Employee's account under
the ESOP which for any Employee for any particular period (disregarding
voluntary Employee contributions) is caused by limitations imposed upon such
Company contributions by law, such as by sections 401(a)(17) and 415 of the
Code.
1.8 "Diverted Other Qualified Plan Contribution" shall mean a sum equal to
the "Other Qualified Plan Deficiency Amount." "Other Qualified Plan Deficiency
Amount" shall mean the sum equal to the amount of underpayment of a Company
contribution to an Employee's account under such Other
<PAGE>
Qualified Plan which for any Employee for any particular period (disregarding
voluntary Employee contributions) is caused by limitations imposed upon such
Company contributions by law, such as by sections 401(a)(17) and 415 of the
Code.
1.9 "EIC Plan" shall mean the 1986 Acme Metals Incorporated Executive
Incentive Compensation Plan, effective June 23, 1986, as the same has been or
may hereafter be amended in the future.
1.10 "EIC Payment" shall mean an incentive award pursuant to the EIC Plan.
1.11 "Employee" shall mean any person, including an officer of the Company
(whether or not he is also a director thereof), who is employed by the Company
or one of its subsidiaries on a full-time basis and who is compensated for such
employment by a regular salary.
1.12 "Committee" shall mean the Compensation Committee of the Board of
Directors of the Company.
1.13 "Participant" shall include any Employee who satisfies the eligibility
requirements of and becomes a participant in accordance with Section 2.1.
1.14 "Year" shall mean a calendar year ending December 31.
1.15 "Deferred Compensation Account" shall mean amounts credited to the
account of a Participant as provided in this Plan.
1.16 "Plan" shall mean this plan, the Acme Metals Incorporated Deferred
Compensation Plan, effective as of January 1, 1994, as the same may from time to
time hereafter be amended.
1.17 "ERISA" shall mean the Employee Retirement Income Security Act of 1974
as amended from time to time.
ARTICLE II
-----------
PARTICIPANTS
-------------
2.1 ELIGIBILITY. Participants in the Plan shall consist of (i) those
Employees who shall from time to time be designated by the Committee as
Participants and who shall elect, in accordance with Section 3.2, to defer part
or all of their compensation and (ii) those Employees for whom a Diverted
Savings Plan Contribution, a Diverted ESOP Contribution, and/or a Diverted Other
Qualified Plan Contribution is placed in a Deferred Compensation Account. The
Committee shall notify all such Participants of their inclusion in the Plan.
ARTICLE III
-----------
DEFERRED COMPENSATION ACCOUNTS
------------------------------
3.1 DEFERRED COMPENSATION ACCOUNTS. The Company shall establish and
maintain on its books an account for each Participant which shall be known as
his "Deferred Compensation Account".
2
<PAGE>
3.2 DEFERRED COMPENSATION ACCOUNT BENEFIT.
(a) Each Employee designated by the Committee who wishes to
participate in the Plan shall make an irrevocable election in
writing of the amount of his Base Salary and/or EIC Payment which
will be deferred under the Plan. Such election shall be made
prior to January 1 of each calendar year. The maximum amount
that a Participant can elect to defer with respect to any
calendar year shall be 30% of his Base Salary and 100% of his EIC
Payment. The amount designated to be deferred under this Section
3.2(a) shall be credited to the Participant's Deferred
Compensation Account.
(b) An amount equal to a Participant's Diverted Savings Plan
Contribution, Diverted ESOP Contribution, and/or Diverted Other
Qualified Plan Contribution shall be credited to such
Participant's Deferred Compensation Account.
(c) Upon the first to occur of the events described in Section
5.2(a), the allocation of amounts to a Participant's Deferred
Compensation Account as provided in the foregoing provisions of
Article III hereof shall cease and terminate.
3.3 VESTING AND FORFEITURE. A Participant shall at all times have a fully
vested and nonforfeitable interest in his Deferred Compensation Account.
ARTICLE IV
----------
INVESTMENTS OF DEFERRED COMPENSATION ACCOUNTS
---------------------------------------------
4.1 INVESTMENTS. Subject to such rules and procedures as the Committee
shall establish, as soon as practicable after any amount has been credited to
the Deferred Compensation Accounts, the Company shall invest the amount so
credited in such property, real, personal, tangible or intangible, as the
Committee shall direct, which investments may include securities of the Company.
Income from such investments shall be reinvested, as soon as practicable, in the
same manner as hereinabove provided with respect to investments of the credited
amounts. The Company, under the direction of the Committee, shall have the
unrestricted right to sell any investment and to reinvest the proceeds of such
sale. From time to time, but no less frequently than each calendar quarter, an
amount equal to the income from such investments (and reinvestments) shall be
credited to the Deferred Compensation Accounts in proportion to the then
balances credited to the Deferred Compensation Accounts.
4.2 REPORTING TO PARTICIPANTS. The Committee shall cause to be kept a
detailed record of all transactions affecting the Deferred Compensation Accounts
and shall from time to time deliver to each Participant a written report setting
forth a description of the securities and the cash balance, if any, then held
and a description of all transactions which have taken place since the date of
the previous report.
4.3 ACTUAL INVESTMENT NOT REQUIRED. Although the benefit payable to the
Participant hereunder is measured by the value of and earnings on the amounts
credited to the Participant's Deferred Compensation Account, the Company need
not actually make an investment to provide earnings. If the Company, in its
discretion, should from time to time make such investment, such investment shall
be solely for the Company's own account, and the Participant shall have no
right, title or interest in any such investment.
3
<PAGE>
4.4 ESTABLISHMENT OF TRUST PERMITTED. Notwithstanding the foregoing
provisions of this Article IV, and subject to Section 6.2, the Company and its
subsidiaries may, in their sole discretion, establish a grantor trust, as
described under section 671 of the Code, subject to the claims of the general
creditors of the Company, or the subsidiary establishing the trust, as the case
may be, for purposes of accumulating assets to provide benefits hereunder. Any
such trust will conform to the terms of the model trust, as described in Revenue
Procedure 92-64. The establishment of such a trust shall not affect the
Company's liability to pay benefits hereunder except that the Company's
liability shall be offset by any payments actually made to a Participant under
such a trust. In the event such a trust is established, the amount to be
invested pursuant to Section 4.1 shall be contributed by the Company to the
trust and invested thereunder, in accordance with Section 4.1 and the trust
agreement.
ARTICLE V
---------
DISTRIBUTION OF DEFERRED COMPENSATION ACCOUNTS
----------------------------------------------
5.1 SOURCE OF PAYMENT. A Participant's Deferred Compensation Account
shall be distributed from the general assets of the Company, to the extent not
paid from a trust established pursuant to Section 4.4.
5.2 TIME AND MANNER OF PAYMENT.
(a) A Participant's Deferred Compensation Account shall be
distributed upon the first to occur of the following events:
(i) Termination of employment with the Company during the
life of the Participant, whether voluntary or
involuntary;
(ii) Retirement of the Participant from full-time employment
with the Company;
(iii) Total disability of the Participant, or such partial
disability as prevents the Participant from continuing
in the full-time employment of the Company; or
(iv) Death of the Participant.
(b) In the discretion of the Committee, a Participant's Deferred
Compensation Account shall be distributed either in a single lump
sum distribution, or in equal or approximately equal installments
over a period of five years; in either event, the distribution
shall commence not later than one year from the date of the first
to occur of the events described in Section 5.2(a).
(c) With respect to the distribution of a Deferred Compensation
Account, the Committee shall, in its discretion, have the right
to make distributions in cash or in kind; provided, however, that
if cash is distributed in lieu of distribution of investments in
kind, the amount of such cash distribution shall be determined by
taking the market value of such undistributed investments as of
the first business day preceding the date of such distributions.
4
<PAGE>
(d) A Participant's Deferred Compensation Account shall continue to
be maintained until all amounts credited thereto have been
distributed.
(e) In the event of the death of a Participant either before or after
any distribution has been made to him from his Deferred
Compensation Account, the balance then remaining in such account
shall be paid to the person or persons as the Participant shall
have designated in a writing filed with the Committee as provided
in Section 5.3 below.
5.3 DESIGNATION OF BENEFICIARIES. The Participant from time to time may
name the person or persons (who may be named concurrently, contingently or
successively) to whom his Deferred Compensation Account is to be paid if he dies
before he receives all of his Deferred Compensation Account. Each such
beneficiary designation will revoke all prior designations by the Participant,
shall not require the consent of any previously named beneficiary, shall be in a
form prescribed by the Committee, and will be effective only when filed with the
Committee during the Participant's lifetime. If the Participant fails to
designate a beneficiary before his death, as provided above, or if the
beneficiary designated by the Participant dies before the date of the
Participant's death or before complete payment of the Participant's Deferred
Compensation Account and the Participant has not designated a contingent
beneficiary, the Committee, in its discretion, may pay a Participant's Deferred
Compensation Account to either (i) one or more of the Participant's relatives by
blood, adoption or marriage and in such proportions as the Committee determines;
or (ii) the legal representative or representatives of the estate of the last to
die of the Participant and his designated beneficiary.
5.4 EMERGENCY PAYMENTS. A Participant may, from time to time, request, in
such manner as may be satisfactory to the Committee, that the Committee
authorize an emergency payment from his Deferred Compensation Account to such
Participant to meet his immediate and heavy financial needs arising as a result
of personal injury, sickness, disability, substantial damage to real or personal
property or other unanticipated and extraordinary emergency of the Participant
or a member of his immediate family and which emergency is beyond the control of
the Participant. In determining the amount to be distributed, the Committee
shall take into account amounts reasonably available from other resources of the
Participant. Emergency payments shall be limited to the amount necessary to
meet the emergency and prevent financial hardship to the Participant.
ARTICLE VI
----------
ADMINISTRATION
--------------
6.1 ADMINISTRATION. Full power and authority to construe, interpret and
administer the Plan shall be vested in the Committee. The Committee shall make
each determination provided for under the Plan and promulgate such rules and
regulations as it considers necessary and appropriate for the implementation or
management of the Plan. Committee members shall not be Participants in the
Plan.
6.2 GENERAL CREDITOR. Notwithstanding any provision of the Plan contained
herein to the contrary, the Participant's Deferred Compensation Account
hereunder shall at all times be reflected on the Company's books as a general
unsecured and unfunded (for tax purposes and for purposes of Title I of ERISA)
obligation of the Company, and the Plan shall not give any person any right or
security interest in any asset of the Company nor shall it imply any trust or
segregation of assets by the Company, other than as described in Section 4.4.
The Participant is solely an unsecured creditor of the Company with
5
<PAGE>
respect to any amounts payable to the Participant hereunder, and the Plan
constitutes a mere promise by the Company to make payments in the future
pursuant to the terms hereof.
6.3 FACILITY OF PAYMENT. If the Participant or his beneficiary is
entitled to payments under the Plan, and in the Committee's opinion such person
becomes in any way incapacitated so as to be unable to manage his financial
affairs, the Committee may authorize the Company to make payments to the
Participant's or beneficiary's legal representative, or to one or more of the
Participant's or beneficiary's relatives by blood, adoption or marriage, or to
the Participant's beneficiary, for such person's benefit, or the Committee may
authorize the Company to make payments for the benefit of the Participant or
beneficiary in any manner that it considers advisable. Any payment made in
accordance with the preceding sentence shall be a full and complete discharge of
any liability for such payment hereunder.
6.4 NON-ALIENATION OF BENEFITS. All rights and benefits under the Plan
are personal to the Participant and neither the Plan nor any right or interest
of a Participant or any person arising under the Plan is subject to voluntary or
involuntary anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment.
6.5 WITHHOLDING FOR TAXES. Notwithstanding the provisions of Section
6.4., the Company may withhold from any payment made by it under the Plan such
amount or amounts as may be required for purposes of complying with the tax
withholding provisions of the Code or any state or local income tax act or for
purposes of paying any estate, inheritance, or other tax attributable to any
amounts payable hereunder.
6.6 EMPLOYMENT RIGHTS. The Plan is not a contract of employment, and
participation in the Plan will not give any Participant the right to be retained
in the employ of the Company, nor any right or claim to any benefit under the
Plan, unless the right or claim has specifically accrued under the Plan.
6.7 PAYMENT OF BASE SALARIES. The Base Salaries of the Participants, less
the amounts of Base Salary allocated to their Deferred Compensation Accounts as
provided herein, shall be paid to the Participants in accordance with the usual
payroll practices of the Company.
6.8 COMMITTEE DETERMINATIONS FINAL. Each determination provided for in
the Plan shall be made by the Committee under such procedures as it may from
time to time prescribe and shall be made in the absolute discretion of the
Committee. Any such determination shall be conclusive on all persons.
6.9 AMENDMENT OR TERMINATION. The Company may in its sole discretion
terminate or amend the Plan from time to time. No such termination or amendment
shall alter a Participant's right to receive a distribution of amounts
previously credited to his Deferred Compensation Account; provided, however,
that if the Company is liquidated, it shall have the exclusive right to
determine the value of each Participant's Deferred Compensation Account, as of a
date established by the Company, and to pay any unpaid distributions in any
manner which the Company determines to be just and equitable.
6
<PAGE>
ARTICLE VII
-----------
MISCELLANEOUS
-------------
7.1 GENDER AND NUMBER. Where the context admits, words denoting men
include women, the plural includes the singular, and the singular includes the
plural.
7.2 SUCCESSORS. Unless otherwise agreed to, the Plan is binding on and
will inure to the benefit of any successor to the Company, whether by way of
merger, consolidation, purchase or otherwise.
7.3 COUNTERPARTS. The Plan may be executed in two or more counterparts,
any one of which shall constitute an original without reference to the others.
7.4 CONTROLLING LAW. The Plan shall be construed in accordance with the
laws of the State of Illinois.
7.5 COMMITTEE LIABILITY. In the absence of bad faith, no member of the
Committee nor any other person administering this Plan shall have any liability
to any person, firm or corporation based on or arising out of the administration
of this Plan, including, without limitation, investment or reinvestment of the
amounts credited to the Deferred Compensation Accounts or the manner of
distribution of the Deferred Compensation Accounts.
This Amendment adopted and executed this 28th day of December, 1994, to be
effective as of January 1, 1994.
ACME METALS INCORPORATED
/s/ B. W. H. Marsden
By:--------------------------------------
B.W.H. Marsden
Chairman and Chief Executive Officer
ATTEST:
/s/ Edward P. Weber, Jr.
--------------------------------------
Edward P. Weber, Jr., Secretary
7
<PAGE>
ACME METALS INCORPORATED DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION
If I should die prior to complete distribution of my Deferred Compensation
Account under the Plan, I hereby designate the following as my beneficiary(ies)
to receive any amounts payable on my behalf under the Plan: (Check A, B or C)
A. ( ) All to _______________________________ , or if (s)he dies before
me, in equal shares to such of the following trusts or persons as
are living at my death: (Enter the name(s) and address(es))
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
B. ( ) In equal shares to such of the following persons as are living at
my death: (Enter name(s) and address(es))
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
C. ( ) All to the following trustee(s) under a trust I have established
as my beneficiary(ies):
Name of each trustee Address of each trustee
-------------------- -----------------------
________________________ ________________________
________________________ ________________________
________________________ ________________________
as trustee(s), or any successor trustee(s), under that certain
trust agreement dated ____________, 19____, executed by me and
said trustee(s), also known as __________________________ (name
of trust, if any) as in effect at my death.
I hereby revoke any beneficiary designation previously signed by me under
the Plan and expressly reserve the right to change or revoke this beneficiary
designation, but I understand that no changes or revocation will be effective
unless it is filed with the Company while I am alive.
______________________________ _______________________________
Date Signed Signature of Participant
_______________________________
Print Name
<PAGE>
ACME METALS INCORPORATED DEFERRED COMPENSATION PLAN
---------------------------------------------------
DEFERRAL ELECTION FOR THE YEAR
--------------------------------------
In accordance with the terms of the Acme Metals Incorporated Deferred
Compensation Plan, I hereby irrevocably elect to defer receipt of ____% of my
Base Salary (as defined in the Plan) and/or ____% of any EIC Payment (as defined
in the Plan) payable during calendar year ________________________.
__________________ _________________________________
Date Signed Signature of Participant
_________________________________
Print Name
<PAGE>
EXHIBIT 10.25
ACME METALS INCORPORATED
1994 STOCK INCENTIVE PROGRAM
1. PURPOSE
The purpose of the Acme Metals Incorporated 1994 Stock Incentive Program
(the "Program") is to attract and retain outstanding individuals as
officers and employees of Acme Metals Incorporated and its subsidiaries
(the "Company") and to furnish incentives to such persons to increase
profits by providing such persons opportunities to acquire shares of the
Company's common stock, $1 par value ("Common Stock"), or to receive
monetary payments, or both, on advantageous terms as herein provided.
2. DEFINITIONS
As used in the Program,
(a) The term "Appreciation Right" means a right granted pursuant to
Paragraph 8 of the Program.
(b) The term "Disinterested Persons" means persons who are "disinterested
persons" as that term is defined in Rule 16b-3, under Section 16 of
the Securities Exchange Act of 1934, as amended; and/or, as "outside
directors" under Section 162(m) of the Code and Regulations
promulgated thereunder.
(c) The term "Board" means those members of the Board of Directors of the
Company who are Disinterested Persons.
(d) The term "Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
(e) The term "Committee" means the Compensation Committee of the Board, or
any successor thereof, consisting of at least three persons, all of
whom are directors of the Company and all of whom are Disinterested
Persons selected by the Board to administer the Program and serving at
the pleasure of the Board.
(f) The term "Date of Grant" means that date specified by the Committee on
which a grant of a Stock Option or Appreciation Right or a grant of a
Stock Award shall become effective (which date shall not be earlier
than the date on which the Committee takes action with respect
thereto).
(g) "Employee" shall mean any person, including an officer, who is
employed by the Company on a full-time basis and is compensated for
such employment by a regular salary.
(h) With respect to the grant of Stock Options and Appreciation Rights,
"Market Value per Share" means as to each share the average of the
high and low prices of the Common Stock on that date (or, if there are
no sales on that date, on the last preceding date on which there was a
reported sale) on the NASDAQ Over-the-Counter Markets, National Market
Issues, or The New York Stock Exchange Composite Transactions, as
reported in THE WALL STREET JOURNAL (corrected for reporting errors),
whichever is applicable upon such date.
<PAGE>
(i) The term "Participant" means an Employee to whom a Benefit has been
granted or awarded.
(j) The term "Optionee" means the optionee named in an agreement
evidencing an outstanding Stock Option.
(k) The term "Option Right" means the right to purchase one share of
Common Stock upon exercise of a Stock Option granted pursuant to
Paragraph 7 of the Program.
(l) The term "Spread" means the excess of the Market Value Per Share of
Common Stock on the date when an Appreciation Right is exercised or
deemed to be exercised over the option price provided for in the
related Option Right.
(m) The term "Stock Award" means an award of shares of Common Stock (and
accompanying cash award, if any) granted pursuant to Paragraph 9 of
the Program as to which any condition imposed thereon has not been
fulfilled or any limitation or restriction imposed thereon has not
lapsed.
(n) The term "Stock Option" means an option to purchase Common Stock
granted pursuant to Paragraph 7 of the Program.
(o) The term "Benefit" means the granting of an Appreciation Right, Option
Right, Stock Option, Stock Award, Restricted Stock or other
opportunities to acquire shares of Common Stock, or to receive
monetary payments, or both, on advantageous terms under the Program.
(p) The term "Subsidiary" means any corporation or other legal entity,
domestic or foreign, more than 50% of the voting securities of which
is owned or controlled, directly or indirectly, by the Company.
(q) The term "Restricted Stock" means an award of shares of Common Stock
granted pursuant to Paragraph 10 of the Program.
(r) The term "Year" means the fiscal year of the Company.
3. ADMINISTRATION
The Program shall be administered by the Committee; and the actions of the
Committee taken pursuant to the Program shall be subject to ratification by
the Board. No director eligible to receive Benefits shall vote upon the
granting of Benefits to himself.
The maximum number of Stock Options and/or Appreciation Rights which may be
awarded to any individual Participant in any three (3) year period during
the term of the Program, shall not exceed 75,000 options and/or rights.
2
<PAGE>
4. PARTICIPANTS
Participants in the Program consist of such officers or key employees of
the Company as the Committee in its sole discretion may designate from time
to time to receive Benefits hereunder. The Committee's designation of a
Participant in any year shall not require the Committee to designate such
persons to receive a Benefit in any other year, or, if so designated, to
receive the same type or amount of Benefit as in any other year, or as may
be received by any other Participant in any year. The Committee shall
consider such factors as it deems pertinent in selecting Participants and
in determining the type and amount of their respective Benefits, including
without limitation (i) the financial condition of the Company; (ii)
anticipated profits for the current or future years; (iii) contributions of
Participants to the profitability and development of the Company; (iv) the
adequacy of the other compensation of Participants.
5. TYPE OF BENEFITS
Benefits under the Program may be granted in any one or a combination of
(a) Stock Options, (b) Appreciation Rights, (c) Stock Awards and (d)
Restricted Stock, all as described below at Paragraphs 6-10 hereof.
6. SHARES RESERVED UNDER THE PROGRAM
There is hereby reserved for issuance under the Program an aggregate of
550,000 shares of Common Stock, subject to adjustment in accordance with
the provisions of Paragraph 16 hereof. Such shares may be shares of
original issuance or treasury shares or a combination thereof. The number
of shares issued hereunder as Stock Awards or Restricted Stock shall not
exceed 150,000, subject to adjustment in accordance with any adjustment
pursuant to Paragraph 16 hereof. If there is a lapse, expiration,
termination or cancellation of any Stock Option (otherwise than upon the
exercise of an Appreciation Right) or Appreciation Right prior to the
exercise thereof, or if shares are issued as a Stock Award or Restricted
Stock and thereafter are reacquired by the Company pursuant to rights
reserved upon issuance thereof, (other than in connection with the
satisfaction of a withholding obligation), such shares may again be used
for new Benefits authorized under the Program. Shares covered by any Stock
Option surrendered upon the exercise of an Appreciation Right shall not be
available for the granting of further Benefits.
7. STOCK OPTIONS
The Committee may, from time to time and upon such terms and conditions as
it may determine, authorize the granting to Participants of options to
purchase shares of Common Stock. Each such grant may utilize any or all of
the authorizations, and shall be subject to all of the limitations,
contained in the following provisions:
(a) Each grant shall specify the number of shares of Common Stock to which
it pertains;
(b) Each grant shall specify an option price per share not less than the
Market Value Per Share on the Date of Grant;
(c) Each grant shall specify that the option price shall be payable at the
time of exercise (i) in cash or by check acceptable to the Company,
(ii) by the transfer to the Company of shares of Common Stock having a
value at the time of exercise equal to the total option price, or
(iii) by a combination of such methods of payment;
-3-
<PAGE>
(d) Successive grants may be made to the same Participant whether or not
any Stock Options previously granted to such Participant remain
unexercised;
(e) Each grant shall specify the period or periods of continuous
employment by the Optionee with the Company which is necessary before
a Stock Option or any installment thereof will become exercisable;
(f) Stock Options granted under the Program may be either (i) options
which are incentive stock options ("ISOs") under Section 422 of the
Code; (ii) options which do not qualify as incentive stock options
under Section 422 of the Code ("nonstatutory options"); or (iii) a
combination of ISOs and nonstatutory options;
(g) No Stock Option shall be exercisable more than ten years from the Date
of Grant;
(h) Each grant of Stock Options shall be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to the
Optionee and containing such terms and provisions, consistent with the
Program and the provisions of Section 16(b) of the Securities Exchange
Act of 1934, as amended, as the Committee may approve;
(i) In addition to any requirement set forth in the Code to assure that
ISOs qualify as incentive stock options under Section 422, ISOs
granted hereunder shall be subject to the following terms and
conditions;
(1) If an Optionee owns more than 10% of the total combined voting
power of all classes of outstanding shares of stock of the
Company or any of its subsidiaries or parent Companies (within
the meaning of Section 424(e) and 424(f) of the Code), then as
ISO granted under the Program to such Optionee shall, by its
terms, fix the exercise price to be at least 110% of the Market
Value Per Share on the Date of Grant of the ISO and such ISO
shall terminate (become non-exercisable) upon the expiration of
five years from the Date of Grant of such ISO;
(2) With respect to each Optionee, a grant will not qualify as an ISO
to the extent, as a result of such grant, the aggregate fair
market value of the Common Stock (determined on the Date of Grant
of each ISO) subject to one or more ISOs first exercisable in any
calendar year shall exceed $100,000.
8. APPRECIATION RIGHTS
The Committee may authorize the grant of Appreciation Rights in connection
with any nonstatutory option granted hereunder. An Appreciation Right
shall be a right of the Optionee, exercisable by surrender of the related
Option Right, to receive from the Company an amount which shall be
determined by the Committee and shall be expressed as a percentage of the
Spread (not exceeding 100%) at the time of exercise. Each such grant may
utilize any or all of the authorizations and shall be subject to all of the
limitations contained in the following provisions:
(a) Any grant may (i) when granted specify that the amount payable on
exercise of an Appreciation Right may be paid by the Company in cash,
in shares of Common Stock, or in any combination thereof, or (ii) may
either grant to the Optionee or retain in the Committee the right to
elect among those alternatives subsequent to the Date of Grant;
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(b) Any grant may specify that the amount payable on exercise of an
Appreciation Right (valuing shares of Common Stock for this purpose at
their Market Value Per Share at the date of exercise) may not exceed a
maximum specified by the Committee at the Date of Grant;
(c) Appreciation Rights may be exercised from time to time commencing on
the third business day following the release for publication, in at
least one of the ways specified in Rule 16b-3 under Section 16 of the
Securities Exchange Act of 1934, of quarterly or annual summary
statements of sales and earnings of the Company and ending on the
twelfth business day thereafter. Notwithstanding the foregoing, no
Appreciation Right may be exercised during the first six months of its
term, except that this limitation shall not apply in the event death
or disability of the Optionee occurs prior to the expiration of the
six-month period. In addition, no Appreciation Right may be exercised
except at a time when the related Option Right is exercisable;
(d) Each grant shall specify that the Committee may from time to time
amend, suspend or terminate the Appreciation Rights covered thereby
(provided that, in the case of an amendment, the amended Appreciation
Rights shall conform to the provisions of the Program) and shall not
increase the amount of such grant;
(e) In the event the grant of an Appreciation Right grants to the Optionee
the right to elect to receive cash in whole or in part in settlement
of the Appreciation Right, the Committee shall retain sole discretion
to approve such election, which approval or disapproval may be given
at any time after the Optionee's election to which it relates;
(f) Each grant of an Appreciation Right shall be evidenced by a
notification executed on behalf of the Company by an officer and
delivered to the Optionee, which notification shall describe such
Appreciation Right, identifying the related Option Right, state that
such Appreciation Right is subject to all the terms and conditions of
the Program, and contain such other terms and provisions, consistent
with the Program, as the Committee may approve.
9. STOCK AWARDS
The Committee may from time to time and upon such terms and conditions as
it may determine, authorize the granting to participants of Stock Awards.
A Stock Award shall be a right of the Participant to receive from the
Company a number of shares of Common Stock of the Company specified by the
Committee, without monetary consideration. Each grant may utilize any or
all of the authorizations, and shall be subject to all of the limitations
contained in the following provisions:
(a) Each such grant shall specify the number of shares of Common Stock to
which it relates;
(b) Each such grant shall be subject to such conditions, limitations,
restrictions and other matters and shall be subject to forfeiture or
lapse in such circumstances as the Committee may prescribe;
(c) Each such grant shall specify the time or times at which the Common
Stock covered by such grant shall be delivered to the Participant;
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(d) Any such grant may be accompanied by a cash award payable at such
times and in such amount (not exceeding 100% of the compensation
income recognized by the participant by reason of such grant for
federal, state and local income tax purposes) as the Committee by
determine;
(e) Each such grant shall specify that the Committee may at any time
amend, suspend or terminate the Stock Award (and accompanying cash
award, if any) covered thereby, provided that, in the case of an
amendment, the amended Stock Award (and accompanying cash award, if
any) shall conform to the provisions of the Program;
(f) Each grant of Stock Awards (and accompanying cash awards, if any)
shall be evidenced by a notification executed on behalf of the Company
by any officer and delivered to and accepted by the Participant, which
notification shall describe the Stock Award (and accompanying cash
award, if any), state that the same is subject to all of the terms and
conditions of the Program, and contain such other terms and
provisions, consistent with the Program, as the Committee may approve:
(g) For purposes of determining the value of any Stock Awards granted
hereunder, the value of such Stock Awards shall be based on the
average of the high and low prices on the date or dates on which the
Common Stock is delivered to the Participants pursuant to the terms of
their respective agreements relating to the Stock Awards or, if there
are no sales on that date, the last preceding date on which there was
a reported sale on the NASDAQ Over-the-Counter Markets, national
market Issues, or The New York Stock Exchange Composite Transactions,
as reported in THE WALL STREET JOURNAL (corrected for reporting
errors), whichever is applicable upon such date.
10. RESTRICTED STOCK PURCHASE PLAN
The Committee is authorized to adopt a Restricted Stock Purchase Plan (the
"Plan") providing for the transfer of shares of Common Stock to officers
and other key employees of the Company at prices below the then current
fair market value of such shares in consideration for their services to the
Company and on terms and conditions which subject the Participant's
interests in such shares to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code. Shares transferred pursuant to such
restricted stock purchase plan shall be subject to such other restrictions,
limitations and conditions as may be required by said Plan or as the
Committee believes to be appropriate, including, without limitation,
restrictions on the sale or other disposition of such Common Stock and
rights of the Company to reacquire such Common Stock upon termination of
the Participant's employment within specified periods.
11. LIMITATION ON TRANSFERABILITY
No Stock Option, Appreciation Right or share of Common Stock subject to
forfeiture or other restriction of the kind described in Paragraph 9(b) or
in any Restricted Stock Purchase Plan adopted hereafter shall be
transferable otherwise than by will or the laws of descent and
distribution, and any such Benefit shall be exercisable during the lifetime
of the Participant to whom such Benefit has been granted only by the
Participant or by the Participant's guardian or legal representative, and
after such Participant's death shall be exercisable only by the
Participant's legal representative.
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12. OTHER PROVISIONS
The award of any Benefit under the Program may also be subject to other
provisions (whether or not applicable to the Benefit awarded to any other
Participant) as the Committee determines appropriate, including, without
limitation, restrictions on resale or other disposition, such provisions as
may be appropriate to comply with federal and state securities laws and
stock exchange requirements, and understandings or conditions as to the
Participant's employment in addition to those specifically provided for
under the Program.
13. MANNER OF ACTION BY THE COMPANY
The Secretary of the Company (or such other officer as the Chief Executive
Officer of the Company may from time to time designate) shall supervise the
maintenance of records for all Participants in the Program. Any
determination of such officer, if approved by the Board, shall be binding
and conclusive for all purposes.
14. WITHHOLDING OF TAXES
The Company shall deduct from any payment, or otherwise collect from the
Participant, any taxes required to be withheld by federal, state or local
governments in connection with any Benefit. The Participant may elect,
subject to approval by the Committee, to have shares withheld by the
Company in satisfaction of such taxes. With respect to Participants
subject to Section 16(b) of the Securities Exchange Act of 1934, an
election to have shares withheld must be irrevocably made at least six
months prior to the date that such taxes are determined with respect to any
such Benefit or be made or become effective during any ten-day period
beginning on the third business day after and ending on the twelfth
business day after a release for publication, in at least one of the
manners specified in Rule 16b-3 under Section 16 of the Securities Exchange
Act of 1934, of quarterly or annual sales and earnings of the Company, if
such period coincides with or is prior to the time that such taxes are
determined; provided, however, that no such election may be made with
respect to withholding occurring within six months of the Date of Grant of
the relevant Benefit. The number of shares to be withheld shall be
calculated by reference to the Market Value per share of the Common Stock
determined in accordance with Paragraph 2(g) on the date that such taxes
are determined. The Company shall give the person entitled to receive a
Benefit notice of the withholding obligation attributable to any amount
payable or shares deliverable under the Program as far in advance as
reasonably practicable, and the Company may defer making payment of
delivery if any such tax may be pending unless and until indemnified to its
satisfaction.
15. TENURE
A Participant's right, if any, to continue to serve the Company as an
officer or employee shall not be enlarged or otherwise affected by the
establishment of the Program or his designation as a Participant.
16. ADJUSTMENT PROVISIONS
(a) If the Company shall at any time change the number of issued shares of
Common Stock without new consideration to the Company (such as by
stock dividends, stock splits or stock combinations), the total number
of shares reserved for issuance under the Program and the number of
shares covered by each outstanding Benefit shall be adjusted so that
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<PAGE>
the aggregate consideration payable to the Company and the value of
each such Benefit shall not be changed. Benefits may also contain
provisions for their continuation or for other equitable adjustments
after changes in the Common Stock resulting from reorganization, sale,
merger, consolidation or similar occurrence.
(b) Notwithstanding any other provision of the Program, and without
affecting the number of shares reserved or available hereunder, the
Committee may authorize the issuance or assumption of Benefits in
connection with any merger, consolidation, acquisition of property or
stock, or reorganization upon such terms and conditions as it may deem
appropriate.
17. AMENDMENT AND TERMINATION OF BENEFITS AND THE PROGRAM
(a) The Committee may terminate the Program at any time and may amend the
Program at any time or from time to time without obtaining any
approval from the Company's stockholders; except that the Program may
not be amended without the approval of the Company's stockholders to
(i) materially increase the aggregate number of shares issuable under
the Program (excepting adjustments pursuant to Section 16 hereof);
(ii) change the class of individuals eligible to receive Benefits; or
(iii) materially increase the Benefits accruing to Participants under
the Program. No benefit shall be granted pursuant to the Program more
than 10 years after the date of ratification and approval of the
Program by the stockholders of the Company.
(b) The Committee may, with concurrence of the affected Optionee, amend or
cancel any agreement evidencing Stock Options granted under this
Program. In the event of cancellation, the Committee may authorize
the granting of new Stock Options (which may or may not cover the same
number of shares which had been the subject of the prior agreement) in
such manner, at such option price, and subject to the same terms,
conditions and discretions, as under the Program would have been
applicable had the cancelled Stock Options not been granted.
(c) In case of termination of employment by reason of death, disability or
retirement under a retirement plan of the Company of a Participant who
holds a Stock Option or Appreciation Right not immediately exercisable
in full, or any Stock Award or Restricted Stock as to which any
condition, limitation, restriction or substantial risk of forfeiture
has not lapsed, the Committee may, in its sole discretion, accelerate
the time at which such Stock Option or Appreciation Right may be
exercised or the time at which such condition, limitation, restriction
or substantial risk of forfeiture will lapse.
18. EFFECTIVE DATE
The Program shall, subject to prior approval of the stockholders of the
Company, become effective on April 28, 1994.
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EXHIBIT 10.35
STOCK OPTION AGREEMENT
Pursuant to the Acme Metals Incorporated
1994 Stock Incentive Program
This agreement, made and entered into as of May 26, 1994 by and between
Acme Metals Incorporated, a Delaware corporation (the "Company"), and the
Optionee, consists of this facing page, the reverse side of this facing page
containing the definition of Change in Control, and the Standard Terms and
Conditions attached hereto.
WHEREAS, the Optionee is an employee of Acme Metals Incorporated or a
subsidiary thereof, (hereinafter called the "Company");
WHEREAS, the 1994 Stock Incentive Program of Acme Metals Incorporated and
its subsidiaries authorizing the granting to officers and to other key employees
of the Company and its subsidiaries of options to buy from the Company shares of
common stock, par value $1 per share, has been duly adopted; and
WHEREAS, the execution of a stock option agreement in the form hereof has
been duly authorized by resolution of the Compensation Committee of the Board of
Directors of the Company duly adopted on May 26, 1994 and incorporated herein by
reference;
NOW, THEREFORE, BE IT RESOLVED, that the Company hereby grants to the
Optionee an option to purchase the number of shares shown below of common stock,
par value $1 per share, of the Company, upon the terms and conditions herein set
forth.
Date of Grant:
Optionee:
Option Shares:
Option Price:
Exercise Schedule First half on
Per Paragraph 1: Second half on
ACME METALS INCORPORATED
By _______________________________
Brian W. H. Marsden
Chairman and Chief Executive
Officer
I hereby acknowledge receipt of the nonqualified stock option granted on
the date shown above, which has been issued to me under the terms and conditions
of the 1994 Stock Incentive Program (the "Plan"). I further acknowledge receipt
of a copy of the Plan and agree to conform to all of the terms and conditions of
this Stock Option Agreement and the Plan.
Date: ______________________ ___________________________________
<PAGE>
Standard Terms and Conditions of
Non-Qualified Stock Option Agreement
Under the 1994 Stock Incentive Program
of
Acme Metals Incorporated
As Adopted By the Compensation Committee of the Board of Directors
on May 26, 1994
1. This option may be exercised in full (until terminated as hereinafter
provided) upon the retirement or upon death of the Optionee while employed by
the Company or any subsidiary or upon a Change in Control* of the Company.
Except as provided in the preceding sentence, this option (until terminated as
hereinafter provided) shall be exercisable only to the extent of one-half of the
shares hereinabove specified after the Optionee shall have been in the
continuous employ of the Company or any subsidiary for one full year from the
date hereof and to the extent of the remaining one-half of such shares after the
next succeeding year during which the Optionee shall have been in the continuous
employ of the Company or any subsidiary. For the purposes of this paragraph,
leaves of absence for illness, military or governmental service, or other cause,
shall be considered as employment. To the extent exercisable, this option may
be exercised in whole or in part from time to time, provided, however, that any
fractional share shall be rounded down to the nearest whole share.
2. The option price may, at the election of the Optionee, be paid (i) in
cash or by check acceptable to the Company, or (ii) by transfer to the Company
of shares of common stock of the Company having a value at the time of exercise
(the average of the high and low prices quoted on NASDAQ Over-the-Counter
Markets, National Markets Issues, or The New York Stock Exchange Composite
Transactions, whichever is applicable, on the date upon which the Optionee's
exercise of stock option is received) no greater than the total option price, or
(iii) any combination of whole shares and funds. In addition, the Optionee
shall pay the Company an amount equal to applicable federal, state and local
withholding taxes. Upon receipt of the payments referred to in the preceding
sentence, the Company agrees to cause certificates for any shares purchased
hereunder to be delivered to the Optionee.
3. This option shall terminate on the earliest of the following dates:
(a) on the date upon which the Optionee ceases to be an employee of
the Company or a subsidiary by reason of termination of
employment for cause;
(b) three months after the Optionee ceases to be an employee of the
Company or a subsidiary, unless he ceases to be such employee by
reason of death, retirement or in a manner described in (a)
above;
(c) two years after the death of the Optionee if the Optionee dies
while an employee of the Company or a subsidiary;
(d) two years after the retirement of the Optionee;
(e) ten years from the date on which this option was granted.
In the event the Optionee shall intentionally commit an act materially inimical
to the interests of the Company or a subsidiary, and the Board of Directors
shall so find, this option shall terminate at the time of such act,
notwithstanding any other provision of this agreement. Nothing contained in
this option
____________
* See reverse side of Stock Option Agreement page for definition of Change in
Control
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<PAGE>
shall limit whatever right the Company or a subsidiary might otherwise have to
terminate the employment of the Optionee.
4. This option is not transferable by the Optionee otherwise than by will
or the laws of descent and distribution and is exercisable, during the lifetime
of the Optionee, only by him.
5. This option shall not be exercisable if such exercise would involve a
violation of any applicable federal or state securities laws, and the Company
hereby agrees to make reasonable efforts to comply with any applicable
securities laws.
6. The Compensation Committee of the Board of Directors (the "Committee")
shall make such adjustments in the option price and in the number or kind of
shares of common stock, par value $1 a share, or other securities covered by
this option as such Committee in its discretion, exercised in good faith, may
determine is equitably required to prevent dilution or enlargement of the rights
of the Optionee that otherwise would result from (a) any stock dividend, stock
split, combination of shares, recapitalization or other change in the capital
structure of the Company, or (b) any merger, consolidation, separation,
reorganization or partial or complete liquidation, or (c) any other corporate
transaction or event having an effect similar to any of the foregoing. No
adjustment provided for in this Paragraph 6 shall require the Company to sell
any fractional shares.
7. The term "subsidiary" as used in this agreement means any corporation
(other than the Company) in an unbroken chain of corporations beginning with the
Company if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing fifty per cent or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain. For purposes of this agreement, the continuous employ of the
Optionee with the Company or a subsidiary shall not be deemed interrupted, and
the Optionee shall not be deemed to have ceased to be an employee of the Company
or any subsidiary, by reason of the transfer of his employment among the Company
and its subsidiaries.
8. The term "retirement" means the termination of an Optionee's
employment under such circumstances as entitle him to elect an immediate pension
under any retirement or pension benefit plan (as defined under the Employee
Retirement Income Security Act of 1974, as amended, "ERISA") of the Company, or
any subsidiary by which he is employed and in which he participates at
termination of employment. If an Optionee does not participate in an ERISA
retirement or pension benefit plan, "retirement" means the termination of an
Optionee's employment under such circumstances as would have entitled him to
elect an immediate pension if any such retirement or pension plan had applied to
such employee.
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<PAGE>
The term "Change in Control" shall mean the occurrence of any of the following
events:
(a) there shall be consummated any consolidation, merger or reorganization
of Acme Metals Incorporated (the "Company") in which the Company is
not the continuing or surviving corporation or pursuant to which the
outstanding voting securities or other capital interests of the
Company would be converted into cash, securities or other property,
other than a consolidation, merger or reorganization of the Company in
which the holders of the Company's outstanding voting securities or
other capital interests immediately prior to such consolidation,
merger or reorganization shall directly or indirectly, have seventy-
five (75%) or more of the outstanding voting securities or other
capital interests of the surviving, resulting or acquiring corporation
or other legal entity;
(b) the Company sells, leases, exchanges or transfers (in one transaction
or a series of related transactions) all or substantially all of its
business and/or assets to any other corporation or other legal entity
of which less than 75% of the outstanding voting securities or other
capital interests of said corporation or other legal entity are owned
in the aggregate by the shareholders of the Company, directly or
indirectly, immediately prior to or after such sale;
(c) the shareholders of the Company shall approve any plan or proposal for
the liquidation or dissolution of the Company;
(d) any person or group (as such terms are used in Section 13(d) or
Section 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act") other than the Company or a subsidiary or any employee benefit
plan sponsored by the Company has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act), directly or
indirectly, of 25% or more of the combined voting power of the
Company's then outstanding voting securities ordinarily (and apart
from rights accruing in special circumstances) having the right to
vote in the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases, or
otherwise;
(e) at any time during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by the
Company's shareholders, of each new Director of the Company was
approved by a vote of at least two-thirds of such Directors of the
Company then still in office who were Directors of the Company at the
beginning of any such two-year period; or
(f) such other event, or events, as shall be determined by the Board of
Directors to be a Change in Control.
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EXHIBIT 10.41
ACME METALS INCORPORATED
GRANT OF STOCK AWARD
Dated as of January 27, 1995
To:
Pursuant to and in accordance with all the terms and conditions of the Acme
Metals Incorporated 1994 Stock Incentive Program (the "Program"), the Board of
Directors (the "Board") of Acme Metals Incorporated (hereinafter sometimes
referred to as "the Company") has granted you a stock award, effective the above
date ("Date of Grant"), of ______ shares of the $1.00 par value common stock of
Acme Metals Incorporated, such Grant of Stock Award ("Stock Award") to be
subject also to the following terms and conditions:
1. Grant of Stock Award
(a) The Company will cause to be issued in your name the number of shares
covered by this Stock Award represented by five (5) stock certificates, each
representing as nearly as practicable twenty per cent (20%) of the total number
of shares covered in total by this Stock Award, and will physically deliver such
certificates to you as promptly as possible as they become earned out and
deliverable under Paragraph 3 of this Stock Award.
(b) When you sign and return this Stock Award you will also sign and
return the five irrevocable stock powers enclosed herewith and will deliver the
same to the Secretary of the Company to facilitate the transfer of any or all of
the stock covered by this Stock Award to the Company (or its assignee or
nominee), if appropriate or required under the terms of this Stock Award or the
Program under which such shares are issued or applicable laws or regulations.
2. ISSUE OF STOCK AWARD - LIMITS ON TRANSFER
Physical custody of the stock certificates representing the shares covered
by this Stock Award will be in the Company's possession subject to the removal
or release of restrictions on transfer thereof, as provided in Paragraph 3
hereof. You expressly agree that you will not sell, assign, transfer, pledge,
or otherwise make any disposition of the shares subject to this Stock Award, or
make any attempt to do so, except as to such shares, if any, which are covered
by this Stock Award and which are represented by one or more stock certificates
duly delivered to you.
3. EARN OUT OF STOCK AWARD
(a) Provided that you are then continuing to serve as an employee of the
Company or a subsidiary thereof, the restrictions on disposition of the shares
covered by this Stock Award (except those that may be imposed by law) shall
lapse and such shares shall become deliverable to you as follows:
(i) twenty per cent (20%) of such shares six months and one day
after the Date of Grant ("First Earnout Date"):
(ii) twenty per cent (20%) of such shares on each of the next
four anniversaries of the First Earnout Date (or the next
preceding business day if such anniversary is not a business
day):
<PAGE>
(iii) in the event of a Change of Control (see attachment for
definition of Change of Control) of the Company.
For purposes of this agreement, continuous employment with the Company
or a subsidiary shall not be deemed interrupted and employment shall not be
deemed to have ceased by reason of transfer of employment among the Company and
its subsidiaries.
(b) The restrictions on your unearned shares shall lapse and all shares
not theretofore delivered to you shall become deliverable as of the date on
which your employment with the Company or a subsidiary terminates by reason of
retirement, death or disability.
(c) Subparagraphs (a) and (b) of this Paragraph 3 are subject to the
provisions of the Program, the provisions of this Stock Award, and any election
or elections you may make pursuant to Paragraph 4 below. As promptly as
reasonably possible after each date on which restrictions on your unearned
shares shall lapse, the Company will physically deliver to you the stock
certificate representing the number of shares as to which restrictions have
lapsed and will destroy the stock power(s) referred to in Paragraph 1(b) hereof
relating to the shares so delivered; provided, however, that none of the stock
subject to this award shall be deliverable to you, unless and until (i) all
necessary requirements of state and federal securities laws and regulations have
been met and (ii) the Company has been reimbursed for applicable withholding
taxes which are payable to federal, state and local governments.
4. PAYMENT OF TAXES
(a) You or any other person receiving stock under this Stock Award shall
be required to pay to the Company or a subsidiary the amount of any federal,
state or local taxes which the Company or a subsidiary is required to withhold
with respect to shares covered by this Stock Award at the time the restrictions
on such shares lapse or at such time as the Company or a subsidiary in its
judgment becomes liable to withhold any such tax ("Tax Date").
(b) You may elect to have the fair market value of up to one-half of the
shares of each installment applied to the payment of federal, state and local
taxes arising out of your right to receive such installment ("Withholding
Election"). "Fair market value" shall mean as to each share the average of the
high and low prices of the Company's common stock on the Tax Date (or, if there
are no sales on that date, the last preceding date on which there was a reported
sale) on the NASDAQ Over-the-Counter Markets, National Markets Issues, or the
New York Stock Exchange Composite Transactions, as reported in THE WALL STREET
JOURNAL (corrected for reporting errors), whichever is applicable on said date.
Such fair market value shall be determined, in the case of the first
installment, on the First Earnout Date, and in the case of all other
installments, on each of the next four anniversaries on which an installment is
earned out, unless a provision of the Program or some other provision of this
Stock Award requires that such installment be valued on a different Tax Date for
federal income tax purposes. If there are no sales of the Company's common
stock on the applicable date, fair market value will be determined as of the
last preceding date on which there was a sale. The fair market value of such
shares will be applied first to state and local taxes at the statutory
withholding rates in effect when the applicable installment is valued, second to
federal income taxes at the statutory withholding rate in effect when the
applicable installment is valued, and any balance will be treated as federal
income taxes withheld in excess of the statutory minimum. The Company or a
subsidiary shall pay to the applicable taxing authorities such amounts for your
account. If you make such an election you will be deemed to have sold and re-
transferred to the Company the number of whole shares covered by your election.
(c) If you do not make a Withholding Election with respect to the first
installment on the accompanying Tax Payment Provisions form dated as of the date
of this Stock Award and return it to the Secretary or Assistant Secretary of the
Company, the Company will deliver a certificate for twenty per cent (20%) of the
shares granted unless by reason of some other provision of this agreement or a
provision of the Program such
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<PAGE>
installment is not deliverable. Withholding Elections with respect to the
second and subsequent installments must be in writing and must be delivered to
the Secretary or Assistant Secretary of the Company either (i) at least six
months before the applicable anniversary of the First Earnout Date or (ii)
during the most recent ten-day period preceding the applicable anniversary of
the First Earnout Date, beginning on the third business day and ending on the
twelfth business day after release for publication of the Company's quarterly or
annual sales and earnings. If no election is received within the time specified
for a particular installment, the Company will deliver a certificate for twenty
per cent (20%) of the shares granted unless by reason of some other provision of
this agreement or a provision of the Program such installment is not
deliverable. If a Withholding Election is timely received, the Company will
cancel the stock certificate issued pursuant to Paragraph 1(a) above which
pertains to such installment and will issue and deliver a replacement
certificate for the difference between the installment of shares and the number
of shares as to which a timely Withholding Election has been made, unless by
reason of some other provision of this Stock Award or a provision of the Program
such installment is not deliverable. If one or more installments become
deliverable by reason of retirement, death, or disability, you or your personal
representative must, within four months next following such event, make a
Withholding Election to have up to one-half the fair market value of such shares
applied to the payment of taxes or to receive the entire installment or
installments in stock and pay the taxes due in cash. The entire installment or
installments will be paid in stock if a Withholding Election to receive such
installment or installments entirely in stock is made within such four-month
period or if a Withholding Election to have the fair market value of shares
applied to the payment of taxes is not made within such four-month period.
(d) The Company or a subsidiary will furnish you with a statement of
applicable withholding taxes providing for the election described herein for
each installment of this Stock Award. You are required to promptly reimburse
the Company or a subsidiary for the amount of withholding taxes shown on such
statement. If you fail to reimburse the Company or a subsidiary within three
months after each applicable Tax Date, the entire amount of the installment will
be forfeited unless the Board in its sole discretion determines to extend the
time for good cause shown. If withholding taxes are due because one or more
installments have become immediately deliverable following retirement, death or
disability, the entire amount of such installment or installments will be
forfeited unless the Company or a subsidiary is reimbursed for all such taxes
within six months following such retirement, death or disability or unless the
Board in its sole discretion determines to extend the time for good cause shown.
5. RIGHTS AS A SHAREHOLDER
Subject to the limitations, conditions, and restrictions on transfer
imposed by this Stock Award and by the Program, it is recognized that you will
be treated as the owner of the stock covered by this Stock Award as follows:
(a) You shall be entitled to receive all dividends, whether in cash, stock
or in any other form, payable with respect to such unearned shares; if
payable in stock, any such dividend shall be subject to all
restrictions applicable to the stock with respect to which such
dividend is paid;
(b) You shall be entitled to vote all such unearned shares in respect to
any question with respect to which a vote of stockholders is required
or solicited.
Such rights shall immediately lapse in the event any shares are forfeited
or lapsed as provided in Paragraphs 6, 7 or 8 hereof.
-3-
<PAGE>
6. AMENDMENT, CANCELLATION AND TERMINATION OF GRANT
Reference is specifically made to the provisions regarding amendment,
cancellation and termination of this Stock Award contained in Paragraph 9(e) of
the Program, and such provision is herein expressly incorporated by reference.
7. ADDITIONAL RESTRICTIONS ON THIS GRANT
As to any shares of stock not delivered (or as to which the date of
delivery as determined under Paragraph 3 hereof has not occurred) to you
pursuant to Paragraph 3 of this Stock Award, any and all of your rights shall
cease and terminate, and the Company shall be fully entitled, legally and
beneficially, to any of such shares not then delivered or deliverable, upon the
happening of any one of the following events specifying termination of such
rights. In such event, the stock certificates representing any unearned or
undelivered shares so forfeited shall be transferred to the Company or its
nominee, by it or its agents, pursuant to your authorization granted the Company
under Paragraph 1(b) hereof.
If your employment terminates for any reason (other than retirement, death
or disability), any shares which have not been earned out shall be forfeited if
you:
(i) COMPETITION
shall be employed by a competitor of, or shall be engaged in
any activity in competition with, the Company or a
subsidiary without the Company's consent;
(ii) CONFIDENTIAL INFORMATION
have divulged without the consent of the Company any secret
or confidential information belonging to the Company or a
subsidiary; or
(iii) have engaged in any other activities which would or which
might constitute grounds for your discharge by the Company
or a subsidiary for cause.
The Company shall give you (or your designated beneficiary or legal
representatives) written notice of any such forfeiture. The determination of
the Board as to the occurrence of any of the events specified in the foregoing
clauses (i), (ii), or (iii) shall be conclusive and binding upon all persons for
all purposes.
8. MISCELLANEOUS PROVISIONS
(a) Your rights and interests under this Stock Award may not be assigned
or transferred except, in the case of your death, to your beneficiary or, in the
absence of such designation, by will or the laws of descent and distribution.
(b) No employee or other person shall have any claim or right to be
granted a stock award under the Program. Neither the Program nor any action
taken thereunder, including this Stock Award, shall be construed as giving any
employee any rights to be retained in the employ of the Company or any
subsidiary thereof.
(c) Express reference is made to all of the terms and conditions of the
Program, and you, by your acceptance of this Stock Award acknowledge that you
have received a copy of such Program, that you have read the same and are
sufficiently familiar therewith to understand both your rights and your
obligations thereunder, and you agree to accept and to be bound by all of the
terms and conditions of this Stock Award
-4-
<PAGE>
and such Program, including without limitation the right of the Board to amend,
cancel, suspend or terminate this Stock Award in whole or in part, on behalf of
yourself and your heirs and assigns.
Stock Award Granted By
ACME METALS INCORPORATED
By ______________________________________
Brian W. H. Marsden
Chairman and Chief Executive Officer
AGREED AND ACCEPTED, including all terms and conditions of the Acme Metals
Incorporated 1994 Stock Incentive Program.
Date:_________________________ Signed:________________________________
-5-
<PAGE>
The term "Change in Control" shall mean the occurrence of any of the following
events:
(a) there shall be consummated any consolidation, merger or reorganization
of Acme Metals Incorporated (the "Company") in which the Company is
not the continuing or surviving corporation or pursuant to which the
outstanding voting securities or other capital interests of the
Company would be converted into cash, securities or other property,
other than a consolidation, merger or reorganization of the Company in
which the holders of the Company's outstanding voting securities or
other capital interests immediately prior to such consolidation,
merger or reorganization shall directly or indirectly, have seventy-
five (75%) or more of the outstanding voting securities or other
capital interests of the surviving, resulting or acquiring corporation
or other legal entity;
(b) the Company sells, leases, exchanges or transfers (in one transaction
or a series of related transactions) all or substantially all of its
business and/or assets to any other corporation or other legal entity
of which less than 75% of the outstanding voting securities or other
capital interests of said corporation or other legal entity are owned
in the aggregate by the shareholders of the Company, directly or
indirectly, immediately prior to or after such sale;
(c) the shareholders of the Company shall approve any plan or proposal for
the liquidation or dissolution of the Company;
(d) any person or group (as such terms are used in Section 13(d) or
Section 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act") other than the Company or a subsidiary or any employee benefit
plan sponsored by the Company has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act), directly or
indirectly, of 25% or more of the combined voting power of the
Company's then outstanding voting securities ordinarily (and apart
from rights accruing in special circumstances) having the right to
vote in the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases, or
otherwise;
(e) at any time during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by the
Company's shareholders, of each new Director of the Company was
approved by a vote of at least two-thirds of such Directors of the
Company then still in office who were Directors of the Company at the
beginning of any such two-year period; or
(f) such other event, or events, as shall be determined by the Board of
Directors to be a Change in Control.
-6-
<PAGE>
EXHIBIT 10.42
ACME METALS INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
RESTATED EFFECTIVE NOVEMBER 1, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Company Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Continuous Service . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.7 Highly Compensated Participant . . . . . . . . . . . . . . . . . . 7
1.8 Hour of Service. . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.9 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.10 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.11 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.12 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.13 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.14 Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.15 Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 2
Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Appointment of Administrative Committee. . . . . . . . . . . . . . 9
2.2 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Powers and Duties. . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Immunity of Committee. . . . . . . . . . . . . . . . . . . . . . . 12
2.5 Claims and Review Procedures . . . . . . . . . . . . . . . . . . . 13
ARTICLE 3
Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Rights of Spouse . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Certification of Participation and Compensation to Committee . . . 17
3.4 Determination of Eligibility . . . . . . . . . . . . . . . . . . . 17
3.5 Loss of Participation Eligibility with Continued Employment. . . . 17
ARTICLE 4
Company Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1 Formula. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Form of Company Contributions. . . . . . . . . . . . . . . . . . . 19
4.3 Determination of Contribution. . . . . . . . . . . . . . . . . . . 19
4.4 Payment of Contributions . . . . . . . . . . . . . . . . . . . . . 19
4.5 Non-Reversion. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 No Contributions by Participants . . . . . . . . . . . . . . . . . 21
<PAGE>
- ii -
Page
----
ARTICLE 5
Investment of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Purchases of Company Stock . . . . . . . . . . . . . . . . . . . . 22
5.3 Suspense Account . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Sales of Company Stock . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 General Requirements . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Requirements for an Exempt Loan. . . . . . . . . . . . . . . . . . 24
6.3 Proceeds of Exempt Loans . . . . . . . . . . . . . . . . . . . . . 26
6.4 Additional Company Contributions . . . . . . . . . . . . . . . . . 27
ARTICLE 7
Allocations to Participants' Accounts. . . . . . . . . . . . . . . . . . . . 28
7.1 Participants' Accounts . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Allocation of Company Stock. . . . . . . . . . . . . . . . . . . . 28
7.3 Allocation of Other Assets . . . . . . . . . . . . . . . . . . . . 29
7.4 Allocation of Forfeitures. . . . . . . . . . . . . . . . . . . . . 29
7.5 Allocation of Dividends on Company Stock . . . . . . . . . . . . . 29
7.6 Allocation of Increase or Decrease in Net Worth of Trust Assets. . 31
7.7 Diversification of Certain Participants' Accounts. . . . . . . . . 32
7.8 Limitations on Annual Additions. . . . . . . . . . . . . . . . . . 34
7.9 Top-Heavy Provisions . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 8
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.1 Normal Distribution. . . . . . . . . . . . . . . . . . . . . . . . 40
8.2 Distribution Upon Death. . . . . . . . . . . . . . . . . . . . . . 41
8.3 Distribution Upon Termination of Employment. . . . . . . . . . . . 41
8.4 Payment of Benefits. . . . . . . . . . . . . . . . . . . . . . . . 42
8.5 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.6 Payment of Benefits: Incompetency. . . . . . . . . . . . . . . . . 45
<PAGE>
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Page
----
ARTICLE 9
Amendment, Transfer and Termination. . . . . . . . . . . . . . . . . . . . . 45
9.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.2 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . 47
9.3 Termination: Discontinuance of Contributions . . . . . . . . . . . 48
ARTICLE 10
Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.1 Coverage of Employees of Subsidiaries
and Newly Acquired Facilities . . . . . . . . . . . . . . . . . . 48
10.2 Participants' Rights, Acquittance . . . . . . . . . . . . . . . . 49
10.3 Spendthrift Clause. . . . . . . . . . . . . . . . . . . . . . . . 49
10.4 Delegation of Authority by the Company. . . . . . . . . . . . . . 50
10.5 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.6 Gender, Number and Headings . . . . . . . . . . . . . . . . . . . 50
10.7 Limitation of Liability and Exhaustion
of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
<PAGE>
ACME METALS INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
ACME METALS INCORPORATED hereby restates the Acme Metals Incorporated
Employee Stock Ownership Plan effective November 1, 1994. The Plan was
established effective January 1, 1989 and was amended by Amendments No. 1
through 7. The Plan is intended to enable salaried employees to accumulate an
ownership interest in the Company and to provide for their retirement security.
The Plan is a combination stock bonus and money purchase plan and an
employee stock ownership plan within the meaning of the applicable provisions of
the Internal Revenue Code.
ARTICLE 1
DEFINITIONS
1.1 COMMITTEE. The term "Committee" means the administrative committee
appointed pursuant to Article 2 below to administer the Plan.
1.2 COMPANY. The term "Company" means Acme Metals Incorporated, a
Delaware corporation, or any successor employer of the Participants covered by
the Plan which adopts the Plan with the consent of the Company.
1.3 COMPANY STOCK. The term "Company Stock" means common stock of the
Company.
1.4 CONTINUOUS SERVICE. (a) The term "Continuous Service" means service
prior to retirement or termination of employment calculated from the
Participant's last hiring date in accordance with the provisions in this Section
1.4,
<PAGE>
- 2 -
including service with Interlake, Inc. which was credited under the Acme Steel
Company Salaried Employees Retirement Savings Plan and including service with
Cold Metal Products Eastern, Inc., The Stanley Works and A. J. Gerrard and
Company, Acme Packaging Corporation, Acme Steel Company and with any other
predecessor employer designated by the Committee. After a break in Continuous
Service, Continuous Service shall be calculated from the date of reemployment
following the last unremoved break in Continuous Service.
(b) A Participant shall not be denied credit for time lost which does not
constitute a break in service.
(c) Continuous Service shall be broken if a Participant (1) quits, is
discharged, or his employment is terminated for any other reason; provided,
however, that any Participant transferred from Acme Steel Company to Acme
Packaging Corporation effective January 1, 1992, or to the Company effective
June 1, 1992, pursuant to the reorganization of Acme Steel Company, shall not be
deemed to have terminated his employment for purposes of this Plan; (2) is
absent due to layoff which continues for more than two years; or (3) is absent
due to authorized leave which continues for more than two years or leave granted
by reason of non-compensable disability which continues for more than two years
or leave due to compensable disability incurred during the course of employment
which continues for more than 30 days after final payment of statutory
compensation for such disability or after
<PAGE>
- 3 -
the end of the period used in calculating a lump sum payment; provided, however,
that Continuous Service shall not be broken by absence of an Employee who enters
the U.S. armed forces or merchant marine for active duty having reemployment
rights under the law with which he complies and is reemployed or if such break
does not exceed five one-year periods of severance from service. In the case of
an Employee who is absent from work for maternity or paternity reasons, the 12-
consecutive month period beginning on the first anniversary of the first date of
such absence shall not constitute a break in service. Absence for maternity or
paternity reasons means an absence by reason of (1) pregnancy of the Employee,
(2) the birth of a child of the Employee, (3) the placement of a child with the
Employee in connection with the adoption of such child by the Employee, or (4)
the Employee's caring for such child for a period beginning immediately
following such birth or placement.
(d) In the event that a Participant incurs a break in service causing a
portion of his account to be forfeited and such Participant is reemployed by the
Company within one year after such break in service, the Company shall repay the
amount previously forfeited, which shall be credited to his account as of the
end of the calendar quarter in which he is reemployed.
(e) A Participant who incurs a break in service shall lose his Continuous
Service for the purpose of Section 8.3.
<PAGE>
- 4 -
However, prior service will be restored when such former Participant is
reemployed if he is reemployed (a) within one year of his break in service or
(b) at any time if he had at least one year of Continuous Service at the time
his service was broken.
(f) Continuous Service shall also include employment with a member of a
controlled group of corporations of which the Company is a member or an
unincorporated trade or business which is under common control with the Company
as determined in accordance with Section 414(c) of the Internal Revenue Code and
regulations issued thereunder. For purposes of this plan a "controlled group of
corporations" shall mean a controlled group of corporations as defined in
Section 1563(a) of the Internal Revenue Code, determined without regard to
Section 1563(a)(4) and (e)(3)(C).
1.5 EARNINGS. The term "Earnings" means wages, salary, commissions,
overtime, incentive or bonus pay for services rendered to the Company, excluding
(a) any payments for supplemental sickness and accident benefits payable under a
program benefiting salaried employees of the Company; (b) any payments by the
Company (or debits) representing unused credits (or debits) under any program of
flexible benefits utilizing an individual spending account for each Participant;
provided, however, that amounts which a Participant elects to have credited to
his account under a plan meeting the requirements of Section 125 of the internal
Revenue Code shall
<PAGE>
- 5 -
not be excluded from the definition of Earnings of the Participant but shall be
treated as Earnings for purposes of this Plan; (c) contributions by the Company
to any public or private employee pension plan, profit sharing plan or employee
stock ownership plan made on behalf of a Participant; provided, however, that
qualified elective contributions under the Acme Metals Incorporated Salaried
Employees Retirement Savings Plan shall not be excluded from the definition of
Earnings of a Participant but shall be treated as Earnings for purposes of this
Plan; (d) any income or gain received by or imputed to a Participant in respect
of a stock option (or the receipt or sale of stock acquired pursuant thereto) or
of a stock appreciation right, a stock award, or restricted stock purchase, or
under any compensation plan unless such plan provides for payment in cash only,
provided, however, that payments of awards in the form of common stock or other
securities of the Company under the Company's Executive Incentive Compensation
Plan shall not be excluded from the definition of Earnings of a Participant; (e)
any amounts which the Company is prohibited by Section 415 of the Internal
Revenue Code from contributing to a Participant's account; (f) severance
payments or premium reimbursements by the Company; and (g) any other non-payroll
income item received from the Company.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan
<PAGE>
- 6 -
to the contrary, for Plan Years beginning on or after January 1, 1994, the
annual Earnings of each Participant taken into account under the Plan shall not
exceed the OBRA '93 Annual Compensation Limit. The OBRA '93 Annual Compensation
Limit is $150,000, as adjusted by the Commissioner of Internal Revenue for
increases in the cost of living in accordance with Section 401(a)(17)(B) of the
Internal Revenue Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which Earnings are
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93 Annual
Compensation Limit will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the denominator of which
is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Section 401(a)(17) of the Internal Revenue Code
shall mean the OBRA '93 Annual Compensation Limit set forth in this provision.
If Earnings for any prior determination period are taken into account in
determining a Participant's benefits accruing in the current Plan Year, the
Earnings for that prior determination period are subject to the OBRA '93 Annual
Compensation Limit in effect for that prior determination period. For this
purpose, for determination periods beginning before the first day of the first
Plan Year beginning on or
<PAGE>
- 7 -
after January 1, 1994, the OBRA '93 Annual Compensation Limit is $150,000.
1.6 EMPLOYEE. The term "Employee" means any salaried person employed by
the Company and any other person in a group designated by the Committee to be
considered "Employees" under the Plan as provided in Section 10.1. The term
"Employee" also includes employees who are also directors. The term "regular
full-time Employee" means any Employee who regularly works a normal schedule of
40 hours per week. The term "part-time Employee" means any Employee who
regularly works a normal schedule of less than 40 hours per week. The term
"temporary Employee" means any Employee hired to work a normal schedule of 40
hours per week during a period of fixed or limited duration which does not
exceed 12 months.
1.7 HIGHLY COMPENSATED PARTICIPANT. The term "Highly Compensated
Participant" means a Participant who during the Plan Year in question or the
prior Plan Year (a) was an owner of 5% or more of the outstanding stock of the
Company or stock possessing more than 5% of the voting power of the Company, or
(b) received compensation exceeding $75,000, or (c) received compensation
exceeding $50,000 and was one of the 20% of the employees of the Company who
received the highest compensation from the Company for the Plan Year, or (d) was
an officer of the Company and received compensation exceeding $45,000 during the
Plan Year, provided that the compensation amounts shall be adjusted from time to
time in accordance with regulations of
<PAGE>
- 8 -
the Secretary of the Treasury relating to the maximum dollar limitation on
additions to defined contribution plans under Section 415(d)(1) of the Internal
Revenue Code. All other Participants are Nonhighly Compensated Participants.
1.8 HOUR OF SERVICE. The term "Hour of Service" means each period of 60
minutes of employment with the Company for which (a) an Employee is directly or
indirectly paid, or entitled to payment, for the performance of duties or for
reasons other than the performance of duties or (b) back pay, irrespective of
mitigation of damages, has either been awarded or agreed to by the Company.
When required in determining eligibility, Hours of Service shall be credited to
the Employee under (a) for the period on which the duties were performed and
under (b) for the period or periods to which the award or agreement pertains
rather than the period on which made, but an Hour of Service shall not be
credited more than once with respect to the same 60-minute period or periods of
employment. Hours under this paragraph shall be calculated and credited
pursuant to Section 2530.200b-2 of the Regulations of the Department of Labor.
1.9 PARTICIPANT. The term "Participant" means an Employee who has
satisfied the eligibility requirements set forth in Section 3.1 and is
participating in the Plan.
1.10 PLAN. The term "Plan" means this plan, the Acme Metals Incorporated
Employee Stock Ownership Plan, as amended from time to time.
<PAGE>
- 9 -
1.11 PLAN YEAR. The term "Plan Year" means a calendar year.
1.12 TRUST AGREEMENT. The term "Trust Agreement" means the agreement
between the Company and the Trustee setting forth the terms under which the
Trustee holds and administers the Trust Fund.
1.13 TRUSTEE. The term "Trustee" means the entity or person appointed by
the Company to hold and administer the assets of the Plan pursuant to a trust
agreement between the Company and the Trustee.
1.14 TRUST FUND. The term "Trust Fund" means the assets of the Plan held
in trust by the Trustee.
1.15 YEAR OF SERVICE. The term "Year of Service" means any 12-month
period during which an Employee completes at least 1,000 Hours of Service.
ARTICLE 2
ADMINISTRATIVE COMMITTEE
2.1 APPOINTMENT OF ADMINISTRATIVE COMMITTEE. The Plan shall be
administered by an administrative committee consisting of not less than six
persons nor more than 10 persons who shall be appointed by the Board of
Directors of the Company. The Board shall have full power to determine the
period during which any Committee member shall serve and in its discretion may
remove any member of the Committee at any time without assigning any reason for
such removal. The members of the Committee may be Participants. Any member of
<PAGE>
- 10 -
the Committee shall automatically cease to be a member of the Committee on
termination of his employment. An officer of the Company shall certify to the
Trustee the names of the members of the Committee and thereafter any change in
its membership.
2.2 QUORUM. The action of a majority of the members of the Committee at
the time acting hereunder, and any instrument executed by a majority of such
members of the Committee, shall be considered the action or instrument of the
Committee. Action may be taken by the Committee at a meeting or in writing
without a meeting.
No member of the Committee, however, shall vote or decide upon any matter
relating solely to himself or to any of his rights or benefits under the Plan.
The Committee may authorize any one or more of its members to execute any
document or documents on behalf of the Committee, in which event the Committee
shall notify the Trustee in writing of such action and of the name or names of
its member or members so designated. The Trustee thereafter may accept and rely
upon any document executed by such member or members as representing action by
the Committee, until the Committee shall file with the Trustee a written
revocation of such designation.
2.3 POWERS AND DUTIES. The Committee shall be charged with the
administration of the Plan and its duties shall include the interpretation of
the provisions of the Plan, the adoption of any rules and regulations which may
become
<PAGE>
- 11 -
necessary or desirable in the operation of the Plan, the determination of how
and when benefits shall be paid, the keeping of individual accounts of each
Participant in the Plan, the making of such determinations and the taking of
such actions as are expressly authorized or directed in the Plan, and the taking
of such other actions as may be required for the proper administration of the
Plan in accordance with the terms hereof. The Committee shall cause the
expenses of administration of the Plan and Trust Fund to be paid from the Trust
Fund unless paid by the Company.
The Plan shall be administered in accordance with the Employee Retirement
Income Security Act of 1974, Public Law 93-406 ("ERISA"), the Tax Equity and
Fiscal Responsibility Act of 1982, Public Law 97-248 ("TEFRA"), the Deficit
Reduction Act of 1984, Public Law 98-369 ("DEFRA"), the Retirement Equity Act of
1984, Public Law 98-397 ("REA"), and the Tax Reform Act of 1986, Public Law 99-
514 ("TRA"), and such other laws as may hereinafter be enacted, as all may be
amended from time to time, and in conformity to regulations and rulings issued
pursuant to such laws.
Within the scope of authority conferred upon it by this Plan and consistent
with the provisions of ERISA, the Committee shall make all decisions as to the
facts bearing upon the right of any person to benefits and the application of
any term of the Plan or any rule or regulation of the Committee to any case.
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The Committee may employ such accountants, counsel, specialists, and other
persons as it deems necessary or desirable in connection with the administration
of the Plan. Such persons may be acting in a similar capacity for, or may be
Employees of, the Company. To the extent permitted by ERISA, the Committee
shall be entitled to rely upon and shall be fully protected in any action taken
by it in good faith in reliance upon and in accordance with any opinions or
reports furnished to it by any such accountant, counsel or other specialist.
2.4 IMMUNITY OF COMMITTEE. To the extent permitted by ERISA, each member
of the Committee, whether or not then in office, shall be held harmless and
indemnified by the Company against all claims and liabilities and all expenses
reasonably incurred or imposed upon him in connection with or resulting from any
action, suit or proceeding, or settlement or compromise thereof approved by the
Company, to which he may be made a party by reason of any action or alleged
action, either of omission or commission, performed by him while acting as a
member of the Committee, except in relation to matters as to which recovery
shall be had against him by reason of a final adjudication in such action, suit
or proceeding finding him guilty of willful misconduct or lack of good faith.
Plan assets shall not be used as a source for any compensation paid to members
of the Committee by reason of their service on the Committee. All reasonable
expenses of the Committee properly
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and actually incurred shall be paid by the Company. Members shall not be
required individually to furnish bonds or other security for faithful
performance of their duties. The Company shall furnish bonding as required by
ERISA.
2.5 CLAIMS AND REVIEW PROCEDURES. If any difference shall arise between
the Company and any Participant who shall be an applicant for a benefit, or to
whom an account balance may be distributable, as to such Participant's right to
a benefit or the amount his distribution and agreement cannot be reached between
the Company and the Participant, the Participant or his authorized
representative shall file a claim for a distribution in the manner and on the
forms provided by the Committee. The Committee shall decide on the merits of
such claim within 60 days after receipt of the claim. The Participant and his
authorized representative, if any, shall be notified in writing of a favorable
decision. If a claim is wholly or partially denied, notice of the decision
shall be furnished within 60 days after receipt of the claim by the Committee.
Such notice shall be written in a manner calculated to be understood by the
claimant and shall include:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on which the
denial is based;
(c) a description of any additional material or information necessary
for the claimant to perfect the
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claim and an explanation of why such material or information is necessary;
and
(d) an explanation of the Plan's claim review procedure.
If notice of denial of a claim is not furnished within the 60 days referred to
above after receipt of the claim by the Committee and the claim has not been
granted, the claim shall be deemed denied for purposes of proceeding to review
as described herein. A claimant whose claim for benefits is denied in whole or
in part or his authorized representative may:
(a) request a review upon written application to the Committee within
60 days after receipt by the claimant of written notice of the denial of
his claim or within 120 days of receipt of his claim by the Committee if
there is no notice of denial;
(b) review pertinent documents in the Company's offices;
(c) submit positions on issues and comments in writing;
(d) in the Committee's discretion, make an oral presentation before
the Committee.
The Committee shall promptly review each denial of a claim upon which an
application for review is submitted. Such review shall be completed within 60
days after receipt of the request for review, unless special circumstances
require an
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extension of time for processing, in which case a decision shall be rendered as
soon as possible, but not later than 120 days after receipt of a timely request
for review. The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, and specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE 3
ELIGIBILITY
3.1 ELIGIBILITY. Each regular full-time Employee shall become eligible to
participate in the Plan on the January 1, April 1, July 1, or October 1
coinciding with or next following the date on which he completes three months of
Continuous Service with the Company following his most recent date of hire. For
the purpose of calculating three months of Continuous Service with the Company,
an Employee's continuous employment with any predecessor employer designated by
the Committee shall be included.
Each part-time or temporary Employee shall become eligible to participate
in the Plan on the January 1, April 1, July 1, or October 1 coinciding with or
next following the date on which he completes a Year of Service with the Company
following his most recent date of hire. For the purpose of calculating a Year
of Service in the preceding sentence, each
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Employee's continuous employment with any other predecessor employer designated
by the Committee shall be included.
Notwithstanding any other provisions in this Section 3.1, if any former
Participant in the Plan is reemployed, he shall be eligible to participate in
the Plan as of the April 1, July 1, October 1 or January 1 coinciding with or
next following the reemployment date.
3.2 RIGHTS OF SPOUSE. On the death of a Participant, the full value of
any benefits available under the Plan shall be distributed to the Participant's
surviving spouse in accordance with Section 8.4 or, if the Participant is not
survived by a spouse, to the beneficiary or beneficiaries as the Participant
shall have designated on forms provided by and filed with the Committee.
Notwithstanding the foregoing sentence, a Participant may elect to designate
another person or persons as beneficiary if the Participant's spouse consents in
writing. In such written consent, the spouse shall acknowledge the effect of
the election. The spouse's signature on the consent must be witnessed by a
notary public or a representative of the Committee. The Committee may accept
designation of a non-spouse beneficiary without such consent if the Participant
establishes to the Committee's satisfaction that there is no spouse or the
spouse cannot be located. A consent shall be valid only as to the spouse who
signed the consent. Another written consent as specified above is required for
each subsequent change of beneficiary.
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3.3 CERTIFICATION OF PARTICIPATION AND COMPENSATION TO COMMITTEE. The
Company, within a reasonable time after the last day of each calendar quarter,
shall certify to the Committee (a) the names of all Participants as of such last
day, (b) the Earnings (as defined in Section 1.5) of each Participant for such
quarter, and (c) the amount of the Company's contribution for the quarter with
respect to such Participants as provided in Section 4.1 hereof.
3.4 DETERMINATION OF ELIGIBILITY. The Committee shall determine the
eligibility of each Employee for participation in the Plan. Subject to Section
2.5, such determination shall be conclusive and binding upon all persons.
The Company shall notify the Committee of the reemployment of any
Participant as an Employee within 10 days following the date thereof. Upon
receipt of such notice of reemployment the Committee shall notify the Trustee
and any remaining balances shall not be distributed unless the Participant shall
make an election as hereinafter provided.
3.5 LOSS OF PARTICIPATION ELIGIBILITY WITH CONTINUED EMPLOYMENT. If a
Participant ceases to be an Employee as defined in Section 1.6, but continues in
the employ of the Company or a member of the controlled group of corporations or
businesses of which the Company is a member, his participation in the Plan shall
continue to the end of the quarter but thereafter shall be suspended. During
the period of any such suspension, no contributions shall be made thereto on his
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behalf. The account balance of any such Participant shall be held in trust
until withdrawn or distributable on account of retirement, disability, death or
termination of employment. In the event any such Participant shall again become
an Employee as defined in Section 1.6, the suspension shall immediately cease.
ARTICLE 4
COMPANY CONTRIBUTIONS
4.1 FORMULA. For each quarter the Company shall contribute to the Trust
Fund an amount equal to three and one-half percent (3-1/2%) of each
Participant's Earnings (as such term is defined in Section 1.5) during such
quarter on behalf of each Participant who is eligible as of the last day of the
quarter and who was actively employed throughout such quarter. The Company
shall contribute to the Trust Fund a pro rata amount based on the period of
employment during any quarter on behalf of a Participant whose eligibility
continues to the end of the quarter in accordance with Section 3.5. Contri-
butions under this paragraph shall be considered to have been made under a money
purchase pension plan.
The Company shall be permitted to make such additional contributions as may
be required under Section 6.4 to make principal and interest payments on exempt
loans. Such additional contributions shall be considered to have been made
under a stock bonus plan within the meaning of Income Tax Regulations Section
1.401-1(a) and (b) and shall be accounted for
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separately from contributions made under the preceding paragraph.
4.2 FORM OF COMPANY CONTRIBUTIONS. The Company's contributions hereunder
may be in the form of cash or Company Stock. The Plan is intended primarily to
hold Company Stock. However, the Company shall make cash contributions in
amounts sufficient to allow the Trustee to pay principal and interest due on any
loan made to the Trustee to finance the purchase of Company Stock. The value of
Company Stock contributed under the provisions of this Section 4.2 shall be its
fair market value at the time it is contributed, as determined by the Committee.
4.3 DETERMINATION OF CONTRIBUTION. The Company shall determine and
certify to the Committee the amount of any contribution made by it under the
terms of this Plan and such determination shall be binding on all Participants,
the Committee, and the Company.
4.4 PAYMENT OF CONTRIBUTIONS. The contribution for each quarter shall be
paid to the Trustee within 60 days after the close of each quarter.
4.5 NON-REVERSION. In no event shall the principal or income of the Trust
Fund be paid to or revert to the Company, or be used for any purpose whatsoever
other than for the exclusive benefit of the Participants or their beneficiaries,
except as provided in this Section 4.5. Contributions under the Plan are
conditioned on initial qualification of the Plan
<PAGE>
- 20 -
under Section 401(a) and related sections of the Internal Revenue Code. If the
Internal Revenue Service issues an adverse determination letter with respect to
its initial qualification, the Trustee shall, at the request of the Committee,
return to the Company the amount of such contribution (adjusted for earnings or
losses) within one calendar year after the date that qualification of the Plan
is denied, provided that the application for the determination letter is made to
the Internal Revenue Service by the time prescribed by law for filing the
Company's return for the taxable year in which the Plan is adopted, or such
later date as may be permitted by law.
Contributions under the Plan are conditioned upon the deductibility of the
contributions under Section 404 of the Internal Revenue Code. If a deduction is
disallowed, the Trustee shall, at the request of the Committee, return the
contributions to the Company within one year after the date the deduction is
disallowed. The amount returned shall not include any earnings or be adjusted
for losses.
If a contribution or any portion thereof is made by the Company by a
mistake of fact, the Trustee shall, at the request of the Committee, return the
contribution within one year after the date of payment to the Trustee. The
amount returned shall not include any earnings or be adjusted for losses.
<PAGE>
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4.6 NO CONTRIBUTIONS BY PARTICIPANTS. Participants shall not be required
or permitted to make contributions to the Plan.
ARTICLE 5
INVESTMENT OF FUNDS
5.1 IN GENERAL. The Trust Fund will be invested primarily in Company
Stock. The Trustee may acquire and hold assets other than Company Stock,
provided that the Trust Fund is at all times invested primarily in Company
Stock. Other assets held by the Trustee may consist of bonds, notes,
debentures, mortgages, equipment trust certificates, investment trust
certificates, preferred or common stocks, real estate or interests therein,
certificates of deposit, commercial paper, obligations of the United States
Government or any agency or instrumentality thereof or in any other property,
real or personal, as the Trustee may acquire. The Trustee shall make
investments of assets of the Trust Fund only as directed by the Committee except
for those funds over which the Trustee is authorized to use its investment
discretion as provided in Section 1.3. The Committee shall have the duty of
diversification over the portion of the Trust Fund which it directs. The
Trustee shall vote securities having voting rights, including Company Stock, in
the manner provided in the Trust Agreement. The Trustee in its own discretion
may invest funds awaiting permanent investment in short-term obligations of the
United States, trust and
<PAGE>
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participation certificates, beneficial interests in any trust, and such other
short-term obligations as the Trustee deems to be appropriate for such interim
investment purposes.
Further, the Trustee may in its own discretion also invest such funds in
deposits bearing a reasonable rate of interests in the banking department of the
Trustee or in any other bank or similar financial institution acting as a
fiduciary with respect to Trust assets. The Trustee may in its own discretion
also retain any portion of such funds in cash without liability for interest and
may deposit cash in any depository, including the banking department of the
Trustee, or in any other banking or similar financial institution acting as a
fiduciary with respect to Trust assets.
In addition the Trustee is specifically authorized to deposit any part or
all of the money and property of the Trust with Harris Trust and Savings Bank,
Chicago, Illinois, as trustee of Harris Trust and Savings Bank Trust for
Collective Investment of Employee Benefit Accounts, restated by Declaration of
Trust effective November 30, 1983, and as amended, to be held and administered
by said Trustee pursuant to all the terms and conditions of such Declaration of
Trust which is hereby incorporated by reference and made a part hereof.
5.2 PURCHASES OF COMPANY STOCK. The Trustee, upon direction of the
Committee, may purchase Company Stock from
<PAGE>
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any shareholder of the Company or from the Company itself. Purchases of Company
Stock shall be made by the Trustee at prices which do not exceed fair market
value. The Committee's determination of the fair market value of Company Stock
shall be conclusive and binding on the Trustee. In determining fair market
value the Committee shall be permitted to take into account the price of Company
Stock quoted on the NASDAQ system or the system of any other national securities
association or the price reported on any national securities exchange on which
Company Stock may be listed. If the seller is the Company or any party in
interest as defined in Section 3(l4) of ERISA, 29 U.S.C. 1002(14), the purchase
price paid for Company Stock shall not be more than adequate consideration and
no commission shall be paid. Shares of Company Stock shall be voted on matters
submitted to shareholders in the manner provided in the Trust Agreement.
5.3 SUSPENSE ACCOUNT. The Committee shall have the power to direct the
Trustee to borrow funds in order to purchase Company Stock through a loan or
loans which meet the requirements of Article 6 below. The Trustee shall create
a suspense account for the purpose of holding Company Stock purchased with the
proceeds of any such loan. In the event there is more than one outstanding
loan, the Committee shall determine the proper priority of payments with respect
to such loans. Company Stock in the suspense account shall be
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released and allocated to other accounts upon payment of principal and interest
on the loan as provided in Section 6.2.
5.4 SALES OF COMPANY STOCK. The Committee shall have the power to direct
the Trustee to sell shares of Company Stock held in the Trust Fund. The
purchaser of such shares of Company Stock may be the Company. If the purchaser
is the Company or any party in interest as defined in Section 3(14) of ERISA, 29
U.S.C. Section 1002(14), the sale price shall not be less than adequate
consideration and no commission shall be paid.
ARTICLE 6
LOANS
6.1 GENERAL REQUIREMENTS. The Trustee shall have the power upon direction
of the Committee to enter in loan agreements and to obtain loans from any
source, including the Company. Any loan which is obtained from or guaranteed by
the Company or any other disqualified person within the meaning of Section
4975(e)(2) of the Internal Revenue Code shall meet the requirements for exempt
loans under Section 6.2 below and the proceeds of the loan shall be applied in
accordance with Section 6.3 below.
6.2 REQUIREMENTS FOR AN EXEMPT LOAN. Any exempt loan to the Trustee must
be made primarily for the benefit of Participants and beneficiaries of the Plan
and must bear a reasonable rate of interest. Any collateral given by the Plan
to the Company or any other disqualified person within the
<PAGE>
- 25 -
meaning of Section 4975(e)(2) of the Internal Revenue Code shall consist only of
shares of Company Stock which are acquired with the proceeds of the loan or
which were used as collateral for a prior exempt loan which was repaid by the
proceeds of the loan. The exempt loan must be without recourse against the
Trust Fund and no person entitled to payment under the loan shall have any right
to assets of the Trust Fund other than loan collateral, contributions made to
the Plan to meet loan obligations, and earnings attributable to the loan
collateral and to investment of the contributions made to meet loan obligations.
Payments of principal and interest on an exempt loan shall be made by the
Trustee from contributions made by the Company to meet loan obligations,
earnings from investment of any such contributions, and earnings from Company
Stock pledged as loan collateral. Payments made on the loan shall
not exceed such amounts. Contributions to the Plan and such earnings must be
accounted for separately until the exempt loan is repaid.
The number of future years remaining until maturity of an exempt loan must
always be definitely ascertainable. The duration of the loan must be determined
without regard to any possible extension or renewal of the loan.
The terms and conditions of any exempt loan shall satisfy the provisions of
Income Tax Regulations Section 54.4975-7 at all times.
<PAGE>
- 26 -
6.3 PROCEEDS OF EXEMPT LOANS. The proceeds of an exempt loan must be used
within a reasonable time after the loan is obtained to purchase Company Stock or
to repay the exempt loan or any prior exempt loan. Company Stock acquired with
exempt loan proceeds may not be subject to a put, call, or other option or to a
buy-sell or similar arrangement while held by the Trustee or when distributed,
regardless of whether the plan is an employee stock ownership plan at the time
of distribution. Any shares of Company Stock held as collateral for an exempt
loan shall be held in a suspense account until released upon payment of the
loan. An exempt loan must provide for release of pledged shares of Company
Stock according to a fraction in which the numerator is the sum of the principal
and interest payments on the loan for a Plan Year and the denominator is the sum
of principal and interest payments expected to be paid during the current Plan
Year and all future years of the loan. If the interest rate on the exempt loan
is variable, the rate to be used in determining the amount of expected future
payments on the loan is the rate in effect at the end of the current Plan Year.
Notwithstanding the previous paragraph, an exempt loan may provide for
release of shares of Company Stock pledged as security on the loan on the basis
solely of principal payments, provided that the following three conditions are
met: (a) the loan must provide for annual payments of principal and interest at
a cumulative rate not less rapid
<PAGE>
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than level annual payments over a period of 10 years; (b) any interest included
on the payment shall be disregarded only to the extent that it would be
considered interest under standard amortization tables; and (c) this alternative
method of calculation shall not be available if by reason of renewal, extension
or refinancing the sum of the expired duration of the exempt loan, the renewal
period, the extension period and the duration of a new exempt loan exceeds 10
years. If the foregoing provisions of this paragraph are met, the number of
shares of Company Stock to be released during the Plan Year shall be equal to
the number of pledged shares multiplied by a fraction in which the numerator is
the amount of principal paid on the exempt loan during the Plan Year and the
denominator is the sum of the principal payments expected to be made in the
current year and in all future years of the loan.
Shares of Company Stock which are released as collateral from the suspense
account shall be allocated to Participants' accounts in the manner provided in
Section 7.2.
6.4 ADDITIONAL COMPANY CONTRIBUTIONS. If required by the terms of any
exempt loan, the Company shall make contributions sufficient to provide for
payment of principal and interest on the exempt loan as payment becomes due,
provided that such additional contributions shall not cause the limitations on
maximum additions to contributions set forth in Section 7.8 to be exceeded. If
the Company is unable
<PAGE>
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to make contributions sufficient to pay principal and interest on an exempt loan
as due without exceeding the limitations, the Company may make a loan to the
Plan sufficient for such purpose, provided that the loan qualifies as an exempt
loan under the provisions of this Article 6.
ARTICLE 7
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
7.1 PARTICIPANTS' ACCOUNTS. The Committee shall maintain an account for
each Participant which shall consist of a Participant's Company Stock account, a
Participant's other assets account and such other account or accounts as the
Committee shall determine. As of the last day of each quarter the Committee
shall cause allocations to be made in accordance with this Article 7 to the
account of each Participant who is eligible as of the last day of the quarter
and who was actively employed throughout the quarter.
7.2 ALLOCATION OF COMPANY STOCK. Shares of Company Stock received by the
Trustee as Company contributions with respect to the quarter or purchased by the
Trustee with Company cash contributions for the quarter and shares of Company
Stock released from the suspense account during the quarter as a result of
payments of principal and interest on an exempt loan made from Company
contributions for the quarter shall be allocated among the accounts of
Participants entitled to share in the allocation in proportion to their relative
Earnings during the quarter.
<PAGE>
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7.3 ALLOCATION OF OTHER ASSETS. Company cash contributions which are not
used in a quarter to pay the principal or interest of an exempt loan and which
are not applied in the quarter to purchase shares of Company Stock shall be
allocated among the other assets accounts of Participants entitled to share in
the allocation in proportion to their relative earnings during the quarter.
7.4 ALLOCATION OF FORFEITURES. Any portion of an account which a
Participant is not entitled to receive under Section 8.3 below shall be
allocated as a forfeiture to remaining Participants' Company Stock accounts or
other assets accounts, as the case may be depending on the nature of the
accounts from which amounts are forfeited, according to Participants' relative
Earnings for the quarter and shall reduce Company contributions for that
quarter. The other assets account portion of a Participant's account shall be
forfeited before any portion of his Company Stock account is forfeited.
7.5 ALLOCATION OF DIVIDENDS ON COMPANY STOCK. Cash and stock dividends on
Company Stock held in Participants' Company Stock accounts shall be allocated to
Participants' Company Stock accounts or other assets accounts, as the case may
be, when received by the Trustee in proportion to the relative holdings of
Company Stock in Participants' Company Stock accounts on the dividend record
date. Upon direction of the Committee the Trustee shall distribute to
Participants all or
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any portion of cash dividends on Company Stock which would otherwise be
allocated to Participants' other assets accounts. Such distribution must be
made not later than 90 days after the end of the Plan Year in which the
dividends are paid. Alternatively, the Committee may direct that the Trustee
make payments of principal and interest on an exempt loan with cash dividends
which would otherwise be allocated to Participants' other assets accounts. In
such event the dividends shall not be allocated to Participants' other assets
accounts but shall be applied to pay the principal and interest on an exempt
loan, provided that the Trustee shall be required to allocate to each
Participant's Company Stock account for the Plan Year in which the dividends are
paid Company Stock having a fair market value which is at least as great as the
dividends applied to pay principal and interest on the exempt loan. Any
Company Stock released from the suspense account as a result of payment of
principal and interest on an exempt loan with cash dividends on Company Stock
held in Participants' Company Stock accounts shall be allocated to Participants'
Company Stock accounts in proportion to their relative holdings of Company
Stock on the dividend record date.
Cash dividends on Company Stock held in the suspense account shall be
applied by the Trustee upon direction of the Committee to pay principal and
interest on an exempt loan or they may be distributed to Participants or
allocated to Participants' other assets accounts in proportion to the ratio
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which each Participant's holdings of Company Stock in his Company Stock account
on the dividend record date bears to the holdings of Company Stock in the
Company Stock accounts of all Participants on that date.
Stock dividends on Company Stock held in the suspense account shall be
allocated to Participants' Company Stock accounts in proportion to the ratio
which each Participant's holdings of Company Stock in his Company Stock account
on the dividend record date bears to the holdings of Company Stock in the
Company Stock accounts of all Participants on that date. Alternatively, the
Committee may direct that the Trustee sell the shares of Company Stock received
as stock dividends on Company Stock in the suspense account and apply the
proceeds to pay principal and interest on an exempt loan, in which case any
Company Stock released as a result of such payments shall be allocated to the
Company Stock accounts of Participants in the manner provided in the preceding
sentence.
7.6 ALLOCATION OF INCREASE OR DECREASE IN NET WORTH OF TRUST ASSETS. As
of the last day of each calendar quarter, the Committee shall determine the
increase or decrease in the net worth of assets of the Trust Fund other than
shares of Company Stock held in Participants' Company Stock accounts and the
suspense account. In determining such net worth, there shall be deducted any
contributions of the Company received by the Trustee since the end of the prior
quarter.
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The Committee, after determining the increase or decrease in the net worth
of the Trust Fund and before allocating Company contributions and forfeitures,
shall allocate to the other assets account of each Participant his share of such
increase or decrease for the quarter in proportion to the ratio of the balance
in his other assets account as of the last day of the quarter to the total of
the balances of all Participants' other assets accounts as of that date.
7.7 DIVERSIFICATION OF CERTAIN PARTICIPANTS' ACCOUNTS. Any Participant
who has attained age 55 and has participated in the Plan for at least 10 years
shall be permitted to elect to diversify the investment of a portion of his
account by filing a written election to such effect with the Committee. The
first such election may be made at any time prior to the 90th day following
the end of the Plan Year following the Plan Year in which the Participant
first satisfied the age and participation requirements. The portion of the
Participant's account to which the election applies shall be up to 25% of
the value of Participant's account as of the end of the quarter in which such
election is received by the Committee. The Participant shall be permitted to
make a similar election prior to the 90th day following the end of the
succeeding four Plan Years. Any such election shall be effective for up to 25%
of the value of the Participant's account as of the end of the quarter in which
the election is received by the Committee, to the extent that such value exceeds
the amount
<PAGE>
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subject to a prior election, except that in the fifth Plan Year in which the
election is permitted, the election may be made for up to 50% of the value of
the Participant's account as of the end of the quarter in which the election is
received. Notwithstanding anything to the contrary in this Section 7.7, any
Participant who is an "officer or director" as those terms are defined under
Section 16 of the Securities Exchange Act of 1934 and desires to elect to
diversify the investment of a portion of his account shall make such election
during the 10-day period falling within the first 90 days of the Plan Year for
which diversification is elected, which period begins on the third business day
following the date of release for publication by the Company of quarterly
summary statements of sales and earnings and ends on the 12th business day
following such date.
The Committee upon receipt of the Participant's election shall make
available no fewer than three investment funds in which the Participant may
direct that the specified portion of his account be invested. The Committee
shall adopt reasonable rules and procedures for election of diversification
options under this Section 7.7 and shall inform the Participant as to the nature
of the investment options and the procedures for making the elections. These
rules and procedures and the investment funds available to the Participant shall
conform to the requirements of Section 401(a)(28) of the Internal Revenue
<PAGE>
- 34 -
Code, Section 16 of the Securities Exchange Act of 1934 and regulations
thereunder.
7.8 LIMITATIONS ON ANNUAL ADDITIONS. Notwithstanding any other provisions
in the Plan, the sum of the annual additions to a Participant's account in any
form for a calendar year shall not exceed the lesser of (a) $30,000 (or, if
greater, one quarter of the dollar limitation in effect under Section
415(b)(1)(A) of the Internal Revenue Code) or (b) 25% of the compensation
received by the Participant from the Company within such year, provided that, in
any Plan Year in which not more than one-third of the Company's contribution is
allocated to the accounts of Highly Compensated Participants, the limitation in
(a) above shall be equal to the sum of the amount described in (a) above plus
the lesser of (i) such amount or (ii) the sum of the value of Company Stock
contributed by the Company on behalf of the Participant for the Plan Year, the
amount of cash contributed by the Company for the Plan Year which is applied by
the Trustee to purchase Company Stock which is allocated to the Participant's
account, and the amount of cash contributed by the Company for the Plan Year
which is applied by the Trustee to pay principal and interest on an exempt loan,
resulting in the release of Company Stock held in the suspense account which is
allocated to the Participant's account. "Annual additions" means the sum of the
following: Company contributions made on the Participant's behalf and
forfeitures allocated to the
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Participant's account, provided that, in any Plan Year in which not more than
one-third of the Company's contribution is allocated to the accounts of Highly
Compensated Participants, annual additions shall not be considered to include
forfeitures of Company Stock purchased with the proceeds of exempt loans and
contributions to the Plan on behalf of Participants which are used to pay
interest on exempt loans. Annual additions shall also include any amounts
allocated to a separate account under a pension or annuity plan if the purpose
of such account is to provide medical benefits after retirement for the
Participant, his spouse or dependents, provided that the amounts allocated to
any such accounts shall not be taken into account in determining whether annual
additions exceed 25% of a Participant's compensation for a Plan Year.
"Compensation" for the purpose of this Section 7.8 means salary and other
amounts paid for services rendered which a Participant receives during a
calendar year, but not contributions made for a Participant under any employee
benefit plan including this Plan, deferred compensation, stock options, and
other distributions subject to special tax benefit.
If the annual additions to a Participant's account will exceed the
limitation imposed above in this Section 7.8, such additions shall be reduced to
the extent necessary to bring them within the limitation by making reductions in
the
<PAGE>
- 36 -
Participant's allocable share of Company contributions and forfeitures.
If a Participant is also participating in any other defined contribution
plans (as defined in ERISA) maintained by the Company, the annual additions made
on behalf of the Participant under any such other plans shall be aggregated with
the annual additions under this Plan and such aggregate amount shall not exceed
the limitation set forth above in this Section 7.8. If reduction is required,
the Participant's contributions under other plans shall be returned to him and,
if that is not sufficient (or there were no such contributions), the reduction
shall be accomplished as described in the preceding paragraph.
If a Participant is also participating in one or more defined benefit plans
(as defined in ERISA) maintained by the Company, then for any calendar year the
sum of the defined benefit plan fraction and the defined contribution plan
fraction shall not exceed one. Such fractions are defined in the following
paragraph. If the sum of the fractions indicates that a reduction in annual
additions to a Participant's account is required, such reduction shall be
accomplished as provided above in this Section.
The "defined benefit plan fraction" means a fraction in which (a) the
numerator is the total projected annual benefit of the Participant under all
defined benefit plans maintained by the Company and (b) the denominator is the
lesser of (i)
<PAGE>
- 37 -
1.25 multiplied by the dollar limitation in effect under Section 415(b)(1)(A) of
the Internal Revenue Code for such year or (ii) 1.4 multiplied by 100% of the
Participant's average compensation for his high three years. Both numerator and
denominator are determined as of the close of the pertinent calendar year. The
numerator is determined using the assumptions that the Participant will continue
employment until normal retirement age according to the Plan and that his
compensation and all other relevant factors used to determine benefits remain
constant as they are for the current year. The total projected annual benefit
used in the numerator shall be adjusted for the age at which benefit payments
commence in accordance with Section 415(b)(2)(C), (D), and (E) of the Internal
Revenue Code. For purposes of applying the limitation test, annual benefits in
forms other than a straight life annuity shall be actuarially adjusted to the
equivalent of such annuity.
The "defined contribution plan fraction" means a fraction in which (c) the
numerator is the sum of the annual additions to the Participant's account under
all defined contribution plans maintained by the Company as of the close of the
year, and (d) the denominator is the sum of the lesser of (i) or (ii) (set forth
below) determined for the year and for each prior Year of Service with the
Company where (i) is 1.25 multiplied by the dollar limitation in effect under
Section 415(c)(l)(A) of the Internal Revenue Code for such year
<PAGE>
- 38 -
(disregarding subsection (c)(6) thereof) and (ii) is the product of 1.4
multiplied by 25% of the Participant's compensation for the year (as determined
in accordance with Section 415(c)(1)(B) of the Internal Revenue Code).
7.9 TOP-HEAVY PROVISIONS. In the event this Plan becomes "top-heavy"
within the meaning of Section 416(g) of the Internal Revenue Code, the following
provisions with respect to vesting, minimum benefits, and limitations on
includable compensation shall take effect and remain in effect during such time
as the Plan is top-heavy:
VESTING: The following table of percentages shall be substituted for the
percentages in Section 8.3 of the Plan:
The Nonforfeitable
Years of Service Percentage is
---------------- ------------------
1 20
2 40
3 60
4 80
5 or more 100
MINIMUM BENEFITS: The Company shall contribute annually for each
Participant who is a non-key employee (within the meaning of Section 416(i)(1)
and (2) of the Internal Revenue Code) an amount which is not less than 3% of
such Participant's compensation (within the meaning of Section 415 of the
Internal Revenue Code). Notwithstanding the foregoing sentence, the percentage
referred to therein shall not exceed the percentage at which contributions are
made (or required to
<PAGE>
- 39 -
be made) under the Plan for the key employee within the meaning of Section 416
of the Internal Revenue Code for whom such percentage is the highest for the
year. Such highest percentage shall be determined for each key employee by
dividing the contributions for such key employee by that portion of his total
compensation for the year which is not more than the OBRA '93 Annual
Compensation Limit. For purposes of this paragraph, all defined contribution
plans required to be included in an "aggregation group" pursuant to Section
416(g)(a)(A)(i) of the Internal Revenue Code shall be treated as one plan. This
paragraph shall not apply to any plan required to be included in an aggregation
group if such plan enables a defined benefit plan required to be included in
such group to meet the non-discrimination requirements of Section 401(a)(4) or
the participation requirements of Section 410 of the Internal Revenue Code. Any
Company contribution attributable to a salary reduction plan or similar
arrangement shall not be taken into account for purposes of Section 416(c)(2) of
the Internal Revenue Code.
ADJUSTMENT OF SECTION 415 LIMITATIONS: While this Plan is top-heavy, the
factor of 1.0 shall be substituted for 1.25 for purposes of computing
denominators of the fractions pursuant to Section 415(e) of the Internal Revenue
Code. Such substitution shall not be made if the Plan provides minimum
contributions in the amount of 4% of each Participant's compensation and if the
Plan would not be top-heavy if 90%
<PAGE>
- 40 -
were substituted for 60% in the tests for top-heaviness set forth in Section
416(g). Further, the substitution of 1.0 for 1.25 shall be suspended with
respect to any Participant so long as there are no Company contributions or
forfeitures allocated to him. If the substitution applies, the dollar amount in
the numerator of the "transition fraction" pursuant to Section 415(e)(6) shall
be changed from $51,875 to $41,500.
IN GENERAL: The Committee shall comply with regulations issued to prevent
inappropriate omissions or avoid duplication of minimum benefits or
contributions in instances where the Company has two or more plans subject to
consideration. For purposes of determining the amount of the account of any
Participant, such amount shall be increased by the aggregate distributions made
with respect to such Participant under the Plan during the 5-year period ending
on the determination date.
The term "determination date" means with respect to any Plan Year the last
day of the preceding Plan Year.
ARTICLE 8
BENEFITS
8.1 NORMAL DISTRIBUTION. A Participant shall be entitled to receive
without forfeiture the then undistributed account balances in his Company Stock
account and his other assets account adjusted to the last day of the calendar
quarter coinciding with or next following the date on which (a) he retires on or
after age 60, (b) becomes permanently and
<PAGE>
- 41 -
totally disabled (as determined by the Committee) or (c) his employment is
terminated by the Company unless such termination is for cause. The term "for
cause" as used in this Plan means any of the following:
(i) conviction of a felony;
(ii) gross negligence in performance of duties; or
(iii) knowingly engaging in wrongful misconduct which results in
substantial damage to the Company.
8.2 DISTRIBUTION UPON DEATH. Upon the death of a Participant prior to
final distribution of any amount remaining to his credit, the full value of such
amount shall be distributed to the Participant's surviving spouse or if there is
no surviving spouse, to any beneficiary or beneficiaries designated in
accordance with Section 3.2. In the absence of a valid designation of
beneficiary, any benefits payable upon death shall be distributed by the Trustee
to the estate of the Participant.
8.3 DISTRIBUTION UPON TERMINATION OF EMPLOYMENT. A Participant who
terminates employment for reasons other than (a) retirement at or after age 60,
(b) total and permanent disability, or (c) termination by the Company (unless
such termination is for cause) shall be entitled to receive a percentage of his
account based upon his completed years of Continuous Service, as defined in
Section 1.4, in accordance with the following vesting schedule:
<PAGE>
- 42 -
Years of Continuous Service Applicable Percentage
--------------------------- ---------------------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
8.4 PAYMENT OF BENEFITS. The benefits provided pursuant to Sections 8.1,
8.2, and 8.3 shall be distributed to each Participant or beneficiary in a lump
sum. Such benefits may be distributed in cash or Company Stock, as the
Participant shall elect. Distribution of the account balance to which a
Participant or his beneficiary is entitled shall be accomplished no later than
the 60th day after the close of the Plan Year in which the Participant retires,
becomes permanently and totally disabled, or terminates his employment, unless
the Participant requests a later date in a signed written statement submitted to
the Committee.
Notwithstanding any other provision of this Plan, the entire interest of a
Participant shall be distributed in conformity to Sections 401(a)(9) and 409(o)
of the Internal Revenue Code.
As required by Section 401(a)(9) of the Code, distribution to a Participant
must be made no later than April 1 in the calendar year following the calendar
year in which the Participant attains age 70-1/2.
As required by Section 409(o) of the Code, unless a Participant otherwise
elects, distribution of the
<PAGE>
- 43 -
Participant's account will be made not later than one year after the close of
the Plan Year in which the Participant retires after attaining age 60, becomes
permanently and totally disabled, or dies or not later than one year after the
close of the fifth Plan Year following the Plan Year in which the Participant
terminates employment, unless the Participant is reemployed by the Company
within one year. For purposes of the preceding sentence, a Participant's
account shall not be considered to include Company Stock which was acquired with
proceeds of an exempt loan until the close of the Plan Year in which the exempt
loan is repaid in full.
8.5 DIRECT ROLLOVERS. (a) This Section 8.5 applies to distributions made
on or after January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election under this Section
8.5, a Distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
(b) An Eligible Rollover Distribution is any distribution of all or any
portion of the balance to the credit of the Distributee, except that an Eligible
Rollover Distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life
<PAGE>
- 44 -
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's designated beneficiary, or for a
specified period of 10 years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the Internal Revenue Code,
and the portion of any distribution that is not includable in gross income
(determined without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
(c) An Eligible Retirement Plan is an individual retirement account
described in Section 408(a) of the Internal Revenue Code, an individual
retirement annuity described in Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
(d) A Distributee includes a Participant or former Participant. In
addition, the Participant's or former Participant's surviving spouse and the
Participant's or former Participant's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Internal Revenue Code, are
<PAGE>
- 45 -
Distributees with regard to the interest of the spouse or former spouse.
(e) A Direct Rollover is a payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
8.6 PAYMENT OF BENEFITS: INCOMPETENCY. In the event a Participant or
beneficiary is declared an incompetent and a conservator or other person legally
charged with his care is appointed, any benefits to which such Participant or
beneficiary is entitled shall be payable to such conservator or other person
legally charged with his care. When a Participant or beneficiary is unable to
manage his affairs, but there has been no judicial determination of incompe-
tency, the Committee shall make such disposition of his benefits as it shall
deem to be in the best interests of the Participant or beneficiary, and the
Trustee shall be directed by the Committee to make payments accordingly.
ARTICLE 9
AMENDMENT, TRANSFER AND TERMINATION
9.1 AMENDMENT. The Company shall have the right at any time, and from time
to time, to amend, in whole or in part, any or all of the provisions of the
Plan. Any amendment shall be made in writing and shall be approved by the Board
of Directors of the Company and signed by one or more duly authorized officers
of the Company. However, no such amendment shall authorize or permit any part
of the Trust Fund to be used for or diverted to purposes other than for the
<PAGE>
- 46 -
exclusive benefit of the Participants or their beneficiaries or permit any
portion of the Trust Fund to revert to or become the property of the Company.
The Company also shall have the right to make any amendment retroactively
which is necessary to qualify the Plan as amended for tax exemption or to bring
the Plan into conformity with the Internal Revenue Code and regulations
thereunder. If any amendment is made which affects the vesting schedule of
benefits under the Plan, or if such vesting schedule is changed by reason of the
operation of the "top-heavy" provisions in Section 7.9 hereof, each Participant
who has 5 or more Years of Service may elect, within a reasonable period after
such an amendment or change, to have his nonforfeitable percentage computed
under the Plan without regard to such amendment. The period during which the
election may be made shall commence with the date the amendment is adopted or
the change becomes operative and shall end on the later of:
(1) 60 days after adoption of the amendment or operation of the
change,
(2) 60 days after the amendment is effective or the change becomes
operative, or
(3) 60 days after the participant is issued written notice of the
amendment or change by the Committee.
However, no amendment may be made to the Plan unless in compliance with
section 411(d)(6) of the Internal Revenue
<PAGE>
- 47 -
Code, which generally prohibits any decrease in a Participant's account balance
or elimination of an optional form of distribution.
Notwithstanding anything in this Section 9.1 to the contrary, those
portions of this Plan which constitute a formula that determines the amount,
price and timing of grants or awards of equity securities of the Company to an
Officer/Director Participant, may not be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code, ERISA
or the rules thereunder.
No amendment which affects the rights, duties or responsibilities of the
Trustee may be made without the Trustee's written consent. Any such amendment
shall become effective upon delivery to the Trustee of a written instrument
authorized by the Board of Directors and executed by the Company and that
Trustee.
9.2 TRANSFER OF ASSETS. The Plan may not be merged or consolidated with,
nor its assets or liabilities transferred to, another plan unless provisions are
made so that each Participant or beneficiary would immediately thereafter be
entitled to receive a benefit at least as great as the benefit he would have
been entitled to receive from this Plan immediately beforehand, assuming for
purposes of this test that this Plan had terminated immediately before and the
successor plan had terminated immediately after the transaction in question.
<PAGE>
- 48 -
9.3 TERMINATION: DISCONTINUANCE OF CONTRIBUTIONS. The Company has the
right pursuant to resolution of its Board of Directors to suspend its
contribution hereunder for any period of time or to terminate this Plan. In
such event the Company shall deliver to the Trustee and the Committee written
notice of such suspension of contributions or termination.
In the event of termination of the Plan the Company shall direct the
Trustee with respect to providing for the expenses of the Plan and allocating
assets in the manner prescribed by ERISA. Upon the termination or partial
termination of the Plan or upon complete discontinuance of contributions
hereunder by the Company, Participants' accounts shall be nonforfeitable.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 COVERAGE OF EMPLOYEES OF SUBSIDIARIES AND NEWLY ACQUIRED FACILITIES.
The Committee shall have the power to authorize participation in the Plan by any
subsidiary corporation affiliated with the Company within the meaning of Section
1504 of the Internal Revenue Code. Subject to receipt of written authorization
and approval from the Committee, any such subsidiary by resolution of its own
Board of Directors may adopt the Plan. From and after the date as of which such
subsidiary shall adopt the Plan, it shall be included within the meaning of the
word "Company" for all purposes hereunder, except that the provisions of Article
2 (pertaining to the
<PAGE>
- 49 -
appointment of the Committee) and Article 9 (pertaining to amendments to or
termination of the Plan) shall apply only to Acme Metals Incorporated unless
expressly provided therein to the contrary.
The Committee shall also have the power to designate groups of employees of
any such subsidiary or newly acquired facility as "employees" within the meaning
of Section 1.6 and to designate the periods of continuous service recognized
under Sections 1.4 and 3.1 for employees of subsidiaries or newly acquired
facilities who become covered by this Plan.
Actions by the Committee pursuant to this Section 10.1 shall be taken on a
non-discriminatory basis and shall be consistent with the requirements of
Sections 401(a) and 410(b) of the Internal Revenue Code and regulations
thereunder.
10.2 PARTICIPANTS' RIGHTS, ACQUITTANCE. Neither the adoption of the Plan,
nor any modification thereof, nor the creation of the Trust Fund or any account
in connection with the Plan, nor the payment of any benefits, shall be construed
as giving to any Participant or other person any legal or equitable right
against the Company, or any officer or employee thereof or against the Committee
or the Trustee, except as herein provided. Under no circumstances shall the
terms of employment of any Participant be modified or in any way affected
hereby.
10.3 SPENDTHRIFT CLAUSE. The benefits, payments, proceeds, claims or
privileges of any Participant or his
<PAGE>
- 50 -
beneficiaries hereunder shall not be subject to attachment or garnishment or
other legal process by any creditor of any such Participant or beneficiary, nor
shall any such Participant or beneficiary have any right to alienate,
anticipate, commute, pledge, encumber, or assign any of the benefits or payments
or proceeds which he may expect to receive, contingently or otherwise, under
this Plan, provided, however, that such restriction on alienation shall not
apply in the case of a qualified domestic relations order as defined in Section
414(p) of the Internal Revenue Code.
10.4 DELEGATION OF AUTHORITY BY THE COMPANY. Whenever the Company under
the terms of this Plan is permitted or required to do or perform any act, it
shall be done or performed by an officer thereunto duly authorized by the Board
of Directors of the Company.
10.5 CONSTRUCTION. This Plan shall be construed according to the laws of
the State of Illinois, and all provisions hereof shall be administered according
to, and its validity shall be determined under, the laws of such state to the
extent such laws are not preempted by ERISA.
10.6 GENDER, NUMBER AND HEADINGS. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form they shall be construed as though
they were also used in the plural form in all cases
<PAGE>
- 51 -
where they would so apply. Headings of sections of this Plan are inserted for
convenience or reference and are not part of this Plan and are not to be
considered in the construction hereof.
10.7 LIMITATION OF LIABILITY AND EXHAUSTION OF REMEDIES. Except for
willful misconduct or fraud and except as provided by ERISA, neither the
Company, the Committee, nor the Trustee shall be subject to any liability in
connection with this Plan. No proceeding for the purpose of obtaining a
determination by a court with respect to any question affecting this Plan or any
rights hereunder may be commenced unless such question has been presented in
writing to the Committee, accompanied or supplemented by such supporting
information as the Committee may reasonably require, and the Committee has had
an opportunity to render a decision and, if requested, to conduct a full and
fair review of such decision rendered, all in accordance with Section 2.5
hereof.
In any action or proceeding involving Plan assets or any property
constituting part or all thereof, or the administration thereof, employees or
former employees of the Company or their beneficiaries or any other person
having or claiming to have an interest in this Plan or in Plan assets shall not
be necessary parties and shall not be entitled to any notice of process.
Any final judgment which is not appealed or appealable that may be entered
in any such action or proceeding shall be
<PAGE>
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binding and conclusive on the parties hereto and all persons having or claiming
to have any interest in the Plan or the Trust Fund.
IN WITNESS WHEREOF, Acme Metals Incorporated has caused this Plan to be
executed by its duly authorized officers on this 28th day of December, 1994, to
be effective as of November 1, 1994.
ACME METALS INCORPORATED
/s/ J. F. Williams
By
-------------------------------
Vice President-Chief
Financial Officer
ATTEST:
/s/ Roberta A. Glab
------------------------
Assistant Secretary
<PAGE>
EXHIBIT 10.43
ACME METALS INCORPORATED
SALARIED EMPLOYEES RETIREMENT SAVINGS PLAN
RESTATED EFFECTIVE NOVEMBER 1, 1994
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1
Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Appointment of Administrative Committee. . . . . . . . . . . . . . 1
1.2 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Powers and Duties. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Immunity of Committee. . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Claims and Review Procedures . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2
Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Rights of Spouse . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Certification of Participation and Compensation to Committee . . . 11
2.5 Determination of Eligibility . . . . . . . . . . . . . . . . . . . 11
2.6 Loss of Participation Eligibility with Continued Employment. . . . 11
ARTICLE 3
Company Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Formula. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Definition: Earnings . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Form of Company Contributions. . . . . . . . . . . . . . . . . . . 16
3.4 Determination of Contribution. . . . . . . . . . . . . . . . . . . 16
3.5 Payment of Contributions . . . . . . . . . . . . . . . . . . . . . 16
3.6 Non-Reversion. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Withdrawal from Accounts During Employment . . . . . . . . . . . . 17
ARTICLE 4
Investment Directions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Manner of Making Directions; New Participants. . . . . . . . . . . 20
4.3 Change of Investment Direction . . . . . . . . . . . . . . . . . . 21
4.4 Committee to Forward Investment Directions . . . . . . . . . . . . 22
ARTICLE 5
401(k) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.1 Qualified Elective Contributions . . . . . . . . . . . . . . . . . 22
5.2 Payment of Qualified Elective Contributions. . . . . . . . . . . . 23
5.3 Excess Contributions . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Distribution of Excess Contributions . . . . . . . . . . . . . . . 24
5.5 Distribution of Excess Deferrals . . . . . . . . . . . . . . . . . 25
<PAGE>
- ii -
5.6 Earnings on Amounts Distributed. . . . . . . . . . . . . . . . . . 26
5.7 Withdrawal from 401(k) Fund. . . . . . . . . . . . . . . . . . . . 27
5.8 Withdrawal of Voluntary Contributions. . . . . . . . . . . . . . . 29
5.9 Withdrawal by Officer or Director. . . . . . . . . . . . . . . . . 30
ARTICLE 6
Allocation of Increases or Decreases
In Net Worth of the Trust Assets and
Maintenance of Participants' Accounts. . . . . . . . . . . . . . . . . . . . 30
6.1 Determination of Increase or Decrease in Net Worth of Trust
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Maintenance and Adjustment of Participants' Accounts . . . . . . . 31
6.3 Limitations on Annual Additions. . . . . . . . . . . . . . . . . . 34
6.4 Top-Heavy Provisions . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 7
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.1 Normal Distribution. . . . . . . . . . . . . . . . . . . . . . . . 41
7.2 Distribution Upon Death. . . . . . . . . . . . . . . . . . . . . . 41
7.3 Distribution Upon Termination of Employment. . . . . . . . . . . . 42
7.4 Allocation of Forfeitures. . . . . . . . . . . . . . . . . . . . . 42
7.5 Payment of Benefits. . . . . . . . . . . . . . . . . . . . . . . . 43
7.6 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.7 Payment of Benefits; Incompetency. . . . . . . . . . . . . . . . . 50
7.8 Continuous Service . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 8
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.1 Appointment of Trustee . . . . . . . . . . . . . . . . . . . . . . 53
8.2 Establishment and Acceptance of Trust. . . . . . . . . . . . . . . 53
8.3 Investment of Trust Assets . . . . . . . . . . . . . . . . . . . . 53
8.4 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.5 Voting of Company Stock Fund Shares. . . . . . . . . . . . . . . . 56
8.6 Powers of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 59
8.7 Valuation of Investment Funds. . . . . . . . . . . . . . . . . . . 60
8.8 Payment from the Trust Assets. . . . . . . . . . . . . . . . . . . 61
8.9 Employment of Agents Authorized. . . . . . . . . . . . . . . . . . 61
8.10 Payment of Compensation, Expenses and Taxes. . . . . . . . . . . . 62
8.11 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.12 Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.13 Immunity of Trustee. . . . . . . . . . . . . . . . . . . . . . . . 64
8.14 Removal, Resignation and Appointment of Successor Trustee. . . . . 65
<PAGE>
- iii -
8.15 Appointment of Investment Adviser. . . . . . . . . . . . . . . . . 66
8.16 Division of Responsibility . . . . . . . . . . . . . . . . . . . . 68
ARTICLE 9
Amendment, Transfer and Termination. . . . . . . . . . . . . . . . . . . . . 69
9.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.2 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . 70
9.3 Termination; Discontinuance of Contributions . . . . . . . . . . . 71
9.4 Discontinuance of Participation. . . . . . . . . . . . . . . . . . 71
ARTICLE 10
Coverage of Employees of Subsidiaries
and Newly Acquired Facilities. . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE 11
Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.1 Participants' Rights, Acquittance . . . . . . . . . . . . . . . . 73
11.2 Spendthrift Clause. . . . . . . . . . . . . . . . . . . . . . . . 73
11.3 Delegation of Authority by the Company. . . . . . . . . . . . . . 74
11.4 Construction of Agreement . . . . . . . . . . . . . . . . . . . . 74
11.5 Gender and Number; Headings . . . . . . . . . . . . . . . . . . . 74
11.6 Limitation of Liability; Exhaustion of Remedies . . . . . . . . . 75
<PAGE>
ACME METALS INCORPORATED
SALARIED EMPLOYEES RETIREMENT SAVINGS PLAN
THIS AGREEMENT made this ________ day of ____________, 1994, effective as
of November 1, 1994, between ACME METALS INCORPORATED (the "Company") and HARRIS
TRUST AND SAVINGS BANK (the "Trustee"),
W I T N E S S E T H:
WHEREAS, the Acme Steel Company Salaried Employees Retirement Savings Plan
was amended and restated effective as of January 1, 1990, and was subsequently
amended by Amendments 1 through 4; and
WHEREAS, Acme Steel Company assigned the Plan to the Company and the
Company assumed and adopted the Plan effective June 1, 1992; and
WHEREAS, the Plan was thereafter amended by Amendments 5 and 6; and
WHEREAS, the Company desires to restate the Plan in its entirety to
incorporate all amendments to the Plan;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Company and the Trustee agree upon the following
provisions:
ARTICLE 1
Administrative Committee
1.1 APPOINTMENT OF ADMINISTRATIVE COMMITTEE. The Plan shall be
administered by an administrative committee consisting of not less than six
persons nor more than 10 (the "Committee") who shall be appointed by the Board
of Directors
<PAGE>
- 2 -
of the Company. The Board shall have full power to determine the period during
which any Committee member shall serve and in its discretion may remove any
member of the Committee at any time without assigning any reason for such
removal. The members of the Committee may be Participants. Any member of the
Committee shall automatically cease to be a member of the Committee on
termination of his employment. An officer of the Company shall certify to the
Trustee the names of the members of the Committee and thereafter any change in
its membership.
1.2 QUORUM. The action of a majority of the members of the Committee at
the time acting hereunder, and any instrument executed by a majority of such
members of the Committee, shall be considered the action or instrument of the
Committee. Action may be taken by the Committee at a meeting or in writing
without a meeting.
No member of the Committee, however, shall vote or decide upon any matter
relating solely to himself or to any of his rights or benefits under the Plan.
The Committee may authorize any one or more of its members to execute any
document or documents on behalf of the Committee, in which event the Committee
shall notify the Trustee in writing of such action and of the name or names of
its member or members so designated. The Trustee thereafter may accept and rely
upon any document executed by such member or members as representing action by
the Committee, until the
<PAGE>
- 3 -
Committee shall file with the Trustee a written revocation of such designation.
1.3 POWERS AND DUTIES. The Committee shall be charged with the
administration of this Plan and its duties shall include the interpretation of
the provisions of the Plan, the adoption of any rules and regulations which may
become necessary or desirable in the operation of the Plan, the determination of
how and when benefits shall be paid, the keeping of individual accounts of each
Participant in the Plan, the making of such determinations and the taking of
such actions as are expressly authorized or directed in the Plan, and the taking
of such other actions as may be required for the proper administration of the
Plan in accordance with the terms hereof.
The Committee may adopt and amend, from time to time, rules of uniform
application (l) permitting a change in investment direction provided in Section
4.3 to be made more or less frequently than once in a calendar quarter, (2)
permitting a withdrawal of contributions as provided in Section 3.7 to be made
more or less frequently than once in a calendar quarter and (3) permitting a
change in the rate of voluntary contributions as provided in Section 5.1 to be
made more or less often than once in a calendar quarter.
The Plan shall be administered in accordance with the Employee Retirement
Income Security Act of 1974, Public Law 93-406 ("ERISA"), the Tax Equity and
Fiscal Responsibility Act
<PAGE>
- 4 -
of 1982, Public Law 97-248, ("TEFRA") the Deficit Reduction Act of 1984, Public
Law 98-369 ("DEFRA"), the Retirement Equity Act of 1984, Public Law 98-397
("REA"), the Tax Reform Act of 1986, Public Law 99-514 ("TRA"), and the
applicable provisions of the Internal Revenue Code of 1986 as heretofore or
hereafter amended (the "Internal Revenue Code"), as all may be amended from time
to time, and in conformity to regulations and rulings issued pursuant to such
laws.
Within the scope of authority conferred upon it by this Agreement and
consistent with the provisions of ERISA, the Committee shall make all decisions
as to the facts bearing upon the right of any person to benefits and the
application of any term of the Agreement or any rule of the Committee to any
case.
The Committee may employ such accountants, counsel, specialists, and other
persons as it deems necessary or desirable in connection with the administration
of the Plan. Such persons may be acting in a similar capacity for, or may be
employees of, the Company. To the extent permitted by ERISA, the Committee
shall be entitled to rely upon and shall be fully protected in any action taken
by it in good faith in reliance upon and in accordance with any opinions or
reports furnished to it by any such accountant, counsel or other specialist.
1.4 IMMUNITY OF COMMITTEE. To the extent permitted by ERISA, each member
of the Committee, whether or not then in
<PAGE>
- 5 -
office, shall be held harmless and indemnified by the Company against all claims
and liabilities and all expenses reasonably incurred or imposed upon him in
connection with or resulting from any action, suit or proceeding, or settlement
or compromise thereof approved by the Company, to which he may be made a party
by reason of any action or alleged action, either of omission or commission,
performed by him while acting as a member of the Committee, except in relation
to matters as to which recovery shall be had against him by reason of a final
adjudication in such action, suit or proceeding finding him guilty of willful
misconduct or lack of good faith. Plan assets shall not be used as a source for
any compensation paid to members of the Committee by reason of their service on
the Committee. All reasonable expenses of the Committee properly and actually
incurred shall be paid by the Company. Members shall not be required
individually to furnish bonds or other security for faithful performance of
their duties. The Company shall furnish bonding as required by ERISA.
1.5 CLAIMS AND REVIEW PROCEDURES. If any difference shall arise between
the Company and any Participant who shall be an applicant for a benefit, or to
whom an account balance may be distributable, as to such Participant's right to
a benefit or the amount of his distribution and agreement cannot be reached
between the Company and the Participant, the Participant or his authorized
representative shall file a claim for a distribution in the manner and on the
forms
<PAGE>
- 6 -
provided by the Committee. The Committee shall decide on the merits of such
claim within 60 days after receipt of the claim. The Participant and his
authorized representative, if any, shall be notified in writing of a favorable
decision. If a claim is wholly or partially denied, notice of the decision
shall be furnished within 60 days after receipt of the claim by the Committee.
Such notice shall be written in a manner calculated to be understood by the
claimant and shall include:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on which the denial is
based;
(c) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(d) an explanation of the Plan's claim review procedure.
If notice of denial of a claim is not furnished within the 60 days referred to
above after receipt of the claim by the Committee and the claim has not been
granted, the claim shall be deemed denied for purposes of proceeding to review
as described herein. A claimant whose claim for benefits is denied in whole or
in part or his authorized representative may:
(a) request a review upon written application to the Committee within 60
days after receipt by the claimant of written notice of the denial of
his claim or within 120 days of receipt of his claim by the Committee
if there is no notice of denial;
(b) review pertinent documents in the Company's offices;
<PAGE>
- 7 -
(c) submit positions on issues and comments in writing;
(d) in the Committee's discretion, make an oral presentation before the
Committee.
The Committee shall promptly review each denial of a claim upon which an
application for review is submitted. Such review shall be completed within 60
days after receipt of the request for review, unless special circumstances
require an extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after receipt of a
timely request for review. The decision on review shall be in writing and shall
include specific reasons for the decision, written in a manner calculated to be
understood by the claimant, and specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE 2
ELIGIBILITY
2.1 ELIGIBILITY. Each regular full-time employee shall become eligible to
participate in the Plan on the April 1, July 1, October 1, or January 1
coinciding with or next following the date on which he completes three months of
continuous service with the Company following his most recent date of hire. For
the purpose of calculating three months of continuous service with the Company,
an employee's continuous employment with any predecessor employer designated by
the Committee shall be taken into account.
<PAGE>
- 8 -
Each part-time or temporary employee shall become eligible to participate
in the Plan on the April 1, July 1, October 1, or January 1 coinciding with or
next following the date on which he completes a Year of Service with the Company
following his most recent date of hire. For the purpose of calculating a Year
of Service in the preceding sentence, each employee's continuous employment with
any predecessor employer designated by the Committee shall be taken into
account.
Notwithstanding any other provisions in this Section 2.1, if any former
Participant in the Plan is reemployed, he shall be eligible to participate in
the Plan as of the April 1, July 1, October 1 or January 1 coinciding with or
next following his reemployment date.
2.2 DEFINITIONS. The term "employee" means any salaried person employed by
the Company and any other person in a group designated by the Committee to be
considered "employees" under the Plan as provided in Article 10. The term
"employee" also includes employees who are also directors. The term "regular
full-time employee" means any employee who regularly works a normal schedule of
40 hours per week. The term "part-time employee" means any employee who
regularly works a normal schedule of less than 40 hours per week. The term
"temporary employee" means any employee hired to work a normal schedule of 40
hours per week during a period of fixed or limited duration which does not
exceed 12 months.
<PAGE>
- 9 -
The term "Year of Service" means any 12-month period during which the
employee completes at least 1,000 Hours of Service.
The term "Hour of Service" means each period of 60 minutes of employment
with the Company for which (a) an employee is directly or indirectly paid, or
entitled to payment, for the performance of duties or for reasons other than the
performance of duties or for which (b) back pay, irrespective of mitigation of
damages, has either been awarded or agreed to by the Company. When required in
determining eligibility, Hours of Service shall be credited to the employee
under (a) for the period in which the duties were performed and under (b) for
the period or periods to which the award or agreement pertains rather than the
period in which made, but Hours of Service shall not be credited more than once
with respect to the same 60-minute period or periods of employment. Hours under
this paragraph shall be calculated and credited pursuant to Section 2530.200b-2
of the Department of Labor Regulations.
The term "Highly Compensated Participant" means a Participant who during
the Plan Year in question or the prior Plan Year (a) was an owner of 5% or more
of the outstanding stock of the Company or stock possessing more than 5% of the
voting power of the Company, or (b) received compensation exceeding $75,000, or
(c) received compensation exceeding $50,000 and was one of the 20% of the
employees who received
<PAGE>
- 10 -
the highest compensation from the Company for the Plan Year, or (d) was an
officer of the Company and received compensation exceeding $45,000 during the
Plan Year, provided that the foregoing compensation amounts shall be adjusted
from time to time in accordance with regulations of the Secretary of the
Treasury relating to the maximum dollar limitation on additions to defined
contribution plans under Section 415(d)(1) of the Internal Revenue Code. All
other Participants are Nonhighly Compensated Participants.
2.3 RIGHTS OF SPOUSE. On the death of a Participant, the full value of any
benefits available under the Plan shall be distributed to the Participant's
surviving spouse in accordance with Section 7.5 or, if the Participant is not
survived by a spouse, to the beneficiary or beneficiaries as the Participant
shall have designated on forms provided by and filed with the Committee.
Notwithstanding the foregoing sentence, a Participant may elect to designate
another person or persons as beneficiary if the Participant's spouse consents in
writing. In such written consent, the spouse shall acknowledge the effect of
the election. The spouse's signature on the consent must be witnessed by a
notary public or a representative of the Committee. The Committee may accept
designation of a non-spouse beneficiary without such consent if the Participant
establishes to the Committee's satisfaction that there is no spouse or the
spouse cannot be located. A consent shall be valid only as to the spouse who
<PAGE>
- 11 -
signed the consent. Another written consent as specified above is required for
each subsequent change of beneficiary.
2.4 CERTIFICATION OF PARTICIPATION AND COMPENSATION TO COMMITTEE. The
Company, within a reasonable time after the last day of each calendar quarter,
shall certify to the Committee (a) the names of all Participants as of such last
day, (b) the earnings (as defined in Section 3.2) of each Participant for such
quarter, and (c) the amount of the Company's contribution for the quarter with
respect to such Participants as provided in Section 3.1 hereof.
2.5 DETERMINATION OF ELIGIBILITY. The Committee shall determine the
eligibility of each employee for participation in the Plan. Subject to Section
1.5, such determination shall be conclusive and binding upon all persons.
The Company shall notify the Committee of the reemployment of any
Participant as an employee within 10 days following the date thereof. Upon
receipt of such notice of reemployment the Committee shall notify the Trustee
and any remaining balances shall not be distributed unless the Participant shall
make an election as hereinafter provided.
2.6 LOSS OF PARTICIPATION ELIGIBILITY WITH CONTINUED EMPLOYMENT. If a
Participant ceases to be an "employee" as defined in Section 2.2, but continues
in the employ of the Company or a member of the controlled group of corporations
or businesses of which the Company is a member, his participation in the Plan
shall continue to the end of the quarter but
<PAGE>
- 12 -
thereafter shall be suspended. During the period of any such suspension, the
Participant shall not be entitled to make any contributions to the Plan nor
shall any contributions be made thereto on his behalf. The account balance of
any such Participant shall be held in trust until withdrawn or distributable on
account of retirement, disability, death or termination of employment. In the
event any such Participant shall again become an "employee" as defined in
Section 2.2, the suspension shall immediately cease.
ARTICLE 3
COMPANY CONTRIBUTIONS
3.1 FORMULA. For each quarter the Company shall contribute to the Trust an
amount equal to 7-1/2% of each Participant's earnings (as such term is
hereinafter defined) during such quarter on behalf of each Participant who is
eligible as of the last day of the quarter and who was actively employed
throughout such quarter. The Company intends that its contributions will
normally be made from its current or accumulated profits, but the existence of
current or accumulated profits shall not be a prerequisite for the Company's
contribution in any quarter. The Company shall contribute to the Trust a pro
rata amount based on the period of employment during the quarter on behalf of a
Participant whose eligibility continues to the end of the quarter in accordance
with Section 2.6.
<PAGE>
- 13 -
A portion of the contribution made by the Company each quarter on behalf of
each Non-Highly Compensated Participant shall be allocated to each such
Participant's 401(k) fund (as defined in Section 6.2). That portion for each
quarter shall be equal to the lesser of 2% of each Non-Highly Compensated
Participant's earnings for the quarter or the entire contribution made by the
Company on behalf of the Participant for the quarter. The balance of the
Company's contribution for the quarter, if any, shall be allocated to each
Participant's retirement savings fund (as defined in Section 6.2). The portion
of the Company contribution allocated to such Participant's 401(k) fund shall be
treated as a qualified nonelective contribution under Section 5.3 in any Plan
Year in which the requirements of Income Tax Regulations Section 1.401(k) -
1(b)(5) are satisfied with respect to such contribution and in which the
qualified nonelective contribution is required to prevent excess contributions
from occurring.
3.2 DEFINITION: EARNINGS. The term "earnings" as used herein shall mean
wages, salary, commissions, overtime, incentive or bonus pay for services
rendered to the Company, excluding (a) any payments for supplemental sickness
and accident benefits payable under a program benefiting salaried employees of
the Company; (b) any payments by the Company (or debits) representing unused
credits (or debits) under any program of flexible benefits utilizing an
individual spending
<PAGE>
- 14 -
account for each Participant; provided, however, that amounts which a
Participant elects to have credited to his account under a plan meeting the
requirements of Section 125 of the Internal Revenue Code shall not be excluded
from the definition of earnings of the Participant but shall be treated as
earnings for purposes of this Plan; (c) contributions by the Company to any
public or private employee pension, profit sharing plan or employee stock
ownership plan made on behalf of a Participant, provided, however, that
qualified elective contributions under Article 5 of this Plan shall not be
excluded from the definition of earnings of a Participant but shall be treated
as earnings for purposes of this Plan; (d) any income or gain received by or
imputed to a Participant in respect of a stock option (or the receipt or sale of
stock acquired pursuant thereto) or of a stock appreciation right, a stock
award, or restricted stock purchase, or under any compensation plan unless such
plan provides for payment in cash only, provided, however, that payments of
awards in the form of common stock or other securities of the Company under the
Company's Executive Incentive Compensation Plan shall not be excluded from the
definition of earnings of a Participant; (e) any amounts which the Company is
prohibited by Section 415 of the Internal Revenue Code from contributing to a
Participant's account; (f) severance payments or premium reimbursements by the
Company; and (g) any other non-payroll income item received from the Company.
<PAGE>
- 15 -
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual earnings of each Participant
taken into account under the Plan shall not exceed the OBRA '93 Annual
Compensation Limit. The OBRA '93 Annual Compensation Limit is $150,000, as
adjusted by the Commissioner of Internal Revenue for increases in the cost of
living in accordance with Section 401(a)(17)(B) of the Internal Revenue Code.
The cost-of-living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which earnings are determined
(determination period) beginning in such calendar year. If a determination
period consists of fewer than 12 months, the OBRA '93 Annual Compensation Limit
will be multiplied by a fraction, the numerator of which is the number of months
in the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Section 401(a)(17) of the Internal Revenue Code
shall mean the OBRA '93 Annual Compensation Limit set forth in this provision.
If earnings for any prior determination period are taken into account in
determining a Participant's benefits accruing in the current Plan Year, the
earnings for that prior determination period are subject to the OBRA '93 Annual
Compensation Limit in effect for that prior determination
<PAGE>
- 16 -
period. For this purpose, for determination periods beginning before the first
day of the first Plan Year beginning on or after January 1, 1994, the OBRA '93
Annual Compensation Limit is $150,000.
3.3 FORM OF COMPANY CONTRIBUTIONS. The Company's contributions hereunder
may be in the form of cash or other property, including stock of the Company, or
any subsidiary of the Company. The value of property contributed under the
provisions of this Section 3.3 shall be its fair market value at the time it is
contributed.
3.4 DETERMINATION OF CONTRIBUTION. The Company shall determine and certify
to the Committee the amount of any contribution made by it under the terms of
this Agreement and such determination shall be binding on all Participants, the
Committee, and the Company.
The Trustee shall have no right or duty to inquire into the amount of the
Company's contributions and shall be accountable only for funds actually
received by it.
3.5 PAYMENT OF CONTRIBUTIONS. The contribution for each quarter shall be
paid to the Trustee within 60 days after the close of each quarter.
3.6 NON-REVERSION. In no event shall the principal or income of this trust
be paid to or revert to the Company, or be used for any purpose whatsoever other
than for the exclusive benefit of the Participants or their beneficiaries.
<PAGE>
- 17 -
3.7 WITHDRAWAL FROM ACCOUNTS DURING EMPLOYMENT. A Participant may, by a
request filed in writing with the Committee at least 30 days (or such shorter
period as the Committee shall establish) in advance, elect to make withdrawals
from the vested portion of his retirement savings fund in accordance with the
following rules:
(a) With respect to the portion of his account attributable to Company
contributions made with respect to his earnings prior to January 1,
1982, a Participant may withdraw at the end of any calendar quarter
(the "distribution date") all or any part thereof.
(b) With respect to the portion of his account attributable to Company
contributions made to the Participant's account with respect to his
earnings after January 1, 1982, a Participant may make a withdrawal,
with the approval of the Committee, for the purpose of (i) paying
medical expenses arising from accident, sickness or disability
incurred by the Participant or a member of his family, (ii) paying
educational expenses of the Participant or a member of his family, or
(iii) purchasing a residence or making a home improvement or addition
to the residence of the Participant. Withdrawals under this
subparagraph (b) shall be limited to the lesser of (i) the portion of
a Participant's
<PAGE>
- 18 -
account which exceeds the Company contributions credited to his
account during the two-year period preceding the date of withdrawal,
or (ii) 40% of that portion of the Participant's account attributable
to Company contributions with respect to the Participant's earnings
after January 1, 1982 which is vested in accordance with Section 7.3.
Withdrawals under this subparagraph (b) shall be effective as of the
end of the calendar quarter in which approved and the Committee shall
not approve such withdrawals more frequently than annually.
(c) Notwithstanding anything in this Section 3.7 to he contrary, any
Participant who is an "officer or director," as those terms are
defined under Section 16 of the Securities Exchange Act of 1934
("Officer/Director Participant"), who elects to make a withdrawal from
the portion of his retirement savings fund invested in the Company
Stock Fund, other than in connection with a disability, shall be
suspended from the Company Stock Fund for a six-month period following
the date of such withdrawal during which period of suspension, the
Officer/Director Participant shall not be entitled to make any
contributions to the Company Stock Fund nor shall any contributions be
made thereto on his behalf.
<PAGE>
- 19 -
Withdrawals under this Section shall be distributed in cash. The claims and
review procedure set forth in Section 1.5 shall apply to any request by a
Participant for a withdrawal under this Section 3.7 which is denied in whole or
in part by the Committee. The Committee shall have sole discretion to interpret
this Section 3.7. The Committee's decision on review of the Participant's
appeal shall be final and binding on all persons and shall be upheld on review
unless determined to be arbitrary or capricious.
ARTICLE 4
INVESTMENT DIRECTIONS
4.1 INVESTMENT FUNDS. Company contributions to the retirement savings
fund, qualified nonelective deferrals and qualified elective deferrals allocated
to the 401(k) fund and (prior to January 1, 1989) each Participant's voluntary
contributions shall be invested by the Trustee as a single trust in one or more
of the following funds in proportion to written directions which Participants
shall from time to time file with the Committee (hereinafter referred to as
"investment directions").
COMPANY STOCK FUND, which shall consist solely of shares of Acme Metals
Incorporated common stock, or securities convertible into Acme Metals
Incorporated common stock;
DIVERSIFIED INVESTMENT FUND, which shall consist of a diversified selection
of bonds, notes, debentures, mortgages, equipment trust certificates, investment
trust certificates,
<PAGE>
- 20 -
preferred or common stocks, real estate or interests therein, certificates of
deposit, commercial paper, obligations of the United States government or any
agency or instrumentality thereof, or in any other property, real or personal,
as the Trustee may acquire. The diversified investment fund may include units
of participation in mutual or group funds which funds may include securities of
the Company;
CASH EQUIVALENTS FUND, which shall consist of certificates of deposit,
commercial paper, United Treasury bills, and such other short-term fixed income
investments as the Trustee may acquire. The cash equivalents fund may include
units of participation in money market or other appropriate mutual funds.
EQUITY INVESTMENT FUND, which shall consist primarily of common and
preferred stocks of private corporations and other ownership interests. The
equity investment fund may include units of participation in equity mutual
funds.
Each Participant shall acquire an undivided pro rata interest in each of
the above investment funds (and in the earnings or losses of such funds, as
hereinafter determined) in accordance with his investment direction.
4.2 MANNER OF MAKING DIRECTIONS; NEW PARTICIPANTS. Each new Participant in
the Plan shall file an investment direction with the Committee at least 30 days
(or such shorter period as the Committee shall establish) prior to the date on
which he becomes eligible to participate. In the absence of such
<PAGE>
- 21 -
direction, the Committee shall file a direction with the Trustee on behalf of
the Participant directing that contributions under Section 3.1 and 5.1 be
invested in the diversified investment fund. The investment direction filed by
or on behalf of a new Participant under this Section shall be irrevocable for
the remainder of the calendar quarter in which the direction takes effect.
4.3 CHANGE OF INVESTMENT DIRECTION. A Participant may at any time,
effective as of the beginning of the following calendar quarter, change his
investment direction by filing a new investment direction with the Committee at
least 30 days (or such shorter period as the Committee shall establish) prior to
such date. Notwithstanding anything in this Section 4.3 to the contrary, any
Officer/Director Participant who desires to change his investment direction
either from or into the Company Stock Fund may do so only by filing a new
investment direction with the Committee at least 30 days (or such shorter period
as the Committee shall establish) prior to such date and during a period
beginning on the third business day following the date of release for
publication by the Company of quarterly or annual summary statements of sales
and earnings and ending on the twelfth business day following such date. In no
event shall an Officer/Director Participant file such a new investment direction
within six months after the date of his most recent previous filing of such an
investment direction. A change in investment direction may apply to the
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- 22 -
Participant's existing account as of such date or to future contributions made
under Sections 3.1 and 5.1, or both, as he may elect.
4.4 COMMITTEE TO FORWARD INVESTMENT DIRECTIONS. All investment directions
shall be made on forms provided by and filed with the Committee, and the
Committee shall direct the Trustee to make investments in accordance with such
investment directions. The Trustee shall be entitled to rely upon the validity
and accuracy of the directions received from the Committee.
ARTICLE 5
401(k) CONTRIBUTIONS
5.1 QUALIFIED ELECTIVE CONTRIBUTIONS. A Participant may elect in writing
on a form provided by the Committee to reduce his earnings for each payroll
period by a specified percentage not less than one-half of 1% nor more than 10%
of his earnings for the period. The Company shall contribute the amount so
elected (referred to herein as "qualified elective contributions") to the
Trustee to be allocated to each Participant's 401(k) fund (as defined in Section
6.2). Once each quarter a Participant may change the rate of qualified elective
contributions or may discontinue qualified elective contributions effective as
of the beginning of the following month by giving notice on a form provided by
and filed with the Committee. Qualified elective contributions and any increase
or decrease in the amount of a Participant's
<PAGE>
- 23 -
qualified elective contributions shall be made in increments of one-half of 1%
of his earnings. A Participant's qualified elective contributions during any
taxable year of the Participant shall not exceed $7,000 or such higher amount as
is permitted from time to time by regulations of the Secretary of the Treasury.
The Committee in its discretion may prospectively decrease the rate of qualified
elective contributions of any Participant at any time in order to prevent
qualified elective contributions in excess of the amount permitted in the
preceding sentence (hereinafter referred to as "excess deferrals") or to satisfy
the nondiscrimination test set forth below in Section 5.3.
5.2 PAYMENT OF QUALIFIED ELECTIVE CONTRIBUTIONS. Qualified elective
contributions shall be paid by the Company to the Trustee not later than 60 days
following the last day of the payroll period to which they relate, and in no
event shall such payments be made later than the date for filing the Company's
income tax return for the Plan Year to which they relate.
5.3 EXCESS CONTRIBUTIONS. The term "excess contributions" means the amount
of qualified elective contributions of Highly Compensated Participants in excess
of the amount permitted under the terms of this Section 5.3. Highly Compensated
Participants' qualified elective contributions shall be treated as excess
contributions in any Plan Year to the extent that the average contribution
<PAGE>
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percentage of Highly Compensated Participants is more than the greater of (a)
one and one-quarter times or (b) two times (provided that the difference between
the average contribution percentage of Highly Compensated Participants and the
average contribution percentage of Non-Highly Compensated Participants does not
exceed two percentage points) the average contribution percentage of Non-Highly
Compensated Participants. If a Participant is a Highly Compensated Participant
in two or more plans which allow for qualified elective contributions, the
qualified elective contributions under all the plans shall be aggregated for the
purpose of determining the average contribution percentage of Highly Compensated
Participants under this Plan. The term "average contribution percentage" with
respect to Highly Compensated Participants means the average, calculated
separately, of the rate of each such Participant's qualified elective
contributions, and with respect to Non-Highly Compensated Participants means the
average, calculated separately, of the rate of each such Participant's qualified
nonelective contributions (if taken into account in the Plan Year as provided in
Section 3.1) and qualified elective contributions.
5.4 DISTRIBUTION OF EXCESS CONTRIBUTIONS. The Committee shall determine
the amount of each Participant's excess contributions by reducing the
contribution percentages of Highly Compensated Participants in the order of size
of the contribution percentage until the average contribution
<PAGE>
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percentage of Highly Compensated Participants is equal to the level permitted by
the preceding Section. In the event that excess contributions are made with
respect to any Participant in any Plan Year, the Committee may, within 2-1/2
months after the end of the Plan Year in which the excess contribution is made,
recharacterize all or any part of a Participant's excess contribution as a
voluntary contribution and shall allocate the amount so recharacterized to the
participant's voluntary fund. Any excess contribution which is not
recharacterized shall be distributed to the Participant within 2-1/2 months
after the end of the Plan Year in which the excess contribution is made. If the
Committee fails to recharacterize or distribute all or any portion of an excess
contribution within the 2-1/2 month period following the end of the Plan Year in
which the excess contribution is made, it shall distribute such amount to the
Participant prior to the end of the Plan Year following the year in which the
excess contribution is made.
5.5 DISTRIBUTION OF EXCESS DEFERRALS. In the event that a Participant's
qualified elective contributions in any taxable year of the Participant exceed
$7,000, or any higher amount permitted by regulations of the Secretary of the
Treasury, the Committee shall direct the Trustee to distribute the excess
deferrals to the Participant on or before the April 15 following the end of the
taxable year in which the excess deferrals were received by the Trustee. Excess
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deferrals may be distributed to a Participant in the same taxable year in which
received by the Trustee, provided that the Committee and the Participant
designate the distribution as an excess deferral and the distribution is made
after the date on which the Trustee received the excess deferral.
5.6 EARNINGS ON AMOUNTS DISTRIBUTED. Any distribution of excess
contributions or of excess deferrals shall include dividends, interest and
changes in the value of assets attributable to the amount distributed. This
portion of the income (or loss) shall be determined for the Plan Year of the
excess contribution or the Participants' taxable year of the excess deferral by
multiplying the income (or loss) on the Participant's 401(k) fund during the
Plan Year or taxable year in question by a fraction in which the numerator is
the excess amount and the denominator is the balance in the Participant's 401(k)
fund as of the end of the Plan Year or taxable year disregarding the income (or
loss) on the 401(k) fund for the year. The amount of income (or loss) so
determined shall be increased by 10% for each complete and partial calendar
month between the last day of the Plan Year or taxable year and the date of
distribution. For this purpose the month in which distribution is made shall be
taken into account if distribution is made after the 15th day of the month and
shall be disregarded if distribution is made on or before the 15th day of the
month.
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5.7 WITHDRAWAL FROM 401(K) FUND. A Participant may, by a request filed in
writing with the Committee at least 30 days (or such shorter period as the
Committee shall establish) in advance, elect to make withdrawals from the
portion of his 401(k) fund consisting of his qualified elective contributions at
any time if necessary to meet an immediate and heavy financial need of the
Participant. A withdrawal will be considered to be for such a need if it is
made for the purpose of (a) paying medical expenses incurred by the Participant
or the Participant's spouse or dependents, (b) paying tuition for the next
semester or of post-secondary education for the Participant, his spouse or
dependents, (c) purchasing a principal residence, excluding mortgage payments,
of the Participant, or (d) preventing the eviction of the Participant from his
principal residence or the foreclosure of a mortgage on the Participant's
principal residence.
A withdrawal will be considered necessary to meet the need if (a) the need
cannot be met from insurance proceeds or other reimbursement or compensation,
(b) the Participant's assets and those of his spouse and minor children that are
reasonably available to him are insufficient to meet the need or, even if
sufficient, cannot reasonably be liquidated for that purpose without causing
further hardship, (c) the need cannot be met by the Participant's ceasing to
make qualified elective contributions, (d) the available distributions from this
Plan or any other Plan of the Company are inadequate to
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meet the need and (e) the Participant is unable to borrow funds from commercial
sources on reasonable commercial terms to meet the need. The Committee shall be
permitted to rely on the Participant's representations as to the existence of
the conditions described above in order to establish the necessity for the
withdrawal unless it appears to the Committee to be unreasonable to do so.
In the event that a Participant makes a withdrawal under this Section 5.7,
the following limitations will apply:
(a) The Participant shall not be permitted to elect qualified elective
contributions during the 12-month period following the withdrawal; and
(b) The Participant's qualified elective contributions during the
Participant's taxable year following the taxable year of his
withdrawal shall not exceed the amount by which the Participant's
qualified elective contributions for the taxable year of the
withdrawal is less than the limit on qualified elective contributions
under Section 402(g) of the Internal Revenue Code for the subsequent
taxable year.
Notwithstanding any other provision of this Plan, if these conditions are
satisfied, the withdrawal will be deemed to be necessary to satisfy the
Participant's need, provided that the amount withdrawn does not exceed the
amount of the need and the Participant has obtained all other distributions and
all nontaxable loans currently available to him under all of the plans
maintained by the Company.
Withdrawals under this Section shall be effective at the end of the
calendar quarter in which the Committee receives notice, provided that advance
notice is given as provided
<PAGE>
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above. Withdrawals shall not be made under this Section more frequently than
annually.
The claims and review procedure set forth in Section 1.5 shall apply to any
request by a Participant for a withdrawal under this Section 5.7 which is denied
in whole or in part by the Committee. The Committee shall have sole discretion
to interpret this Section 5.7. The Committee's decision on review of the
Participant's appeal shall be final and binding on all persons and shall be
upheld on review unless determined to be arbitrary or capricious.
5.8 WITHDRAWAL OF VOLUNTARY CONTRIBUTIONS. Participants shall not be
permitted to make voluntary contributions under the Plan after December 31,
1988. The Committee shall continue to maintain a separate record pursuant to
Section 6.2 of the portion of a Participant's account attributable to voluntary
contributions made prior to January 1, 1989 and to recharacterized excess
contributions. At any time, effective as of the end of the calendar quarter, a
Participant may withdraw all or any part of the account balance maintained with
respect to his voluntary contributions made prior to January 1, 1989 and his
recharacterized contributions upon notice in writing delivered to the Committee
at least 30 days (or such shorter period as the Committee shall establish) in
advance of such date. Withdrawals under this Section shall be distributed in
cash. A Participant shall be deemed to withdraw the portion of his account
represented by his
<PAGE>
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voluntary contributions made prior to January 1, 1989 before withdrawal of any
other portion of his account.
5.9 WITHDRAWAL BY OFFICER OR DIRECTOR. Notwithstanding anything in
Sections 5.7 or 5.8 to the contrary, any Officer/Director Participant who elects
to make a withdrawal from the portion of his 401(k) Fund consisting of his
qualified elective contributions, his voluntary contributions made prior to
January 1, 1989 or recharacterized excess contributions, which are invested in
the Company Stock Fund, other than in connection with a disability, shall be
suspended from the Company Stock Fund for a six-month period following the date
of such withdrawal during which period of suspension, the Officer/Director
Participant shall not be entitled to make any contributions to the Company Stock
Fund nor shall any contributions be made thereto on his behalf.
ARTICLE 6
ALLOCATION OF INCREASES OR DECREASES
IN NET WORTH OF THE TRUST ASSETS AND
MAINTENANCE OF PARTICIPANTS' ACCOUNTS
6.1 DETERMINATION OF INCREASE OR DECREASE IN NET WORTH
OF TRUST ASSETS. As of the last day of each calendar quarter, based on the fair
market value of the investment funds provided by the Trustee pursuant to Section
8.7, the Committee shall determine separately the increase or decrease in the
net worth of each of the investment funds forming a part of the retirement
savings fund, the 401(k) fund, and the voluntary fund (as defined in Section
6.2) for the quarter by deducting
<PAGE>
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from the fair market value of each investment fund under determination the
aggregate of the following: (a) any contributions of the Company paid to and
credited by the Trustee to such investment fund with respect to said quarter,
and (b) the total of the account balances of all Participants with respect to
such investment fund as of the last day of the quarter, reduced by any
distributions from such investment fund made during said quarter and prior to
the making of any of the adjustments specified in Section 6.2 hereof. Any
increase or decrease in the net worth of each investment fund forming part of
the retirement savings fund, the 401(k) fund and the voluntary fund shall be
credited or charged to the account balances of the respective Participants as
provided in Section 6.2 hereof.
6.2 MAINTENANCE AND ADJUSTMENT OF PARTICIPANTS' ACCOUNTS. The Committee
shall maintain a separate record of account for each Participant. The Committee
shall maintain separate accounts of the voluntary fund, the 401(k) fund, and the
retirement savings fund. The term "voluntary fund" shall mean the Participants'
voluntary contributions made prior to January 1, 1989, and recharacterized
excess contributions and the net earnings on such voluntary and recharacterized
contributions. The term "401(k) fund" shall mean qualified nonelective
deferrals and qualified elective deferrals by the Company authorized under
Section 401(k) of the Internal Revenue Code and net earnings thereon. The term
"retirement
<PAGE>
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savings fund" shall mean the remainder of the trust assets which do not comprise
the voluntary fund and the 401(k) fund. The voluntary fund, the 401(k) fund and
the retirement savings fund shall not constitute a segregated fund but each fund
shall for accounting and recordkeeping purposes be treated as though separate
from each other fund. The Committee shall show separately the interest of each
Participant in the respective investment funds of the retirement savings fund,
the 401(k) fund and the voluntary fund. The Committee shall also, for the
purpose of withdrawals under Section 3.7, show separately the various portions
of the Participant's retirement savings fund derived from contributions under
the Plan with respect to his earnings after December 31, 1981 and prior to
January 1, 1982.
Subject to the limitations contained in Section 6.3, the Committee after
determining the increase or decrease in the net worth of the respective
investment funds in the retirement savings fund, the 40l(k) fund and the
voluntary fund (as provided in Section 6.1) shall make the following adjustment
in Participants' account balances as of the last day of each quarter:
(a) FIRST: Allocate to the account of each Participant his share of the
increase or decrease for the quarter in the net worth of each of the investment
funds of the retirement savings fund, the 401(k) fund, and the voluntary fund on
the basis of the ratio of his account balance with respect to each
<PAGE>
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such investment fund as of the last day of such quarter to the total of all
account balances with respect to each investment fund as of said date;
(b) SECOND: After making the adjustment required above, credit the
respective investment fund or funds of each Participant in the retirement
savings fund, in accordance with his investment direction, with his share of the
Company's contributions to that fund for such quarter and credit the respective
investment fund or funds of each Participant in the 401(k) fund, in accordance
with his investment direction, with his share of qualified nonelective
contributions and qualified elective contributions for the quarter.
The accounts of Participants as adjusted in accordance with this Section,
subject to the limitations contained in Section 6.3, shall be determinative of
the value of the interest of each Participant in the trust for all purposes
until a subsequent determination is made by the Committee.
For purposes of this Article, the terms "account for each Participant,"
"Participant's account," "accounts of Participants," "401(k) account" and
similar phrases without limitation shall include the undistributed account
balance of a Participant who shall have retired or terminated his employment, or
any undistributed account balance payable to the beneficiary of a Participant
who shall have died, retired or terminated his employment.
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6.3 LIMITATIONS ON ANNUAL ADDITIONS. Notwithstanding any other provisions
in the Agreement, the sum of the annual additions to a Participant's account in
any form for a calendar year shall not exceed $30,000 (or, if greater, one
quarter of the dollar limitation in effect under Section 415(b)(1)(A) of the
Internal Revenue Code) or 25% of the compensation received by the Participant
from the Company within such year, whichever is less. "Annual additions" means
the sum of the following: Company contributions made on the Participant's
behalf, including qualified nonelective contributions and qualified elective
contributions, and forfeitures allocated to the Participant's account. Annual
additions for the purpose of the dollar limitation set forth above shall also
include any amounts allocated to a separate account under a defined benefit plan
if the purpose of such account is to provide medical benefits after retirement
for the Participant, his spouse or dependents, and such participant is a key
employee within the meaning of Section 416(i)(1) of the Internal Revenue Code.
"Compensation" for the purposes of this Section means salary and other amounts
paid for services rendered which a Participant receives during a calendar year,
but not contributions made for a Participant under any employee benefit plan
including this Plan, deferred compensation, stock options, and other
distributions subject to special tax benefit.
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If the annual additions to a Participant's account will exceed the
limitation imposed above in this Section, such additions shall be reduced to the
extent necessary to bring them within the limitation by making reductions as
follows: the Participant's contributions shall be returned to him to the extent
necessary and if that is not sufficient (or there were no such contributions),
the Participant's allocable share of Company contributions and forfeitures shall
be reduced.
If a Participant is also participating in any other qualified defined
contribution plans (as defined in ERISA) maintained by the Company, the annual
additions made on behalf of the Participant under any such other plans shall be
aggregated with the annual additions under this Plan and such aggregate amount
shall not exceed the limitation set forth above in this Section. If reduction
is required, it shall be accomplished as described in the preceding paragraph.
If a Participant is also participating in one or more qualified defined
benefit plans (as defined in ERISA) maintained by the Company, then for any
calendar year the sum of the defined benefit plan fraction and the defined
contribution plan fraction shall not exceed one (1.0). Such fractions are
defined in the following paragraph. If the sum of the fractions indicates that
a reduction in annual additions to a Participant's account is required, such
reduction shall be accomplished as provided above in this Section.
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- 36 -
The "defined benefit plan fraction" means a fraction in which (a) the
numerator is the total projected annual benefit of the Participant under all
defined benefit plans maintained by the Company and (b) the denominator is the
lesser of (i) 1.25 multiplied by the dollar limitation in effect under Section
415(b) (1) (A) of the Internal Revenue Code for such year or (ii) 1.4 multiplied
by 100% of the Participant's average compensation for his high three years.
Both numerator and denominator are determined as of the close of the pertinent
calendar year. The numerator is determined using the assumptions that the
Participant will continue employment until normal retirement age according to
the Plan and that his compensation and all other relevant factors used to
determine benefits remain constant as they are for the current year. The total
projected annual benefit used in the numerator shall be adjusted for the age at
which benefit payments commence in accordance with Section 415(b) (2) (C), (D),
and (E) of the Internal Revenue Code. For purposes of applying the limitation
test, annual benefits in forms other than a straight life annuity shall be
actuarially adjusted to the equivalent of such annuity.
The "defined contribution plan fraction" means a fraction in which (c) the
numerator is the sum of the annual additions to the Participant's account under
all defined contribution plans maintained by the Company as of the close of the
year, and (d) the denominator is the sum of the lesser of (i) or
<PAGE>
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(ii) (set forth below) determined for the year and for each prior year of
service with the Company where (i) is 1.25 multiplied by the dollar limitation
in effect under Section 415(c) (1) (A) of the Internal Revenue Code for such
year (disregarding subsection (c) (6) thereof) and (ii) is the product of 1.4
multiplied by 25% of the Participant's compensation for the year (as determined
in accordance with Section 415(c) (1) (B) of the Internal Revenue Code).
In computing the denominator for any year ending after December 31, 1982,
the Committee may elect to use the following special procedure as provided in
Section 415(e) (6) of the Internal Revenue Code. Such special procedure applies
to all Participants for all years ending before January 1, 1983. The special
procedure consists of multiplying the denominator as determined for the year
ending in 1982 in conformity with Section 415, as in effect during 1982, by a
"transition fraction." Such "transition fraction" means a fraction in which (e)
the numerator is the lesser of (i) $51,875 or (ii) 1.4 multiplied by 25% of the
Participant's compensation for the year ending in 1981, and (f) the denominator
of such "transition fraction" is the lesser of $41,500 or 25% of the
Participant's compensation for the year ending in 1981.
After the Committee determines that the Plan satisfies the requirements of
Section 415 of the Internal Revenue Code for the last year beginning before
January 1, 1983, the
<PAGE>
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Committee may utilize regulations when prescribed by the IRS under which the sum
of the defined benefit plan fraction and the defined contribution plan fraction,
as computed under Section 415(e) (1) of the Internal Revenue Code, as amended by
TEFRA, will not be allowed to exceed one (1.0) for the year.
Pursuant to such regulations, the Committee shall subtract the amount
authorized from the numerator of the defined contribution plan fraction (not to
exceed such numerator) in order to adjust such sum so that it will not exceed
one (1.0).
This Section is designed to apply the requirements of Section 415 of the
Internal Revenue Code as amended by TEFRA and set forth in implementing
regulations. This Section shall therefore be interpreted so as to achieve
compliance with Section 415 as presently constituted and with such regulations
as may be issued pursuant thereto.
6.4 TOP-HEAVY PROVISIONS. In the event this Plan becomes "top-heavy"
within the meaning of Section 416(g) of the Internal Revenue Code, the following
provisions with respect to vesting, minimum benefits, and limitations on
includable compensation shall take effect and remain in effect during such time
as the Plan is top-heavy:
MINIMUM BENEFITS: The Company shall contribute annually for each
Participant who is a non-key employee (within the meaning of Section 416(i)(1)
and (2) of the Internal Revenue Code) an amount which is not less than 3% of
such
<PAGE>
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Participant's compensation (within the meaning of Section 415 of the Internal
Revenue Code). Notwithstanding the foregoing sentence, the percentage referred
to therein shall not exceed the percentage at which contributions are made (or
required to be made) under the Plan for the key employee within the meaning of
Section 416 for whom such percentage is the highest for the year. Such highest
percentage shall be determined for each key employee by dividing the
contributions for such employee by that portion of his total compensation for
the year which is not more than the OBRA '93 Annual Compensation Limit. For
purposes of this paragraph, all defined contribution plans required to be
included in an "aggregation group" pursuant to Section 416(g)(a)(A)(i) of the
Internal Revenue Code shall be treated as one plan. This paragraph shall not
apply to any plan required to be included in an aggregation group if such plan
enables a defined benefit plan required to be included in such group to meet the
non-discrimination requirements of Section 401(a)(4) or the participation
requirements of Section 410 of the Internal Revenue Code. Any Company
contribution attributable to a salary reduction plan or similar arrangement
shall not be taken into account for purposes of Section 416(c)(2) of the
Internal Revenue Code.
ADJUSTMENT OF SECTION 415 LIMITATIONS: While this Plan is top-heavy the
factor of 1.0 shall be substituted for 1.25 in computing denominators of the
fractions pursuant to Section
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415(e) of the Internal Revenue Code. Such substitution shall not be made if the
Plan provides minimum contributions in the amount of 4% of each Participant's
compensation and if the Plan would not be top-heavy if 90% were substituted for
60% in the tests for top-heaviness set forth in Section 416(g). Further, the
substitution of 1.0 for 1.25 shall be suspended with respect to any Participant
so long as there are no Company contributions, forfeitures or voluntary
nondeductible contributions allocated to him. If the substitution applies, the
dollar amount in the numerator of the "transition fraction" pursuant to Section
415(e) (6) shall be changed from $51,875 to $41,500.
IN GENERAL: The Committee shall comply with regulations issued to prevent
inappropriate omissions or avoid duplication of minimum benefits or
contributions in instances where the Company has two or more plans subject to
consideration. For purposes of determining the amount of the account of any
Participant, such amount shall be increased by the aggregate distributions made
with respect to such Participant under the Plan during the 5-year period ending
on the determination date.
The term "determination date" means with respect to any Plan Year the last
day of the preceding Plan Year.
<PAGE>
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ARTICLE 7
BENEFITS
7.1 NORMAL DISTRIBUTION. A Participant shall be entitled to receive
without forfeiture the then undistributed account balances in the retirement
savings fund, the 401(k) fund and the voluntary fund adjusted to the last day of
the calendar quarter coinciding with or next following the date on which (a) he
retires on or after age 60, (b) he becomes permanently and totally disabled (as
determined by the Committee) or (c) his employment is terminated by the Company
unless such termination is for cause. The term "for cause" as used in this Plan
means any of the following:
(i) Conviction of a felony;
(ii) gross negligence in performance of duties; or
(iii) knowingly engaging in wrongful misconduct which results in
substantial damage to the Company.
7.2 DISTRIBUTION UPON DEATH. Upon the death of a Participant prior to
final distribution of any amount remaining to his credit, the full value of such
amount shall be distributed to the Participant's surviving spouse or if there is
no surviving spouse, to any beneficiary or beneficiaries designated in
accordance with Section 2.3. In the absence of a valid designation of
beneficiary, any benefits payable upon death shall be distributed by the Trustee
to the estate of the Participant.
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7.3 DISTRIBUTION UPON TERMINATION OF EMPLOYMENT. A Participant who
terminates employment for reasons other than (a) retirement at or after age 60,
(b) total and permanent disability, or (c) termination by the Company (unless
such termination is for cause) shall be entitled to receive without forfeiture
his entire account balance in his 401(k) fund and voluntary fund adjusted to the
last day of the calendar quarter coinciding with or next following the date on
which he terminates employment, plus all or a portion of his account balance in
the retirement savings fund determined as follows: 100% of the portion of his
account balance in the retirement savings fund which is attributable to his
account balance with respect to his earnings prior to January 1, 1982, plus a
percentage of the portion of the remainder of his account balance in the
retirement savings fund based upon his completed years of continuous service, as
defined in Section 7.8, in accordance with the following vesting schedule:
Years of Service Applicable Percentage
---------------- ---------------------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
7.4 ALLOCATION OF FORFEITURES. Any portion of a Participant's account
which the Participant is not entitled to receive in accordance with Section 7.3
shall be forfeited and
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shall reduce the amount of the Company contributions under Section 3.1.
7.5 PAYMENT OF BENEFITS. The benefits provided pursuant to Sections 7.1,
7.2, and 7.3 shall be distributed to each Participant or beneficiary in a lump
sum except in the case of Participants who retire after attaining age 60 and
after completing at least 15 years of continuous service or who are eligible for
a pension other than a deferred vested pension pursuant to the Consolidated
Pension Plan for Acme Salaried and Hourly Employees or would be so eligible if
they were Participants in that Plan. Such Participants as identified in the
foregoing clause may elect to receive distribution in a series of installments.
Except where limited by Section 401(a)(9) of the Internal Revenue Code in the
manner described below in this Section 7.5, such installments may be payable in
a series over a period not exceeding 30 years or in a combination of lump sum
and installments, subject in either case to the following conditions:
(a) Participants electing the installment form of payment must direct the
investment of their account to the Cash Equivalents Fund and will not
be permitted thereafter to change either this investment direction or
the period over which the installments are payable.
(b) Installment payments will be made on a quarterly basis with the
initial installment payments in an
<PAGE>
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amount of not less than $1,000; such payments will be adjusted after
the end of each calendar year to an amount equal to the value of the
account at the end of the year just completed divided by the number of
installment payments remaining and such adjusted amount shall remain
in effect until the next such adjustment.
(c) Notwithstanding the foregoing, a Participant receiving installment
payments may, at any time, elect to receive the entire remaining
balance of his account as a single lump sum payment.
(d) If a Participant receiving installment payments is reemployed by the
Company, such payments shall cease and, unless the Participant elects
the lump sum payment referred to in (c) above with respect to the
remaining balance of his account prior to the end of the calendar
quarter during which his date of reemployment falls, such remaining
balance shall become subject thereafter to the investment direction,
withdrawal restrictions and other provisions of the Plan.
Such benefits may be distributed in cash or other property, including, in the
case of the Company Stock Fund, stock or securities of the Company, as the
Participant shall direct. Commencement of payment or distribution of the
account balances to which a Participant or his beneficiary is entitled
<PAGE>
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shall be accomplished no later than the 60th day after the close of the Plan
Year in which the Participant retires, becomes permanently and totally disabled,
or terminates his employment, unless the Participant requests a later date in a
signed written statement submitted to the Committee. No election is permissible
which will cause a distribution with respect to the Participant in the event of
his death to be more than "incidental" in amount in relation to the amount the
Participant is expected to receive during his lifetime within the meaning of
regulations issued by the Internal Revenue Service. The Committee may make
distributions required hereunder through a paying agent appointed by the
Committee. To provide the paying agent with funds to make such distributions,
the Trustee shall make deposits from the trust assets to such checking account
or accounts in such bank or banks (including any bank acting as Trustee
hereunder) at such times and in such amounts as the Committee shall direct in
writing. Funds held in any such checking account shall be held in trust by the
paying agent as agent for the Trustee for the benefit of those entitled to
benefits hereunder. The Committee shall designate each person authorized to
draw checks or drafts on any such account and may, among other things, authorize
the use of the facsimile signature of such person on such checks or drafts. The
Trustee shall not be further accountable for amounts so deposited and shall not
have any duty, responsibility or liability to see to the
<PAGE>
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application made of such funds by the paying agent or by any person authorized
by the Committee to draw checks or drafts thereon, or to ascertain that the
application of such funds complies with the terms of this Agreement.
Notwithstanding any other provisions of this Plan, the entire interest of a
Participant shall be distributed in conformity to Section 401(a) (9) of the
Internal Revenue Code.
The entire interest of each Participant, if living, which is payable as a
lump sum shall be distributed not later than April 1 of the calendar year
following the calendar year in which the Participant attains age 70-1/2.
If such distribution is to be in periodic payments, distribution shall be
made in accordance with regulations so as to be completed in a period not
exceeding:
(i) the life of the Participant,
(ii) the lives of such Participant and a designated beneficiary,
(iii) a period certain not extending beyond the life expectancy of such
Participant, or
(iv) a period certain not extending beyond the life expectancies of
such Participant and a designated beneficiary.
If such periodic distribution has begun and the Participant dies before his
entire interest has been distributed to him, the remaining portion of such
interest shall be distributed at least as rapidly as under the method of
periodic distribution in force as of the date of the Participant's death.
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If the Participant's spouse is not the designated beneficiary, the method
of distribution selected must assure that at least 50% of the amount available
for distribution is paid within the life expectancy of the Participant.
If a Participant dies before periodic distribution of his interest has
begun, the entire interest shall be distributed within five years after the
death of such Participant, unless (x) or (y) below applies:
(x) If, however, any portion of the Participant's interest is payable to
(or for the benefit of) a designated beneficiary, such portion shall
be designated in substantially equal installments (in accordance with
regulations) over a period not to exceed the life of such designated
beneficiary (or over a period not extending beyond the life expectancy
of such beneficiary). Such distributions are required to begin no
later than one year after the date of the Participant's death or such
later date as regulations prescribe.
(y) If such designated beneficiary is the surviving spouse of the
Participant, distribution is not required to begin until the date on
which the Participant would have attained age 70-1/2. If the spouse
dies before distribution begins, subsequent distributions shall be
made as if the Participant had died on the date of the spouse's death.
<PAGE>
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For purposes of applying the provisions of said Section 401(a)(9), the life
expectancy of a Participant and the Participant's spouse (other than in the case
of a life annuity) may be redetermined, but not more frequently than annually.
In the case of any other designated beneficiary, such life expectancy shall be
calculated once at the time benefit payments commence and shall not be
recalculated (unless such calculation is discovered to be erroneous).
Any amount paid to a child of a Participant shall be treated as if it had
been paid to the Participant's surviving spouse if such amount will become
payable to such surviving spouse when such child reaches majority (or upon
another event permitted under regulations).
7.6 DIRECT ROLLOVERS.
(a) This Section 7.6 applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section 7.6, a distributee
may elect, at the time and in the manner prescribed by the Committee to have any
portion of an eligible rollover distributed paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
(b) An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that an eligible
rollover distribution does not include: any distribution that is one
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of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of 10 years or more; any
distribution to the extent such distribution is required under Section 401(a)(9)
of the Internal Revenue Code, and the portion of any distribution that is not
includable in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(c) An eligible retirement plan is an individual retirement account
described in Section 408(a) of the Internal Revenue Code, an individual
retirement annuity described in Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the distributee's rollover
distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(d) A distributee includes a Participant or former Participant. In
addition, the Participant's or former Participant's surviving spouse and the
Participant's or former Participant's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
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in Section 414(p) of the Internal Revenue Code, are distributees with regard to
the interest of the spouse or former spouse.
(e) A direct rollover is a payment by the Plan to the eligible retirement
plan specified by the distributee.
7.7 PAYMENT OF BENEFITS; INCOMPETENCY. In the event a Participant or
beneficiary is declared an incompetent and a conservator or other person legally
charged with his care is appointed, any benefits to which such Participant or
beneficiary is entitled shall be payable to such conservator or other person
legally charged with his care.
7.8 CONTINUOUS SERVICE.
(a) The term "continuous service" as used in this Plan means service prior
to retirement or termination of employment calculated from the Participant's
last hiring date in accordance with the provisions in this Section 7.8,
including service with Interlake, Inc. which was credited under a prior version
of this Plan and including service with Cold Metal Products Eastern, Inc., The
Stanley Works, and A. J. Gerrard and Company, and with any predecessor employer
designated by the Committee. After a break in continuous service, continuous
service shall be calculated from the date of reemployment following the last
unremoved break in continuous service.
(b) A Participant shall not be denied credit for time lost which does not
constitute a break in service.
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(c) Continuous service shall be broken if a Participant (l) quits, is
discharged, or his employment is terminated for any other reason; provided,
however, that any Participant transferred from Interlake, Inc. to Acme Steel
Company effective May 29, 1986, pursuant to the reorganization of Interlake,
Inc., or from Acme Steel Company to Acme Packaging Corporation effective
January 1, 1992, or to the Company effective June 1, 1992 pursuant to the
reorganization of Acme Steel Company, shall not be deemed to have terminated his
employment for purposes of this Plan; (2) is absent due to layoff which
continues for more than two years; or (3) is absent due to authorized leave
which continues for more than two years or leave granted by reason of non-
compensable disability which continues for more than two years or leave due to
compensable disability incurred during the course of employment which continues
for more than 30 days after final payment of statutory compensation for such
disability or after the end of the period used in calculating a lump sum
payment; provided, however, that continuous service shall not be broken by
absence of an employee who enters the U.S. armed forces or merchant marine for
active duty having reemployment rights under the law with which he complies and
is reemployed or if such break does not exceed five one-year periods of
severance from service. In the case of an employee who is absent from work for
maternity or paternity reasons, the 12 consecutive month period beginning on the
first anniversary of the first
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date of such absence shall not constitute a break in service. Absence for
maternity or paternity reasons means an absence by reason of (l) pregnancy of
the employee, (2) the birth of a child of the employee, (3) the placement of a
child with the employee in connection with the adoption of such child by the
employee, or (4) the employee's caring for such child for a period beginning
immediately following such birth or placement.
(d) In the event that a Participant incurs a break in service causing a
portion of his account to be forfeited in accordance with Section 7.4 and such
Participant is reemployed by the Company within one year after such break in
service, the Company shall repay the amount previously forfeited, which shall be
credited to his retirement savings account as of the end of the calendar quarter
in which he is reemployed.
(e) A Participant who incurs a break in service shall lose his service for
the purpose of Section 7.3. However, prior service will be restored when such
former Participant is reemployed if he is reemployed (a) within one year of his
break in service or (b) at any time if he had at least one year of continuous
service at the time his service was broken.
(f) Continuous service shall also include employment with a member of a
controlled group of corporations of which the Company is a member or an
unincorporated trade or business which is under common control with the Company
as determined in accordance with Section 414(c) of the Internal Revenue Code
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and regulations issued thereunder. For purposes of this Plan a "controlled
group of corporations" shall mean a controlled group of corporations as defined
in Section 1563(a) of the Internal Revenue Code, determined without regard to
Section 1563(a)(4) and (e)(3)(C).
ARTICLE 8
TRUSTEE
8.1 APPOINTMENT OF TRUSTEE. The trust assets shall be managed by a
corporate Trustee, and such successor corporate Trustees shall be appointed from
time to time by the Board of Directors of the Company.
8.2 ESTABLISHMENT AND ACCEPTANCE OF TRUST. The Trustee shall receive the
contributions of the Company and the Participants. All such contributions
together with the income therefrom shall constitute a single trust, which shall
be held, managed, invested and administered in trust pursuant to the terms of
this Agreement and which for investment, accounting and recordkeeping purposes
may be divided into separate funds as herein provided. The Trustee shall have
the power to receive and hold amounts transferred to it from other plans or
retirement accounts upon direction of the Committee and to establish such
accounts or subaccounts within the trust as the Trustee deems appropriate to
administer such transferred amounts.
8.3 INVESTMENT OF TRUST ASSETS. The Trustees shall invest and reinvest the
principal and income of the trust and
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keep the trust assets invested, without distinction between principal and
income, in such securities or in such property as shall be necessary to create
and maintain the investment funds in accordance with Section 4.1. In making
such investments, the Trustee shall not be restricted to securities or other
property of the character authorized or required by applicable law from time to
time for trust investments. Any investment in stocks, bonds, notes, or other
securities or property shall not be deemed an improper or imprudent investment
merely because the Trustee has individually participated in the issuance,
underwriting or original sale, whether as a member of a syndicate or in any
other way, or a part or all of the proceeds received by the issuer or seller are
to be used to satisfy any obligations of the issuer or seller to the Trustee
individually. In addition the Trustee in its own discretion may invest funds
awaiting permanent investment in the investment funds under Section 4.1 in
short-term obligations of the United States, trust and participation
certificates, beneficial interests in any trust, and such other short-term
obligations as the Trustee deems to be appropriate for such interim investment
purposes.
Further, the Trustee may in its own discretion also invest such funds in
deposits bearing a reasonable rate of interest in the banking department of the
Trustee or in any other bank or similar financial institution acting as a
fiduciary with respect to trust assets. The Trustee may in
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its own discretion also retain any portion of such funds in cash without
liability for interest and may deposit cash in any depositary, including the
banking department of the Trustee, or in any other banking or similar financial
institution acting as a fiduciary with respect to trust assets. Notwithstanding
any other provision of this Agreement, all or any part of the trust assets may
be transferred to and invested in any collective investment trust then qualified
for tax exemption under Section 401(a) of the Internal Revenue Code, or
amendment thereof, which is then maintained by the Trustee, by an agent or
Investment Agent of the Trustee, or by an investment manager appointed by the
Committee. The provisions of the document governing such collective investment
trust, as amended from time to time, shall govern any investment therein and are
hereby made a part of this Agreement.
8.4 VOTING OF SHARES. The Trustee shall have the voting rights with
respect to all securities having voting rights held in trust pursuant to this
Plan and, except as provided in Section 8.5 in the case of shares held by the
Trustee in the Company Stock Fund or as provided in Section 8.15 with respect to
securities held in an investment adviser account, the Trustee may in its
discretion vote such shares itself or by such proxies as it may select. The
Trustee shall be protected and indemnified in the manner provided in Section
8.15 against
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liability for exercise of voting rights pursuant to directions received from an
investment adviser.
8.5 VOTING OF COMPANY STOCK FUND SHARES. The Trustee shall vote, in person
or by proxy, shares held by the Trustee in the Company Stock Fund in such manner
as it may be directed by those Participants with an interest in such fund on the
last day of the most recent calendar quarter which is at least 60 days prior to
the annual or special shareholders meeting at which such shares will be voted.
The voting directions of each Participant shall be stated as a proportion of all
shares of stock in the Company Stock Fund held by or for the account of the
Trustee on the record date for such annual or special meeting of shareholders.
Each Participant's proportion shall be in the ratio which his account balance in
the Company Stock Fund, determined at the end of the applicable calendar quarter
in accordance with Section 6.2, bears to the sum of all such account balances so
determined. The Committee shall distribute appropriate forms, on which shall be
recorded the ratio described in the preceding sentence, to Participants
contemporaneously with the Company's solicitation of proxies for such
shareholders' meeting. The form shall include a statement to the effect that
voting instructions will not be effective unless received by the Trustee before
the close of business on the fifth business day next preceding the date of the
shareholders' meeting. The Trustee shall tabulate all voting instructions
which, with respect to any matter as to
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which a proxy vote is solicited, differ from the recommendations set forth in
the proxy statement furnished in connection with proxies solicited by the
Company's Board of Directors. The sum of the ratio so tabulated with respect to
each such matter shall be multiplied by the number of shares in the Company
Stock Fund on the record date, and the Trustee shall vote the number of shares
so determined in accordance with Participants' voting instructions; all other
shares shall be voted by the Trustee, in person or by proxy, in accordance with
the recommendations set forth in the proxy statement furnished in connection
with proxies solicited by the Company's Board of Directors.
In the event of a tender or exchange offer for shares of the Company common
stock, the Trustee shall tender shares held by the Trustee in the Company Stock
Fund in proportion to the voting directions of Participants with an interest in
such fund on the last day of the most recent calendar quarter which is at least
60 days prior to the date of the tender or exchange offer. The voting
directions of each Participant shall be stated as a proportion of all shares of
stock in the Company Stock Fund held by or for the account of the Trustee on the
last day on which shares can be tendered in response to the tender or exchange
offer. Each Participant's proportion shall be the ratio which his account
balance in the Company Stock Fund, determined at the end of the applicable
calendar quarter in accordance with Section 6.2, bears to the sum of
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all such account balances so determined. As soon as is practicable after
receipt of the tender or exchange offer, the Committee shall distribute
appropriate forms which indicate the ratio described above along with copies of
the tender or exchange offer or other materials which reasonably inform
Participants of the terms of the offer. The form shall include a statement to
the effect that a Participant's directions to tender the proportion of Company
stock in the fund attributable to his interest in the fund shall not be
effective unless received by the Trustee before the close of business on the
fifth business day preceding the last day on which shares can be tendered by the
Trustee in response to the offer. The Trustee shall tabulate all directions by
Participants to tender shares in the Company Stock Fund and shall determine the
ratio of the account balances in the Company Stock Fund as of the end of the
applicable quarter of all Participants giving such directions to the sum of the
account balances in the Company Stock Fund of all Participants. The ratio so
tabulated shall be multiplied by the number of shares in the Company Stock Fund
on the last day on which shares can be tendered and the Trustee shall tender the
number of shares so determined in response to the tender or exchange offer. All
other shares in the Company Stock Fund shall not be tendered. The Trustee shall
allocate the proceeds or other property received as a result of the tender to in
the Common Stock Fund when received by the Trustee.
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The directions of each Participant as to any tender or exchange offer shall be
held in strict confidence by the Trustee and shall not be disclosed by the
Trustee except pursuant to an order of a court having proper jurisdiction.
If any Company common stock is held in the Diversified Investment Fund, the
provisions of this Section 8.5 as to the voting or tender of Company common
stock shall apply to such Company common stock in the same manner as if it were
held in the Company Stock Fund.
8.6 POWERS OF TRUSTEE. In furtherance and not in limitation of its
investment authority, the Trustee shall have full power and authority to deal
with all or any part of the trust assets, including, without limitation: to
invest, reinvest, and change investments; to acquire shares of Company common
stock or securities convertible into Company common stock, on the open market or
from the Company; to sell for cash or on credit, convey, or convert, redeem or
exchange, all or any part of the trust assets; to borrow, and to pledge as
security for such borrowings all or any part of the trust assets; to enforce, by
suit or otherwise, or to waive its rights on behalf of the trust; to compromise,
adjust and settle any and all claims against or in favor of it or the trust; to
vote, or give proxies to vote, any stock or other security (except as provided
in Section 8.5); to waive notice of meetings; to oppose, participate in and
consent to the
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reorganization, merger, consolidation or readjustment of the finances of any
enterprise, to pay assessments and expenses in connection therewith, and to
deposit securities under deposit agreements; to hold investments unregistered,
or to register them in its name, as Trustee, or in the name of a nominee; to
make, execute, acknowledge and deliver any and all such instruments that it
shall deem necessary or appropriate to carry out the powers herein granted; and
generally to exercise any of the powers of an owner with respect to all or any
part of the trust assets. No person dealing with the Trustee shall be bound to
see to the application of any money or property paid or delivered to the Trustee
or to inquire into the validity or propriety of any transaction by it or on its
behalf.
8.7 VALUATION OF INVESTMENT FUNDS. As of the last day of each month the
Trustee shall determine the fair market value of the respective investment funds
and notify the Committee in writing of such fair market value as so determined.
The fair market value of each investment fund shall be the fair market value of
all securities and other assets then held in such funds, including income
accrued and unpaid at the close of the month. In determining fair market value
the Trustee may rely upon any information that it believes to be reliable
including reports of sales and of bid and ask prices of issues listed on an
exchange as disclosed in newspapers of general circulation or in generally
recognized financial services quotations with
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respect to unlisted issues as supplied by any reputable broker or investment
bank or from any other source that the Trustee believes to be reliable, or the
Trustee may make any such determination based upon its own analysis of such
records or reports of any company issuing such stock or other securities as are
made available to it. The Trustee shall be entitled to rely conclusively upon
information which it believes to be reliable, and the Trustee's determination
with respect to fair market value shall be final and conclusive upon all
persons.
8.8 PAYMENT FROM THE TRUST ASSETS. The Trustee, upon the written direction
of the Committee, shall make payments out of the trust assets to such persons,
including any paying agent provided for in Section 7.7, in such manner, in such
amounts, from such investment funds, and for such purposes as may be specified
in the written direction of the Committee and the Trustee shall have no duty to
question the propriety of any such direction. Upon any such payment being made,
the amount thereof shall no longer constitute a part of the trust assets. The
Trustee shall not be responsible in any way for the application of such payments
or for the adequacy of the trust assets to meet and discharge any and all
liabilities under the Plan.
8.9 EMPLOYMENT OF AGENTS AUTHORIZED. The Trustee shall have the power to
employ suitable agents, including but not limited to auditors, accountants, and
legal and other counsel, and to pay reasonable compensation for their services.
Such
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agents may be persons acting in a similar capacity for the Company. To the
extent permitted by ERISA, the opinion of any such agent shall be complete
authority and protection for any action taken or omitted by the Trustee acting
in good faith and in accordance with such opinion. The Trustee may employ
agents and delegate to them ministerial duties.
8.10 PAYMENT OF COMPENSATION, EXPENSES AND TAXES. The Trustee shall be
paid such reasonable compensation as shall from time to time be agreed upon
between the Company and the Trustee. The Trustee shall be reimbursed for all
reasonable expenses incurred by it in the administration of the Trust. Such
compensation and expenses shall be paid by the Company, but until paid shall
constitute a charge or lien upon the trust assets. All taxes of any and all
kinds whatsoever that may be levied or assessed under existing OR future laws
upon, or in respect of, the trust assets or the income therefrom, and investment
expenses, shall be paid from the trust assets.
8.11 FISCAL YEAR. The books of account and records of this Plan and trust
shall be kept on a calendar year basis.
8.12 ACCOUNTING. The Trustees shall keep accurate and detailed accounts of
all investments, receipts, disbursements, and other transactions hereunder. All
accounts, books and records relating to such transactions shall be open to
inspection and audit at all reasonable times by any person designated by the
Company.
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Within 120 days following the close of each fiscal year of the Trust and
within 30 days after the removal or resignation of a Trustee as provided in
Section 8.14 hereof, the Trustee shall file with the Company a written account
setting forth all investments, receipts, disbursements, and other transactions
effected by it during the period from the last such accounting, and a list of
the trust assets and their current value as of the end of the fiscal year. Such
account may be in the form of monthly or quarterly statements which taken
together reflect the matters set forth in the preceding sentence. Upon the
expiration of 90 days from the date of filing such annual or other account, the
Trustee shall be forever released and discharged from all liability and
accountability to anyone with respect to the propriety of its acts and
transactions shown in such account, except with respect to any such acts or
transactions as to which the Company shall file with the Trustee written
objections within such 90 day period. The approval of any accounting, act or
procedure by the Company shall fully discharge the Trustee with respect thereto.
Nothing herein contained, however, shall be deemed to preclude the Trustee from
having any accounting approved by a court of competent jurisdiction.
No person other than the Company may require an accounting or bring an
action against the Trustee with respect to the Trust created hereby or its
actions as Trustee.
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8.13 IMMUNITY OF TRUSTEE. (a) The Trustee shall not be liable for the
making, retention, or sale of any investment or reinvestment made by it, as
herein provided, nor for any loss to, or diminution of, the trust assets, unless
due to willful misconduct or lack of good faith.
(b) The Trustee shall be fully protected in relying upon a certification of
the members of the Committee with respect to any instruction, direction,
tabulation, or advice of the Committee and also in relying upon the
certification of an officer of the Company as to the membership of the Committee
as it then exists and in continuing to rely upon such certification until a
subsequent certification is filed with the Trustee. The Trustee shall be fully
protected in acting upon any instrument, certificate or paper believed by it to
be genuine and to be signed or presented by the proper person or persons, and
the Trustee shall be under no duty to make any investigation or inquiry as to
any statement contained in any such writing, but may accept the same as
conclusive evidence of the truth and accuracy of the statements therein
contained.
(c) The Trustee shall be held harmless and indemnified by the Company
against all claims and liabilities and all expenses reasonably incurred or
imposed upon it in connection with or resulting from any action, suit, or
proceeding, or settlement or compromise thereof approved by the Company, to
which the Trustee may be made a party by reason of any action or alleged action,
either of omission or commission, performed
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by it while acting as Trustee, except in relation to matters as to which
recovery shall be had against it by reason of a final adjudication in such
action, suit or proceeding finding the Trustee guilty of willful misconduct or
lack of good faith.
(d) The Trustee shall not be liable for any neglect, omission, or wrong-
doing of any agent where reasonable care has been exercised in his selection.
8.14 REMOVAL, RESIGNATION AND APPOINTMENT OF SUCCESSOR TRUSTEE. The
Trustee may be removed by the Company upon 30 days' notice in writing to the
Trustee and the Committee. The Trustee may resign as of the end of any calendar
year upon 30 days notice in writing to the Company and the Committee. Upon such
removal or resignation of a Trustee, the Company shall appoint a successor
trustee who shall have the same powers and duties as those conferred hereunder
upon the Trustee, and upon acceptance of such appointment by the successor
trustee, the Trustee shall assign, transfer and pay over to such successor
trustee, the assets then constituting the trust fund. The Trustee is
authorized, however, to reserve such reasonable sum of money as it may deem
advisable, to provide for any sums chargeable against the Trust for which it may
be liable, and for payment of its fees and expenses in connection with the
settlement of its accounts or otherwise, and any balance of such reserve
remaining after the payment of such fees and expenses shall be paid over to the
successor trustee.
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8.15 APPOINTMENT OF INVESTMENT ADVISER. Notwithstanding anything above to
the contrary, the Committee shall have the right from time to time to appoint
and remove an investment adviser and to direct the segregation of any part or
all of the trust assets into one or more accounts, to be known as "investment
adviser accounts" and if it does so, it shall appoint an individual, partnership
or corporation as investment adviser to manage the portion or portions of the
trust assets so segregated. An "investment adviser" is any fiduciary other than
a "named fiduciary" or a Trustee of this Plan and Trust who (a) has the power to
manage, acquire, or dispose of any portion of the Trust Fund; (b) is registered
as an investment adviser under the Investment Advisers Act of 1940, is a bank as
defined in that Act, or an insurance company qualified to perform the services
described herein; and (c) has acknowledged in writing that he is a fiduciary
with respect to the Plan. Written notice of any such appointment and/or
removal shall be given to the Trustee and the investment adviser so appointed.
As long as such investment adviser is acting, such investment adviser shall have
full authority to direct the Trustee with respect to the acquisition, retention,
management, disposition of the assets from time to time comprising the
investment adviser account being managed by such investment adviser and the
voting of the proxies thereon, and the Trustee shall have no duty or obligation
to review the assets from time to time comprising
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such investment adviser account, to make any recommendations with respect to the
investment, reinvestment or retention thereof, nor with respect to the voting of
proxies thereon, nor to determine whether any direction from such investment
adviser is proper or within the terms of the Plan.
The Trustee shall have no liability or responsibility to the Company or any
beneficiary of the Trust for acting without question on the direction of, or for
failure to act in the absence of directions from, the investment adviser for any
investment adviser account. The Trustee may assume that any investment adviser
account previously established and the appointment of any investment adviser for
that account continues in force until receipt of written notice to the contrary
from the Company. Pending receipt of directions from the investment adviser,
any cash received by the Trustee from time to time for any investment adviser
account may be retained by the Trustee, in its discretion, in cash, without any
liability for interest. In addition, the Company will indemnify the Trustee and
hold it harmless from any liability or expense in connection with or arising out
of (a) any action taken or omitted or any investment or disbursement of any part
of the trust assets made by the Trustee at the direction of the investment
adviser or any inaction with respect to the trust assets in the absence of
directions from the investment adviser, or (b) any action taken by the Trustee
pursuant to a notification of an order to purchase or sell securities issued
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by an investment adviser directly to a broker or dealer under a power of
attorney.
8.16 DIVISION OF RESPONSIBILITY. The various responsibilities assigned to
the Trustee and other fiduciaries (in the sense of the ERISA definition of
fiduciary) pursuant to this Agreement are intended to be allocated to each
fiduciary separately and no responsibility pursuant to this Agreement shall be
shared with another fiduciary hereunder unless the Agreement specifically
provides for sharing. The Trustee shall have the sole responsibility for the
management of assets held by it subject to this Agreement except as to assets
for which a third person investment adviser or investment agent is appointed.
The Company shall have the sole responsibility for making contributions to
provide benefits under the Agreement and shall have the sole authority to
appoint and remove the Trustee and members of the Committee and to amend or
terminate the Plan. The Committee shall have the sole authority for the
administration of this Plan. Each of the fiduciaries may rely upon any
direction, information, or action of another fiduciary furnished or taken
pursuant to this Plan as being proper without inquiry into the propriety
thereof. Each fiduciary shall be responsible for the proper exercise of its own
powers, duties, responsibilities and obligations under this Plan and, as
permitted by ERISA, shall not be responsible for any act or failure to act of
another fiduciary.
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ARTICLE 9
AMENDMENT, TRANSFER AND TERMINATION
9.1 AMENDMENT. The Company shall have the right at any time, and from time
to time, to amend, in whole or in part, any or all of the provisions of the Plan
and trust created by this Agreement. Any amendment shall be made in writing and
shall be approved by the Board of Director of the Company and signed by one or
more duly authorized officers of the Company. However, no such amendment shall
authorize or permit any part of the Trust Fund to be used for or diverted to
purposes other than for the exclusive benefit of the Participants or their
beneficiaries or permit any portion of the Trust Fund to revert to or become the
property of the Company. No amendment which affects the rights, duties or
responsibilities of the Trustee may be made without the Trustee's written
consent. Any such amendment shall become effective upon delivery to the Trustee
of a written instrument authorized by the Board of Directors and executed by the
Company and the Trustee.
The Company also shall have the right to make any amendment retroactively
which is necessary to qualify the Plan as amended for tax exemption or to bring
the Plan into conformity with the Internal Revenue Code and regulations
thereunder. If any amendment is made which affects the vesting schedule of
benefits under the Plan, or if such vesting schedule is changed by reason of the
operation of the "top-heavy" provisions in Section 6.4 hereof, each Participant
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who has five or more years of service may elect, within a reasonable period
after such an amendment or change, to have his nonforfeitable percentage
computed under the Plan without regard to such amendment. The period during
which the election may be made shall commence with the date the amendment is
adopted or the change becomes operative and shall end on the later of:
(1) 60 days after adoption of the amendment or operation of the change,
(2) 60 days after the amendment of the change is effective, or
(3) 60 days after the Participant is issued written notice of the
amendment or change by the Committee.
However, no amendment may be made to the Plan unless in compliance with
Section 411(d)(6) of the Internal Revenue Code, which generally prohibits any
decrease in a Participant's account balance or elimination of an optional form
of distribution.
Notwithstanding anything in this Section 9.1 to the contrary, those
portions of this Plan which constitute a formula that determines the amount,
price and timing of grants or awards of equity securities of the Company to an
Officer/Director Participant, may not be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code, ERISA
or the rules thereunder.
9.2 TRANSFER OF ASSETS. This Plan may not be merged or consolidated with,
nor its assets or liabilities transferred
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to another Plan unless provisions are made so that each Participant or
beneficiary would immediately thereafter be entitled to receive a benefit at
least as great as the benefit he would have been entitled to receive from this
Plan immediately beforehand, assuming for purposes of this test that this Plan
had terminated immediately before and the successor Plan had terminated
immediately after the transaction in question.
9.3 TERMINATION; DISCONTINUANCE OF CONTRIBUTIONS. The Company has the
right pursuant to resolution of its Board of Directors to suspend its
contribution hereunder for any period of time or to terminate this Plan by
delivering to the Trustee and the Committee written notice of such suspension of
contributions or termination.
In the event of termination of the Plan the Company shall direct the
Trustee with respect to providing for the expenses of the Plan and allocating
assets in the manner prescribed by ERISA. Upon the termination or partial
termination of the Plan or upon complete discontinuance of contributions
hereunder by the Company, the amounts credited to the Participants' accounts as
of such date shall be nonforfeitable.
9.4 DISCONTINUANCE OF PARTICIPATION. In the event an Officer/Director
participant ceases to make voluntary contributions to the Company Stock Fund,
such Officer/Director participant may not commence such contributions again in
the
<PAGE>
- 72 -
Company Stock Fund for at least six months after the date on which he ceased
making contributions.
ARTICLE 10
COVERAGE OF EMPLOYEES OF SUBSIDIARIES
AND NEWLY ACQUIRED FACILITIES
The Committee shall have the power to authorize participation in the Plan
by any subsidiary corporation affiliated with the Company within the meaning of
Section 1504 of the Internal Revenue Code. Subject to receipt of written
authorization and approval from the Committee, any such subsidiary by resolution
of its own Board of Directors may adopt the Plan and Trust hereby created. From
and after the date as of which such subsidiary shall adopt this Plan, it shall
be included within the meaning of the word "Company" for all purposes hereunder,
except that the provisions of Article 1 (pertaining to the appointment of the
Committee), Article 8 (pertaining to the Trustee), and Article 9 (pertaining to
amendments to or termination of the Plan and Trust), shall apply only to Acme
Metals Incorporated unless expressly provided therein to the contrary.
Certified copies of resolutions of the adopting subsidiary shall be filed with
the Committee and the Trustee.
The Committee shall also have the power to designate which groups of
employees of any subsidiary described in the preceding paragraph or any newly
acquired facility are to be considered "employees" within the meaning of Section
2.2 and
<PAGE>
- 73 -
to designate the periods of continuous service recognized under Sections 2.1 and
7.8 for employees of subsidiaries or newly acquired facilities who become
covered by this Plan.
Actions by the Committee pursuant to this Article 10 shall be taken on a
non-discriminatory basis and shall be consistent with the requirements of
Sections 401(a) and 410(b) of the Internal Revenue Code and regulations
thereunder.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 PARTICIPANTS' RIGHTS, ACQUITTANCE. Neither the establishment of the
Trust created hereby, nor any modification thereof, nor the creation of any fund
or account, nor the payment of any benefits, shall be construed as giving to any
Participant or other person any legal or equitable right against the Company, or
any officer or employee thereof or against the Committee or the Trustee, except
as herein provided. Under no circumstances shall the terms of employment of any
Participant be modified or in any way affected hereby.
11.2 SPENDTHRIFT CLAUSE. The benefits, payments, proceeds, claims or
privileges of any Participant or his beneficiaries hereunder shall not be
subject to attachment or garnishment or other legal process by any creditor of
any such Participant or beneficiary, nor shall any such Participant or
beneficiary have any right to alienate, anticipate, commute, pledge, encumber,
or assign any of the benefits or payments or
<PAGE>
- 74 -
proceeds which he may expect to receive, contingently or otherwise, under this
Agreement, PROVIDED, HOWEVER, that such restriction on alienation shall not
apply in the case of a qualified domestic relations order as defined in Section
414(p) of the Internal Revenue Code. A domestic relations order entered before
January 1, 1985 shall be treated as qualified if payment of benefits pursuant to
such order has commenced as of such date. Such an order may nevertheless be
treated as qualified, in the sole discretion of the Committee, if payments of
benefits have not commenced as of such date, even though such order does not
comply with Section 414(p) of the Internal Revenue Code.
11.3 DELEGATION OF AUTHORITY BY THE COMPANY. Whenever the Company under
the terms of this Agreement is permitted or required to do or perform any act it
shall be done or performed by an officer thereunto duly authorized by the Board
of Directors of the Company.
11.4 CONSTRUCTION OF AGREEMENT. This Agreement shall be construed
according to the laws of the State of Illinois, and all provisions hereof shall
be administered according to, and its validity shall be determined under, the
laws of such state to the extent such laws are not preempted by ERISA.
11.5 GENDER AND NUMBER; HEADINGS. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used
<PAGE>
- 75 -
herein in the singular form they shall be construed as though they were also
used in the plural form in all cases where they would so apply. Headings of
sections and subsections of the Plan are inserted for convenience of reference
and are not part of the Plan and are not to be considered in the construction
hereof.
11.6 LIMITATION OF LIABILITY; EXHAUSTION OF REMEDIES. Except for willful
misconduct or fraud and except as provided by ERISA, neither the Company, the
Committee, nor the Trustee shall be subject to any liability in connection with
this Agreement. No proceeding for the purpose of obtaining a determination by a
court with respect to any question affecting this Agreement or any rights
hereunder may be commenced unless such question has been presented in writing to
the Committee, accompanied or supplemented by such supporting information as the
Committee may reasonably require, and the Committee has had an opportunity to
render a decision and, if requested, to conduct a full and fair review of such
decision rendered, all in accordance with Section 1.5 hereof. The Committee
shall have sole discretion in the interpretation of the Plan and its decisions
shall be final and binding on all persons. On review, decisions of the
Committee shall be upheld unless determined to be arbitrary or capricious.
In any action or proceeding involving Plan assets or any property
constituting part or all thereof, or the
<PAGE>
- 76 -
administration thereof, employees or former employees of the Company or their
beneficiaries or any other person having or claiming to have an interest in this
trust shall not be necessary parties and shall not be entitled to any notice of
process.
Any final judgment which is not appealed or appealable that may be entered
in any such action or proceeding shall be binding and conclusive on the parties
hereto and all persons having or claiming to have any interest in this trust.
IN WITNESS WHEREOF, the Company and the Trustee have caused this Plan to be
executed by their duly authorized officers and their respective corporate seals
to be hereunto affixed on this 28th day of December, 1994, effective as of
November 1, 1994.
ACME METALS INCORPORATED
/s/ J. F. Williams
By
--------------------------------
Vice President-Chief
Financial Officer
ATTEST:
/s/ Roberta A. Glab
--------------------------
Assistant Secretary
HARRIS TRUST AND SAVINGS BANK
/s/ Katherine B. Allen
By
----------------------------------
ATTEST:
--------------------------
<PAGE>
EXHIBIT 10.44
CONSOLIDATED PENSION PLAN
FOR ACME SALARIED AND HOURLY EMPLOYEES
(As amended and restated effective November 1, 1994)
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Rule of Construction. . . . . . . . . . . . . . . . . . . . 4
Section 1.3 Provision of Benefits . . . . . . . . . . . . . . . . . . . 4
Section 1.4 Commencement of Accrual . . . . . . . . . . . . . . . . . . 4
Section 1.5 Non-Duplication of Benefits . . . . . . . . . . . . . . . . 5
ARTICLE II
Trust and Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 In General. . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Company Contributions . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Payment of Benefits . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 Fiduciary Responsibilities. . . . . . . . . . . . . . . . . 6
Section 3.2 Committee Membership. . . . . . . . . . . . . . . . . . . . 7
Section 3.3 Organization of Committee . . . . . . . . . . . . . . . . . 7
Section 3.4 Committee Actions . . . . . . . . . . . . . . . . . . . . . 8
Section 3.5 Evidence of Committee Action. . . . . . . . . . . . . . . . 8
Section 3.6 Powers of Committee . . . . . . . . . . . . . . . . . . . . 8
Section 3.7 No Personal Liability . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.1 Prior Benefits Preserved. . . . . . . . . . . . . . . . . . 10
Section 4.2 Amendment of Plan . . . . . . . . . . . . . . . . . . . . . 11
Section 4.3 Impossibility of Diversion. . . . . . . . . . . . . . . . . 12
Section 4.4 Plan Merger/Consolidation . . . . . . . . . . . . . . . . . 12
Section 4.5 Termination of Plan . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
CONSOLIDATED PENSION PLAN
FOR ACME SALARIED AND HOURLY EMPLOYEES
(As amended and restated effective November 1, 1994)
Since May 29, 1986 ACME STEEL COMPANY has maintained this Plan. Until
December 31, 1993, the Plan was called the "Consolidated Pension Plan for Acme
Steel Company Salaried Employees and Riverdale Plant Hourly Employees" and
consisted of Appendix A (salaried employees) and Appendix B (Riverdale plant
hourly employees). Effective December 31, 1993 the Acme Steel Company Chicago
Plant Hourly Employees' Pension Plan was merged into the Plan and comprises
Appendix C. From that date until July 31, 1994, the Plan was called
"Consolidated Pension Plan for Acme Steel Company Salaried and Hourly
Employees." Effective July 31, 1994, the Acme Metals Incorporated Salaried
Employees Past Service Pension Plan and the Acme Packaging Corporation Salaried
Employees Past Service Pension Plan were merged into Appendix A of this Plan,
which became the "Consolidated Pension Plan for Acme Salaried and Hourly
Employees." The Plan is hereby restated effective November 1, 1994 and
incorporates all amendments that became effective on or before that date.
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Whenever used herein:
(a) "Appendix A" means the appendix to this Plan which provides pension
coverage hereunder for the salaried employees of the Company as defined therein.
<PAGE>
2
(b) "Appendix B" means the appendix to this Plan which provides pension
coverage hereunder for the hourly employees on the payroll of the Riverdale
Plant of the Company as defined therein.
(c) "Appendix C" means the appendix to this Plan which provides pension
coverage hereunder for the hourly employees on the payroll of the Chicago Plant
of the Company as defined therein.
(d) "Board of Directors" means the Board of Directors of the Company.
(e) "Committee" means the administrative committee appointed to administer
this Plan as provided in Article III hereof.
(f) "Company" means Acme Steel Company, a Delaware corporation.
(g) "Merger" means the combination of the pension plans comprising this
Plan into a single consolidated pension plan within the meaning of the Internal
Revenue Code and regulations issued thereunder.
(h) "ERISA" means the Employee Retirement Income Security Act of 1974,
enacted by the Congress of the United States and signed by the President as
Public Law 93-406, as amended from time to time, including in particular as
amended by the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA")
(Public Law 97-248); the Deficit Reduction
<PAGE>
3
Act of 1984 ('DEFRA') (Public Law 98-369); the Retirement Equity Act of 1984
('REA') (Public Law 98-397); the Tax Reform Act of 1986 ('TRA') (Public Law 99-
514).
(i) "Fiduciary" includes the Company, the Trustee, and the Committee; use
of the term "Fiduciary" is intended to be consistent with the definition of
"Fiduciary" in ERISA and in regulations and official governmental
interpretations issued pursuant to ERISA.
(j) "Participant" means any Employee of the Company (as defined in either
Appendix A, B or C) who qualifies for pension coverage under this Plan in
accordance with either Appendix A, B or C to this Plan.
(k) "Plan" means this pension plan, entitled the Consolidated Pension Plan
for Acme Salaried and Hourly Employees, effective November 1, 1994, as amended
and restated.
(l) "Plan Year" means the calendar year, January 1, through December 31 of
each year.
(m) "Trust" means the trust agreement pursuant to which the assets
utilized to finance the benefits payable under this Plan are held and
administered.
(n) "Trustee" means the corporation or individuals or any successor
trustee duly appointed by the Board of Directors to administer the Trust Fund in
accordance with the Trust.
<PAGE>
4
(o) "Trust Fund" means all property held by the Trustee which the Company
deposits pursuant to the Trust to finance the payment of benefits and defray
administrative expenses and includes the income earned on such property.
SECTION 1.2 RULE OF CONSTRUCTION. Wherever consistent with the terms of
this Plan, the provisions of Appendix A, B or C to this Plan shall be given
effect; but where such provisions conflict with any provision of this Plan, such
provision shall prevail in construing the text of this Plan and the texts of the
Appendices together.
SECTION 1.3 PROVISION OF BENEFITS. Subject to the Company's obtaining
and/or retaining approval by the authorized District Director of Internal
Revenue of the Trust or Trusts hereto fore or hereafter established to provide
the benefits set forth in this Plan as exempt under the applicable provisions of
the Internal Revenue Code or successors to them, the benefits set forth in
Appendix A, B and C hereto shall be provided by the Company or caused to be
provided by the Company for the Participants.
SECTION 1.4 COMMENCEMENT OF ACCRUAL. Commencing November 30, 1983, as
determined in accordance with Appendix A or Appendix B, and commencing
January 1, 1994, as determined in accordance with Appendix C, affected employees
of the Company stopped accruing benefits under the pension plans merged herein
and began coverage and benefit accrual
<PAGE>
5
under this Plan as provided in the Appendix hereto applicable to them.
SECTION 1.5 NON-DUPLICATION OF BENEFITS. Notwithstanding any other
provision of the Plan, a Participant who is entitled to pension benefits under
any other pension plan maintained by any member of a controlled group of
corporations of which the Company is a member shall not be entitled to pension
benefits under this Plan based on whole or in part on the same period of
employment. In the event of such duplication of benefits, appropriate
adjustments shall be made by the Committee to the benefits payable under this
Plan. No pension shall be paid for any Participant under more than one Section
of the Plan based on the same period of employment.
ARTICLE II
TRUST AND FINANCING
SECTION 2.1 IN GENERAL. For the purpose of supplying the benefits herein
provided, the Company is utilizing the Trust referred to in 1.1(m).
Contributions of the Company are deposited in the Trust Fund administered by the
Trustee referred to in 1.1(n). Such Trustee and any successor trustee appointed
by the Board of Directors shall have such rights, powers and duties as set forth
in the Trust, as amended from time to time.
<PAGE>
6
SECTION 2.2 COMPANY CONTRIBUTIONS. Contributions of the Company to the
Trust Fund shall be made in such amounts and at such times as the Company shall
determine. The Company intends to contribute annually at least such amounts as
are actuarially determined to be required to fund the Plan as prescribed by
Section 412 of the Internal Revenue Code, as amended from time to time. Such
contributions shall be made in accordance with a funding policy and method to be
established by the Company consistent with the objectives of the Plan and in
conformity with ERISA.
SECTION 2.3 PAYMENT OF BENEFITS. All of the assets of the Trust Fund are
available to pay benefits to eligible Participants and their beneficiaries
irrespective of whether such eligibility is determined in accordance with
Appendix A, B or C hereto. This Plan assumed the liabilities of and obtained
and pooled the assets of the pension plans merged to form this Plan.
ARTICLE III
ADMINISTRATION
SECTION 3.1 FIDUCIARY RESPONSIBILITIES. The various responsibilities
assigned by the Company to fiduciaries pursuant to this Plan are allocated to
each fiduciary separately and no responsibility pursuant to this Plan or ERISA
shall be shared with another fiduciary unless the Plan specifically provides for
sharing. The Company shall have the sole responsibility for making
contributions to provide
<PAGE>
7
benefits under the Plan and shall have the sole authority to appoint and remove
the Trustee and the members of the Committee and to amend or terminate the Plan.
The Committee shall have the sole responsibility for the administration of this
Plan. The Trustee shall have the sole responsibility for the administration of
the Trust and the management of assets held in the Trust Fund in accordance with
the terms of the Trust except as to assets for which another investment manager
is appointed. Each fiduciary may rely upon any direction, information or action
of another fiduciary furnished or taken pursuant to this Plan as being proper
without further inquiry. Each fiduciary shall be responsible for the proper
exercise of its own powers, duties, responsibilities and obligations under this
Plan and shall not be responsible for any act or failure to act of another
fiduciary.
SECTION 3.2 COMMITTEE MEMBERSHIP. This Plan shall be administered by an
administrative committee consisting of not less than six individuals and not
more than 10 who shall be appointed by the Board of Directors and shall serve at
the pleasure of the Board of Directors. A member of the Committee may resign by
delivering his written resignation to the Company and to the Committee.
SECTION 3.3 ORGANIZATION OF COMMITTEE. The members of the Committee shall
elect one of their number as chairman and shall appoint a secretary who may, but
need not, be a
<PAGE>
8
member of the Committee. The Committee is authorized to employ such clerical,
medical, actuarial, accounting, legal and other help and services as it deems
necessary or desirable in connection with the administration of the Plan. To
the extent permitted by ERISA, the Committee shall be entitled to rely upon and
shall be fully protected in any action taken by it in good faith in relying
upon, any opinions or reports furnished to it by any qualified specialist.
SECTION 3.4 COMMITTEE ACTIONS. All actions of the Committee concurred in
by not less than four of its members shall be the action of the Committee. All
such actions may be taken at meetings or by written consent without a meeting.
Within the powers conferred by the Plan and the Trust, all decisions and actions
of the Committee as to the facts in any case and the meaning or intent of any
provision of the Plan and the Trust, or of any rules or regulations of the
Committee, and their application to any case shall be final and conclusive.
SECTION 3.5 EVIDENCE OF COMMITTEE ACTION. The Committee may authorize any
one or more of its members to execute any document on behalf of the Committee or
to certify in writing over his or their signature any decision or action of the
Committee. Any signature or certification pursuant to such authority shall have
the same force and
<PAGE>
9
effect as if executed or signed by all of the members of the Committee.
SECTION 3.6 POWERS OF COMMITTEE. Subject to the action of the Board of
Directors, the Committee shall exercise the following powers and duties, acting
always in a uniform and nondiscriminatory manner consistent with the provisions
of ERISA:
(a) to grant such benefits as the Plan provides for and advise the Trustee
with respect to such benefits and direct the Trustee to pay such
benefits from the Trust Fund;
(b) to adopt and enforce such rules and regulations as it shall deem
necessary or proper for the efficient administration of the Plan and
the Trust;
(c) to interpret the terms and provisions of the Plan and the Trust;
(d) to decide all questions which may arise in connection with the
operation of the Plan and the Trust subject to the right of review
provided in the Appendices (A, B, and C) and the Committee shall
follow the procedures for review when such procedures are properly
invoked by Participants or their authorized representatives;
<PAGE>
10
(e) to remedy any ambiguities, inequities, inconsistencies, or omissions
in the Plan or Trust by general rule or specific decision;
(f) to cause to be maintained all records and accounts necessary for the
proper administration of the Plan and Trust;
(g) to cause to be prepared and delivered periodic reports no less often
than annually to the Board of Directors and all reports, notices, and
filings required by ERISA; and
(h) to exercise such other powers consistent with the terms of the Plan,
the Trust, and ERISA as the Committee deems necessary to carry out the
purposes and provisions of the Plan and the Trust.
SECTION 3.7 NO PERSONAL LIABILITY. Members of the Committee shall serve
without compensation from the Plan or Trust. All reasonable expenses of the
Committee properly and actually incurred shall be paid by the Company. Members
or authorized representatives shall not be required individually to furnish
bonds or other security for faithful performance of their duties. The Company
shall furnish bonding as required by ERISA. To the extent permitted by ERISA,
no member of the Committee or authorized representative of the Committee shall
be subject to individual liability for any act done, allowed to be done, or
omitted to be done in good faith by him or by any other
<PAGE>
11
member or members of the Committee, by any authorized representative of the
Committee or by any other fiduciary. Members of the Committee and authorized
representatives of the Committee shall be subject to liability only for their
own individual malfeasance.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1 PRIOR BENEFITS PRESERVED. Notwithstanding any other provision
in this Plan, the monthly amount of any pension payable under this Plan shall in
no event be less than the amount of any retirement benefit to which an employee
of the Company would have been entitled on October 31, 1994, by virtue of prior
credited service under this Plan or any applicable predecessor plans.
SECTION 4.2 AMENDMENT OF PLAN. The Board of Directors may amend this Plan
at any time and from time to time by an instrument in writing executed by
officers of the Company duly authorized to execute such instrument, PROVIDED,
HOWEVER, that:
(a) no amendment may be made prior to the satisfaction of all expenses of
the Plan and expenses of the Trust attributable to this Plan and of
all liabilities with respect to Participants, co-pensioners, or
surviving spouses which could permit any part of the Trust Fund
attributable to this Plan to be used for or diverted to any
<PAGE>
12
purpose other than for the exclusive benefit of such persons and the
payment of administration expenses of the Plan and of the Trust
attributable to this Plan; and
(b) no amendment shall deprive any person of nonforfeitable rights to
benefits accrued to the date of such amendment.
If any amendment is made which affects the vesting schedule of benefits
under the Plan, each Participant who has 5 or more years of service may elect,
within a reasonable period after the adoption of the amendment, to have his
nonforfeitable percentage computed under the Plan without regard to such
amendment. The period during which the election may be made shall commence with
the date the amendment is adopted and shall end on the later of:
(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment is effective, or;
(3) 60 days after the Participant is issued written notice of the
amendment by the Committee.
SECTION 4.3 IMPOSSIBILITY OF DIVERSION. It shall be impossible at any
time prior to the satisfaction of all liabilities with respect to Participants,
their co-pensioners, and surviving spouses for any part of the corpus or income
of the Trust Fund within the taxable year or thereafter to be used for, or
diverted to, purposes other than for the exclusive benefit of such persons. All
<PAGE>
13
forfeitures arising under the Plan shall be applied to reduce the Company's
contributions. No such forfeitures shall be applied to increase the benefits
any Participant or other person would otherwise receive under the Plan.
SECTION 4.4 PLAN MERGER/CONSOLIDATION. This Plan may not be merged or
consolidated with, nor its assets or liabilities transferred to another plan
unless provisions are made so that each Participant would immediately thereafter
be entitled to receive a benefit at least as great as the benefit he would have
been entitled to receive from this Plan immediately before the transaction,
assuming for purposes of this test that this Plan had terminated immediately
before and the successor plan had terminated immediately after such transaction.
SECTION 4.5 TERMINATION OF PLAN. This Plan is intended to be permanent,
but the Company may terminate this Plan at any time and cause the Trust Fund to
be liquidated as provided in ERISA or other applicable law. Upon the
termination or partial termination of the Plan, the rights of all affected
Participants to benefits accrued to the date of such termination or partial
termination, to the extent funded as of such date, are nonforfeitable. In the
event of termination of the Plan, the Committee shall direct the Trustee to make
provision for the expenses of the Plan and the Trust Fund and then to allocate
the assets in the Trust Fund (to the extent such assets are sufficient) in
<PAGE>
14
accordance with Section 4044 of ERISA. Any assets remaining after the provision
for expenses and allocations required by ERISA shall be returned to the Company.
Executed this 28th day of December, 1994, to be effective as of November 1,
1994.
ACME STEEL COMPANY
/s/ J. F. Williams
By:
-----------------------------
Vice President-Chief
Financial Officer
ATTEST:
/s/ Roberta A. Glab
-----------------------
Assistant Secretary
<PAGE>
APPENDIX A TO THE
CONSOLIDATED PENSION PLAN
FOR ACME SALARIED AND HOURLY EMPLOYEES
(As Amended and Restated Effective July 31, 1994)
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Retirement Effective Date. . . . . . . . . . . . . . . . . 8
ARTICLE II
Eligibility for Pension. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.1 Normal Retirement. . . . . . . . . . . . . . . . . . . . . 8
Section 2.2 62/15 Retirement . . . . . . . . . . . . . . . . . . . . . 8
Section 2.3 30-Year Retirement . . . . . . . . . . . . . . . . . . . . 9
Section 2.4 60/15 Retirement . . . . . . . . . . . . . . . . . . . . . 9
Section 2.5 Permanent Incapacity Retirement. . . . . . . . . . . . . . 9
Section 2.6 70/80 Retirement . . . . . . . . . . . . . . . . . . . . . 10
Section 2.7 Deferred Vested Pension. . . . . . . . . . . . . . . . . . 11
Section 2.8 Limitation . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
Amount of Pension. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.1 Types of Pension Payments. . . . . . . . . . . . . . . . . 12
Section 3.2 Special Payment. . . . . . . . . . . . . . . . . . . . . . 12
Section 3.3 Regular Pension. . . . . . . . . . . . . . . . . . . . . . 14
Section 3.4 Increased Pension - Permanent
Incapacity, 70/80, and Special
Supplemental Amount. . . . . . . . . . . . . . . . . . . . 25
Section 3.5 Addition to Pension. . . . . . . . . . . . . . . . . . . . 30
Section 3.6 Regular Pension - Part-Time
Participants . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.7 Deduction for Public Pension . . . . . . . . . . . . . . . 31
Section 3.8 Deduction for Other Pension. . . . . . . . . . . . . . . . 33
Section 3.9 Deduction for Severance Allowance. . . . . . . . . . . . . 35
Section 3.10 Deduction for Disability Payments . . . . . . . . . . . . 37
Section 3.11 Pension Application . . . . . . . . . . . . . . . . . . . 38
Section 3.12 Commencement and Termination of
Regular Pension . . . . . . . . . . . . . . . . . . . . . 39
Section 3.13 Lump Sum Payment. . . . . . . . . . . . . . . . . . . . . 43
Section 3.14 Pre-Pension Spouse Coverage . . . . . . . . . . . . . . . 44
Section 3.15 Automatic 50% Spouse Option . . . . . . . . . . . . . . . 48
Section 3.16 Co-Pensioner Options. . . . . . . . . . . . . . . . . . . 54
<PAGE>
- ii -
PAGE
----
ARTICLE IV
Surviving Spouse's Benefit . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 4.1 Eligibility. . . . . . . . . . . . . . . . . . . . . . . . 61
Section 4.2 Amount of Benefit. . . . . . . . . . . . . . . . . . . . . 62
Section 4.3 Calculation of Benefit Amount. . . . . . . . . . . . . . . 62
Section 4.4 Commencement and Termination of
Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 4.5 Determination of Status as Surviving
Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 4.6 Notification of Benefit Eligibility. . . . . . . . . . . . 66
Section 4.7 Surviving Spouse of Part-Time
Participant. . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE V
Determination of Continuous Service. . . . . . . . . . . . . . . . . . . . . 67
Section 5.1 Calculation. . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE VI
Reemployment After Attainment of Pension Eligibility . . . . . . . . . . . . 71
Section 6.1 Applicability of Other Sections. . . . . . . . . . . . . . 71
Section 6.2 Effect on Pension. . . . . . . . . . . . . . . . . . . . . 72
Section 6.3 Continuous Service of Reemployed
Participant. . . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.4 Special Pension Eligibility after
Reemployment . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.5 Special Rules as to Amount of
Pension. . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 6.6 Amount of Reinstated 70/80 Pension . . . . . . . . . . . . 74
ARTICLE VII
Claims Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 7.1 Disputes as to Eligibility or Amount . . . . . . . . . . . 74
Section 7.2 Disputes as to Permanent Incapacity. . . . . . . . . . . . 76
ARTICLE VIII
Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.1 1983 Merger. . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.2 1986 Reorganization. . . . . . . . . . . . . . . . . . . . 78
Section 8.3 January 1992 Spin-Off. . . . . . . . . . . . . . . . . . . 79
Section 8.4 June 1992 Spin-Off . . . . . . . . . . . . . . . . . . . . 79
Section 8.5 Asset Transfers. . . . . . . . . . . . . . . . . . . . . . 80
<PAGE>
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PAGE
----
ARTICLE IX
Merger of Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.2 Single Plan. . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.3 Benefit Accruals . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE X
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.1 Non-Alienation Provision. . . . . . . . . . . . . . . . . 82
Section 10.2 Deduction from Pension. . . . . . . . . . . . . . . . . . 83
Section 10.3 Non-Vested Pension Rights . . . . . . . . . . . . . . . . 83
Section 10.4 Unreduced Pension . . . . . . . . . . . . . . . . . . . . 83
Section 10.5 Exclusive Benefit . . . . . . . . . . . . . . . . . . . . 84
Section 10.6 Limitations on Benefits . . . . . . . . . . . . . . . . . 84
Section 10.7 Top-Heavy Monitoring. . . . . . . . . . . . . . . . . . . 88
Section 10.8 Top-Heavy Rules . . . . . . . . . . . . . . . . . . . . . 90
Section 10.9 Model Amendment . . . . . . . . . . . . . . . . . . . . . 93
ARTICLE XI
Transition Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 11.1 Eligibility For Transition Pension. . . . . . . . . . . . 94
Section 11.2 Amount of Transition Pension. . . . . . . . . . . . . . . 94
ARTICLE XII
Hospital-Medical Benefits
For Eligible Pensioners and Surviving Spouses. . . . . . . . . . . . . . . . 96
Section 12.1 Allocation of Funds to Separate
Account . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 12.2 Method of Allocation. . . . . . . . . . . . . . . . . . . 97
Section 12.3 Benefits Payable. . . . . . . . . . . . . . . . . . . . . 98
Section 12.4 Definitions . . . . . . . . . . . . . . . . . . . . . . . 98
Section 12.5 Additional Requirements . . . . . . . . . . . . . . . . . 100
ARTICLE XIII
Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 13.1 In General. . . . . . . . . . . . . . . . . . . . . . . . 103
Section 13.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . 103
<PAGE>
APPENDIX A TO THE
CONSOLIDATED PENSION PLAN
FOR ACME SALARIED AND HOURLY EMPLOYEES
(AS AMENDED AND RESTATED EFFECTIVE JULY 31, 1994)
-------------------------------------------------
Appendix A to the Consolidated Pension Plan for Acme Steel Company Salaried
Employees and Riverdale Plant Hourly Employees (the "Plan") was restated as of
May 29, 1986. The Acme Packaging Corporation Salaried Employees Past Service
Pension Plan was established as of January 1, 1992 and covered employees
transferred as of that date from Acme Steel Company to Acme Packaging
Corporation who were then participants in Appendix A. The Acme Metals
Incorporated Salaried Employees Past Service Pension Plan was established as of
June 1, 1992 and covered employees transferred as of that date from Acme Steel
Company to Acme Metals Incorporated who were then participants in Appendix A.
Accrued benefits and funds attributable to each set of employees were
transferred to the respective plans.
In order to satisfy the minimum participation requirements of Section
401(a)(26) of the Internal Revenue Code, the Acme Packaging Corporation Salaried
Employees Past Service Pension Plan is merged into the Plan as of July 31, 1994,
retroactive to January 1, 1992 for purposes of Section 401(a)(26) of the Code,
and the Acme Metals Incorporated Salaried Employees Past Service Pension Plan is
merged into the Plan as of July 31, 1994, retroactive to June 1, 1992 for
purposes of Section 401(a)(26), both merged plans continuing as part of Appendix
A. The assets of the merged plans are transferred to the Plan and the
liabilities of the merged
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plans are assumed by the Plan as of July 31, 1994. Effective July 31, 1994 the
name of the Plan is changed to the Consolidated Pension Plan for Acme Salaried
and Hourly Employees. From and after July 31, 1994 the terms of this Appendix A
shall govern the eligibility and benefits of participants in the merged plans
who are employed by Acme Packaging Corporation and Acme Metals Incorporated on
July 31, 1994, as well as participants employed by Acme Steel Company who
continue to be covered under Appendix A.
ARTICLE I
INTRODUCTION
SECTION 1.1 DEFINITIONS. Wherever used herein:
(a) "Employee" means any salaried employee, including any officer or
employee who is also a director, who accrued benefits under this plan prior to
January 1, 1982 and who is or has been regularly employed by the Company on or
after May 29, 1986. "Employee" shall not include persons employed by any
business organization which is merged into or consolidated with the Company or
whose assets are acquired by the Company at any time after January 1, 1982, or
any person who is or was first hired by the Company or a Related Company as a
salaried employee on or after January 1, 1982. "Employee" includes any
individual who at any time participated in the Acme Packaging Corporation
Salaried Employees' Past Service Pension Plan (hereinafter "Packaging
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Plan") or the Acme Metals Incorporated Salaried Employees' Past Service Pension
Plan (hereinafter "Metals Plan").
(b) "Participant" means any Employee, including any former Employee who is
receiving or is entitled to receive pension benefits under this Plan, and any
former salaried employee of the Company's Chicago, Illinois, Riverdale, Illinois
or Pittsburg, California operations who is no longer accruing continuous
service, but who had an accrued benefit under this Plan as of July 31, 1994.
(c) "Continuous Service" means continuous service determined pursuant to
Article V.
(d) "Public Pension" means a benefit in the nature of an annuity, pension
or payment of similar kind under Title II of the Social Security Act or its
successor (hereinafter "Social Security Act"), or under a provision of law
hereafter established, if as to such benefit the Company has contributed
directly or indirectly by tax or otherwise with respect to employment of the
participant.
(e) "Eligible for Public Pension" is used with respect to a participant
when he is eligible to receive, or would upon application be eligible to
receive, a Public Pension, or would be so eligible except for an offset or
suspension imposed by law.
(f) "Earnings" for the purpose of (g) below, means salary and wages paid
by the Company or a Related Company to a participant, including (1) regular,
incentive, overtime or
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bonus pay; (2) any qualified elective contributions on behalf of the participant
to the Acme Metals Incorporated Salaried Employees Retirement Savings Plan; and
(3) effective January 1, 1988, payment of awards in the form of common stock or
other securities of Acme Metals Incorporated under the Company's Executive
Incentive Compensation Plan or any other incentive compensation plan established
by the Company. The term "Earnings" excludes: (1) that portion of any salary
or wages otherwise includable in "Earnings" for the purpose of (g) below which
is in excess of $200,000 ($150,000 effective January 1, 1994 pursuant to Exhibit
B) during a Plan Year, provided that this limitation shall be adjusted in
accordance with regulations of the Secretary of the Treasury issued in
connection with maximum limitations on benefits payable under defined benefit
plans; (2) that portion of all types of salary, wages, and other payments which
is attributable to and designated by the Company as a Cost-of-Living Adjustment;
(3) any income received in the form of supplemental sickness and accident
benefits under a Company program and any payments (or debits) representing
unused credits (or debits) under any program of flexible benefits utilizing an
individual spending account for each participant; (4) severance payments and
premium reimbursements; and (5) all other non-payroll income items, including:
(i) contributions by the Company to any public or private employee pension or
profit-sharing plan made on behalf of a participant except for qualified
elective
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contributions under the Acme Metals Incorporated Salaried Employees Retirement
Savings Plan; (ii) any gain received by or imputed to a participant in respect
of a stock option (or the receipt or sale of stock acquired pursuant thereto) or
stock appreciation rights or under any compensation plan unless such plan
provides for payment in cash only, provided, however, that payments of awards in
the form of common stock or other securities of Acme Metals Incorporated under
the Company's Executive Incentive Compensation Plan or any incentive savings
plan established by the Company shall not be excluded from the definition of
"Earnings" of a participant; and (iii) any income attributable to stock received
under a stock awards or restricted stock purchase plan. "Cost-of-Living
Adjustment" means any portion of wages, salary, or other payments made to a
participant resulting from a formal plan or program which provides for automatic
periodic pay increases in amount determined by (x) reference to changes in a
specified price index and/or (y) reference to any guaranteed minimum increase
specified by such plan or program, provided, however, that any such increases
which have been included in wages, base salary or other payments prior to
November 1, 1978 shall be treated as earnings.
(g) "Average Monthly Earnings" means the participant's total earnings from
the Company or Related Companies for the five highest 12 calendar month period
out of the last 10 consecutive 12 calendar month periods immediately preceding
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the first month in which retirement becomes effective divided by 60, provided,
however, that in the case of a participant who was on leave of absence during
such 5 periods of 12 calendar months, sickness and accident benefits received
during such period of leave of absence shall not be included as earnings and the
period during such leave in which such benefits were paid shall be deducted from
the divisor of 60.
(h) "Board of Directors" means the Board of Directors of the Company.
(i) "Committee" means the committee appointed to administer this Plan as
provided in Article III of the Consolidated Plan.
(j) "Company" means Acme Steel Company (Interlake, Inc. prior to May 29,
1986), a Delaware corporation, and effective September 1, 1994 where the context
requires, Acme Metals Incorporated and Acme Packaging Corporation; "Related
Company" or "Related Companies" means Acme Packaging Corporation for the period
January 1, 1992 to July 31, 1994, and/or Acme Metals Incorporated for the period
June 1, 1992 to July 31, 1994.
(k) "ERISA" means the Employee Retirement Income Security Act of 1974,
enacted by the Congress of the United States and signed by the President as
Public Law 93-406, as amended from time to time; "TEFRA" means the Tax Equity
and Fiscal Responsibility Act of 1982, enacted by the Congress of the United
States and signed by the President as Public Law 97-
<PAGE>
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248, as amended from time to time; "DEFRA" means the Deficit Reduction Act of
1984, enacted by the Congress of the United States and signed by the President
as Public Law 98-369, as amended from time to time; "REA" means the Retirement
Equity Act of 1984, enacted by the Congress of the United States and signed by
the President as Public Law 98-397, as amended from time to time; "TRA" means
the Tax Reform Act of 1986, enacted by the Congress of the United States and
signed by the President as Public Law 99-514, as amended from time to time.
(l) "Fiduciary" includes the Company, the Trustee, and the Committee; use
of the term "Fiduciary" is intended to be consistent with the definition of
"Fiduciary" in ERISA and in regulations and official governmental
interpretations issued pursuant to ERISA.
(m) "Plan" as used within the four corners of this Appendix A, shall mean
Appendix A to the Consolidated Pension Plan for Acme Salaried and Hourly
Employees.
(n) Words in the masculine gender set forth in this Plan shall include, and
be read as being in, the feminine gender also.
(o) Words in the singular set forth in this Plan shall be read and
construed as being in the plural wherever the context requires.
(p) "Section" means the subdivisions of this Appendix A to the Consolidated
Plan unless the context clearly indicates otherwise.
<PAGE>
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SECTION 1.2 RETIREMENT EFFECTIVE DATE. For purposes of this Plan,
retirement shall be considered to occur:
(a) in the case of a participant who applies for pension prior to a break
in continuous service, on the date he specifies as the date he wishes to retire,
which shall be a date on or after the latest of:
(1) the date of his request for retirement,
(2) the date of his attainment of eligibility for a pension under this
Plan, or
(3) the last day for which he earned salary or wages from the Company, but
not later than the last day of his continuous service:
(b) in the case of a participant who applies for pension after a break in
continuous service, on the first day of the month immediately following the
month in which the last day of his continuous service falls.
ARTICLE II
ELIGIBILITY FOR PENSION
SECTION 2.1 NORMAL RETIREMENT. Any participant who shall have attained
the age of 65 years shall be eligible to retire on or after January 1, 1982 and
shall upon his retirement (hereinafter "normal retirement") be eligible for a
normal retirement pension.
SECTION 2.2 62/15 RETIREMENT. Any participant who has not attained the
age of 65 years and who shall have had at least 15 years of continuous service
and shall have attained
<PAGE>
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the age of 62 years shall be eligible to retire on or after January 1, 1982 and
shall upon his retirement (hereinafter "62/15 retirement") be eligible for a
62/15 retirement pension.
SECTION 2.3 30-YEAR RETIREMENT. Any participant who has not attained the
age of 62 years and who shall have had at least 30 years of continuous service
shall be eligible to retire on or after January 1, 1982 and shall upon his
retirement (hereinafter "30-year retirement") be eligible for a 30 year
retirement pension.
SECTION 2.4 60/15 RETIREMENT. Any participant who shall have had at
least 15 but less than 30 years of continuous service and shall have attained
the age of 60 years but not the age of 62 years shall be eligible to retire on
or after January 1, 1982 and shall upon his retirement (hereinafter "60/15
retirement") be eligible for a 60/15 retirement pension.
SECTION 2.5 PERMANENT INCAPACITY RETIREMENT. Any participant who shall
have had at least 15 years of continuous service and who shall have become
permanently incapacitated shall be eligible to retire on or after January 1,
1982 and shall upon his retirement (hereinafter "permanent incapacity
retirement") be eligible for a permanent incapacity retirement pension. A
participant shall be considered to be permanently incapacitated (as "permanently
incapacitated" is used herein) only if (a) he has been totally disabled by
bodily injury or
<PAGE>
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disease so as to be prevented thereby from engaging in any suitable occupation
or employment for which he is qualified by virtue of experience and ability and
(b) in the opinion of a qualified physician designated by the Company, it will
be permanent and continuous during the remainder of his life. Incapacity
contracted, suffered or incurred while the participant was engaged in, or
resulted from his having engaged in a criminal enterprise, or resulting from
future service in the armed forces and which prevents him from returning to
employment with the Company and for which he receives a military pension, shall
not entitle a participant to a pension under this paragraph. Such pension shall
be discontinued if such participant shall cease to be permanently incapacitated
prior to age 62. The permanency of incapacity may be verified by medical
examination prior to age 62 at any reasonable time.
SECTION 2.6 70/80 RETIREMENT. Any participant who has not attained the
age of 65 years and who shall have had at least 15 years of continuous service
and (i) shall have attained the age of 55 years and whose combined age and years
of continuous service shall equal 70 or more, or (ii) whose combined age and
years of continuous service shall equal 80 or more, and
(a) whose continuous service is broken by reason of a permanent shutdown
of a plant, department or
<PAGE>
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subdivision thereof or by reason of a layoff or physical disability,
or
(b) whose continuous service is not broken and who is absent from work by
reason of a physical disability or a layoff and whose return to active
employment is declared unlikely by the Company, or
(c) whose position has been eliminated as the result of an internal
personnel reorganization and there exists no other suitable employment
for such participant elsewhere in the Company, shall be eligible to
retire on or after January 1, 1982 and shall upon his retirement
(hereinafter "70/80 retirement") be eligible for a 70/80 retirement
pension.
SECTION 2.7 DEFERRED VESTED PENSION. Any participant not eligible to
receive a pension under any other provision of this Article II whose continuous
service is broken on or after January 1, 1989 for any reason and who, at the
time of such break in continuous service, shall have had at least 5 years of
continuous service shall be eligible for a deferred vested pension (hereinafter
"deferred vested pension"), subject to the provisions relating to application
set forth in Section 3.11(c) and commencement of pension set forth in Sections
3.12(d) and (e). At the time of such break in continuous service, the Company
shall furnish such a participant an
<PAGE>
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appropriate written notice of the eligibility requirements and his relevant
employment data.
SECTION 2.8 LIMITATION. Notwithstanding anything to the contrary
contained in this Plan, no pension (including any special payment) shall be
payable for any month with respect to which the participant claims and is
eligible for salary continuance or sickness and accident benefits for Employees
provided under a Company program or similar benefits provided under law.
ARTICLE III
AMOUNT OF PENSION
SECTION 3.1 TYPES OF PENSION PAYMENTS. A pension granted pursuant to
Section 2 shall consist of:
(a) a special initial pension amount (hereinafter "special payment")
except in the case of any participant eligible for a pension for
permanent incapacity retirement or a deferred vested pension (or as
provided in Section 6.5), and
(b) a regular pension amount (hereinafter "regular pension"), payable in
monthly installments except as otherwise provided in Section 3.13,
provided in accordance with the provisions of this Article III.
SECTION 3.2 SPECIAL PAYMENT. (a) The amount of special payment for a
participant who was entitled to receive a vacation in the year of retirement or
who would have been entitled to receive a vacation in the year of retirement
<PAGE>
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except for such retirement shall be an amount equivalent to 13 weeks of salary
reduced by all vacation pay the participant received in such year and, for any
participant who retires on or after January 1, 1992, reduced further in
accordance with (d) below.
(b) The amount of special payment for a participant not in any event
entitled to vacation in the year of retirement shall be an amount equivalent to
13 weeks of salary reduced by the amount of vacation pay the participant
received for the most recent year in which he was entitled to vacation and, for
any participant who retires on or after January 1, 1992, reduced further in
accordance with (d) below.
(c) The special payment shall be payable for the first 3 full calendar
months following the month in which retirement occurs. Such special payment
shall be made in a lump sum within the first full calendar month in which
retirement occurs, or within the month following the month in which application
for pension is made, whichever is later.
(d) For a participant who retires on or after January 1, 1992, the special
payment calculated in accordance with (a) and (b) above shall be reduced by an
amount which is the product of (1) and (2) below where (1) is an amount
equivalent to the participant's salary for the number of weeks equal to thirteen
less the number of weeks of vacation to which he would be entitled at the time
of retirement solely on the basis of years of service, and (2) is a fraction in
which the
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numerator is the years of continuous service acquired by the participant between
December 31, 1991 and his retirement and the denominator is the participant's
total years of continuous service at retirement.
SECTION 3.3 REGULAR PENSION. (a) The regular pension shall be a monthly
amount determined in accordance with (b), (c), (d) and (e) below, adjusted in
accordance with the provisions of Sections 3.4, 3.5, 3.7, 3.8, 3.9, 3.10 and
3.14(d), if applicable, plus an additional transition pension, if any,
determined in accordance with Article XI.
(b) Subject to (c) and (d) below, the monthly amount used in the
calculation of any regular pension payable to a participant prior to his
attaining age 65, except as otherwise provided in Section 3.4, shall be
determined in accordance with (l) or (2) below, whichever is higher, and the
monthly amount used in the calculation of any regular pension payable to a
participant after he has attained age 65, except as otherwise provided in
Section 3.4, shall be determined in accordance with (1), (2) or (3) below,
whichever is highest:
(1) an amount (hereinafter "1.1-1.2 percent pension") equal to the
participant's average monthly earnings multiplied by:
(i) for a participant with more than 30 years of continuous service
as of December 31, 1981, 33% plus a percent determined by
multiplying 1.2% by the number of years (and fractions
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thereof calculated to the nearest month) of his continuous
service as of December 31, 1981, in excess of 30 years, or
(ii) for a participant with 30 or less years of continuous service, as
of December 31, 1981, 1.1% multiplied by the number of yea
fractions thereof calculated to the nearest month) of his
continuous service as of December 31, 1981, or
(2) an amount (hereinafter "minimum pension") equal to
(i) for a participant with more than 30 years of continuous service
as of December 31, 1981, $487.50 plus an amount determined by
multiplying $18.50 by the number of years (and fractions thereof
calculated to the nearest month) of his continuous service as of
December 31, 1981, in excess of 30 years, or
(ii) for a participant with more than 15 but not more than 30 years of
continuous service as of December 31, 1981, $232.50 plus an
amount determined by multiplying $17.00 by the number of years
(and fractions thereof calculated to the nearest month) of his
continuous service as of December 31, 1981 in excess of 15 years,
or
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(iii) for a participant with not more than 15 years of continuous
service as of December 31, 1981, an amount determined by
multiplying $15.50 by the number of years (and fractions thereof
calculated to the nearest month) of his continuous service as of
December 31, 1981.
(3) an amount (hereinafter "1.5 percent pension") equal to the
participant's average monthly earnings multiplied by 1.5% times his
years of continuous service as of December 31, 1981 (and fractions
thereof calculated to the nearest month) reduced by 65% of the
participant's Public Pension for which he would be eligible at age 65
under the applicable regulations in effect at the time of such
retirement and assuming, in the case of a participant who retires
prior to age 65, that he did not receive any income after retirement
which would be treated as wages for purposes of the Social Security
Act, provided that, for purposes of calculating the reduction in 1.5
percent pension, the participant's Public Pension shall be reduced
according to a fraction in which the numerator is the participant's
number of years (and fractions thereof calculated to the nearest
month) of continuous service as of December 31, 1981 and the
denominator is the participant's total number of
<PAGE>
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years (and fractions thereof calculated to the nearest month) of
continuous service at retirement.
(c) Notwithstanding anything to the contrary in (b) above, in the case of
a participant who has attained the age of 62 or who becomes eligible for
Social Security disability benefit payments (irrespective of age),
(1) the monthly amount used in the calculation of any regular pension may
not exceed an amount which when added to the monthly amount of Social
Security will result in a sum that is greater than the product of:
(i) the participant's gross average monthly earnings, multiplied by
(ii) the sum of 70% plus 1% for each full year of continuous service
as of December 31, 1981 in excess of 15;
(2) PROVIDED, HOWEVER, that a monthly amount affected by the limitation in
(l) above shall not be less than an amount equal to $12 for each of
the first 15 years of continuous service as of December 31, 1981 (and
fractions thereof calculated to the nearest month) plus $13 for each
year of continuous service as of December 31, 1981 between 15 and 30
(and fractions thereof calculated to the nearest month) and $14 for
each year of continuous service as of December 31, 1981 in excess of
30 (and
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fractions thereof calculated to the nearest month); and
(3) PROVIDED, FURTHER, that there shall be no adjustment in the monthly
amount determined under (1) above because of future
increases in the participant's monthly amount of Social
Security which may become effective subsequent to the date
of his retirement or because of the additional amounts
provided pursuant to Section 3.4 or 3.5.
(4) The phrase "monthly amount of Social Security" shall be:
(i) in the case of a participant who retires prior to age 62, the
Social Security Act Old-Age Benefit to which the participant
shall become entitled at age 62 based on the law in effect at the
time of his retirement and on the assumption that he will receive
no creditable compensation for Social Security purposes after the
date of his retirement and utilizing either an estimate of the
participant's compensation prior to retirement or a statement
obtained by the participant from the Social Security
Administration as prescribed in Section 3.7, or
(ii) in the case of a participant who retires on or after the
attainment of age 62, the Social
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Security Act Old-Age Benefit to which he is or would be entitled
at the date of his retirement based on the law in effect at such
date.
For purposes of calculating the limitation in this paragraph (c)
applicable to benefits based on continuous service as of December 31,
1981, the monthly amount of a participant's Social Security shall be
reduced according to a fraction in which the numerator is the
participant's number of years (and fractions thereof calculated to the
nearest month) of continuous service as of December 31, 1981 and the
denominator is the participant's total number of years (and fractions
thereof calculated to the nearest month) of continuous service at
retirement.
(5) For the purpose of (l) above, "gross average monthly earnings" means
the sum of the participant's gross earnings (W-2 earnings) for the 2
calendar years of the last 10 calendar years prior to retirement in
which the participant's earnings were the highest divided by 24. The
calendar year in which the participant retires shall be included as
one of the last 10 calendar years prior to retirement if retirement
occurs after June 30 of such year and the participant
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worked in such year; however, the earnings for any such participant
shall be adjusted to be fairly representative of the amount he would
have earned had he worked for the entire year by dividing the
participant's W-2 earnings for such year by the number of full months
elapsed in such year to the date of his retirement and assuming the
participant would have earned the same amount for each remaining full
month of such year, subject to adjustment for any scheduled general
increase in salary rates becoming effective after retirement.
(6) In the case of a participant who retires on other than a deferred
vested pension and who did not work for one or more full calendar
months due solely to layoff or disability during either or both of the
last two calendar years in which he worked prior to retirement, his W-
2 earnings shall be increased to the level of his base salary for each
such calendar month in which he did not receive full salary.
(d) (1) For a 60/15 retirement the monthly amount determined in (b) and (c)
above is applicable only if regular pension commences after attainment
of age 62, and for any deferred vested pension the monthly amount
determined in (b) and (c) above is applicable only if
<PAGE>
- 21 -
(i) with respect to a participant who incurs a break in continuous
service after attaining age 40 and completing at least 15 years
of continuous service, regular pension commences after the
participant has attained
(ii) with respect to a participant who incurs a break in continuous
service either prior to attaining age 40, or after attaining age
40 and before completing at least 15 years of continuous service,
regular pension commences after the participant has attained age
65.
(2) A participant may in his application for 60/15 pension elect an
immediate pension, and a participant who incurs a break in continuous
service after attaining age 40 and completing at least 15 years of
continuous service who is entitled to a deferred vested pension may,
pursuant to Section 3.11(c), make application for commencement of
pension payments after attainment of age 60 and prior to attainment of
age 62, and in either such case the monthly amount calculated under
(b) and (c) above shall be reduced to the actuarial equivalent thereof
in accordance with the following table. Since the 1.5 percent pension
does not apply to this type of retirement prior to attainment of age
65, if the 1.5 percent pension produces the highest pension on
recalculation at attainment of age 65, then the same percentage will
be applied to the net amount of such pension after reduction of 65% of
Public Pension and after
<PAGE>
- 22 -
reduction of such Public Pension, if applicable, according to the
fraction set forth in paragraph (b)(3) above.
Age at Start
OF PENSION PERCENTAGE
60.......................................... 83.82%
60-1/12..................................... 84.46%
60-2/12..................................... 85.09%
60-3/12..................................... 85.73%
60-4/12..................................... 86.36%
60-5/12..................................... 87.00%
60-6/12..................................... 87.64%
60-7/12..................................... 88.27%
60-8/12..................................... 88.91%
60-9/12..................................... 89.54%
60-10/12.................................... 90.18%
60-11/12.................................... 90.81%
61.......................................... 91.45%
61-1/12..................................... 92.16%
61-2/12..................................... 92.87%
61-3/12..................................... 93.59%
61-4/12..................................... 94.30%
61-5/12..................................... 95.01%
61-6/12..................................... 95.72%
61-7/12..................................... 96.44%
61-8/12..................................... 97.15%
61-9/12..................................... 97.86%
61-10/12.................................... 98.57%
61-11/12.................................... 99.29%
62..........................................100.00%
The above percentages shall be applied on the basis of the participant's age to
the nearest month.
(3) A participant who incurs a break in continuous service either prior to
attaining age 40, or after attaining age 40 and before completing at least
15 years of continuous service, and who is entitled to a deferred vested
pension may, pursuant to Section 3.11(c), make application for commencement
of pension payments after attainment of age 60 and prior to attainment of
age 65, and in such case
<PAGE>
- 23 -
the monthly amount calculated under (b) and (c) above shall be reduced to
the actuarial equivalent thereof in accordance with the following table.
Since the 1.5 percent pension does not apply to this type of retirement
prior to attainment of age 65, if the 1.5 percent pension provides the
highest pension on recalculation at attainment of age 65, then the same
percentage will be applied to the net amount of such pension after
reduction of 65% of Public Pension and after reduction of such Public
Pension, if applicable, according to the fraction set forth in paragraph
(b)(3) above.
Age at Start
OF PENSION PERCENTAGE
60........................................................ 63.10%
60-1/12................................................... 63.58%
60-2/12................................................... 64.06%
60-3/12................................................... 64.54%
60-4/12................................................... 65.02%
60-5/12................................................... 65.50%
60-6/12................................................... 65.98%
60-7/12................................................... 66.45%
60-8/12................................................... 66.93%
60-9/12................................................... 67.41%
60-10/12.................................................. 67.89%
60-11/12.................................................. 68.37%
61........................................................ 68.85%
61-1/12................................................... 69.38%
61-2/12................................................... 69.92%
61-3/12................................................... 70.45%
61-4/12................................................... 70.99%
61-5/12................................................... 71.53%
61-6/12................................................... 72.06%
61-7/12................................................... 72.60%
61-8/12................................................... 73.14%
61-9/12................................................... 73.67%
61-10/12.................................................. 74.21%
61-11/12.................................................. 74.75%
62........................................................ 75.28%
62-1/12................................................... 75.89%
<PAGE>
- 24 -
Age at Start
OF PENSION PERCENTAGE
62-2/12................................................... 76.49%
62-3/12................................................... 77.10%
62-4/12................................................... 77.10%
62-5/12................................................... 78.30%
62-6/12................................................... 78.91%
62-7/12................................................... 79.51%
62-8/12................................................... 80.11%
62-9/12................................................... 80.71%
62-10/12.................................................. 81.32%
62-11/12.................................................. 81.93%
63........................................................ 82.53%
63-1/12................................................... 83.21%
63-2/12................................................... 83.89%
63-3/12................................................... 84.58%
63-4/12................................................... 85.26%
63-5/12................................................... 85.94%
63-6/12................................................... 86.62%
63-7/12................................................... 87.30%
63-8/12................................................... 87.99%
63-9/12................................................... 88.67%
63-10/12.................................................. 89.35%
63-11/12.................................................. 90.03%
64........................................................ 90.72%
64-1/12................................................... 91.49%
64-2/12................................................... 92.26%
64-3/12................................................... 93.04%
64-4/12................................................... 93.81%
64-5/12................................................... 94.58%
64-6/12................................................... 95.36%
64-7/12................................................... 96.13%
64-8/12................................................... 96.91%
64-9/12................................................... 97.68%
64-10/12.................................................. 98.45%
64-11/12.................................................. 99.23%
65........................................................ 100.00%
The above percentages shall be applied on the basis of the participant's age to
the nearest month.
(e) Any offsets for Public Pension under Section 3.7, Other Pension under
Section 3.8, Severance Allowance under Section 3.9, and Disability Payments
under Section 3.10 shall, for purposes of calculating the regular pension
under this Article III, be determined according to a
<PAGE>
- 25 -
fraction in which the numerator is the participant's number of years (and
fractions thereof calculated to the nearest month) of continuous service as
of December 31, 1981 and the denominator is the participant's total number
of years (and fractions thereof calculated to the nearest month) of
continuous service.
SECTION 3.4 INCREASED PENSION - PERMANENT INCAPACITY,
70/80, AND SPECIAL SUPPLEMENTAL AMOUNT. (a) In the determination of the amount
of any regular pension for permanent incapacity or 70/80 retirement, the monthly
amount shall be determined in accordance with Sections 3.3(b) and
(c), PROVIDED, HOWEVER, that:
(1) The monthly pension calculation under Section 3.3(b) sub-clause (3)
will be applicable immediately upon retirement without the 65% Public
Pension reduction for any month for which the participant is not
eligible for Public Pension; and
(2) The monthly pension calculation under Section 3.3(b) sub-clauses (1)
and (2) shall be increased by $400.00 but such increase shall not
apply for any month for which the participant is eligible for Public
Pension.
(b) Any participant who, as of September 30, 1985, is accruing continuous
service and who on such date will either (i) have completed 35 or more
years of credited service or (ii) have attained the age of 60 and will have
<PAGE>
- 26 -
accrued 30 years of credited service shall be eligible to receive a special
supplemental amount ("supplement") in addition to his regular pension in
accordance with this Section 3.4(b).
(1) The supplement shall consist of $400.00 per month commencing with the
first month for which an eligible participant receives regular pension
(the fourth month of retirement).
(2) The supplement shall be paid for a period of twelve months or until
the participant attains age 62, whichever is the longer period. No
supplement shall be paid for any month following the month in which
the participant dies.
(3) To receive the supplement, an eligible participant shall retire on
December 31, 1985. An eligible participant must apply for retirement
with the supplement between September 1, 1985 and September 30, 1985.
(4) The retirement date of any participant applying for the supplement may
be postponed by the Company, but not to a date later than March 31,
1986. Such postponement shall be limited to cases in which the
participant's retirement would create an operational difficulty for
the Company or if a suitable replacement for the participant is
required and cannot be obtained immediately. The
<PAGE>
- 27 -
Company and participant may agree upon an earlier retirement date, but
not any date earlier than September 30, 1985.
(c) Any participant who is an employee of the Corporate Office (assigned to the
Corporate Office and whose compensation is debited against the Corporate
Office payroll account) and who, as of June 30, 1986, is accruing
continuous service and on such date (i) will have attained the age of 55
and will have completed 15 years of credited service (including service
after January 1, 1982) or (ii) whose age and credited service (including
service after January 1, 1982) when combined shall total 80, shall be
eligible to receive a special supplemental amount ("supplement") in
addition to 1.1-1.2 percent pension or minimum pension, all in accordance
with this Section 3.4(c). However, if 1.5 percent pension without the
supplement and without offset for Social Security produces a higher
pension, such pension shall be paid in lieu of the 1.1-1.2 percent pension
or minimum pension, all in accordance with this Section 3.4(c). Except as
modified in this Section 3.4(c), the pension for such retirement shall be
paid as if it had been for 70/80 retirement.
(1) The supplement shall consist of $800.00 per month commencing with the
first month for which an
<PAGE>
- 28 -
eligible participant receives regular pension (the fourth month of
retirement).
(2) The supplement shall be paid for a period of eighteen months or until
the participant attains age 62, whichever is the longer period; the
1.5 percent pension, without the supplement and the offset for Social
Security, shall be paid for the same period, after which the offset
for Social Security shall be imposed. No supplement nor 1.5 percent
pension without offset for Social Security shall be paid for any month
following the month in which the participant dies.
(3) To receive the supplement or the 1.5 percent pension without Social
Security offset, an eligible participant shall retire on June 30,
1986. An eligible participant must apply for retirement under this
Section 3.4(c) between May 31, 1986, and July 1, 1986.
(4) The retirement date of any participant applying for retirement under
this Section 3.4(c) may be postponed by the Company, but not to a date
later-than December 31, 1986. Such postponement shall be limited to
cases in which the participant's retirement would create an
operational difficulty for the Company or if a suitable replacement
for
<PAGE>
- 29 -
the participant is required and cannot be obtained immediately.
In the event of the reorganization of Interlake, Inc. only
participants who are transferred to The Interlake Corporation Salaried
Employees Past Service Pension Plan effective as of the effective date
of the reorganization shall continue to be eligible for benefits under
this Section 3.4(c).
(d) By letter dated August 3, 1992, the Company and Related Companies offered
early retirement to Eligible Employees. Eligible Employees who accept the
offer of early retirement on or before August 31, 1992 received an Early
Retirement Pension Supplement. For purposes of this paragraph (d),
"Eligible Employee" means (i) an Employee of the Company or Related
Company, (ii) who is a participant in the Plan or the Packaging Plan or the
Metals Plan, (c) who is not an officer or a sales or marketing employee,
and (d) who as of December 31, 1992 would have at least 55 years of age and
at least 15 years of continuous service, or would have years of age and
years of continuous service which total at least 80. For purposes of this
paragraph, "Early Retirement Pension Supplement" means an additional
pension payment of $500.00 per month, starting in the fourth month after
retirement and continuing for the longer of 12 months or the date of
Eligibility for Public Pension, but in no
<PAGE>
- 30 -
event continuing beyond the life of the recipient. Payments made pursuant
to the Company's offer of early retirement are not Severance Allowances for
purposes of Section 3.9(a) of the Plan.
SECTION 3.5 ADDITION TO PENSION. Commencing January 1, 1982, or the first
month thereafter for which regular pension is payable, there shall be paid to
each participant retiring on or after January 1, 1982 an additional amount equal
to five percent (5%) of the monthly amount determined in accordance with
Sections 3.3(b) (1) and (3), subject to the provisions of Sections 3.3(c) and
(d).
SECTION 3.6 REGULAR PENSION - PART-TIME PARTICIPANTS. Notwithstanding
anything to the contrary contained in the foregoing provisions of this Article
III, the amount of the minimum pension otherwise applicable (including the
minimum Pension provided in Section 3.3(c)) shall, in the case of any
participant the Company finds to be a part-time participant, be reduced to an
amount equitably related to the hours worked by him in comparison to hours
worked by other participants. The Company shall not find a participant to be
a part-time participant unless for the mutual convenience of the participant
and the Company he was, in the 120 months preceding his retirement, regularly
scheduled to work fewer hours than the straight-time schedule of full-time
participants.
<PAGE>
- 31 -
SECTION 3.7 DEDUCTION FOR PUBLIC PENSION. Deductions for Public Pension
shall be made from the amount determined in accordance with Sections 3.3(b), (c)
and (d) and Section 3.5 in accordance with the following provisions:
(a) Except as provided in Sections 3.3(b)(3) and 3.3(c), regular pension
shall not be affected by Public Pension related to the Social Security
Act;
(b) Compensation in periods prior to separation from service or prior to
retirement shall be determined as required by Revenue Ruling 84-45.
(1) Such compensation shall be estimated by applying either of the
following salary scales, projected backwards, to the
participant's pre-retirement, pre-separation, and pre-hire
compensation history at separation from service or retirement:
(i) the actual change in the average wages from year to year as
determined by the Security Administration, or
(ii) a level percentage per year that is not less than six
percent per annum.
(2) Each employee shall be given clear written notice of his right to
supply his actual salary history and the financial consequences
of failing to supply such history. Such notice shall be included
each time a summary
<PAGE>
- 32 -
plan description (within the meaning of ERISA) is provided to an
employee and upon an employee's separation from service. Such
notice shall state that employee can obtain an actual salary
history from the Social Security Administration.
(3) If a participant supplies documentation of his salary history,
any offset based on Social Security will, if required, be
adjusted as indicated by such actual salary history and on the
assumption that such participant does not receive any income
after separation or retirement which would constitute wages for
purposes of Social Security. Such documentation must be
supplied within 120 days following (i) the date of separation
from service (by retirement or otherwise) or (ii) the date on
which a participant is given notice in writing of the benefit to
which he is entitled, whichever is later.
(c) In the event that for any month a participant is eligible for Public
Pension not related to the Social Security Act, there shall be a
deduction for such Public Pension from the amount determined in
accordance with Sections 3.3(b), (c) and (d) and Section 3.5. The
amount of such deduction shall be
<PAGE>
- 33 -
the amount of Public Pension paid or payable to the participant, or
that would upon application become payable to him for such month,
without regard to any offset, suspension or reduction imposed by law
(including any reduction by reason of commencement of such Public
Pension prior to the age at which it is first provided under law
without such a reduction) subject to any adjustment required in
accordance with Section 3.3(e); provided such deduction shall be
limited to the amount, to the extent reasonably determinable, of such
Public Pension attributable to employment by the Company and Related
Companies.
(d) After a deduction for Public Pension first becomes applicable, it
shall not be changed to reflect any increase of such Public Pension
resulting from
(1) amendment of the law under which such Public Pension is provided,
if the effective date of such increase occurs after the first
month with respect to which a deduction for such Public Pension
became applicable, or
(2) subsequent employment by other than the Company or a Related
Company.
SECTION 3.8 DEDUCTION FOR OTHER PENSION. If any participant entitled to
pension benefits pursuant to this Plan is or shall become, or upon application
would become, entitled
<PAGE>
- 34 -
to any other pension or payment in the nature of a pension (other than a payment
covered by Section 3.10, a benefit in the nature of an annuity, pension or
payment of similar kind by reason of any law or a payment made pursuant to this
Plan) from any source or fund to which the Company or any of its subsidiaries,
domestic or foreign, shall have directly or indirectly contributed (any such
other pension or payment being hereinafter referred to as "Other Pension") then
the amount determined in accordance with Sections 3.3(b), (c) and (d) and
Sections 3.4 and 3.5 for any period shall be reduced by the amount of any such
other Pension paid or payable to him or that would upon application become
payable to him for the corresponding period, subject to any adjustment required
in accordance with Section 3.3(e); PROVIDED, HOWEVER, that if such participant
shall have contributed to such source or fund, then the amount by which such
amount would otherwise be reduced in accordance with the foregoing provisions of
this Section 3.8 shall be decreased by the amount of that part of such Other
Pension which shall be attributable to the contributions which such participant
shall have made to such source or fund. "Other Pension" does not mean or
include (a) any benefits paid or payable under the Company's Salaried Employees
Retirement Savings Plan or Employee Stock Ownership Plan, (b) any amounts paid
or payable under the Company's or a Related Company's group life insurance
program, or (c) any amounts paid or payable under any plan or agreement of
<PAGE>
- 35 -
deferred compensation for current services. "Other Pension" includes any pension
or payment under any pension plan established by The Interlake Corporation, The
Interlake Companies, Inc. or Interlake Packaging Corporation.
SECTION 3.9 DEDUCTION FOR SEVERANCE ALLOWANCE. (a) If, as a result of the
complete or partial shutdown of a plant, department or subdivision thereof or as
a result of a reduction in force, any participant is or shall become entitled to
or shall be paid any discharge, liquidation or dismissal or severance allowance
or payment of similar kind (hereinafter "severance allowance") by reason of any
plan of the Company or a related company, or in respect of which it shall have
directly or indirectly contributed, or by reason of any law, then the total
amount of such severance allowance paid or payable to him shall be deducted from
the amount determined in accordance with Sections 3.3(b), (c) and (d) and
Sections 3.4 and 3.5 upon retirement, subject to any adjustment required in
accordance with Section 3.3(e); PROVIDED, HOWEVER, that (i) such severance
allowance shall not be deducted from or charged against any deferred vested
pension, and (ii) if such participant shall have contributed to the source or
fund out of which such severance allowance shall be paid or become payable, then
the amount which is deducted from or charged against such amount in accordance
with the foregoing provisions of this Section 3.9 shall be decreased by the
amount of that part of such severance
<PAGE>
- 36 -
allowance which shall be attributable to the contributions which such
participant shall have made to such source or fund.
(b) If any participant becomes entitled to severance allowance which may
be deducted from the amount determined in accordance with Sections 3.3(b), (c)
and (d) and Sections 3.4 and 3.5 under (a) above, he may waive payment of the
severance allowance. Such waiver must be in writing on a form provided by the
Company. If the participant waives such severance allowance, the total amount
of regular pension paid to or on behalf of him and his co-pensioner (if any)
shall not be less than the amount of such severance allowance.
(c) The following standards will apply to the deduction provided above.
The deduction will be made in full in each case in which the amount of pension
determined to be payable to the participant after application of the deduction
provided in this Section 3.9, or the cost of such pension after such deduction,
is equal to or greater than the greatest amount or cost of any such pension
which would be payable to a participant under age 40 who is eligible for a
deferred vested pension and who has the same years of service and compensation
history as the participant. The deduction will not be made in any case in which
the amount or cost of such pension after the deduction for severance pay
<PAGE>
- 37 -
is less than the amount or cost of such deferred vested pension. In all other
cases, the deduction will be made but only to the extent that the amount or cost
of such pension after the deduction for severance pay is equal to the amount or
cost of such deferred vested pension. In any case in which there is a
difference between the amount and the cost of any such pension or a difference
between the amount or cost of any such deferred vested pension, the
determination required by this Section 3.9 shall be based on the factor that
produces the largest deduction. In determining the cost of any such pension and
such deferred vested pension for purposes of this Section 3.9, the assumptions
reported in the filing of the most recent Schedule B to Form 5500 shall govern.
SECTION 3.10 DEDUCTION FOR DISABILITY PAYMENTS. Any amount paid to or on
behalf of any participant on account of injury or occupational disease incurred
in the course of his employment by the Company, a Related Company, or any other
employer causing disability in the nature of a permanent disability, whether
pursuant to Worker's Compensation, Occupational Disease or similar statutory law
(except fixed statutory payments for the loss of, or 100% loss of use of, any
bodily member or a benefit in the nature of an annuity, pension or payment of
similar kind by reason of any law), shall be deducted from or charged against
the amount determined in accordance with Sections 3.3(b), (c) and (d) and
Sections 3.4 and 3.5, subject to any adjustment required in accordance with
Section 3.3(e); PROVIDED, HOWEVER, that any such deduction or charge shall be
adjusted to take into account expenses such as reasonable lawyers' fees and
medical
<PAGE>
- 38 -
expenses incurred by the participant in processing claim for such payment, and
that any payments received by the participant under such laws shall not be
deducted from any such amount for permanent incapacity retirement payable prior
to age 65 or from the increase in pension provided by Section 3.4. If any
amount which is to be deducted from or charged against the amount determined in
accordance with Sections 3.3(b), (c) and (d) and Sections 3.4 and 3.5 pursuant
to this Section is determined with respect to a period of time, such deduction
or charge shall be made only with respect to the same period. If any such
amount is not determined with respect to a period of time, the Company shall
apportion the amount to a period of time which approximates the period over
which the local government organization having authority over workers'
compensation and occupational disability claims might award a disability payment
for similar conditions.
SECTION 3.11 PENSION APPLICATION. (a) Each application for a pension
shall be in writing on a form provided by the Company. The Company may require
any applicant for a pension to furnish to it such information as may reasonably
be required.
(b) Except as provided in (c) below, a participant may make application
for pension at any time prior or subsequent to his retirement.
(c) A participant may make application for a deferred vested pension not
earlier than 90 days prior to the first day
<PAGE>
- 39 -
of the month for which the first installment of pension is payable as provided
in Sections 3.12(d) or 3.12(e).
SECTION 3.12 COMMENCEMENT AND TERMINATION OF REGULAR PENSION. (a) In
the case of a participant who is eligible for any type of pension other than
permanent incapacity pension, 60/15 pension or deferred vested pension, the
first installment of any regular pension shall be payable for the first full
calendar month following the three calendar months for which the special payment
is made.
(b) In the case of a participant who is eligible for permanent incapacity
pension, the first installment of any regular pension shall be payable for the
first full calendar month following the month in which retirement occurs;
(c) In the case of a participant who is eligible for a 60/15 pension, the
first installment of regular pension shall be payable for the fourth calendar
month following the month in which the participant attains age 62 unless the
participant elects earlier commencement in accordance with Section 3.3(d)(2), in
which case the first installment of regular pension shall be payable for the
first full calendar month following the three calendar months for which the
special payment is made.
(d) In the case of a participant who is eligible for a deferred vested
pension and who incurs a break in continuous service after attaining age 40 and
completing at least 15 years of continuous service, the first installment of
regular
<PAGE>
- 40 -
pension shall be payable for the calendar month next following the participant's
62nd birthday unless the participant elects earlier commencement in accordance
with Section 3.3(d)(2), in which case the first installment of regular pension
shall be payable for the later of (i) the calendar month specified by the
participant in his application for pension, provided such month is subsequent to
the month in which he attains age 60, or (ii) the calendar month in which
application for pension is made.
(e) In the case of a participant who is eligible for a deferred vested
pension and who incurs a break in continuous service either prior to attaining
age 40, or after attaining age 40 and before completing at least 15 years of
continuous service, the first installment of regular pension shall be payable
for the calendar month next following the participant's 65th birthday unless the
participant elects earlier commencement in accordance with Section 3.3(d)(3), in
which case the first installment of regular pension shall be payable for the
later of (i) the calendar month specified by the participant in his application
for pension, provided such month is subsequent to the month in which he attains
age 60, or (ii) the calendar month in which application for pension is made.
(f) The last installment of any regular pension shall be payable for the
month in which the death of the participant shall occur.
<PAGE>
- 41 -
(g) Notwithstanding any other provision of this Plan, the entire interest
of a participant shall be distributed in conformity to Section 401(a)(9) of the
Internal Revenue Code.
The entire interest of each participant which is payable as a lump sum
shall be distributed not later than April 1 of the calendar year following the
year in which the participant attains age 70-1/2. If distribution to a
participant who attains age 70-1/2 is to be in periodic payments, distribution
shall begin no later than such April 1 and shall be made in accordance with
regulations --
(i) over the life of the participant;
(ii) over the lives of such participant and a designated beneficiary;
(iii) over a period certain not extending beyond the life expectancy of
such participant, or
(iv) over a period certain not extending beyond the life expectancies
of such participant and a designated beneficiary.
Any additional benefits that accrue after the April 1 described above shall
begin being distributed as of the January 1 following the calendar year in which
the additional benefits accrue.
If such periodic distribution has begun and the participant dies before his
entire interest has been distributed to him, the remaining portion of such
interest shall be distributed at least as rapidly as under the method
<PAGE>
- 42 -
of periodic distribution in force as of the date of the participant's death.
If the participant's spouse is not the designated beneficiary, the method
of distribution selected must assure that at least 50 percent of the amount
available for distribution is paid within the life expectancy of the
participant.
If a participant dies before periodic distribution of his interest has
begun, the entire interest shall be distributed within five years after the
death of such participant, unless (x) or (y) below apply:
(x) If, however, any portion of the participant's interest is payable to
(or for the benefit of) a designated beneficiary, such portion may be
distributed in substantially equal installments (in accordance with
regulations) over the life of such designated beneficiary (or over a
period not extending beyond the life expectancy of such beneficiary).
Such distributions are required to begin no later than one year after
the date of the participant's death or such later date as regulations
prescribe.
(y) If such designated beneficiary is the surviving spouse of the
participant, distribution is not required to begin until the date on
which the participant would have attained age 70-1/2. If the
<PAGE>
- 43 -
spouse dies before distribution begins, subsequent distributions shall
be made as if the participant had died on the date of the spouse's
death.
For purposes of applying the provisions of said Section 401(a)(9), the life
expectancy of a participant and the participant's spouse (other than in the case
of a life annuity) may be redetermined, but not more frequently than annually.
In the case of any other designated beneficiary, such life expectancy shall be
calculated once at the time benefit payments commence and shall not be
recalculated (unless such calculation is discovered to be erroneous).
Any amount paid to a child of a participant shall be treated as if it had
been paid to the participant's surviving spouse if such amount will become
payable to such surviving spouse when such child reaches majority (or upon
another event permitted under regulations).
SECTION 3.13 LUMP SUM PAYMENT. The Company shall make a lump sum payment
which shall be the equivalent actuarial value of the regular pension otherwise
payable if such equivalent actuarial value is not more then $3,500.00. In
determining such equivalent actuarial value mortality shall be based on UP-1984
unisex table with no adjustment. Interest shall be at the rate set by the
Pension Benefit Guaranty Corporation for immediate annuities as of the first day
of the month in which the amount of a lump sum payment is to be determined.
<PAGE>
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SECTION 3.14 PRE-PENSION SPOUSE COVERAGE. (a) Any participant who has
five years of continuous service and who has a spouse, shall have automatic Pre-
Pension Spouse Coverage which will provide a lifetime monthly payment for the
participant's spouse following the participant's death. Any monthly payment
resulting from such coverage shall be in addition to any surviving spouse's
benefit provided under Article IV.
(b) Any participant who continues in active employment after having
attained age 65 and who has a spouse will automatically have Pre-Pension Spouse
Coverage.
(c) (1) Pre-Pension Spouse Coverage will automatically terminate as of
the earliest of:
(i) the date the participant is divorced from his spouse,
(ii) the date the spouse dies, or
(iii) the date the participant's pension payments commence.
(2) The effective date of Pre-Pension Spouse Coverage for a
Participant who is reemployed following retirement shall be the date of
reemployment.
(d) For participants who have completed at least 5 years of continuous
service, the amount of pension payable under Pre-Pension Spouse Coverage shall
be reduced as follows. The amount determined in accordance with Sections
3.3(b), (c) and (d) plus the 5% addition to pension provided pursuant to
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Section 3.5, if applicable, and the transition benefit provided pursuant to
Section 11.2, if applicable, will be reduced by an amount equal to the product
of: 1/10 of 1% of such amount, multiplied by the number of years (and fractions
thereof) that such coverage was in effect prior to attainment of age 55 and 15
years of service or age 60 and 10 years of service and 7/10 of 1% of such amount
multiplied by the number of years (and fractions thereof) that such coverage was
in effect subsequent to attainment of such age and service. A reduction made
for any year in which such rate changes shall be pro-rated on the basis of
months at each rate.
(e) If a participant dies while Pre-Pension Spouse Coverage is in effect,
the surviving spouse shall receive 50% of an amount equal to the product of:
(1) the amount determined in accordance with Sections 3.3(b) and (c), the
5% addition to pension provided pursuant to Section 3.5, if
applicable, and the transition benefit provided pursuant to Section
11.2, if applicable, as though the participant had retired on the date
of his death and, in the case of a participant who died prior to
attainment of age 65, as though he had been age 65 on the date of his
death, reduced in accordance with (d) above, multiplied by
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(2) the applicable percentage obtained from Exhibit A, based on the ages
of the participant and his spouse as of the participant's date of
death.
(f) (1) For participants who have attained the age and service specified
in paragraph (d) above as of the date of their death, the first
installment of the amount payable to the participant's spouse
pursuant to this Section 3.14 shall be payable for the month
following the month in which the participant's death occurs and
the last installment shall be payable for the month in which the
spouse's death occurs.
(2) For participants who have not attained the age and service
specified in paragraph (d) above who die while Pre-Pension Spouse
Coverage is in effect, the first installment of the amount
payable to the participant's spouse pursuant to this Section 3.14
shall be payable for the first month in which the participant
could have received a monthly pension benefit, had he survived to
such date and retired, and the last installment shall be payable
for the month in which the spouse's death occurs.
(g) Satisfactory proof of marriage of the participant and his spouse and
of the age of the participant's spouse will be required prior to the
payment of
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monthly installments under this coverage. Satisfactory proof of
divorce or of the death of the participant's spouse will be required
for automatic termination of Pre-Pension Spouse Coverage under (c)(l)
above.
(h) Any waiver of Pre-Pension Spouse Coverage by a participant must be
consented to by the participant's spouse. Such consent by the spouse
must be witnessed by a representative of the Committee or a notary
public. The Committee may accept a waiver without such consent if the
participant satisfactorily establishes that there is no spouse or the
spouse cannot be located. Any consent shall be valid only with
respect to the spouse who signs such consent. Until benefits
commence, a participant may revoke a waiver any number of times
without the consent of the spouse. Any waiver of the Pre-Pension
Spouse Coverage by a participant prior to the Plan Year in which such
participant attains age 35 shall become invalid on the first day of
the Plan Year in which he attains age 35. A new waiver and consent
must be executed in order to continue to waive the Pre-Pension Spouse
Coverage.
(i) Each participant shall be provided with information regarding Pre-
Pension Spouse Coverage. Such
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information shall be furnished within a period beginning on the
first day of the Plan Year in which the participant attains age 32 and
ending with the close of the Plan Year in which the participant
attains age 34. The period for furnishing information shall also
include a reasonable period after an Employee becomes a participant
following the period described in the preceding sentence and a
reasonable period after a participant terminates employment before he
attains age 35. Such information shall also be furnished to any
participant upon completing 5 years of continuous service if such
service is completed prior to the participant attaining age 35 and the
information has not already been furnished. Such information shall
include a written explanation of:
(1) the terms and conditions of Pre-Pension Spouse Coverage,
(2) the participant's right to waive such Coverage and the effect of
such waiver;
(3) the rights of the participant's spouse with respect to such
waiver, and
(4) the participant's right to revoke such waiver and the effect of
such revocation.
SECTION 3.15 AUTOMATIC 50% SPOUSE OPTION. (a) (1) Unless a participant
who has a spouse at the time pension
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payments commence revokes the Automatic 50% Spouse Option within the period
established by (a)(3) below, he shall receive a "net reduced pension" during his
lifetime and after the death of the participant his spouse shall receive a
lifetime monthly payment equal to one-half of his "reduced pension."
(2) For the purpose of this Section 3.15, "reduced pension" means an amount
equal to the product of:
(i) the amount determined in accordance with Sections 3.3(b), (c) and (d),
the 5% addition to pension provided pursuant to Section 3.5, if
applicable, and the transition benefit provided pursuant to Section
11.2, if applicable, reduced in accordance with Section 3.14(d), if
applicable, and subject to the deductions provided pursuant to
Sections 3.7 and 3.8, if applicable, multiplied by
(ii) the applicable percentage obtained from Exhibit A, based on the ages
of the participant and his spouse at the date pension payments
commence;
and "net reduced pension" means the reduced pension increased in accordance
with the provisions of Section 3.4, if applicable, and decreased in
accordance with the provisions of Sections 3.9 and 3.10, if applicable.
(3) A participant may waive the Automatic 50% Spouse Option by a written form
duly filed with the Company at any time within the 90-day period prior to
the date pension
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payments commence, provided that the participant's spouse consents to the
waiver in writing. Such waiver must designate a beneficiary or form of
benefit payment which may not be changed without spousal consent (or the
consent of the spouse expressly permits designations by the participant
without any requirement of further consent by the spouse). The spouse's
consent must acknowledge the effect of the waiver and must be witnessed by
a representative of the Committee or notary public. The Committee may
accept a waiver without such consent if the participant satisfactorily
establishes that there is no spouse or the spouse cannot be located. Any
consent shall be valid only with respect to the spouse who signs such
consent. A participant may rescind a waiver an unlimited number of times
without spousal consent until benefit payments commence. If a participant
properly waives the Automatic Spouse Option he may
(i) receive the regular pension otherwise payable under this Plan during
his lifetime, or
(ii) elect a Co-Pensioner Option in accordance with the provisions set
forth in Section 3.16, provided that the spouse's consent shall
acknowledge a specific non-spouse co-pensioner and any change in co-
pensioners.
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Within a reasonable time prior to retirement the Company shall furnish a
written explanation of:
(i) the terms and conditions of the Automatic 50% Spouse Option,
(ii) the participant's right to waive such Option and the effect of such
waiver,
(iii) the rights of the participant's spouse with respect to such waiver and
(iv) the participant's right to rescind such waiver and the effect of such
rescission.
(b) Any monthly payment resulting from the Automatic 50% Spouse Option shall be
in addition to any surviving spouse's benefit provided under Article IV.
(c) In the case of a participant who has not revoked the Automatic 50% Spouse
Option, the first installment of net reduced pension shall be payable for
the month in which he is first entitled under Section 3.12 to receive
regular pension. The last installment of such net reduced pension shall be
payable for the month in which the participant's death shall occur;
PROVIDED, HOWEVER, that any monthly installments payable to such
participant and remaining unpaid at the time of his death will be paid to
his spouse, if then surviving. The first monthly payment to the
participant's spouse shall be payable for the month following the month in
which the participant's death shall occur, but not for any month prior to
the
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month for which the participant would have first been entitled to receive a
net reduced pension, and the last monthly payment to such spouse shall be
payable for the month in which such spouse shall die.
(d) Any revocation of the Automatic 50% Spouse Option shall be executed on the
form prescribed for this purpose by the Company and shall be deemed to be
duly filed when it shall have been received by the Company.
(e) Satisfactory proof of marriage of the participant and his spouse and of the
age of the participant's spouse will be required prior to the payment of
monthly installments under this coverage.
(f) If any participant shall die prior to commencement of pension payments, the
participant's spouse shall not be entitled to any payments pursuant to this
Section 3.15.
(g) If any participant shall not have revoked the Automatic 50% Spouse Option
within the period established by (a)(3) above and his spouse shall die
after the end of such period, but prior to the death of such participant,
such participant shall continue to receive net reduced pension
installments.
(h) If any participant shall not have revoked the Automatic 50% Spouse Option
and his spouse shall die within the period established by (a)(3) above, the
participant shall be treated the same as if he had revoked such option.
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(i) Notwithstanding anything to the contrary contained in this Section 3.15,
if, after the retirement of a participant who shall not have revoked the
Automatic 50% Spouse Option, the amount of regular pension which would have
been payable to him under this Plan had he revoked such option is subject
to any further deduction, change, offset or correction, then the amount
payable under such option to such participant and/or his spouse shall be
adjusted to reflect any such further deduction, change, offset or
correction.
(j) Notwithstanding anything to the contrary in this Section 3.15, in the case
of a participant who retires under a 60/15 retirement and who elects to
defer the commencement of pension payments until after attainment of age
62, and who does not revoke the Automatic 50% Spouse Option as provided in
(a) above, such participant will receive a net reduced pension commencing
with the fourth calendar month following the month in which the participant
attains age 62. If the participant dies prior to attainment of age 62, the
amount payable to the participant's spouse shall be equal to one-half the
reduced pension which would have been payable to the participant, had he
been permitted to and had he elected to receive a net reduced pension
commencing on the date of death, based on the ages of the participant and
his spouse as of the date of the participant's death. If the
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spouse of any participant who has not revoked the Automatic 50% Spouse
Option dies prior to commencement of regular pension, the participant will
still receive the net reduced pension commencing with the fourth calendar
month following the month in which the participant attains age 62 as
provided above.
(k) For the purpose of this Section 3.15, in the case of a participant who
retires on other than a deferred vested pension, pension payments shall be
deemed to commence as of the date of retirement and, in the case of a
participant eligible for a deferred vested pension, pension payments shall
be deemed to commence as of the first of the month for which regular
pension is first payable under the provisions of Section 3.12.
SECTION 3.16 CO-PENSIONER OPTIONS. (a) Any participant may, under the
conditions set forth in (d) below by written notice duly filed with the Company,
(1) elect to convert the regular pension otherwise payable to him under
this Plan upon retirement into a "net reduced pension," in accordance
with the Co-Pensioner Options described below; or
(2) revoke any such election previously made, in which event he shall be
treated as if he had not made such election; or
<PAGE>
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(3) change any such election from one to the other of such options and/or
change the person previously named as his co-pensioner.
100% CO-PENSIONER OPTION-A "net reduced pension" payable to the participant
during his life, with the provision that after his death, an amount equal
to the "reduced pension" shall be paid to such person, to be known as his
"co-pensioner," as he shall have nominated by written designation duly
filed with the Company.
50% CO-PENSIONER OPTION-A "net reduced pension" payable to the participant
during his life, with the provision that after his death, an amount equal
to one-half of the "reduced pension" shall be paid to such person, to be
known as his "co-pensioner," as he shall have nominated by written
designation duly filed with the Company.
TEN-YEAR CERTAIN & LIFE OPTION-A "net reduced pension" payable to the
participant during his life, with the provision that in the event of his
death within a 10-year period following retirement, an amount equal to the
reduced pension shall be paid to his designated beneficiary ("co-
pensioner") for the remainder of such 10-year period.
OTHER OPTIONS - A participant may elect any other optional form of payment
of his retirement benefit that is made available by the Committee, except
that the
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Committee shall not make a lump sum option available prior to normal
retirement.
(b) For the purpose of this Section 3.16, "reduced pension" means an amount
equal to the product of:
(1) the amount determined in accordance with Sections 3.3(b), (c) and (d),
the 5% addition to pension provided pursuant to Section 3.5, if
applicable, and the transition benefit provided in accordance with
Section 11.2, if applicable, reduced in accordance with Section
3.14(d), if applicable, and subject to the deductions provided
pursuant to Sections 3.7 and 3.8, if applicable, multiplied by
(2) the applicable percentage obtained from Exhibit A, based on the ages
of the participant and his co-pensioner upon retirement or the
participant's 65th birthday, whichever is earlier;
and "net reduced pension" means the reduced pension decreased in accordance
with the provisions of Sections 3.9 and 3.10, if applicable.
(c) Notwithstanding anything to the contrary in (a) and (b) above, if the
participant has elected any of the Co-Pensioner Options and if, upon
retirement, the participant has a spouse who can become eligible for a
surviving spouse's benefit:
(1) The participant shall receive a pension equal to the sum of:
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(i) 50% of an amount equal to the monthly amount determined in
accordance with Sections 3.3(b), (c) and (d), the 5% addition to
pension provided pursuant to Section 3.5, if applicable, and the
transition benefit provided pursuant to Section 11.2, if
applicable, reduced in accordance with Section 3.14(d), if
applicable, and subject to the deductions provided pursuant to
Sections 3.7 and 3.8, if applicable, and
(ii) 50% of his reduced pension, decreased in accordance with the
provisions of Sections 3.9 and 3.10, if applicable.
(2) The participant's co-pensioner shall, following the participant's
death, receive an amount equal to 50% of the participant's reduced
pension if the participant had elected a 100% Co-Pensioner Option, or
a Ten-Year Certain & Life Option, or an amount equal to 25% of the
participant's reduced pension if the participant had elected a 50% Co-
Pensioner Option.
(3) For the purposes of determining the appropriate reduced pension, if
the participant's co-pensioner is other than the participant's spouse,
it will be presumed that the participant does not have a spouse unless
he furnishes proof to the contrary in
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the form of a marriage certificate or other evidence satisfactory to
the Company.
(d) Any participant may in accordance with the provisions of (a) above elect an
option, revoke an option election or change an option election and/or co-
pensioner at any time prior to the date pension payments commence, or
within 90 days following the date on which the Company provides written
notice to the participant regarding the Co-Pensioner Options, or if the
participant has not been given specific information regarding the terms and
conditions of such options and the financial effect upon his pension of
electing such options, and within 60 days of receiving the notice regarding
the options makes a written request for such specific information, within
90 days following the date on which the Company provides such information,
whichever is later; provided, however, that with respect to a participant
who has a spouse at the time pension payments commence, the election of
either Co-Pensioner Option will be null and void unless the participant is
able to properly revoke the Automatic Spouse Option provided under Section
3.15.
(e) In the case of a participant who shall have elected one of the options
specified, the first installment of net reduced pension shall be payable
for the month for which he is first entitled under Section 3.12 to receive
a regular pension; and the last installment of such net
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reduced pension to the participant shall be payable for the month in which
his death shall occur; PROVIDED, HOWEVER, that any monthly installments
payable to such participant and remaining unpaid at the time of his death
may be paid to his co-pensioner, if then surviving. The first monthly
payment to his co-pensioner shall be payable for the month following the
month in which such participant's death shall occur. The last monthly
payment that shall be payable to such co-pensioner if a spouse shall be
payable for the month in which such co-pensioner shall die, except as
otherwise provided for the Ten-Year Certain & Life Option specified in
paragraph (a) above and for a non-spouse co-pensioner the last monthly
payment shall be made within five years after the participant's death in
accordance with Section 3.16(m). In the event of the death of both the
employee who has elected the Ten-Year Certain & Life Option provided under
paragraph (a) above and his beneficiary or beneficiaries before the
guaranteed number of payments have been made, the commuted value of the
balance of payments as determined by the Committee shall be paid in a lump
sum to the estate of the last to die of such employee and such
beneficiaries.
(f) Any election or revocation of an option, or change of an option election
and/or co-pensioner pursuant to this Section 3.16, shall be executed on a
form prescribed for
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such purpose by the Company and shall be deemed to be duly filed when it
shall have been received by the Company.
(g) Satisfactory proof of age of the named co-pensioner will be required prior
to the payment of pension installments under an elected option. No consent
shall be required of the person designated as co-pensioner in an election
under any Co-Pensioner Option in order to revoke such election or to change
the co-pensioner and/or the option elected.
(h) If any participant shall have elected an option under this Section 3.16 and
shall die prior to his retirement, such election shall cease to be of any
effect, and the co-pensioner shall not be entitled to any payments by
reason of the election of such option.
(i) If any participant shall have elected an option under this Section 3.16 and
his co-pensioner shall die after such participant shall have retired, such
participant shall continue to receive net reduced pension installments in
accordance with such option.
(j) If any participant shall have elected an option under this Section 3.16 and
his co-pensioner shall die before such participant shall have retired, then
the participant shall be treated the same as IF he had not made such
election.
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(k) Notwithstanding anything to the contrary contained in this Section 3.16,
if, after the retirement of a participant who shall have elected any Co-
Pension Option, the amount of regular pension which would have been payable
to him under this Plan had he not elected an option is subject to any
further deduction, change, offset or correction, then the amount payable
under an elected option to such participant and/or his co-pensioner shall
be adjusted to reflect any such further deduction, change, offset or
correction.
(l) Notwithstanding anything to the contrary contained in this Section 3.16, in
the event that the amount payable to a co-pensioner is determined as though
the participant did not have a spouse who could become eligible for a
surviving spouse's benefit, because such participant who had a spouse at
retirement failed to notify the Company that he had such a spouse, the
amount otherwise payable to the co-pensioner for any month shall be reduced
by the amount of any surviving spouse's benefit provided for the same month
pursuant to Article IV of this Plan.
ARTICLE IV
SURVIVING SPOUSE'S BENEFIT
SECTION 4.1 ELIGIBILITY. With respect to any participant who has
completed at least 15 years of continuous service and who dies on or after
January 1, 1982, and either
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(a) at a time (1) when he is accruing continuous service, or (2) before
application for pension and after a break in continuous service which
occurred on or after January 1, 1982 under conditions of eligibility
for retirement on immediate pension, or
(b) after retirement on or after January 1, 1982 on other than a deferred
vested pension his surviving spouse, as determined pursuant to Section
4.5, shall be eligible for a monthly benefit (hereinafter "surviving
spouse's benefit"), as set forth below.
SECTION 4.2 AMOUNT OF BENEFIT. Unless the provisions of Section 4.3
result in a higher amount, the amount of any surviving spouse's benefit payable
shall be $140.00 for any month before the month in which the surviving spouse
attains the age at which widow's or widower's benefits are first provided under
a law referred to in Section 1.1(d) and $90.00 for any month thereafter.
SECTION 4.3 CALCULATION OF BENEFIT AMOUNT. Unless the provisions of
Section 4.2 result in a higher amount, the amount of any surviving spouse's
benefit payable shall be determined in accordance with the following:
(a) If eligibility for such a benefit arises by reason of the death of a
participant covered by Section 4.1(a), the monthly amount of the
benefit, subject to the provisions of (d) and (e) below, shall be
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equal to 50% of the amount determined in accordance with Sections
3.3(b) and (c) and, if applicable, 50% of the transition benefit
provided pursuant to Section 11.2, both calculated as though the
participant had retired on the date of his death and, in the case of a
participant who died prior to attainment of age 65 as though he had
been age 65 on the date of his death.
(b) If eligibility for such a benefit arises by reason of the death of a
participant covered by Section 4.1(b), the monthly amount of the
benefit, subject to the provisions of (c), (d) and (e) below, shall be
equal to 50% of the amount determined in accordance with Sections
3.3(b), (c) and (d) and Section 3.5, if applicable, and 50% of the
transition benefit provided pursuant to Section 11.2, if applicable.
(c) In the case of a participant who dies after 60/15 Retirement and prior
to age 62 and who had elected to defer the commencement of regular
pension until after attainment of age 62, the regular pension and
transition pension payable to the participant shall, for the purposes
of applying the provisions of (b) above, be deemed to be the amount
determined in accordance with Sections 3.3(b), (c) and (d) and Section
3.5, if applicable, and Section 11.2, if
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applicable, which would have been payable if, under the provisions of
this Plan, he had been permitted to and had elected to receive regular
pension commencing with the first month for which the surviving
spouse's benefit is payable.
(d) Commencing with the first surviving spouse's benefit payable after the
surviving spouse attains the age at which widow or widower's benefits
are first provided under a law referred to in Section 1.1(d), the
amount of the surviving spouse's benefit otherwise payable for any
month shall be reduced by 50% of the amount of the widow's or
widower's benefit to which the surviving spouse is, or upon
application would be, entitled for such month based on the law in
effect at the time the surviving spouse's benefit first becomes
payable (without regard to any offset or suspension imposed by such
law). If the surviving spouse is not eligible for such a widow's or
widower's benefit for such month, the amount of the reduction shall be
equal to 50% of the amount of the widow's or widower's benefit that
could have become payable to the surviving spouse for such month,
based on the participant's earnings, if the surviving spouse had been
eligible and had applied for such a benefit.
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(e) If the surviving spouse receives, or upon application would be
entitled to receive, any payment rights acquired by the participant,
which would if received by the participant have been subject to
deduction under Section 3.8 from any regular pension otherwise payable
to the participant (except any such payment received by the surviving
spouse by reason of an election by the participant to receive a
reduced payment), the amount of such payment not attributable to the
contributions of the participant shall be deducted from the surviving
spouse's benefit otherwise determined under this Section 4.3. The
surviving spouse's benefit payable upon the death of any Employee
shall be further reduced by the amount of any lump sum death benefit,
if any, to which the Employee's spouse may be entitled by virtue of
the Employee's participation in Acme Steel Employees Retirement Plan A
on November 1, 1962.
SECTION 4.4 COMMENCEMENT AND TERMINATION OF BENEFIT. The first
installment of any surviving spouse's benefit shall be payable for the month
following the month in which the participant shall die, and the last installment
shall be payable for the month in which the surviving spouse shall die;
PROVIDED, HOWEVER, that a surviving spouse's benefit shall not be payable for
any month for which a special payment was
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payable to the participant. In connection with an application for a surviving
spouse's benefit, the Company may require the surviving spouse to grant any
authorization necessary to receive relevant records from the agency
administering the law referred to in Section 1.1(d).
SECTION 4.5 DETERMINATION OF STATUS AS SURVIVING SPOUSE. A person shall
be considered a surviving spouse for the purposes of this Article IV, only if
(a) immediately after a participant's death, such person is a widow or
widower of such participant within the provisions of the Social
Security Act, except that where such Act requires reference to the law
of the District of Columbia, the applicable law shall be that of the
State of Illinois, and
(b) with respect to a participant who dies after retirement, such person
was married to the participant at the date of the participant's
retirement.
SECTION 4.6 NOTIFICATION OF BENEFIT ELIGIBILITY. The Company shall make
reasonable effort, by an appropriate method or methods, to inform the surviving
spouse of an eligible participant of the existence of this benefit.
SECTION 4.7 SURVIVING SPOUSE OF PART-TIME PARTICIPANT. In the case of a
surviving spouse of a deceased part-time participant, notwithstanding the
provisions of Section 4.2, the amounts set forth in such Section 4.2 shall be
reduced on
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the same basis as is provided in Section 3.6 for the reduction of the minimum
pension of a part-time participant, whether or not the minimum pension was
applicable to such deceased part-time participant.
ARTICLE V
DETERMINATION OF CONTINUOUS SERVICE
SECTION 5.1 CALCULATION. The term "continuous service" as used in this
Plan means service ending with the last day of the month in which the
participant retires. For purposes of determining vesting, continuous service
shall be taken into account from an Employee's date of hire with the Company or
a Related Company, whether before or after such Employee has attained age 18.
Continuous service shall be calculated from the Employee's last hiring date
(this means in the case of a break in continuous service, continuous service
shall be calculated from the date of reemployment following the last unremoved
break in continuous service) in accordance with the following provisions;
PROVIDED, HOWEVER, that the last hiring date prior to the date of this Plan
shall be based on the practices in effect at the time the break occurred:
(a) There shall be no deduction for any time lost which does not
constitute a break in continuous service, except that in determining
length of continuous service for pension purposes,
(1) that portion of any absence which continues beyond two years from
commencement of absence
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due to a layoff or leave of absence authorized by the Company
shall not be creditable as continuous service; PROVIDED, HOWEVER,
that absence in excess of two years due to a compensable
disability incurred during the course of employment shall be
creditable as continuous service, if the Employee is returned to
work within 30 days after final payment of statutory compensation
for such disability or after the end of the period used in
calculating lump sum payment, and
(2) the period between a break in service and the date of
reemployment which results in the removal of a break in
accordance with (c) below shall not be creditable as continuous
service.
(b) Continuous service shall be broken by:
(1) quit; discharge or termination of employment for any other
reason;
(2) Leave of absence or layoff which continues for more than two
years, except that absence in excess of two years due to
compensable disability incurred during course of employment shall
not break continuous service, provided the Employee is returned
to work within 30 days after final payment of
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statutory compensation for such disability or after the end of
the period used in calculating a lump sum payment; PROVIDED,
HOWEVER, that continuous service shall not be considered to be
broken by absence of any Employee who subsequent to May 1, 1940
entered the military, naval, or merchant marine service of the
United States, and who has reemployment rights under the law and
complies with requirements of law as to reemployment and is
reemployed.
(c) An Employee who incurs a break in continuous service prior to becoming
eligible for an immediate or deferred vested pension and who is
reemployed by the Company shall, upon completion of one year of
continuous service following such reemployment, have such break in
continuous service removed if the period of continuous service accrued
prior to the break is in excess of the period between the break and
the date of reemployment or if such break does not exceed five one-
year periods of severance from service. In the case of an Employee
who is absent from work for maternity or paternity reasons, the
twelve-consecutive month period beginning on the first anniversary of
the first date of such absence shall not constitute a break
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in service. Absence for maternity or paternity reasons means an
absence by reason of (l) pregnancy of the Employee, (2) the birth of a
child of the Employee, (3) the placement of a child with the Employee
in connection with the adoption of such child by the Employee, or (4)
the Employee's caring for such child for a period beginning
immediately following such birth or placement.
(d) Notwithstanding (c) above, a participant who incurs a break in service
by reason of quit or discharge prior to becoming eligible for an
immediate or deferred vested pension and who is reemployed by the
Company within one year from such quit or discharge shall, except as
otherwise provided in (b)(2) above, be deemed to have had such break
in service removed solely for purposes of determining eligibility for
a pension pursuant to Section 2.1 or an unreduced pension commencing
at age 65 pursuant to Section 2.7.
(e) Notwithstanding the foregoing paragraphs in this Section, continuous
service shall include periods of employment as an Employee with Acme
Metals Incorporated, Acme Steel Company and Acme Packaging Corporation
for all purposes and, for purposes of eligibility to participate and
vesting only, continuous service shall also include employment
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with other members of the controlled group of corporations of which
the Company is a member or an unincorporated trade or business which
is under common control with the Company as determined in accordance
with Section 414(c) of the Internal Revenue Code and regulations
issued thereunder. For purposes of this Plan a "controlled group of
corporations" shall mean a controlled group of corporations as defined
in Section 1563(a) of the Internal Revenue Code, determined without
regard to Section 1563(a)(4) and (e)(3)(C).
(f) Notwithstanding any other provision of the Plan, continuous service
shall not be broken as a result of any transfer of employment as of
May 29, 1986, pursuant to the reorganization of Interlake, Inc. or as
of January 1, 1992 or June 1, 1992 pursuant to the reorganization of
Acme Steel Company or as a result of any transfer of employment at any
time among Acme Metals Incorporated, Acme Steel Company or Acme
Packaging Corporation.
ARTICLE VI
REEMPLOYMENT AFTER ATTAINMENT OF PENSION ELIGIBILITY
SECTION 6.1 APPLICABILITY OF OTHER SECTIONS. Except as otherwise provided
in this Article VI, the provisions of all other sections of this Plan shall be
applicable to any participant who is reemployed by the Company after having been
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retired and receiving a pension or after having attained eligibility for a
deferred pension under this or a prior version of this Plan.
SECTION 6.2 EFFECT ON PENSION. Any participant who is receiving a pension
under this or a prior version of this Plan shall upon reemployment by the
Company have his pension discontinued.
SECTION 6.3 CONTINUOUS SERVICE OF REEMPLOYED PARTICIPANT. (a) Any
participant who has been retired and receiving a pension or who is eligible for
a deferred vested pension under this or a prior version of the Plan and who
shall be reemployed by the Company shall be credited with his continuous service
as at the date of his prior retirement plus his continuous service accruing
after reemployment for the purpose of calculating any subsequent pension
benefits to which he may become entitled; PROVIDED, HOWEVER, nothing in this
Section shall affect the calculation of continuous service as provided in
Section 5.1(b)(2).
(b) If a participant who received a lump sum payment in accordance with
Section 3.13 is reemployed by the Company, the continuous service with respect
to which he received such lump sum payment is to be used in calculating any
subsequent pension benefit to which he may become entitled only if, within five
years of such reemployment, or if sooner within a period of five consecutive
one-year breaks in continuous service, the participant repays an amount equal to
the lump
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sum payment (reduced by an amount determined by multiplying the regular pension
which had been settled by such lump sum payment by the number of months between
incurrence of the break in continuous service and reemployment) plus interest
accrued at the rate established by law. At the time of reemployment, the
participant shall be informed of his right to make repayment under the
conditions described above.
SECTION 6.4 SPECIAL PENSION ELIGIBILITY AFTER REEMPLOYMENT.
Notwithstanding anything to the contrary contained in this Plan, any participant
who has been retired and receiving a pension pursuant to the provisions of this
Plan for 70/80 retirement or similar provisions of a prior version of this Plan
and is subsequently reemployed by the Company shall upon ceasing work after
reemployment and prior to age 62 by reason of a permanent shutdown of a plant,
department or subdivision thereof or by reason of a layoff or physical
disability be eligible to retire on or after January 1, 1982 and shall upon his
retirement (hereinafter "reinstated 70/80 retirement") be eligible for a pension
commencing with the month in which retirement becomes effective; PROVIDED,
HOWEVER, that such participant shall not be eligible under the provisions of
this Section 6.4 to retire during a period of absence from work due to a
physical disability until such disability shall have continued for a period of
six consecutive full calendar months or until the participant's attainment of
age 62, whichever first occurs.
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SECTION 6.5 SPECIAL RULES AS TO AMOUNT OF PENSION. Special payment shall
not be made in any case where a special payment was made to the participant for
a prior retirement under this or any prior version of this Plan.
SECTION 6.6 AMOUNT OF REINSTATED 70/80 PENSION. The amount of regular
pension for reinstated 70/80 retirement shall be determined the same as for a
regular pension for 70/80 retirement.
ARTICLE VII
CLAIMS REVIEW
SECTION 7.1 DISPUTES AS TO ELIGIBILITY OR AMOUNT. (a) If any difference
shall arise between the Company and any participant who shall be an applicant
for a pension, or to whom a pension shall be payable, as to such participant's
right to a pension or the amount of his pension and agreement cannot be reached
between the Company and the participant, the participant or his authorized
representative shall file a claim for a pension in the manner and on the forms
provided by the Committee. The Committee or its authorized representatives
shall decide on the merits and the participant and his authorized
representative, if any, shall be notified in writing of the decision.
(b) If a claim is wholly or partially denied, the notice of the decision
shall be furnished within 60 days after receipt of the claim by the Committee.
Such notice shall be
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written in a manner calculated to be understood by the claimant and shall
include:
(i) the specific reason or reasons for the denial;
(ii) specific reference to pertinent plan provisions on which the denial is
based;
(iii) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(iv) an explanation of the Plan's claim review procedure.
If notice of denial of a claim is not furnished within the 60 days referred
to above after receipt of the claim by the Committee and the claim has not
been granted, the claim shall be deemed denied for purposes of proceeding
to review as described in (c) below.
(c) A claimant whose claim for benefits is denied in whole or in part or his
authorized representative may:
(i) request a review upon written application to the Committee within 60
days after receipt by the claimant of written notice of the denial of
his claim or within 120 days of receipt of his claim by the Committee
if there is no notice of denial;
(ii) review pertinent documents in the Company's offices;
(iii) submit positions on issues and comments in writing.
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The Committee or its authorized representative shall promptly review each
denial of a claim upon which an application for review is submitted. Such
review shall be completed within 60 days after receipt of the request for
review, unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered as soon as possible,
but not later than 120 days after receipt of a timely request for review.
The decision on review shall be in writing and shall include specific
reasons for the decision, written in a manner calculated to be understood
by the claimant, and specific references to the pertinent plan provisions
on which the decision is based.
SECTION 7.2 DISPUTES AS TO PERMANENT INCAPACITY. If any difference shall
arise between the Company and any participant as to whether such participant is
or continues to be permanently incapacitated within the meaning of Section 2.5,
such difference shall be resolved as follows:
The participant shall be examined by a physician appointed for the purpose
by the Company and the participant may select a physician to examine him
after he has been examined by the physician appointed by the Company. If
they shall disagree concerning whether the participant is permanently
incapacitated, that question shall be submitted to a third physician
selected by such two physicians. The medical opinion of the third
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physician, after examination of the participant and consultation with the
other two physicians, shall decide such question. The fees and expenses of
the third physician shall be shared equally by the Company and the
participant.
ARTICLE VIII
FINANCING
SECTION 8.1 1983 MERGER. Effective November 30, 1983, the Interlake, Inc.
Salaried Employees Past Service Pension Plan, as amended, was merged with the
Interlake, Inc. Riverdale Plant Hourly Employees Pension Plan, as amended.
Accordingly, the two said plans constituted a "single plan" within the meaning
of Internal Revenue Service regulations issued pursuant to Section 414 of the
Internal Revenue Code as in effect on November 30, 1983. The assets of each of
the former plans became available, as of November 30, 1983, to pay benefits to
all employees of the Company covered by the Consolidated Plan (including this
Appendix A and Appendix B thereto). The liabilities of the former plans were
assumed by the Consolidated Plan as of November 30, 1983. Benefit accruals
under the former plans stopped as of November 30, 1983 and commenced for
eligible employees of the Company under the Consolidated Plan, which, from the
date of consolidation, provided pension coverage in accordance with the
provisions of Appendix A or B thereto, as applicable.
<PAGE>
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SECTION 8.2 1986 REORGANIZATION. Pursuant to the Agreement and Plan of
Reorganization authorized by the Board of Directors of Interlake, Inc. on
February 27, 1986, Interlake, Inc. transferred its material handling, packaging
and certain other businesses to The Interlake Corporation and its subsidiaries
and continued to operate its iron and steel and domestic strapping businesses
under the name Acme Steel Company. As a result of the reorganization, certain
salaried employees of Interlake, Inc. who had accrued benefits under this Plan
were transferred to The Interlake Corporation or one of its subsidiaries.
In order to continue pension benefits for the transferred employees,
certain assets of this Plan were transferred to three past service pension plans
established by The Interlake Corporation and its subsidiaries to cover
transferred employees who accrued benefits under this Plan prior to January 1,
1982. This Plan continued to cover (i) salaried employees of Acme Steel Company
who accrued benefits under this Plan prior to January 1, 1982, (ii) Acme Steel
Company hourly employees employed at the Riverdale, Illinois operation,
(iii) former Interlake, Inc. hourly employees formerly employed at its Riverdale
operation who had a vested accrued benefit under this Plan as of May 29, 1986
and (iv) former salaried employees of Interlake, Inc. at its Chicago, Illinois
or Riverdale, Illinois operations who had an accrued benefit under this Plan as
of January 1, 1982.
<PAGE>
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SECTION 8.3 JANUARY 1992 SPIN-OFF. Effective January 1, 1992 the Acme
Packaging Corporation Salaried Employees Past Service Pension Plan (the
"Packaging Plan") was established to continue the benefits offered under this
Appendix A to certain salaried employees who became employed by Acme Packaging
Corporation on or after such date and to certain former employees of the
Riverdale strapping division who were then receiving, or had a vested right to
receive, a pension under Appendix A. The liabilities of this Plan for those
employees under Appendix A were assumed by the Packaging Plan as of such date.
Benefit accruals for those employees under Appendix A of this Plan ceased as of
January 1, 1992 and commenced for such eligible employees under the Packaging
Plan on such date. Assets held in trust as of December 31, 1991, in connection
with Appendix A to this Plan that were attributable to the liabilities assumed
by the Packaging Plan were held in trust for the benefit of the employees who
became participants in the Packaging Plan as of January 1, 1992.
SECTION 8.4 JUNE 1992 SPIN-OFF. Effective June 1, 1992, the Acme Metals
Incorporated Salaried Employees Past Service Pension Plan (the "Metals Plan")
was established to continue the benefits offered under Appendix A to certain
salaried employees who became employed by Acme Metals Incorporated on or after
such date and to certain former corporate and administrative employees of Acme
Steel Company who were then receiving, or had a vested right to receive, a
pension under
<PAGE>
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Appendix A to this Plan. The liabilities of this Plan for those employees under
Appendix A were assumed by the Metals Plan as of such date. Benefit accruals
for those employees under this Plan ceased as of June 1, 1992 and commenced for
such eligible employees under the Metals Plan on such date. Assets held in
trust as of May 31, 1992, in connection with Appendix A to this Plan that were
attributable to the liabilities assumed by the Metals Plan were held in trust
for the benefit of the employees who became participants in the Metals Plan as
of June 1, 1992.
SECTION 8.5 ASSET TRANSFERS. Assets held in trust under Appendix A to
this Plan immediately prior to the spin-offs described in Sections 8.2 and 8.3
that were attributable to Employees of the Company who become participants in
the Packaging Plan as of January 1, 1992 and the Metals Plan as of June 1, 1992
were transferred with the liabilities assumed by those Plans on behalf of those
participants. During the period commencing January 1, 1992 or June 1, 1992, as
the case may be, and ending July 31, 1994, in the event that a participant of
this Plan or the Packaging Plan or the Metals Plan terminated employment with
the Company or a Related Company and immediately commenced employment as a
salaried employee covered by Appendix A to this Plan or by the Packaging Plan or
the Metals Plan, the assets and liabilities attributable to him under the plan
under which he ceased
<PAGE>
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participation are treated as having been transferred to the plan under which he
became a participant.
ARTICLE IX
MERGER OF PLANS
SECTION 9.1 MERGER. Effective July 31, 1994 the Packaging Plan and the
Metals Plan are merged with this Plan and will continue as Appendix A of this
Plan.
SECTION 9.2 SINGLE PLAN. The purpose of the merger is to satisfy the
requirements of Section 401(a)(26) of the Internal Revenue Code. In accordance
with regulations and guidelines of the Internal Revenue Service relating to
compliance with Section 401(a)(26), the mergers for such compliance purposes are
retroactive to January 1, 1992 for the Packaging Plan and to June 1, 1992 for
the Metals Plan. The merged plans constitute a "single plan" within the meaning
of Internal Revenue Service Regulations issued pursuant to Section 414 of the
Internal Revenue Code as in effect on July 31, 1994.
SECTION 9.3 BENEFIT ACCRUALS. Benefit accruals under the Packaging Plan
and the Metals Plan stopped as of July 31, 1994 and commenced for eligible
employees under this Plan, which, from the date of consolidation, shall provide
pension coverage in accordance with the provisions of Appendix A. It is
intended that benefits of Participants in this Plan and in the Packaging Plan
and the Metals Plan accrued prior to July 31, 1994 take into account service and
compensation with
<PAGE>
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the Company and with Related Companies as if the Participants had been employed
by a single employer.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 NON-ALIENATION PROVISION. No benefit payable under this Plan
shall be subject in any way to alienation, sale, transfer, assignment, pledge,
attachment. garnishment, execution, or encumbrance of any kind, and any attempt
to accomplish the same shall be void PROVIDED, HOWEVER, that such restriction or
alienation shall not apply in the case of a qualified domestic relations order
as defined in Section 414(p) of the Internal Revenue Code. A domestic relations
order entered before January 1, 1985 shall be treated as qualified if payment of
benefits pursuant to such order has commenced as of such date. Such order may
be treated as qualified, in the sole discretion of the Committee, if payments of
benefits have not commenced as of such date and such order does not comply with
Section 414(p) of the Internal Revenue Code.
If the Committee shall find that any person (participant, co-pensioner or
surviving spouse) to whom any benefit payment is due or to become due has become
physically or mentally unable to handle his own affairs, or is a minor, the
Committee in its sole discretion may direct that any benefit due him, unless
claim shall have been made therefor by a duly appointed legal representative, be
paid to his spouse, a child, a parent
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or other blood relative or a person with whom he resides for the exclusive
benefit and use of such participant, co-pensioner or surviving spouse, and such
payment shall be a complete discharge of all liability under this Plan.
SECTION 10.2 DEDUCTION FROM PENSION. Upon authorization by a participant,
on a form approved by the Company, the amount of premium payable by him for
hospitalization and physicians' services coverage upon retirement, as provided
under an insurance plan covering such participant, or the amount of any
overpayments made to the participant by the Company or its insurer in the course
of paying any benefits provided by any insurance plan covering such participant,
shall be deducted from any pension payable under this pension plan to the extent
permitted by law.
SECTION 10.3 NON-VESTED PENSION RIGHTS. No participant prior to his
retirement under conditions of eligibility for pension benefits shall have any
right or interest in or to any portion of any funds which may be paid into any
pension trust or trusts heretofore or hereafter established for the purpose of
paying pensions and no participant or co-pensioner shall have any right to
pension benefits except to the extent provided in this Plan. Employment rights
shall not be enlarged or affected by reason of this Plan.
SECTION 10.4 UNREDUCED PENSION. Notwithstanding any other provision in
this Plan, the monthly amount of any pension payable under this Plan shall in no
event be less than
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the amount of any retirement benefit to which an Employee would have been
entitled on January 1, 1982, by virtue of prior continuous service under this
Plan or any applicable predecessor plans.
SECTION 10.5 EXCLUSIVE BENEFIT. It shall be impossible at any time prior
to the satisfaction of all liabilities with respect to participants, their co-
pensioners, and surviving spouses for any part of the corpus or income of the
Trust Fund within the taxable year or thereafter to be used for, or diverted to,
purposes other than for the exclusive benefit of such persons. All forfeitures
arising under the Plan shall be applied to reduce the Company's contributions.
No such forfeitures shall be applied to increase the benefits any participant or
other person would otherwise receive under the Plan.
SECTION 10.6 LIMITATIONS ON BENEFITS. (a) Except as otherwise provided in
Section 415 of the Internal Revenue Code, the benefits under the Plan with
respect to a participant shall not exceed, when expressed as an annual benefit
in the form of a straight life annuity (with no ancillary benefits), the lesser
of (1) $90,000 (or such higher amount as may be prescribed by the Internal
Revenue Service in annual adjustments to reflect increases in the cost of
living) or (2) 100% of the participant's average compensation for his high three
consecutive calendar years. For a participant who had less than 10 years of
participation the limitations under
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(1) above shall be multiplied by a fraction in which the numerator is the number
of years (or part thereof) of participation in the Plan and the denominator is
10 and the limitation under (2) above shall be multiplied by a fraction in which
the numerator is the number of years (or part thereof) of continuous service and
the denominator is 10. In no event shall either fraction described above reduce
the limitation to an amount less than one-tenth (1/10) of the limitation
otherwise applicable. To the extent provided by regulations issued by the
Secretary of the Treasury, the fractions described above are to be applied
separately with respect to each change in the benefit structure of this Plan as
if such change were a new plan.
(b) Except as otherwise provided in Section 415(e) of the Internal Revenue
Code, for participants who also participate in any defined contribution plan as
defined in Section 414(i) of the Internal Revenue Code the rate of annual
benefit accrual by such participants under this Plan shall be reduced to the
extent necessary to prevent the sum of the following fractions, computed as of
the close of any calendar year after January 1, 1983, from exceeding 1.0:
Projected annual benefit of the participant under the Plan (and all other such
includable plans)
-------------------------------------------------------------------------------
Projected annual benefit assuming the Plan (and all other such includable plans)
provided a benefit equal to the lesser of 1.25 multiplied by the maximum benefit
allowed by paragraph (a)(l) above or a benefit equal to 1.4 multiplied by the
maximum benefit allowed by paragraph (a)(2) above
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Plus
Sum of section 415(c)* annual additions to such participant's accounts under all
defined contribution plans in such Plan Year and all prior Plan Years
-------------------------------------------------------------------------------
Sum of the lesser of either 1.25 multiplied by the dollar limitation on
additions to defined contribution plans as required by Section 415(c)(1)(A) or
1.4 multiplied by the percentage limitation on additions to defined contribution
plans as required by Section 415(c)(1)(8)*
The Committee may elect with respect to any year beginning with 1983 that
the denominator of the fraction applicable to defined contribution plans with
respect to all participants for years prior to 1983 be equal to the amount
determined under such denominator for 1982 under the provisions of the Plan
applicable to such year multiplied by the following fraction:
Lesser of $51,875 or 1.4 multiplied by 25 percent of the participant's 1981
earnings
-------------------------------------------------------------------------------
Lesser of $41,500 or 25 percent of the participant's 1981 earnings
(c) For purposes of applying the limitations set forth in (a) and (b) of
this Section 10.6 all defined benefit plans within the meaning of Section 414(j)
of the Internal Revenue Code (whether or not terminated) of the Company shall be
treated as one defined benefit plan, and all defined contribution plans of the
Company shall be treated as one defined contribution plan.
(d) In addition to other limitations set forth in the Plan and
notwithstanding any other provisions of the Plan, the
____________________
* Refers to Section number in the Internal Revenue Code.
<PAGE>
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accrued benefit, including the right to any optional benefit provided in the
Plan (and all other defined benefit plans required to be aggregated with this
Plan under the provisions of Section 415 of the Internal Revenue Code of 1954),
shall not increase to an amount in excess of the amount permitted under Section
415 of the Internal Revenue Code of 1954 as amended by the Tax Equity and Fiscal
Responsibility Act of 1982.
(e) In the case of a participant whose pension becomes payable before the
Social Security retirement age, the $90,000 limitation shall be reduced to the
actuarial equivalent of an annual pension in the amount of $90,000 beginning at
the Social Security retirement age. For purposes of this paragraph the Social
Security retirement age shall be the retirement age specified for the
participant under Section 216(l) of the Social Security Act, except that Section
216(l) shall be applied without regard to the age increase factor and as if the
early retirement age were 62. The reduction shall be made in the manner
prescribed by the Secretary of the Treasury and shall be consistent with the
reduction for old age insurance benefits commencing before the Social Security
retirement age. The interest rate utilized in making such adjustments shall be
the rate used in calculating the participant's pension, or 5%, if greater.
(f) If a participant's pension becomes payable after the Social Security
retirement age, the $90,000 limitation in
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Section 10.6(a) shall be increased to the actuarial equivalent of a pension in
the amount of $90,000 beginning at the Social Security retirement age. The
interest rate utilized in such adjustment shall be 5%.
(g) In the case of a participant covered by the Plan as of January 1, 1987
whose current accrued benefit under this Plan as of that date exceeded the
amount permitted for a defined benefit plan under Section 415(b) of the Internal
Revenue Code the defined benefit plan limit of the Code applicable to that
participant shall be considered to be equal to the amount of the participant's
current accrued benefit. For this purpose the participant's current accrued
benefit means his benefit under this Plan determined as of December 31, 1986 and
calculated as an annual benefit payable in the form of a straight life annuity
with no ancillary benefits, disregarding any changes in the terms of the Plan
after May 5, 1986 or any cost-of-living adjustment occurring after May 5, 1986.
SECTION 10.7 TOP-HEAVY MONITORING. As one of its duties pursuant to
paragraph 9.6(f) of the Consolidated Plan, the Committee shall monitor the "top-
heavy" ratio as defined in Section 416(g)(1)(A)(i) of the Internal Revenue Code.
Such monitoring shall be as described in regulations of the Internal Revenue
Service and shall include the following factors:
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(a) Identifying "key employees" as defined in Section 416(i) of the
Internal Revenue Code;
(b) To the extent permitted by regulations of the Internal Revenue
Service, use of the same actuarial assumptions in determining the
present value of a pension benefit commencing at normal retirement age
which were used as of the most recent "valuation date" by the
"enrolled actuary" for the Plan in establishing the amount of funding
required by law.
(c) Computation of the ratio of the present value of (1) the cumulative
accrued benefits under the Plan for "key employees" to (2) the
cumulative accrued benefits under the Plan for all employees in
accordance with Section 416(g) of the Internal Revenue Code. The Plan
is "top-heavy" within the meaning of such Section 416(g) if the ratio
specified exceeds 60 percent.
(d) Aggregation of all plans in which "key employees" participate or which
otherwise must be aggregated as required pursuant to Section 416(g)(2)
of the Internal Revenue Code; and
(e) Use of the "determination date" defined in Section 416(g)(4)(C) of the
Internal Revenue Code: the last day of the preceding Plan Year and use
of each June 30th as the "valuation date." For purposes of
calculating the ratio in this paragraph (e), the
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accrued benefits of Employees who did not perform any service during
the prior 5 year period ending on the determination date (as defined
below) shall not be taken into account.
SECTION 10.8 TOP-HEAVY RULES. In the event this Plan becomes "top-heavy"
within the meaning of Section 416(g) of the Internal Revenue Code, the following
provisions with respect to vesting and minimum benefits shall take effect and
remain in effect during such time as the Plan is top-heavy: VESTING: The first
sentence of Section 2.7 shall be changed to read as follows:
Any Participant not eligible to receive a pension under any other provision
of this Section II whose continuous service is broken on or after January
1, 1982 for any reason and who, at the time of such break in continuous
service, shall have had at least 2 years of continuous service shall be
eligible for the percentage of pension benefit provided in the table set
forth in Section 10.8, depending upon the amount of such continuous service
(hereinafter "deferred vested pension"), subject to the provisions relating
to application set forth in Section 3.11(c) and commencement of pension set
forth in Sections 3.12(d) and (e).
The non-forfeitable percentage of pension determined under Section 3.3(b)
to which a participant is entitled
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shall be determined in accordance with the following table:
The nonforfeitable
Years of Service percentage is:
---------------- ------------------
2 20
3 40
4 60
5 80
6 or more 100
MINIMUM BENEFITS: The regular pension determined under Section 3.3(b) for each
participant who is a "non-key employee" (within the meaning of Section 416(i)(1)
and (2) of the Internal Revenue Code), when expressed as an annual retirement
benefit, shall not be less than the applicable percentage of the participant's
average compensation for years in the testing period. For purposes of this
paragraph, the following terms shall have the following meanings:
"Applicable percentage" shall mean the lesser of 2 percent multiplied by
the number of years of service with the Company or 20 percent.
"Year of service" is to be determined pursuant to paragraphs (4), (5) and
(6) of Section 411(a) of the Internal Revenue Code except that no year of
service shall be taken into account under this paragraph if the Plan was
not a top-heavy plan for any Plan Year ending during such year of service
or such year of service was completed in a Plan Year beginning before
January 1, 1984.
<PAGE>
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"Testing period" shall mean the period of consecutive years (not exceeding
5) during which the participant had the greatest aggregate compensation
from the Company. A year shall not be taken into account if such year ends
in a Plan Year beginning before January 1, 1984 or such year begins after
the close of the last year in which the Plan was a top-heavy plan (within
the meaning of Section 416(g) of the Internal Revenue Code). Years
included in the testing period shall be adjusted to eliminate years not
included in a year of service.
"Annual retirement benefit" shall mean a benefit payable annually in the
form of a single life annuity (with no ancillary benefits) beginning at the
normal retirement age under the Plan.
ADJUSTMENT OF SECTION 415 LIMITATIONS: While this Plan is top-heavy, the factor
of 1.0 shall be substituted for 1.25 in computing denominators of the fractions
pursuant to Section 10.6(b) of the Plan. Such substitution shall not be made if
the Plan can comply with an applicable percentage of 3 percent or an increase of
the 20 percent alternative by 1 percentage point for each year for which the
Plan was top-heavy, but such increase shall not exceed 10 percentage points, and
benefits for key employees do not exceed 90% of all accrued benefits under the
Plan. Further, the substitution of 1.0 for 1.25 shall be suspended with respect
to any participant so long as there are no accruals for such participant under
the Plan.
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IN GENERAL: The Committee shall comply with regulations issued to prevent
inappropriate omissions or avoid duplication of minimum benefits or
contributions in instances where the Company has two or more plans to be
considered. For purposes of determining the present value of the cumulative
accrued benefit for any participant, such present value shall be increased by
the aggregate distributions made with respect to such participant under the Plan
during the 5-year period ending on the determination date.
The term "determination date" means with respect to any Plan Year the last
day of the preceding Plan Year.
SECTION 10.9 MODEL AMENDMENT. The Model Amendment adopted March 30, 1989
with respect to accrued benefits under this Plan, and subsequently under the
Packaging Plan and the Metals Plan, shall cease to be effective and no benefit
payable under this Plan or under the Packaging Plan or the Metals Plan shall be
affected by the provisions of the Model Amendment. Any benefit that was
calculated taking the Model Amendment into account shall be recalculated without
regard to the Model Amendment and any participant or other payee shall be made
whole for any diminution of benefit attributable to operation of the Model
Amendment.
<PAGE>
- 94 -
ARTICLE XI
TRANSITION PENSION
Section 11.1 ELIGIBILITY FOR TRANSITION PENSION. Participants who retire
on or after January 1, 1982 under the applicable provisions of Article II above
shall be eligible for monthly transition pensions under this Article XI, if any,
in addition to pensions determined in accordance with Sections 3.3(b), (c), (d)
and (e) above.
SECTION 11.2 AMOUNT OF TRANSITION PENSION. (a) The monthly transition
pension shall be the amount by which the participant's regular pension
determined in accordance with Sections 3.3(b), (c), (d), and (e) based upon
continuous service during the period January 1, 1982 through December 31, 1991
as determined under (b) below exceeds the monthly benefit which could be
provided by the portion of the participant's account under the Salaried
Employees Retirement Savings Plan of the Company and Related Companies
(hereinafter "Retirement Savings Plan") determined under (c) below.
(b) For the purpose of calculating the transition pension under this
Article XI, the participant's regular pension shall be determined by calculating
the monthly amount of such pension in accordance with the formulas set forth in
Sections 3.3(b), (c), (d), and (e) based on the participant's years (and
fractions thereof calculated to the nearest month) of continuous service prior
to January 1, 1992. ln such calculation, the date December 31, 1981 shall be
replaced
<PAGE>
- 95 -
wherever it appears in Sections 3.3(b), (c), (d), and (e) by the earlier of the
last day of the participant's continuous service or December 31, 1991. There
shall be subtracted from such amount the monthly pension calculated under
Sections 3.3(b), (c), (d), and (e) on the basis of his years (and fractions
thereof calculated to the nearest month) of continuous service as of December
31, 1981.
(c) The portion of the participant's account to be offset against the
amount determined under (b) above shall be determined on the basis of the value
at retirement of (1) the Company contributions allocated to the participant's
account under the Retirement Savings Plan with respect to earnings during the
period January 1, 1982 through December 31, 1988 which are in excess of 6-1/2%
of the participant's earnings for each quarter as defined for Retirement Savings
Plan purposes and (2) the entire Company contributions under Section 3.1 of the
Retirement Savings Plan allocated to the participant's account with respect to
the participant's earnings during the period January 1, 1989 through
December 31, 1991. The sum of such amounts (hereinafter referred to as the
"transition benefit portion") shall include a credit for amounts which would
have been allocated to the participant's account in accordance with the
Retirement Savings Plan in the absence of limitations imposed by Section 6.3 of
said Retirement Savings Plan which prohibited the allocation of such amounts and
in the absence of limitations
<PAGE>
- 96 -
on the amount of compensation that can be taken into account for purposes of
that Plan under Section 401(a)(17) of the Internal Revenue Code. The transition
benefit portion shall be calculated as if all such contributions had at all
times prior to the participant's retirement been invested in the diversified
investment fund maintained under the Retirement Savings Plan. The monthly
pension which can be provided by the transition benefit portion shall be
determined on the basis of a 10-year certain and life annuity using the same
actuarial assumptions as are then being employed by the Pension Benefit Guaranty
Corporation in valuing benefits in non-multi-employer terminating plans.
ARTICLE XII
HOSPITAL-MEDICAL BENEFITS
FOR ELIGIBLE PENSIONERS AND SURVIVING SPOUSES
SECTION 12.1 ALLOCATION OF FUNDS TO SEPARATE ACCOUNT. Effective as of May
29, 1986, the Plan shall provide for the payment of benefits for sickness,
hospitalization and medical expenses (referred to as "Section 401(h) benefits")
of participants who have retired, and the spouses and eligible dependents of
such participants (referred to as "medical expense beneficiaries"). As of the
commencement date for providing such benefits, the Committee shall cause to be
allocated to a separate account, which shall be maintained by the Trustee for
the purposes set forth in this Article XII (but which need not be invested
separately from other funds
<PAGE>
- 97 -
held by the Trustee under the Plan for retirement benefits), a portion of the
Trust Fund not to exceed the amount of accrued liability for Section 401(h)
benefits as determined by an "enrolled" actuary (within the meaning of ERISA).
Such allocated portion of the Trust Fund shall be used to provide funds for
payment of the accrued liability, in whole or in part, for Section 401(h)
benefits of medical expense beneficiaries but in no event shall the amounts so
transferred at any time reduce the Trust Fund (remaining after setting aside
such separate account) below an amount which is 110% of a sum required to fully
fund all accrued retirement benefits under the Plan. The Committee may provide
for further allocations to such separate account, subject to the same
conditions, as of a convenient date in each year following the initial
allocation. Contributions to fund Section 401(h) benefits hereunder may be made
by the Company from time to time, provided that such contributions meet the
requirements of Section 12.5.
SECTION 12.2 METHOD OF ALLOCATION. The portion or portions of the Trust
Fund that may be allocated to a separate account each year as provided in
Section 12.1 shall not exceed such amount as an enrolled actuary (using such
factors as expected claims, earnings and mortality assumptions) determines to be
necessary to provide for the payment of Section 401(h) benefits of medical
beneficiaries during such year and, in addition, the Committee may allocate such
amounts
<PAGE>
- 98 -
as may be required to provide funds to pay existing determined accrued
liabilities for such benefits, in whole or in part.
SECTION 12.3 BENEFITS PAYABLE. The Section 401(h) benefits (and the
amounts thereof) which are to be paid pursuant to this Article XII are specified
in the Program of Hospital-Medical Benefits for Eligible Pensioners and
Surviving Spouses effective October 25, 1984, as the same may be amended and/or
supplemented from time to time (or any similar program which supersedes such
Program, as so amended and/or supplemented). Nothing herein shall be construed
as guaranteeing to any retired or active participant or his dependents that any
medical benefits shall continue to be provided hereunder or under such Program
in the future or under the same terms and conditions as such medical benefits
currently are provided under the Program, and the Company has reserved the right
to amend the Program as provided for therein, including the right to amend the
coverages thereunder, the eligibility therefore and the manner in which the cost
thereof is shared by the Company and participants and their dependents.
SECTION 12.4 DEFINITIONS. For purposes of this Section, the following
terms shall have the following meanings:
(a) "Dependents" shall mean:
(1) The spouse of a pensioner.
(2) Unmarried children under 19 years of age. Such children include:
<PAGE>
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(i) a blood descendant of the first degree,
(ii) a legally adopted child (including a child living with the
adopting parents during a period of probation),
(iii) a stepchild residing in the pensioner's household, or
(iv) a child permanently residing in the household of which the
pensioner is the head and is actually being supported solely
by such pensioner, provided the pensioner is related to the
child by blood or marriage or is the child's legal guardian.
(3) Children after attainment of age 19 but not beyond attainment of
age 25, if, in addition to otherwise meeting the definition of
dependent children as contained in (2), such child is a full-time
student.
(4) Children after attainment of age 19, if in addition to otherwise
meeting the definition of dependent children as contained in (2),
such child is incapable of self-support because of a disabling
illness or injury that commenced prior to age 19.
<PAGE>
- 100 -
(b) "Medical expense" shall mean expenses for medical care as defined in
Section 213(d)(1) of the Internal Revenue Code.
SECTION 12.5 ADDITIONAL REQUIREMENTS. The following requirements shall
apply to the separate account established hereunder to provide for the payment
of Section 401(h) benefits of medical expense beneficiaries:
(a) Contributions to fund Section 401(h) benefits hereunder may be made by
the Company from time to time, provided that (i) such contributions
are reasonable and ascertainable and (ii) the aggregate of
contributions (made after the date on which the Plan first includes
Section 401(h) benefits) to provide Section 401(h) benefits provided
for under the Plan shall not exceed 25 percent of the aggregate
contributions to the Plan (made after such date) other than
contributions to fund past service credits. At the time the Company
makes a contribution to the Plan, it shall designate that portion of
such contribution allocable to the funding of medical benefits. Any
benefits provided directly by the Company on or after May 29, 1986
shall be considered as provided under the Plan and as contributions to
the Plan to provide medical benefits hereunder except to the extent
such amounts may be considered as interest free loans by
<PAGE>
- 101 -
the Company to the Plan in accordance with Prohibited Transaction
Class Exemption 80-26 (which Exemption would permit the Plan to repay
the Company such amounts paid on behalf of the Plan as interest free
loans).
(b) It shall be impossible, at any time prior to the satisfaction of all
liabilities under the Plan to provide Section 401(h) benefits of
medical expense beneficiaries, for any part of the corpus or income of
such separate account to be (within the taxable year or thereafter)
used for, or diverted to, any purpose other than the providing of such
benefits and the payment of expenses attributable to the
administration of such benefits.
(c) Upon the satisfaction of all liabilities under the Plan to provide
Section 401(h) benefits, any amounts remaining in such separate
account shall revert to the Company. Notwithstanding the foregoing,
it is intended that no amount transferred to the separate account
hereunder to provide medical benefits shall revert to the Company
(subject to the permitted repayment of any amounts which are
considered as interest free loans under Prohibited Transaction
Exemption 80-26). Accordingly, if amounts are transferred to the
separate account pursuant to Section 12.1 in excess
<PAGE>
- 102 -
of the medical benefits currently payable from such account, as long
as any such transferred amounts are held in such separate account the
medical benefit liabilities under the Plan and such separate account
may not be terminated until all such transferred amounts have been
distributed to provide medical benefits. During such periods of time
that the separate account contains both transferred amounts under
Section 12.1 and contributions under Section 12.5(a), all payments
from the separate account shall be considered as distribution of
amounts transferred under Section 12.1 and earnings thereon before any
such distributions are considered as distributions of contributions
made under Section 12.5(a) which were held therein to fund such
benefits shall be released from such separate account and shall
thereafter be held by the Trustee for the purpose of providing
retirement benefits under the Plan.
(d) At no time shall the value of the assets of such separate account
exceed 25 percent of the value of the aggregate assets held in the
Trust Fund established for the Plan.
<PAGE>
- 103 -
ARTICLE XIII
DIRECT ROLLOVERS
SECTION 13.1 IN GENERAL. This Article applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election under this Article,
a Distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
SECTION 13.2 DEFINITIONS.
(a) ELIGIBLE ROLLOVER DISTRIBUTION. An Eligible Rollover Distribution is
any distribution, of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated beneficiary; or for a specified
period of 10 years or more; any distribution to the extent such distribution is
required under Section 401(a)(9) of the Internal Revenue Code; and the portion
of any distribution that is not includable in gross
<PAGE>
- 104 -
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(b) ELIGIBLE RETIREMENT PLAN. An Eligible Retirement Plan is an individual
retirement account described in Section 408(a) of the Internal Revenue Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an Eligible Rollover
Distribution to the surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
(c) DISTRIBUTEE. A Distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Internal Revenue Code, are Distributees with regard to the interest of
the spouse or former spouse.
(d) DIRECT ROLLOVER. A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
<PAGE>
EXHIBIT A
Tables of Percentages
These Tables of Percentages will be used in calculating the amounts payable
under the several options listed below.
I. Pre-Pension Spouse Coverage (50%), Automatic 50% Spouse Option, or 50% Co-
Pensioner Option
<TABLE>
<CAPTION>
PARTICIPANT'S AGE
DIFFERENCE BETWEEN
PARTICIPANT'S AGE AND
SPOUSE'S OR CO-
PENSIONER'S AGE 50% OPTIONS
52 55 58 61 64
PARTICIPANT 51 AND TO TO TO TO AND
OLDER UNDER 54 57 60 63 OVER
<S> <C> <C> <C> <C> <C> <C>
20 or more years 71% 72% 73% 73% 74% 74%
17, 18, or 19 years 71% 72% 73% 74% 75% 75%
14, 15, or 16 years 72% 73% 74% 75% 76% 76%
11, 12, or 13 years 73% 74% 75% 77% 77% 78%
8, 9, or 10 years 74% 75% 77% 78% 79% 80%
5, 6 or 7 years 75% 76% 78% 79% 81% 81%
2, 3, or 4 years 76% 77% 79% 81% 82% 83%
less than 2 years 77% 70% 81% 83% 84% 85%
PARTICIPANT
YOUNGER
less than 2 years 77% 79% 81% 83% 84% 85%
2, 3, or 4 years 79% 80% 82% 84% 86% 87%
5, 6, or 7 years 80% 82% 84% 86% 88% 89%
8, 9, or 10 years 82% 84% 86% 88% 90% 91%
11, 12, or 13 years 84% 85% 88% 90% 92% 93%
14, 15, or 16 years 86% 87% 89% 91% 93% 94%
17, 18, or 19 years 87% 89% 91% 93% 95% 96%
20 or more years 89% 91% 93% 94% 96% 96%
</TABLE>
NOTES: Participant's age and spouse's or co-pensioner's age rounded to the
nearest whole year; E.G., age 51 years, six months becomes 52. Age
differential is net difference between participant's and spouse's or
co-pensioner's ages as rounded.
<PAGE>
If the named co-pensioner is any person other than the pensioner's
spouse, it may, in compliance with Internal Revenue Service
regulations, be necessary to modify the amount payable to the
pensioner and co-pensioner so as to provide that the present value of
the benefit payable to the pensioner is more than 50% of the present
value of the pension that would have been payable to the pensioner had
he not elected a survivor option.
<PAGE>
II. 100% Co-Pensioner Option
<TABLE>
<CAPTION>
PARTICIPANT'S AGE
DIFFERENCE BETWEEN
PARTICIPANT'S AGE AND
SPOUSE'S OR CO-
PENSIONER'S AGE 50% OPTIONS
51 52 55 58 61 64
PARTICIPANT AND TO TO TO TO AND
OLDER UNDER 54 57 60 63 OVER
<S> <C> <C> <C> <C> <C> <C>
20 or more years 56% 57% 58% 58% 58% 58%
17, 18, or 19 years 56% 58% 59% 60% 60% 60%
14, 15, or 16 years 57% 59% 60% 61% 62% 62%
11, 12, or 13 years 58% 60% 62% 63% 64% 64%
8, 9, or 10 years 59% 61% 63% 65% 66% 66%
5, 6, or 7 years 60% 62% 65% 67% 68% 69%
2, 3, or 4 years 62% 64% 67% 69% 71% 72%
less than 2 years 64% 66% 69% 71% 73% 75%
PARTICIPANT
YOUNGER
less than 2 years 64% 66% 69% 71% 73% 75%
2, 3, or 4 years 66% 68% 71% 74% 76% 78%
5, 6, or 7 years 68% 70% 73% 76% 79% 81%
8, 9, or 10 years 70% 73% 76% 79% 82% 84%
11, 12, or 13 years 73% 75% 79% 82% 85% 87%
14, 15, or 16 years 75% 78% 81% 84% 87% 90%
17, 18, or 19 years 78% 81% 84% 87% 90% 92%
20 or more years 80% 83% 87% 89% 92% 93%
</TABLE>
NOTES: Participant's age and spouse's age or co-pensioner's age are rounded
to the nearest whole year; E.G., age 51 years, six months, becomes 52.
Age differential is net difference between participant's and spouse's
or co-pensioner's ages as rounded.
If the named co-pensioner is any person other than the pensioner's
spouse, it may, in compliance with Internal Revenue Service
regulations, be necessary to modify the amount payable to the
pensioner and co-pensioner so as to provide that the present value of
the benefit payable to the pensioner is more than 50% of the present
value of the pension that would have been payable to the pensioner had
he not elected a survivor option.
<PAGE>
III. Ten-Year Certain and Life Option
PARTICIPANT'S OPTION
AGE PERCENTAGE
64 and Over 92%
61 to 63 94%
58 to 60 96%
55 to 57 97%
52 to 54 98%
51 and Under 99%
NOTE: Participant's age is rounded to the nearest full year; E.G., age
51 years, six months, becomes 52.
<PAGE>
EXHIBIT B
MODEL AMENDMENT REQUIRED
BY
IRC SECTION 401(a)(17)
PART I
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, for plan
years beginning on or after January 1, 1994, the annual compensation of
each employee taken into account under the plan shall not exceed the OBRA
'93 annual compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar year applies
to any period, not exceeding 12 months, over which compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93 annual
compensation limit will be multiplied by a fraction, the numerator of which
is the number of months in the determination period, and the denominator of
which is 12.
For plan years beginning on or after January 1, 1994, any reference in
this plan to the limitation under section 401(a)(17) of the Code shall mean
the OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current plan
year, the compensation for that prior determination period is subject to
the OBRA '93 annual compensation limit in effect for that prior
determination period. For this purpose, for determination periods
beginning before the first day of the first plan year beginning on or after
January 1, 1994, the OBRA '93 annual compensation limit is $150,000.
<PAGE>
PART II
Unless otherwise provided under the plan, each section 401(a)(17)
employee's accrued benefit under this plan will be the greater of the
accrued benefit determined for the employee under 1 or 2 below:
1. the employee's accrued benefit determined with respect to
the benefit formula applicable for the plan year beginning
on or after January 1, 1994, as applied to the employee's
total years of service taken into account under the plan for
the purposes of benefit accruals, or
2. the sum of:
(a) the employee's accrued benefit as of the last day of
the last plan year beginning before January 1, 1994, frozen in
accordance with section 1.401(a)(4)-13 of the regulations, and
(b) the employee's accrued benefit determined under the
benefit formula applicable for the plan year beginning on or
after January 1, 1994, as applied to the employee's years of
service credited to the employee for plan years beginning on or
after January 1, 1994, for purposes of benefit accruals.
A section 401(a)(17) employee means an employee whose current accrued
benefit as of a date on or after the first day of the first plan year
beginning on or after January 1, 1994, is based on compensation for a year
beginning prior to the first day of the first plan year beginning on or
after January 1, 1994, that exceeded $150,000.
PART III
If this plan satisfies the requirements of section 1.401(a)(4)-13(d)
of the regulations for a fresh-start as of the last day of the last plan
year beginning before January 1, 1994, then, notwithstanding any other
provisions of the plan, any section 401(a)(17) employee's accrued benefit,
frozen in accordance with section 1.401(a)(14-13 of the regulations as of a
fresh-start date, is adjusted to reflect increases in the employee's
compensation after the fresh-start date. However, this
<PAGE>
adjustment may be made only if the adjustment will not cause the plan to
fail to satisfy the consistency requirement of section 1.401(a)(4)-13(c),
as modified by section 1.401(a)(17)-1(e) of the proposed regulations.
In determining a section 401(a)(17) employee's accrued benefit in any
plan year beginning on or after January 1, 1994, the portion of the
employee's frozen accrued benefit attributable to plan years beginning
before January 1, 1994, will be determined in accordance with Method A for
statutory section 401(a)(17) employees and Method B for section 401(a)(17)
employees other than statutory section 401(a)(17) employees.
A statutory section 401(a)(17) employee means an employee whose
current accrued benefit as of a date on or after January 1, 1994, is based
on compensation for a year beginning prior to January 1, 1989, that
exceeded $200,000.
A section 401(A)(17) employee means an employee whose current accrued
benefit as of a date on or after January 1, 1994, is based on compensation
for a year beginning prior to January 1, 1994, that exceeded $150,000.
Method A (statutory section 401(a)(17) employees):
Step 1: Determine each statutory section 401(a)(17) employee's accrued
benefit as of the last day of the last plan year beginning before
January 1, 1989, frozen in accordance with section 1.401(a)(4)-13
of the regulations.
Step 2: Adjust the amount in step 1 up through the last day of the last
plan year beginning before the first plan year beginning on or
after January 1, 1994, under the method provided under the plan
for increasing the amount in step 1 to take into account
increases in compensation in plan years beginning on or after
January 1, 1989. However, if the plan does not provide for such
increases, the amount in step 2 shall be equal to the amount in
step 1.
Step 3: Determine the statutory section 401(a)(17) employee's accrued
benefit as of the last day of the last plan year beginning before
January 1, 1994, frozen in accordance with section 1.401(a)(4)-13
of the regulations.
Step 4: Subtract the amount determined in step 2 from the amount
determined in step 3.
<PAGE>
Step 5: Adjust the amount in step 4 by multiplying it by the following
fraction (not less than 1). The numerator of the fraction is the
statutory section 401(a)(17) employee's average compensation
determined for the current year (as limited by section
401(a)(17)), using the same definition and compensation formula
in effect as of the last day of the last plan year beginning
before January 1, 1994. The denominator of the fraction is the
employee's average compensation for the last day of the last plan
year beginning before January 1, 1994, using the definition and
compensation formula in effect as of the last day of the last
plan year beginning before January 1, 1994.
Step 6: Adjust the amount in step 1 by multiplying it by the following
fraction (not less than 1). The numerator of the fraction is the
statutory section 401(a)(17) employee's average compensation for
the current year (as limited by section 401(a)(17)), using the
same definition of compensation and compensation formula in
effect as of the last day of the last plan year beginning before
January 1, 1989. The denominator of the fraction is the
employee's average compensation for the last day of the last plan
year beginning before January 1, 1989, using the definition and
compensation formula in effect as of the last day of the last
plan year beginning before January 1, 1989.
Step 7: Add the amounts determined in step 5, and the greater of steps 6
or 2.
Method B (section 401(a)(17) employees other
than statutory section 401(a)(17) employees):
Step 1: Determine the accrued benefit of each section 401(a)(17) employee
other than statutory section 401(a)(17) employees as of the last
day of the plan year beginning before January 1, 1994, frozen in
accordance with section 1.401(a)(4)-13 of the regulations.
Step 2: Adjust the amount in step 1 by multiplying it by the following
fraction (not less than 1). The numerator of the fraction is the
average compensation of the section 401(a)(17) employee who is
not a statutory section 401(a)(17) employee determined for the
current year (as limited by section 401(a)(17), using
<PAGE>
the same definition and compensation formula in effect as of the
last day of the last plan year beginning before January 1, 1994.
The denominator of the fraction is the employee's average
compensation for the last day of the last plan year beginning
before January 1, 1994, using the definition and compensation
formula in effect as of the last day of the last plan year
beginning before January 1, 1994.
<PAGE>
EXHIBIT 10.45
ACME METALS INCORPORATED
SUPPLEMENTAL BENEFITS PLAN
EFFECTIVE JANUARY 1, 1994
Acme Metals Incorporated, a Delaware corporation, hereby establishes a
nonqualified plan of deferred compensation to supplement the benefits payable to
certain of its employees under its qualified defined benefit plan. The Plan is
effective January 1, 1994.
ARTICLE I
DEFINITIONS
The following words and phrases as used herein shall have the meanings set
forth below.
SECTION 1.1. The term "Board of Directors" shall mean the Board of
Directors of the Company.
SECTION 1.2. The term "Company" shall mean Acme Metals Incorporated, a
Delaware corporation.
SECTION 1.3. The term "Company Plan" shall mean Appendix A of the
Consolidated Pension Plan for Acme Salaried and Hourly Employees, as amended
from time to time, and as amended to reflect the merger of the Acme Metals
Incorporated Salaried Employees Past Service Pension Plan and the Acme Packaging
Corporation Salaried Employees Past Service Pension Plan into Appendix A
effective July 31, 1994.
SECTION 1.4. The term "Company Plan Benefits" shall mean one of the forms
of benefit including, without limitation, Pre-Pension Spouse Coverage and the
Automatic 50% Spouse Option provided for under the Company Plan.
<PAGE>
-2-
SECTION 1.5. The term "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors.
SECTION 1.6. The term "Competitive Activity" shall have the meaning
contained in the Severance Pay Plan.
SECTION 1.7. The term "Continuous Service under the Company Plan" shall
mean the number of years and completed months of continuous service determined
under the Company Plan.
SECTION 1.8. The term "Discharge for Cause" shall mean discharge from
employment with the Company based on the fact that the Participant has done any
act or thing materially harmful to the Company, including, without limitation,
(i) an act of fraud, embezzlement or theft in connection with his
duties or in the course of his employment with the Company;
(ii) intentional wrongful damage to property of the Company;
(iii) intentional wrongful disclosure of secret processes;
(iv) intentional wrongful disclosure of any confidential information
of the Company; or
(v) employment in or engagement in any Competitive Activity.
SECTION 1.9. The term "Employee" shall mean any person, including an
officer of the Company (whether or not he is also a director thereof), who is
employed by the Company on a full-
<PAGE>
-3-
time basis and who is compensated for such employment by a regular salary.
SECTION 1.10. The term "Participant" shall include any Employee who
satisfies the eligibility requirements for participation in accordance with
Section 2.1.
SECTION 1.11. The term "Plan" shall mean this plan, the Acme Metals
Incorporated Supplemental Benefits Plan, effective January 1, 1994, as amended
from time to time.
SECTION 1.12. The term "Severance Pay Plan" shall mean the Company's Key
Executive Severance Pay Plan established on November 7, 1984, for the benefit of
certain participants thereunder, as the same may hereafter be amended or
restated from time to time in accordance with the terms thereof.
SECTION 1.13. The term "Supplemental Benefits" shall mean one of the
Supplemental Benefits referred to in Article III of this Agreement.
Except as otherwise specifically defined herein, the definition of terms
used in the Company Plan shall, unless the context clearly indicates otherwise,
apply to the terms used in this Plan.
ARTICLE II
PARTICIPANTS
SECTION 2.1. ELIGIBILITY. Participants in the Plan shall consist of those
Employees who are participants in the Company Plan and who shall from time to
time be designated by the Compensation Committee as Participants.
<PAGE>
-4-
SECTION 2.2. NOTICE OF ELIGIBILITY. The Compensation Committee shall
notify all such Participants of their inclusion in the Plan.
ARTICLE III
SUPPLEMENTAL BENEFITS
SECTION 3.1. PAYMENT. Except as otherwise provided herein, Supplemental
Benefits payable hereunder to Participants, their surviving spouses or
beneficiaries shall, subject to Section 3.3 and to the other provisions hereof,
commence at the same time and be payable in the same manner, under the same
conditions, for the same period, in the same optional form and to the same
person or persons as the corresponding Company Plan Benefit is payable under the
Company Plan, provided, however, that notwithstanding any contrary provision of
the Severance Pay Plan, all amounts payable hereunder for the period of the
remainder of the Severance Period (as that term is defined in Section 1.1.6 of
the Severance Pay Plan) shall be amounts of cash compensation payable pursuant
to an Other Plan (as that term is defined in Paragraph E of the Recitals
contained in the Severance Pay Plan) for purposes of Section 3.1 of the
Severance Pay Plan. For purposes of this Plan, a failure to reject the
Automatic 50% Spouse Option under the Company Plan shall be deemed an election
thereof.
SECTION 3.2 QUALIFICATION. The following Supplemental Benefits will be
payable under this Plan:
<PAGE>
-5-
(a) SUPPLEMENTAL NORMAL RETIREMENT BENEFIT. If a Participant's employment
with the Company terminates on or after he attains age 65 and he then meets the
requirements for a Normal Retirement Pension under the Company Plan, the Company
shall pay to him or his surviving spouse or beneficiary a Supplemental Normal
Retirement Benefit in a monthly amount determined in accordance with Section
3.3.
(b) SUPPLEMENTAL EARLY RETIREMENT BENEFIT. If a Participant's employment
with the Company terminates before he meets the requirements for such Normal
Retirement Pension but after he shall attain the age and complete the years of
Continuous Service required for 62/15 Retirement, 60/15 Retirement or 70/80
Retirement under the Company Plan, the Company shall pay to him or his surviving
spouse or beneficiary a Supplemental Early Retirement Benefit in a monthly
amount determined in accordance with Section 3.3.
(c) SUPPLEMENTAL PERMANENT INCAPACITY BENEFIT. If a Participant's
employment with the Company terminates because he is incapacitated and he then
meets the requirements under the applicable provisions of the Company Plan, the
Company shall pay to him or his surviving spouse or beneficiary a Supplemental
Permanent Incapacity Benefit in a monthly amount determined in accordance with
Section 3.3.
(d) SUPPLEMENTAL PRE-PENSION SPOUSE COVERAGE. If a Participant dies while
employed by the Company and if his surviving spouse is entitled to a benefit
under the Pre-
<PAGE>
-6-
Pension Spouse Coverage of the Company Plan, the Company shall pay to the
Participant's surviving spouse a Supplemental Pre-Pension Spouse Benefit in a
monthly amount determined in accordance with Section 3.3.
(e) SUPPLEMENTAL DEFERRED VESTED BENEFIT. If a Participant's employment
with the Company terminates for any reason other than a Discharge for Cause and
if he then meets the requirements for a Deferred Vested Retirement Pension under
the Company Plan, the Company shall pay to him a Supplemental Deferred Vested
Retirement Benefit in a monthly amount determined in accordance with Section
3.3.
SECTION 3.3. AMOUNT OF SUPPLEMENTAL BENEFIT. Each Supplemental Benefit
shall be the monthly amount of the Company Plan Benefit to which the
Participant, his surviving spouse or beneficiary, as the case may be, would be
entitled,
(1) if earnings taken into consideration under the Company Plan were
not limited to $150,000 per year (or such other limitation that results
from adjustments to reflect cost-of-living increases pursuant to
regulations of the Secretary of the Treasury) by reason of Section
401(a)(17) of the Internal Revenue Code of 1986, as amended (the "Code"),
as Section 401(a)(17) may hereafter be amended or superseded;
(2) if the Company Plan did not contain the limitations on benefits
set forth in Section 10.6 thereof, as the same may hereafter be amended or
<PAGE>
-7-
superseded, or any other limitations by reason of Section 415 of the Code
as Section 415 may hereafter be amended or superseded, or by reason of any
other applicable law or regulation which provides for a limitation of the
amount of benefits payable under the Company Plan; and
(3) if the amount of any compensation from the Company, receipt of
which the Participant elects to defer until retirement or a later date
(other than amounts payable under the Company Plan or any other tax-
qualified employee benefit plan or any gain from a stock option or
compensation arising from a stock award) were included in the Company
Plan's definition of earnings;
less the amount of the Company Plan Benefit actually payable to the Participant,
spouse, or beneficiary.
SECTION 3.4. SPECIAL RULES. No Supplemental Benefit shall be changed or
modified (as to amount or otherwise) by reason of an amendment to the Company
Plan which becomes effective after the termination of the Participant's
employment with the Company. There shall be no duplication of Supplemental
Benefits hereunder. Notwithstanding any other provision of this Plan, the
amount of Supplemental Benefits payable under the Plan shall be reduced by the
amount of any supplemental pension payable for the same reason or reasons under
an agreement between the Company and the Participant.
SECTION 3.5. FORFEITURE. Notwithstanding the foregoing, a Participant
(and his surviving spouse and beneficiary, if
<PAGE>
-8-
any) shall forfeit all rights to any Supplemental Benefit if the Participant's
employment with the Company is terminated because of a Discharge for Cause.
SECTION 3.6. GENERAL. (a) The obligations of the Company herein set
forth shall be deemed a general obligation of the Company. The Company does
not intend initially to create a trust or other fund to provide for the payment
of Supplemental Benefits. No right or interest of the Participant, his
surviving spouse or any beneficiary (or any person claiming through or under any
of them) which may arise as a result of this Plan shall be assignable or
transferable in any manner or be subject to anticipation, sale, pledge,
encumbrance, attachment or other legal process for or against the Participant,
his surviving spouse, a beneficiary or any other person.
(b) Employment rights shall not be enlarged or affected hereby. The
Company shall continue to have the right to terminate the employment of a
Participant with or without cause.
SECTION 3.7. BENEFICIARIES. The Participant's elections and designations
of beneficiaries in accordance with the provisions of the Company Plan shall be
controlling under this Plan. This Plan shall not enlarge or restrict a
Participant's right to make any election or designate any beneficiary under the
Company Plan.
<PAGE>
-9-
DATED and EXECUTED this 28th day of December, 1994, to be effective as of
January 1, 1994.
ACME METALS INCORPORATED
By /s/ B. W. H. Marsden
------------------------------
B.W.H. Marsden
Chairman of the Board of Directors
ATTEST:
/s/ Edward P. Weber, Jr.
------------------------------------
Edward P. Weber, Jr.
Secretary
<PAGE>
EXHIBIT 10.48
AMENDMENT NO. 2 TO THE
ACME METALS INCORPORATED SALARIED EMPLOYEES
PAST SERVICE PENSION PLAN
The Acme Metals Incorporated Salaried Employees Past Service Pension Plan
hereby is amended as of the dates indicated below.
1. Section 1.1(f) "Earnings" is changed effective January 1, 1994 by
substituting $150,000 for $200,000 and by adding Appendix A attached hereto.
2. A new Article XIV is added effective January 1, 1993 to read as follows:
XIV. DIRECT ROLLOVERS
SECTION 14.1. IN GENERAL. This Article applies to
distributions made on or after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a
Distributee's election under this Article, a Distributee may elect, at
the time and in the manner prescribed by the Committee, to have any
portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
SECTION 2. DEFINITIONS.
(a) ELIGIBLE ROLLOVER DISTRIBUTION. An Eligible Rollover
Distribution is any distribution, of all or any portion of the balance to
the credit of the Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the Distributee's
designated beneficiary; or for a specified period of 10 years or more;
any distribution to the extent such distribution is required under
Section 401(a)(9) of the Internal Revenue Code; and the portion of any
distribution that is not includable in gross income (determined without
regard to the exclusion for net
<PAGE>
-2-
unrealized appreciation with respect to employer securities).
(b) ELIGIBLE RETIREMENT PLAN. An Eligible Retirement Plan is an
individual retirement account described in Section 408(a) of the Internal
Revenue Code, an individual retirement annuity described in Section 408(b)
of the Code, an annuity plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the Code, that accepts the
Distributee's Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
(c) DISTRIBUTEE. A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former spouse who
is the alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Internal Revenue Code, are Distributees
with regard to the interest of the spouse or former spouse.
(d) DIRECT ROLLOVER. A Direct Rollover is a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
Executed this 31st day of July, 1994.
ACME METALS INCORPORATED
By /s/ Jerry F. Williams
-----------------------------------------
Jerry F. Williams
Its Vice President-Finance & Administration
---------------------------------------
ATTEST:
By /s/ Roberta A. Glab
-----------------------
Roberta A. Glab
Its Assistant Secretary
----------------------
<PAGE>
-3-
APPENDIX A
MODEL AMENDMENT REQUIRED
BY
IRC SECTION 401(a)(17)
In addition to other applicable limitations set forth in the plan,
and notwithstanding any other provision of the plan to the contrary, for
plan years beginning on or after January 1, 1994, the annual compensation
of each employee taken into account under the plan shall not exceed the
OBRA '93 annual compensation limit. The OBRA '93 annual compensation limit
is $150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar year applies
to any period, not exceeding 12 months, over which compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93 annual
compensation limit will be multiplied by a fraction, the numerator of which
is the number of months in the determination period, and the denominator of
which is 12.
For plan years beginning on or after January 1, 1994, any reference in
this plan to the limitation under section 401(a)(17) of the Code shall mean
the OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current plan
year, the compensation for that prior determination period is subject to
the OBRA '93 annual compensation limit in effect for that prior
determination period. For this purpose, for determination periods
beginning before the first day of the first plan year beginning on or after
January 1, 1994, the OBRA '93 annual compensation limit is $150,000.
PART II
Unless otherwise provided under the plan, each section 401(a)(17)
employee's accrued benefit under this
<PAGE>
-4-
plan will be the greater of the accrued benefit determined for the employee
under 1 or 2 below:
1. The employee's accrued benefit determined with respect to
the benefit formula applicable for the plan year beginning
on or after January 1, 1994, as applied to the employee's
total years of service taken into account under the plan for
the purposes of benefit accruals, or
2. the sum of:
(a) the employee's accrued benefit as of the last day of
the last plan year beginning before January 1, 1994, frozen in
accordance with section 1.401(a)(4)-13 of the regulations, and
(b) the employee's accrued benefit determined under the
benefit formula applicable for the plan year beginning on or
after January 1, 1994, as applied to the employee's years of
service credited to the employee for plan years beginning on or
after January 1, 1994, for purposes of benefit accruals.
A section 401(a)(17) employee means an employee whose current accrued
benefit as of a date on or after the first day of the first plan year
beginning on or after January 1, 1994, is based on compensation for a year
beginning prior to the first day of the first plan year beginning on or
after January 1, 1994, that exceeded $150,000.
PART III
If this plan satisfies the requirements of section 1.401(a)(4)-13(d)
of the regulations for a fresh-start as of the last day of the last plan
year beginning before January 1, 1994, then, notwithstanding any other
provisions of the plan, any section 401(a)(17) employee's accrued benefit,
frozen in accordance with section 1.401(a)(14-13 of the regulations as of a
fresh-start date, is adjusted to reflect increases in the employee's
compensation after the fresh-start date. However, this adjustment may be
made only if the adjustment will not cause the plan to fail to satisfy the
consistency
<PAGE>
-5-
requirement of section 1.401(a)(4)-13(c), as modified by
section 1.401(a)(17)-1(e) of the proposed regulations.
In determining a section 401(a)(17) employee's accrued benefit in any
plan year beginning on or after January 1, 1994, the portion of the
employee's frozen accrued benefit attributable to plan years beginning
before January 1, 1994, will be determined in accordance with Method A for
statutory section 401(a)(17) employees and Method B for section 401(a)(17)
employees other than statutory section 401(a)(17) employees.
A statutory section 401(a)(17) employee means an employee whose
current accrued benefit as of a date on or after January 1, 1994, is based
on compensation for a year beginning prior to January 1, 1989, that
exceeded $200,000.
A section 401(A)(17) employee means an employee whose current accrued
benefit as of a date on or after January 1, 1994, is based on compensation
for a year beginning prior to January 1, 1994, that exceeded $150,000.
Method A (statutory section 401(a)(17) employees):
Step 1: Determine each statutory section 401(a)(17) employee's accrued
benefit as of the last day of the last plan year beginning before
January 1, 1989, frozen in accordance with section 1.401(a)(4)-13
of the regulations.
Step 2: Adjust the amount in step 1 up through the last day of the last
plan year beginning before the first plan year beginning on or
after January 1, 1994, under the method provided under the plan
for increasing the amount in step 1 to take into account
increases in compensation in plan years beginning on or after
January 1, 1989. However, if the plan does not provide for such
increases, the amount in step 2 shall be equal to the amount in
step 1.
Step 3: Determine the statutory section 401(a)(17) employee's accrued
benefit as of the last day of the last plan year beginning before
January 1, 1994, frozen in accordance with section 1.401(a)(4)-13
of the regulations.
<PAGE>
-6-
Step 4: Subtract the amount determined in step 2 from the amount
determined in step 3.
Step 5: Adjust the amount in step 4 by multiplying it by the following
fraction (not less than 1). The numerator of the fraction is the
statutory section 401(a)(17) employee's average compensation
determined for the current year (as limited by section
401(a)(17)), using the same definition and compensation formula
in effect as of the last day of the last plan year beginning
before January 1, 1994. The denominator of the fraction is the
employee's average compensation for the last day of the last plan
year beginning before January 1, 1994, using the definition and
compensation formula in effect as of the last day of the last
plan year beginning before January 1, 1994.
Step 6: Adjust the amount in step 1 by multiplying it by the following
fraction (not less than 1). The numerator of the fraction is the
statutory section 401(a)(17) employee's average compensation for
the current year (as limited by section 401(a)(17)), using the
same definition of compensation and compensation formula in
effect as of the last day of the last plan year beginning before
January 1, 1989. The denominator of the fraction is the
employee's average compensation for the last day of the last plan
year beginning before January 1, 1989, using the definition and
compensation formula in effect as of the last day of the last
plan year beginning before January 1, 1989.
Step 7: Add the amounts determined in step 5, and the greater of steps 6
or 2.
Method B (section 401(a)(17) employees other
than statutory section 401(a)(17) employees):
Step 1: Determine the accrued benefit of each section 401(a)(17) employee
other than statutory section 401(a)(17) employees as of the last
day of the plan year beginning before January 1, 1994, frozen in
accordance with section 1.401(a)(4)-13 of the regulations.
<PAGE>
-7-
Step 2: Adjust the amount in step 1 by multiplying it by the following
fraction (not less than 1). The numerator of the fraction is the
average compensation of the section 401(a)(17) employee who is
not a statutory section 401(a)(17) employee determined for the
current year (as limited by section 401(a)(17), using the same
definition and compensation formula in effect as of the last day
of the last plan year beginning before January 1, 1994. The
denominator of the fraction is the employee's average
compensation for the last day of the last plan year beginning
before January 1, 1994, using the definition and compensation
formula in effect as of the last day of the last plan year
beginning before January 1, 1994.
<PAGE>
EXHIBIT 13
ACME METALS AT A GLANCE
Acme Metals Incorporated, headquartered in Riverdale, Illinois, has two business
segments: Steel Making and Steel Fabricating. Acme, a leader in its major
product lines, has embarked on a modernization and expansion of its Steel
Making operations. The investment will transform Acme Steel into a low-cost
integrated steel producer in North America, with expanded niche markets for
custom steels and benefits for its steel-using Steel Fabricating operations.
These operations provide a market for as much as 45 percent of that steel.
Items below in the "Description," "Products," "Production Facilities,"
"Principal Markets," "1994 Performance," and "1995 Prospects" sections are
listed in order, by paragraph, for ACME Steel, ACME Packaging, Alpha Tube,
and Universal Tool & Stamping in each section.
DESCRIPTION
Custom-produced steel in small order lots, in special chemistries and widths,
with exact product chemistries, and in-house steel-processing services matched
by few mills make Acme Steel unique. Its integrated steelmaking process
differentiates its product quality from mini-mill competitors, while its
production and processing flexibility differentiates Acme Steel from other
integrated steelmakers.
Modern manufacturing facilities, located in every major U.S. region, a broad
product line, along with a strong sales and distribution network make Acme
Packaging an industry leader in steel strapping and strapping products.
A marketing-driven strategy, strong product quality, technical support, and a
broad value-added product line sold to a diverse customer base make Alpha Tube a
leader in the welded steel tube market.
Strong planning and control systems, new product development, customer technical
support, and a midwestern location convenient to automotive assembly plants make
Universal a leading manufacturer of automotive lifting equipment.
PRODUCTS
Sheet, strip, and semifinished steel in low-, mid-, and high-carbon; alloy;
high-strength, low-alloy; and special grades
Steel strapping, strapping tools, and industrial packaging products
Welded steel tube
Auto and light truck jacks
PRODUCTION FACILITIES
Acme Steel's coke, iron, and steel complex is located in Chicago and Riverdale,
IL.
Acme Packaging's flagship plant in Riverdale, IL is supported by satellite
plants in New Britain, CT, Bay Point, CA, and Leeds, AL.
Alpha operates two tube manufacturing plants and a steel processing facility in
the Toledo, OH, area.
Universal's operations are located in Butler, IN.
PRINCIPAL MARKETS
Agricultural, automotive components, industrial equipment, industrial fasteners,
pipe and tube, processor/converter, and tool manufacturing industries
Agricultural, automotive, brick, construction, fabricated and primary metals,
forest products, paper, and wholesale industries
Appliance, automotive, construction, heating/ventilation/air conditioning,
household and leisure furniture, material handling, recreational products,
service center, truck exhaust, and water heater industries
Automotive and truck manufacturing industries
1994 PERFORMANCE
Strong end markets, improved pricing, and best-ever quality and productivity
performance brought record sales and operating income.
Improved demand and record quality and productivity performance offset flat
prices to produce record sales and operating performance.
Improved sales in value-added target markets, improved quality and cost
performance, record productivity, and an improving economy led to improved
operating performance.
Near-record sales and operating results, despite unrelenting competition and
intense pressure on selling prices. Major quality and productivity gains.
Patented new jack designs will improve future performance.
1995 PROSPECTS
Continued strong performance. Price realizations should improve, along with
world supply/demands situation.
Benefits of a late 1994 price increase and improved export markets should
produce even stronger performance.
Further sales and operational gains, as target market penetration and quality/
productivity improvements continue. Modest capital expenditures will improve
performance in target markets.
Competitive pressures will challenge Universal to increase productivity to
maintain performance.
Acme Metals Incorporated
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
IN THOUSANDS, EXCEPT PER SHARE, EMPLOYEE AND SHAREHOLDER DATA 1994 1993 % CHANGE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR THE YEAR
------------------------------------------------------------------------------------------------------
Net sales $522,880 $457,406 14%
------------------------------------------------------------------------------------------------------
Gross profit 76,288 45,223 69%
------------------------------------------------------------------------------------------------------
Gross profit margin 14.6% 9.9% -
------------------------------------------------------------------------------------------------------
Income before income taxes and extraordinary item 28,693 10,432 175%
------------------------------------------------------------------------------------------------------
Income tax provision 9,935 4,173 138%
------------------------------------------------------------------------------------------------------
Extraordinary item (1,787) - -
------------------------------------------------------------------------------------------------------
Net income after extraordinary item 16,971 6,259 171%
------------------------------------------------------------------------------------------------------
Net margin 3.3% 1.4% 129%
------------------------------------------------------------------------------------------------------
Capital expenditures 56,339 11,749 380%
------------------------------------------------------------------------------------------------------
Depreciation 15,514 15,234 2%
------------------------------------------------------------------------------------------------------
Average shares outstanding 7,873 5,440 45%
------------------------------------------------------------------------------------------------------
PER COMMON SHARE
------------------------------------------------------------------------------------------------------
Net income before extraordinary item 2.38 1.15 107%
------------------------------------------------------------------------------------------------------
Extraordinary item (0.22) - -
------------------------------------------------------------------------------------------------------
Net income 2.16 1.15 88%
------------------------------------------------------------------------------------------------------
AT YEAR-END
------------------------------------------------------------------------------------------------------
Shareholders' equity 223,278 83,203 -
------------------------------------------------------------------------------------------------------
Return on equity 11.1% 7.3% -
------------------------------------------------------------------------------------------------------
Long-term debt 265,055 49,333 -
------------------------------------------------------------------------------------------------------
Debt as a percentage of capitalization 54% 40% -
------------------------------------------------------------------------------------------------------
Number of common shareholders 7,000 7,600 -8%
------------------------------------------------------------------------------------------------------
Number of employees 2,750 2,800 -2%
------------------------------------------------------------------------------------------------------
Shares outstanding 11,558,000 5,406,000 114%
------------------------------------------------------------------------------------------------------
Cash and investments (including restricted portion) 354,420 50,444 603%
------------------------------------------------------------------------------------------------------
</TABLE>
ABOUT THE COVER:
--------------------------------------------------------------------------------
Acme Metals' two business segments achieved impressive performances in 1994. The
top four photos illustrate its operating subsidiaries: Acme Steel Company, Acme
Packaging Corporation, Alpha Tube Corporation, and Universal Tool & Stamping
Company, Inc. Steel, its manufacture and fabrication, is the common thread in
both business segments. The modernization of Acme Metals' Steel Making segment,
begun in 1994, promises improved financial performance for the Steel Making
and Steel Fabricating segments. Shown in the bottom photo is a model of the new
facility.
<TABLE>
<CAPTION>
QUARTERLY STOCK PRICES 1994 1993 1992
-------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter 27 1/4-17 1/2 12 1/4-17 1/4 13 1/4-18 3/4
-------------------------------------------------------------------------
Second Quarter 26 1/4-21 1/2 14 -18 14 1/4-19 3/4
-------------------------------------------------------------------------
Third Quarter 26 1/2-21 1/2 13 -20 3/4 12 3/4-18 1/4
-------------------------------------------------------------------------
Fourth Quarter 22 3/4-15 13 3/4-18 3/4 11 -13 1/2
-------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CONTENTS
------------------------------------------------------------
<S> <C>
Corporate Profile IFC
------------------------------------------------------------
Financial Highlights 1
------------------------------------------------------------
Shareholders' Letter 2
------------------------------------------------------------
Review of Operations 3
------------------------------------------------------------
Form 10-K 9
------------------------------------------------------------
Officers and Directors IBC
------------------------------------------------------------
Shareholders' Information IBC
------------------------------------------------------------
</TABLE>
1
<PAGE>
DEAR ACME METALS SHAREHOLDER:
[PHOTO]
Brian W.H. Marsden (shown in corn field site of Steel Making modernization and
expansion).
In 1994, both of our business segments, Steel Making and Steel Fabricating,
enjoyed record sales and operating profitability. For the year, Acme Metals
earned $17.0 million, or $2.16 per common share, on sales of $522.9 million, up
substantially from 1993's net income of $6.3 million, or $1.15 per share, on
sales of $457.4 million. In fact, if it weren't for nonrecurring and
extraordinary charges related to the modernization and expansion of our Steel
Making segment, the full year's net income would have been an all-time record
for Acme.
The improving economy certainly played a role in our performance, but cost
reduction efforts and Acme's strategy of providing value-added products to
strong niche markets also contributed to 1994's results.
The year also saw us embark on the company's largest modernization and
expansion program ever, as we strengthen our position and financial performance
in Acme Metals' core Steel Making segment.
RECORD SEGMENT RESULTS
In Steel Fabricating, Acme Packaging enhanced its position as the nation's
leading producer of steel strapping and strapping products, and made gains in
key markets and product lines. Alpha Tube Corporation continued to shift an
increased percentage of its sales into more profitable value-added product
lines. Universal Tool & Stamping, despite intense competition and unrelenting
pressure from its auto industry customers to reduce costs, achieved near-record
sales.
In Steel Making, Acme Steel Company benefited from strong demand,
significantly improved pricing, and increased participation in commercial steel
markets.
In both of our business segments, continued productivity and quality gains
contributed to 1994's strong results. We have now expanded the Total Quality
Improvement (TQI) process to all of our operations. Begun in 1991 and based on
employee involvement and process standardization, TQI has helped us achieve
continuous quality improvement throughout the organization.
As we explained in last year's Annual Report and subsequent mailings to
shareholders, our current profitability in Steel Making tends to mask the
long-term inability of Acme Steel's ingot-producing technology to meet
customers' future cost and quality standards, and to earn a satisfactory return
on shareholders' investment.
The installation of a continuous thin slab caster/hot strip mill complex will
position us as a high-quality, low-cost producer of niche steel products. You'll
find further information on ground breaking and construction progress later in
this report.
The modernization and expansion project is being financed with $119.3 million
in equity and $240.7 million in debt, issued in 1994, along with existing and
future cash from operations.
Project startup, scheduled for the second half of 1996, will reduce Acme
Steel's costs by 20 percent, increase shipping capacity by approximately 35
percent, and significantly improve product quality.
All of our people at Acme Metals showed great dedication in helping the
company achieve 1994's record results and begin the modernization and expansion.
During the year, Eugene P. Berg retired from our Board of Directors, after
many years of service with Acme Metals and its predecessor organization. In
1994, Carol M. O'Cleireacain, former director, New York City Office of Man-
agement & Budget, was elected to the Board of Directors. She was nominated by
the United Steelworkers of America, under the terms of the innovative six-year
labor agreement signed by Acme Metals and the union in 1993. Early in 1995,
L. Frederick Sutherland, president, Uniform Services Group, ARAMARK Corporation,
was elected to the Board.
1995 OUTLOOK
The domestic economy remains strong. Growth may not match 1994's pace, but
analysts tell us that the economic recovery gaining strength in Europe and other
major economies may help maintain healthy markets for steel and steel products.
Our internal efforts to improve quality, productivity, and cost performance will
continue to bear fruit, as will our niche market strategies, and we look forward
to strong results.
/s/ Brian W. H. Marsden
Brian W. H. Marsden
Chairman and Chief Executive Officer
March 10, 1995
2
<PAGE>
[PHOTO]
Steel coils are slit to exact width and automatically packaged on Acme Steel's
RS-67 slitter (top photo). The slitter will process the wide coils that Acme
Steel's new facility will roll.
[PHOTO]
Employees at the Chicago Coke Plant carefully clean new doors (at right) between
oven pushes.
Employee members of a TQI team monitor operations of a new argon stirring system
they helped develop (below) at the Basic Oxygen Furnace Steelmaking Shop. Argon
stirring homogenizes steel chemistry and temperature, for a more uniform,
consistent product.
[PHOTO]
STEEL MAKING
ACME STEEL COMPANY
Strong commercial steel markets, significantly improved pricing, continued cost
control efforts, and record quality and productivity performance helped Acme
Steel achieve record sales and operating performance during 1994.
Demand was especially strong in the automotive components, construction
machinery and farm equipment, and converter markets. During 1994, reduced sales
to Acme's Alpha Tube subsidiary permitted Acme Steel to sell a larger percentage
of its output commercially as higher value-added niche steels, improving
profitability.
The market's strength permitted Acme Steel to increase prices twice during
the year. The subsidiary began implementing an additional increase on January 2,
1995.
The year's high operating levels placed heavy demands on the subsidiary's
people and equipment. Despite that, overall performance was exceptional.
Productivity was up, unit conversion costs down, and quality up. The
subsidiary's Total Quality Improvement (TQI) process played a major role in that
improvement.
The bulk of Acme Steel's 1994 capital spending funded environmental
improvements at the company's Chicago Coke Plant and the Basic Oxygen Furnace
steelmaking shop at the Riverdale plant. The subsidiary is ahead of the
timetable for implementing challenging Clean Air Act standards at the coke
operation.
During 1994, the Acme Metals Board of Directors approved construction of a
new continuous thin slab caster/hot strip mill complex adjacent to Acme Steel's
Riverdale plant. Ground was broken for the modernization and expansion on August
25, 1994. Construction will require 27 months, with commercial shipments
scheduled for the fall of 1996. The project will reduce Acme Steel's costs by 20
percent and increase shipping capability by nearly 35 percent. On the next two
pages, you'll find a special update on ground breaking and construction.
AT ACME STEEL IN 1994:
-
THE NEW RS-67 STEEL SLITTER, INSTALLED IN 1993, ACHIEVED PEAK PERFORMANCE.
PROVIDING CUSTOMERS WITH STEEL COILS SLIT TO PRECISE WIDTHS IS ONE OF THE
PROCESSING SERVICES THAT DIFFERENTIATE ACME STEEL IN THE MARKETPLACE.
-
THE SUBSIDIARY SUCCESSFULLY TESTED HIGH NATURAL GAS/OXYGEN INJECTION AT ITS
CHICAGO IRON PLANT. INJECTING NATURAL GAS INTO AN IRONMAKING BLAST FURNACE
SIGNIFICANTLY INCREASES PRODUCTION CAPABILITY.
-
INSTALLATION OF NEW OVEN DOORS AT THE CHICAGO COKE PLANT HELPED KEEP THIS
FACILITY IN COMPLIANCE WITH CLEAN AIR ACT STANDARDS.
3
<PAGE>
ACME STEEL COMPANY
On August 15 at a press conference in Chicago, reporters got their first look
at a model of Acme Metals' new facility, the world's first minigratedTM steel
mill.
[PHOTO]
ACME PLANS PLANT
IN RIVERDALE
RIVERDALE - Acme Metals
Incorporated plans to build a modern new steel-making plant in suburban
Riverdale with state-of-the-art technology designed to cut production and
operating costs.
The plant's new technology also will mean the elimination of about 300
jobs after it opens in 1996, officials said Monday.
Acme said the new equipment will cut manufacturing costs by 20 percent,
mostly through reduced labor costs.
Construction will begin Aug. 27.
Newspapers and broadcast stations throughout the country picked up the story
about Acme Metals' bold investment.
"WE WILL BUILD THE WORLD'S NEWEST, MOST MODERN MINIGRATED[REGISTERED TRADEMARK]
STEEL PLANT ON THIS SITE."
Two years of detailed study and hard work came to a gratifying conclusion in
August 1994. On the 15th, Acme Metals Chairman and Chief Executive Officer Brian
W. H. Marsden held a press conference atop the Sears Tower in downtown Chicago.
As Marsden told reporters, "Twenty years ago, you could have looked out of
these windows and seen a vibrant steel industry. Most of those plants are gone,
but today, Acme is beginning what we believe will be a new chapter in Chicago's
steel saga-and the beginning of a new era for American steelmaking."
Less than two weeks later, on August 25, more than 700 Acme employees,
customers, and suppliers; company, union, and governmental leaders; and
community residents took part in ground breaking ceremonies.
The plant Acme Metals is building is unique, combining the quality of the
company's existing, low-cost integrated steelmaking operations with the
productivity and low cost of the new continuous thin slab caster/compact hot
strip mill technology. The facility, scheduled for completion in the second half
of 1996, will be the world's first minigratedTM mill. It will reduce steel
processing time from today's ten days to just 90 minutes.
[PHOTO]
Acme Metals Chairman and CEO Brian W. H. Marsden (left) briefs reporters at the
announcement press conference.
[PHOTO]
President and COO Stephen D. Bennett and Marsden respond to media questions.
[PHOTO]
Government, union, and company officials stand before members of Acme Metals'
Board of Directors for ceremonial ground breaking.
[PHOTO]
4
<PAGE>
AUGUST 1994
The corn field adjacent to Acme's Steel Making operations
in Riverdale, IL.
[PHOTO]
NOVEMBER 1994
Following ground breaking, preparation of the new facility's site (top inset)
has begun.
[PHOTO]
JANUARY 1995
Test borings (bottom inset) are preparing the site for the plant's foundations,
scheduled to be laid in February and March.
[PHOTO]
Chairman and CEO Marsden addresses guests at the ground breaking ceremonies.
President and COO Steve Bennett is at his left.
[PHOTO]
Lynn Williams, retired International President of the United Steelworkers of
America, spoke at the ground breaking about the labor-management partnership the
modernization represents.
[PHOTO]
Chairman and CEO Marsden points out features of the new facility at the employee
open house following ground breaking.
[PHOTO]
A traditional piper led guests at the ground breaking to a luncheon after the
event.
[PHOTO]
Acme executives (left to right) Brian Marsden, Joe DiMauro, Steve Bennett and
Tony Capito at the ground breaking ceremonies.
[PHOTO]
5
<PAGE>
STEEL FABRICATING
ACME PACKAGING CORPORATION
AT ACME PACKAGING
IN 1994:
-
AUTOMATING COIL HANDLING AND PACKAGING AT ITS LEEDS, AL, PLANT, BROUGHT
SIGNIFICANT PRODUCTIVITY GAINS AND COST REDUCTIONS. THIS AND OTHER INVESTMENTS
AT LEEDS HAVE POSITIONED THE PLANT TO PROFITABLY SERVE GROWING SOUTHEASTERN AND
EXPORT MARKETS.
-
INVESTMENTS ALSO IMPROVED ENVIRONMENTAL AND PRODUCTIVITY PERFORMANCE AT THE BAY
POINT, CA, PLANT.
-
INSTALLATION OF FIVE NEW TRUCK LOADING DOCKS AT THE FLAGSHIP RIVERDALE, IL,
PLANT WILL IMPROVE CUSTOMER SERVICE AND PRODUCTIVITY.
-
SALES OF STRAPPING TOOLS PRODUCED AT ACME PACKAGING'S WORLD-CLASS MANUFACTURING
CENTER IN NEW BRITAIN, CT, SET NEW RECORDS.
Continued improvements in product quality, productivity, and customer service
helped the subsidiary capitalize on strong customer demand and achieve record
sales and financial performance in 1994.
Acme Packaging is the nation's leading manufacturer of steel strapping and
strapping products, including a full line of strapping tools. Robust business
conditions in construction, forest products, and other markets created strong
domestic demand for strapping products throughout the year, although currency
relationships led to a modest decline in its export markets. Exports account for
less than 5 percent of Acme Packaging's shipments.
An active Total Quality Improvement (TQI) process and the launch of a
multi-year effort to achieve ISO/QS 9000 quality certification led to a fourth
consecutive year of improved quality performance. Overall productivity also set
new records, also for a fourth consecutive year.
Acme Packaging made targeted capital expenditures during the year. It also
expanded its distributor training program. Distributor sales represent Acme
Packaging's largest market channel. In 1995, the subsidiary will offer
distributors an automated, computer-based product information system.
To provide customers with a full product line, the subsidiary began
distributing a full line of plastic strapping products in 1994.
Looking to 1995, Acme Packaging will enjoy a full year's results of a 7
percent price increase on its steel strapping, which it began implementing in
November 1994. It should also benefit from a modest increase in export sales,
and from continued quality and productivity gains.
[PHOTO]
Coils of steel strapping move down the new automated handling and packaging line
(top photo) installed at the Leeds, AL, plant. Leeds is one of Acme Packaging's
three satellite plants.
[PHOTO]
Construction of five new shipping bays at the flagship Riverdale plant (middle
photo) increased shipping capacity and improved ability to turn customer orders
around quickly.
Acme Packaging sales executives conduct a distributor training program (below),
discussing benefits strapping customers will see from Acme Metals' Steel Making
modernization. Use of automated, computer-based information systems is part of
expanded distributor communication efforts, to strengthen the subsidiary's
leading sales channel.
[PHOTO]
6
<PAGE>
[PHOTO]
Modernized tube mill at Alpha (top photo) produces welded steel tubing up to
3 1/2 inches in diameter.
[PHOTO]
Micrometer readings of key tubing quality parameters are taken by operators at
the tube mill, then automatically entered into a computer system (at left).
Tracking product quality provides Alpha and its customers a permanent record of
each product and process.
[PHOTO]
Employees from all three Alpha Tube operations listen attentively (at left)
to customer presentations at first annual TQI Days presentations. Alpha
instituted the employee involvement quality effort during 1994. In photo below,
Alpha employee inspects tubing strapped and ready to ship.
[PHOTO]
STEEL FABRICATING
ALPHA TUBE CORPORATION
During 1994, Alpha Tube accelerated its shift from commodity markets to becoming
a marketing-driven manufacturer of specialty, value-added tubing products. Gains
in target markets, customer base rationalization, development of innovative new
products, and improved quality and productivity performance produced record
sales and financial performance.
The tube manufacturing industry is fragmented and highly competitive. The
target market strategy begun in 1993 is differentiating Alpha, providing
customers excellent service and quality products at a competitive price and
value. Expansion of Alpha's Tech Service Group provides customers technical and
metallurgical support. Careful analysis of Alpha's strengths, including
extensive use of activity-based costing, has identified target markets.
Complementing this marketing shift, Alpha has continued its efforts to reduce
costs and scrap and improve product quality and productivity. A subsidiary-wide
Total Quality Involvement (TQI) process and targeted capital spending have
helped accomplish these objectives. Alpha has also continued to grow its own
steel service center business, through its Alta Slitting operation. Alta, which
processes steel for Alpha's tube mills, also stocks quantities of various Acme
Steel high-carbon, value-added niche market steels, which it supplies to the
nearby automotive market on a just-in-time basis. In 1995, Alta Slitting will
broaden its product line.
Alpha Tube anticipates further growth and improved financial performance in
1995, thanks to quality and productivity improvements, further gains in target
markets, and increased sales from new products, such as the patented Supra
Tube.-TM-
AT ALPHA TUBE CORPORATION IN 1994:
-
MODERNIZATION OF ONE OF THE SUBSIDIARY'S FIVE TUBE PRODUCTION MILLS HAS IMPROVED
PRODUCT QUALITY, PRODUCTIVITY, AND COST PERFORMANCE.
-
EMPLOYEES OF ALPHA'S ALPHA TUBE, BETA TUBE, AND ALTA SLITTING OPERATIONS MET FOR
A FULL-DAY KICKOFF OF THE SUBSIDIARY'S TOTAL QUALITY INVOLVEMENT PROCESS,
FEATURING CUSTOMER PRESENTATIONS, TEAM BUILDING EXERCISES, AND OTHER ACTIVITIES.
THREE TQI TEAMS FORMED IN 1994 ARE FOCUSING ON COMMUNICATION, TEAMWORK, AND
SAFETY.
-
ALPHA PATENTED ITS WELDED SUPRA TUBE-TM- PRODUCT, PROVIDING PERFORMANCE
COMPARABLE TO MORE COSTLY TUBING.
7
<PAGE>
STEEL FABRICATING
UNIVERSAL TOOL & STAMPING COMPANY, INC.
AT UNIVERSAL TOOL IN 1994:
-
A NEW JACK THAT STORES WITHIN THE TIRE RIM PROVIDES IMPROVED TRUNK SPACE. FORD
MOTOR COMPANY WILL INTRODUCE IT IN ITS BEST-SELLING TAURUS AND SABLE CAR LINES
FOR THE 1996 MODEL YEAR.
-
UNIVERSAL DEVELOPED TWO ADDITIONAL NEW DESIGNS, ONE, A LIGHTER, LOWER-COST AUTO
JACK, WILL BE INSTALLED IN GENERAL MOTORS' FULL-SIZED CAR LINES BEGINNING IN
1996. THE OTHER, A LIGHTER, LOWER-COST SCISSORS JACK, REPLACED A COMPETITOR'S
BOTTLE JACK IN 1994 IN NISSAN'S PICKUP TRUCK LINE.
-
THE ULTRALIGHT-TM- JACK, USING A SPECIAL HIGH-STRENGTH STEEL, WAS ACCEPTED
FOR ONE OF GENERAL MOTORS' 1996 VAN LINES.
Universal, a leading manufacturer of jacks for automobiles and light trucks,
achieved near-record sales and financial performance during 1994.
As a supplier to the automotive industry, Universal competes in a
price-sensitive market against component manufacturers throughout the world who
sell to auto and truck manufacturers. Those customers demand that suppliers
continually reduce costs and improve product quality.
Despite these competitive pressures, Universal's performance exceeded
expectations for the year. Vehicle sales remained strong throughout 1994.
Continued quality and productivity gains helped improve cost performance, while
aggressive new product development promises sales gains in the future. New
lightweight jacks, improved jack storage designs, and other advances all helped
improve the subsidiary's competitiveness.
During 1994, Universal accelerated the implementation of the Total Quality
Improvement (TQI) process, and also began a several-year effort to achieve
ISO 9000 certification. ISO 9000 is an internationally accepted quality systems
standard.
In 1995, the subsidiary will face continued pricing pressures from
customers. These pressures, plus lower anticipated shipments, will offset the
enhanced operating performance.
[PHOTO]
Three new jack designs (top) developed in 1994 will benefit future sales.
[PHOTO]
Installation of an automated coordinate measurement unit helps Universal meet
customers' strictest quality standards.
Employee places jack subassembly onto painting line.
[PHOTO]
8
<PAGE>
--------------------------------------------------------------------------------
BOARD OF DIRECTORS
BRIAN W. H. MARSDEN 3,4
Chairman and Chief Executive Officer of
Acme Metals Incorporated
STEPHEN D. BENNETT 3,4
President and Chief Operating Officer of
Acme Metals Incorporated
C. J. GAUTHIER 1,2,3,5
Retired Chairman, President, and
Chief Executive Officer of NICOR, Inc.
(public utility holding company)
EDWARD G. JORDAN 1,4,5
Retired Chairman of Consolidated Rail
Corporation (Conrail)
ANDREW R. LAIDLAW 1,3,5
Chairman of the Executive Committee of the
law firm of Seyfarth, Shaw, Fairweather &
Geraldson
FRANK A. LEPAGE 2,4,5
Retired Director and Executive Vice President of
The Firestone Tire and Rubber Company
(manufacturer of tires and related products)
REYNOLD C. MACDONALD 1,3,4,5
Retired Chairman of the Board of
Acme Steel Company
JULIEN L. MCCALL 2,4,5
Retired Chairman of the Board and Chief
Executive Officer of National City Corporation
(bank holding company)
CAROL M. O'CLEIREACAIN 1,5
Independent Consultant and former Director,
New York City Office of Management and
Budget (government agency)
WILLIAM P. SOVEY 2,4,5
Vice Chairman and Chief Executive Officer of
the Newell Co. (diversified manufacturer of
hardware, housewares, office, and industrial
products)
L. FREDERICK SUTHERLAND 2,4
President, Uniform Services Group of
ARAMARK Corporation (highly diversified
services company)
WILLIAM R. WILSON 1,2,5
Retired Chairman of the Board and
Chief Executive Officer of Lukens, Inc.
(diversified metals manufacturer)
BOARD COMMITTEES
1 Audit Review
2 Compensation
3 Executive
4 Finance
5 Nominating
--------------------------------------------------------------------------------
EXECUTIVE OFFICERS
BRIAN W. H. MARSDEN
Chairman and Chief Executive Officer
STEPHEN D. BENNETT
President and Chief Operating Officer
JAMES W. HOEKWATER
Treasurer
GREGORY J. PRITZ
Controller
RICHARD J. STEFAN
Vice President-Employee Relations
EDWARD P. WEBER, Jr.
Vice President, General Counsel, and Secretary
JERRY F. WILLIAMS
Vice President-Finance and Administration,
Chief Financial Officer
--------------------------------------------------------------------------------
INVESTOR INFORMATION
ANNUAL MEETING
Shareholders are cordially invited to attend the Annual Meeting of Shareholders,
which will be held at 10:00 a.m., April 27, 1995, in the 6th-floor auditorium of
Harris Trust & Savings Bank, 111 West Monroe Street, Chicago, Illinois.
STOCK MARKET INFORMATION
Acme Metals Incorporated common stock is traded on the NASDAQ National Market
System under the symbol ACME and on the Toronto Stock Exchange under the symbol
AMK. As of March 6, 1995, there were 11,576,084 shares of common stock
outstanding, held by 6,528 shareholders of record.
DIVIDENDS
No dividends on the common stock have been declared or paid since Acme became a
public company. Special payments in 1992 and 1988 reflected the redemption of
preferred stock purchase rights. In addition, certain covenants on the company's
debt limit its ability to pay future dividends.
-------------------------------------------------------------------------------
PRINCIPAL OFFICERS OF SUBSIDIARY COMPANIES
ACME PACKAGING CORPORATION
Robert W. Dyke, President
ACME STEEL COMPANY
Gary S. Lucenti, President
ALPHA TUBE CORPORATION
Steven G. Jansto, President
UNIVERSAL TOOL & STAMPING COMPANY, INC.
Larry C. Kipp, President
--------------------------------------------------------------------------------
SHAREHOLDER QUESTIONS AND 10-K OFFER
Shareholders with questions concerning Acme Metals, or requesting a copy of the
company's Form 10-K, should direct inquiries to Charles A. Nekvasil, director,
Public and Investor Relations, Acme Metals Incorporated.
Shareholders with questions concerning the transfer of shares should contact:
TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company of New York
Shareholder Services
P.O. Box 2500
Jersey City, NJ 07303-2500
201-324-0498 or 800-446-2617
CO-TRANSFER AGENT AND REGISTRAR
Montreal Trust Company
151 Front Street West
Toronto, Ontario, Canada M5J 2N1
416-981-9633
For information regarding lost stock certificates, duplicate mailings, or change
of address, including seasonal changes, please contact First Chicago Trust
Company of New York.
Hearing-impaired stockholders can communicate with First Chicago Trust
Company of New York via a telecommunications device (TDD), phone number
201-222-4955.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
200 East Randolph Drive
Chicago, IL 60601
--------------------------------------------------------------------------------
<PAGE>
EXHIBIT 13
APPENDIX TO ANNUAL REPORT
*The top four photos on the cover (clockwise from right top) are a picture
of steel strapping, a picture of an auto jack, a picture of welded steel tubing,
and a picture of a coil of steel. The bottom photo is a picture of a model of
the company's new steel making facility. The cover reads, "Our two business
segments, Steel Making and Steel Fabricating, achieved record sales and
operating performances in 1994. Looking to the future, a major 27-month
modernization and expansion of our Steel Making operations, begun in 1994, will
create an even stronger, more profitable company for our shareholders."
*The first graph on the inside front cover (folded) is a chart showing the
company's net sales for the last three years. Sales shown are $391.5 million
for 1992, $457.4 million for 1993, and $522.9 million for 1994.
*The second graph on the inside front cover (folded) is a chart showing the
company's net income (loss) for the last three years. Shown are a loss ($2.8
million, before cumulative effect of changes in accounting principles) for 1992,
net income of $6.3 million for 1993, and net income of $17.0 million for 1994.
*The third graph on the inside front cover (folded) is a chart showing
shareholders' equity for the last three years. Shown are $89.3 million for
1992, $83.2 million for 1993, and $223.3 million for 1994.
*The top photo on the inside gatefold cover is a picture of coils of hot-
rolled steel.
*The second (from top) photo on the inside gatefold cover is a picture of
steel strapping.
*The third (from top) photo on the inside gatefold cover is a picture of
welded steel tubing.
1
<PAGE>
*The fourth (from top) photo on the inside gatefold cover is a picture of
an auto jack, stored in a tire rim.
*The photo on Page 2 is a picture of Brian W.H. Marsden, Chairman and Chief
Executive Officer of Acme Metals Incorporated.
*The top photo on Page 3 is a picture of the RS-67 Steel Slitter.
*The middle photo on Page 3 is a picture of an employee cleaning oven doors
at the company's Chicago Coke Plant.
*The bottom photo on Page 3 is an employee team observing operation of the
argon stirring station at the Basic Oxygen Furnace Steel Making Shop.
*The first photo on Page 4 (clockwise from top) is a picture of a model of
the company's new steel making facility.
*The second photo (clockwise from top) on Page 4 is a picture of
dignitaries and the Board of Directors at the ground breaking ceremonies for the
new facility.
*The third photo (clockwise from top) on Page 4 is a picture of Acme Metals
President and Chief Operating Officer Stephen D. Bennett and Chairman and Chief
Executive Officer Brian W.H. Marsden at the press conference announcing the new
facility.
*The fourth photo (clockwise from top) on Page 4 is a Picture of Acme
Metals Chairman and Chief Executive Officer Brian W. H. Marsden at the press
conference announcing the new facility.
*The first photo (clockwise from left top) on Page 5 is a picture of the
corn field site for the new facility.
*The second photo (clockwise from top) on Page 5 is a picture of a
construction worker on the construction site.
*The third photo (clockwise from top) on Page 5 is a picture of equipment
on the construction site.
*The fourth photo (clockwise from top) on Page 5 is a picture of Lynn
Williams, retired International President of the United Steelworkers of America.
2
<PAGE>
*The fifth photo (clockwise from top) on Page 5 is a picture of Acme
executives Brian Marsden, Joe DiMauro, Steve Bennett, and Tony Capito.
*The sixth photo (clockwise from top) on Page 5 is a picture of a piper
leading ground breaking guests to a luncheon.
*The seventh photo (clockwise from top) on Page 5 is a picture of Acme
Metals Chairman and Chief Executive Officer Brian W.H. Marsden showing employees
a model of the new steel making facility.
*The eighth photo (clockwise from top) on Page 5 is a picture of Acme
Metals Chairman and Chief Executive Officer Brian W.H. Marsden and President and
Chief Operating Officer Stephen D. Bennett at the ground breaking.
*The top photo on Page 6 is a picture of a new automated handling and
packaging line at the Acme Packaging Corporation Leeds, AL plant.
*The middle photo on Page 6 is a picture of the new shipping bays at the
Acme Packaging Corporation's Riverdale, IL plant.
*The bottom photo on Page 6 is a picture of a distributor training session.
*The first photo (from top) on Page 7 is a picture of a modernized tube
mill.
*The second photo (from top) on Page 7 is a picture of an employee taking
micrometer readings of a piece of welded steel tube.
*The third photo (from top) on Page 7 is a picture of employees at a
training session.
*The fourth photo (from top) on Page 7 is a picture of an employee
inspecting welded steel tubing.
*The top photo on Page 8 is a picture of three new auto and truck jack
models.
3
<PAGE>
*The middle photo on Page 8 is a picture of an employee operating an
automated coordinate measurement unit.
*The bottom photo on Page 8 is a picture of an employee placing a jack
subassembly onto a painting line.
4
<PAGE>
EXHIBIT 21
ACME METALS INCORPORATED
SUBSIDIARY LISTING
AS OF MARCH 1, 1995
------------------------
Subsidiary Name, D/B/A, State or Country of
and Its Subsidiaries Incorporation Type of Business
------------------------------ --------------------- ----------------------
Acme Steel Company Delaware Integrated steel
producer
(d/b/a Acme Steel Company, Inc.,
State of Alabama)
(d/b/a Acme Steelstrapping Company,
State of Texas)
Alabama Metallurgical Washington Leases real estate and
Corporation equipment
Acme Packaging Corporation Delaware Manufacture and sale of
(d/b/a Acme Steel Packaging steel strapping and
Corporation, State of related tools
California)
Acme Steel Company Barbados Foreign trading
International, Inc. company
Alpha Tube Corporation Delaware Manufacture and sale
of welded carbon steel
tubing
Alta Slitting Corporation Delaware Slitting and processing
of steel products
Universal Tool & Stamping Indiana Manufacture and sale of
Company, Inc. auto and truck jacks
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-17235, 33-19437, 33-38747 and 33-30841) of Acme
Metals Incorporated of our report dated March 17, 1995 appearing on page 33 in
this Annual Report on Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
March 21, 1995
Chicago, Illinois
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheets at December 31, 1994 and Consolidated
Statements of Operations for the Twelve Months Ended December 31, 1994 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-25-1994
<PERIOD-START> DEC-26-1993
<PERIOD-END> DEC-25-1994
<CASH> 76,639
<SECURITIES> 76,384
<RECEIVABLES> 62,179
<ALLOWANCES> 1,301
<INVENTORY> 44,982
<CURRENT-ASSETS> 273,842
<PP&E> 410,304
<DEPRECIATION> 261,475
<TOTAL-ASSETS> 682,330
<CURRENT-LIABILITIES> 81,391
<BONDS> 265,055
<COMMON> 11,558
0
0
<OTHER-SE> 211,720
<TOTAL-LIABILITY-AND-EQUITY> 682,330
<SALES> 522,880
<TOTAL-REVENUES> 522,880
<CGS> 431,615
<TOTAL-COSTS> 446,592
<OTHER-EXPENSES> 42,708<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,031
<INCOME-PRETAX> 28,693
<INCOME-TAX> 9,935
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 1,787<F2>
<CHANGES> 0
<NET-INCOME> 16,971
<EPS-PRIMARY> 2.16
<EPS-DILUTED> 0
<FN>
<F1>Includes a $9,459 non-recurring charge.
<F2>For prepayment of previously existing debt.
</FN>
</TABLE>
