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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 September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ____
Commission file number 0-14061
STEEL TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Kentucky 61-0712014
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15415 Shelbyville Road, Louisville, KY 40245
(Address of principal executive offices)
Registrant's telephone number, including area code: 502-245-2110
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
PREFERRED SHARE PURCHASE RIGHTS
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 [ ].
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 amendments to this Form 10-K. [X]
Aggregate market value of the voting stock (which consists solely of
shares of common stock) held by non-affiliates of the registrant as
of December 8, 2000, computed by reference to the closing price of
the registrant's common stock, as quoted in the Nasdaq National
Market System on such date: $53,520,710.
Number of shares of the registrant's Common Stock outstanding at
December 8, 2000: 10,316,251.
Portions of the registrant's annual report to shareholders for the
fiscal year ended September 30, 2000 are incorporated by reference
into Part II. Portions of the definitive proxy statement furnished to
shareholders of the registrant in connection with the annual meeting
of shareholders to be held on January 25, 2001 are incorporated by
reference into Part III.
PART I
ITEM 1. BUSINESS
GENERAL
Steel Technologies Inc. ("the Company") was incorporated under the
laws of the state of Kentucky in 1971 as Southern Strip Steel, Inc.
In June 1985, the name of the corporation was changed to Steel
Technologies Inc.
The Company is an intermediate steel processor engaged in the
business of processing flat rolled steel to specified close
tolerances in response to orders from industrial customers who
require steel of precise thickness, width, temper, finish and shape
for their manufacturing purposes. The Company purchases commercial
tolerance steel in coils up to 72 inches in width from major steel
mills, processing it to the precise thickness, width, temper, finish
and shape specified by its customers. The processed steel is
distributed from facilities located in Indiana, Kentucky, Maryland,
Michigan, Missouri, North Carolina, Ohio and South Carolina in the
U.S. and four facilities in Mexico. The Company has customers in 38
states primarily in the East, Midwest and South, as well as into
Mexico and Canada. The Company's principal processed products are:
cold-rolled strip and sheet, cold-rolled one-pass strip, high carbon
and alloy strip and sheet, hot-rolled strip and sheet, high strength
low alloy strip and sheet, hot-rolled pickle and oil and coated strip
and sheet, pickling of hot-rolled black coils, blanking and
cut-to-length processing of coil steel, and fabrication and welding
of steel sheets and plates.
Intermediate steel processors occupy a niche between the primary
steel producers and industrial customers who need processed steel for
their end-product manufacturing purposes. The primary producers have
historically emphasized the sale of commercial tolerance steel to
large volume purchasers and have generally viewed the intermediate
steel processor as an integral part of this customer base.
Furthermore, end-product manufacturers have increasingly sought to
purchase steel with closer tolerances, on shorter lead times, and
with more reliable and more frequent delivery than the primary
producers can efficiently provide. Additionally, most manufacturers
are not willing to commit to the investment in technology, equipment
and inventory required to further process the steel for use in their
manufacturing operations. These industry forces have created a
market in which the strength of the Company's business is based upon
its capability to process steel to more precise specifications and to
service the steel purchasing and delivery requirements of its
customers more expeditiously than the primary producers.
STEEL PROCESSING
The Company maintains inventory of coiled steel purchased from the
primary producers and mini-mills. This steel, purchased as a
continuous sheet, typically 36 to 72 inches wide and between .015 and
.625 inches thick is known as "commercial tolerance" because its
ranges of thickness, width and temper are established by general
industry standards which may not be of sufficient quality for the
manufacturing purposes of the Company's customers.
Customer orders are entered in a computerized order entry system, and
appropriate inventory is then selected and scheduled for processing
in accordance with the customer's specified delivery date. The
Company attempts to maximize yield from its inventory by scheduling
customer orders to use to the fullest extent practicable the
purchased widths of its coils. One of the first processing functions
involves the pickling of hot rolled black coil steel. This process
is a cleaning process that improves the quality of hot rolled steel
by removing the scale on the surface of the steel and prepares the
hot rolled steel for further processing. The next processing
function typically involves slitting coils to specified widths
subject to close tolerances. After slitting, the processed product
is ready for either delivery to the customer or additional
processing.
Many of the Company's orders involve an additional process known as
"cold reduction." Cold reduction reduces the thickness of the steel
to a customer's specification by passing the steel through a set of
rolls under pressure. This process significantly increases the value
added by the Company to the product. During the rolling process the
edges of the steel may also be conditioned into square, full round or
partially round shapes. After cold reduction, it is sometimes
necessary to subject the rolled steel to high temperatures for long
periods of time in order to "anneal" or soften the steel. This
annealing capability is accomplished in the Company's own furnaces
and is particularly suitable for high carbon and alloy strip orders.
After annealing, orders are then ready for additional slitting and
cold reduction and subsequent shipment to the customer.
The Company has achieved high quality and productivity levels through
its commitment to modern and efficient equipment used to perform the
pickling, slitting, cold reduction, annealing, blanking processes.
The Company's pickling facility is capable of high volume pickling,
leveling, coating and slitting of hot rolled steel to greater than
industry standards. The Company's slitting lines are capable of
maintaining width tolerances of +/- .002 inches. The Company has
computerized all of its rolling equipment, which has improved its
capability to deliver flat rolled steel products processed to closer
than standard tolerances. The Company's computerized rolling mills
are capable of maintaining thickness tolerances of +/-.0003 inches.
Computers monitor thickness during the cold reduction process,
rapidly adjusting roll position to maintain the proper tolerance as
the steel passes through the rolling mill. The computers also provide
both visual displays and documented records of the thickness
maintained throughout the entire coil. Annealing is accomplished in
high convection bell furnaces. These furnaces feature extraordinary
thermal consistency, rapid water cooling and advanced atmosphere
controls for good surface cleanliness of the rolled steel product.
The Company's blanking lines are capable of producing blanks from
coils up to 84 inches in width and maximum gauge of .25 inches thick.
Flatness of the steel is controlled by an automatic hydraulic leveler
and diagnostic equipment that continually monitors the steel during
processing to minimize scrap and provide up-to-the minute production
information.
QUALITY CONTROL
The ability to obtain high quality steel from its suppliers on a
consistent basis is critical to the Company's business. Most of any
nonconforming raw material is diverted to less critical applications.
The Company, through its technical services department, has
instituted strict quality control measures to assure that the quality
of purchased raw materials will allow the Company to meet the
specifications of its customers and to reduce the costs of production
interruptions resulting from poor quality steel. Physical, chemical,
and metallographic analyses are performed on selected raw materials
to verify that their mechanical and dimensional properties,
cleanliness, surface characteristics, and chemical content are
acceptable. Similar analyses are conducted on processed steel on a
selected basis before delivery to the customer. The Company also
uses statistical process control techniques to monitor its slitting
and cold reduction processes so management can document to customers
that required tolerances have been continuously maintained throughout
processing. This close attention to product quality has enabled the
Company to limit the amount of customer returns and allowances. The
Company's technical services department is located in the research
and development engineering and technology center in Louisville,
Kentucky. The Company's metallurgical laboratory is located in the
Eminence, Kentucky plant.
MARKETING
The Company's marketing staff consists of sales personnel located
throughout the United States and Mexico. In addition to cultivating
additional business from existing customers and developing new
accounts, these sales personnel are responsible for identifying
market trends in their assigned areas. The marketing staff consists
of one Senior Vice President-Sales, five regional Vice
Presidents-Sales, and by the Company's technical services department,
which develops application engineering ideas. The Company is
frequently requested to recommend the type of steel which can best
serve a customer's specific needs.
CUSTOMERS AND DISTRIBUTION
The Company produces to customer order rather than for inventory.
Although some blanket orders are taken for periods of up to one year,
such blanket orders represent a projection of anticipated customer
requirements and do not become firm orders until the customer calls
for delivery of specified quantities of particular products at
specified times. The Company is therefore required to maintain a
substantial inventory of raw materials to meet the short lead times
and just-in-time delivery requirements of many of its customers.
Customers typically place firm orders for delivery within two to
three weeks. The Company's backlog of firm orders at November 30,
2000 was $44,000,000, approximately 7% higher than the $41,000,000 at
November 30, 1999.
The Company processes steel for sale to a variety of industrial
customers, including those in the automotive, automotive supply,
appliance, lawn and garden, railcar, machinery and office equipment
industries. In fiscal 2000, 1999, and 1998 sales to the automotive
industry directly accounted for 10% of the Company's sales,
respectively, and sales to the automotive supply industry accounted
for 50%, respectively. The Company believes its long-term
relationships with its major customers are a significant factor in
its business.
The Company supplies processed steel to more than approximately 1,000
active accounts. These customers are generally located within 300
miles of one of the Company's plants. The location of Company
facilities near a great number of customers permits the efficient
distribution of the Company's products by truck. Independent
trucking companies afford a convenient and expeditious means for
shipping approximately two-thirds of the Company's products to its
customers. The Company also maintains a small number of
tractor-trailer trucks to provide flexible delivery service to those
customers who do not arrange for their own shipping needs.
SUPPLIERS
In 2000, the Company obtained its steel for processing from a number
of integrated and mini mill sources close to its facilities and a
limited number of foreign steel companies. The Company obtains its
raw material requirements by ordering steel possessing specified
physical qualities and alloy content. The Company believes that it
is not dependent on any one of its suppliers for raw materials and
that its relationships with its suppliers are good.
JOINT VENTURES
In April 1987, the Company formed Mi-Tech Steel, Inc. (Mi-Tech
Steel), a 50% owned corporate joint venture with Mitsui Steel
Development Co., Inc. Mi-Tech Steel was established to own and
operate high-volume steel slitting facilities to serve Japanese and
domestic automotive and appliance parts manufacturers located in the
United States. The initial processing facility was opened in
December 1987 in Murfreesboro, Tennessee. In January 1990, a second
Mi-Tech Steel processing facility opened in Greensburg, Indiana. A
third processing facility, the first for Mi-Tech Steel with pickling
and slitting capabilities opened in December 1997 in Decatur,
Alabama. Steel Technologies is providing management services for the
Mi-Tech Steel operations.
In October 1990, Processing Technology, Inc. (Processing Technology),
was established. The Company holds a 5% investment in the common
stock of this corporate joint venture with LTV Steel Company and
Mitsui Steel Development Co., Inc. Processing Technology operates
facilities in Perrysburg, Ohio and Burns Harbor, Indiana, which
process flat rolled steel and provide steel storage principally for
LTV Steel Company. Both facilities began operations in fiscal 1992.
COMPETITION
Steel processing is highly competitive. The Company primarily
competes with a number of other intermediate steel processors who are
capable of processing steel to closer than standard tolerance. The
primary characteristics of competition encountered by the Company are
quality of product, reliability of delivery and price.
ENVIRONMENTAL MATTERS
The Company's manufacturing facilities are subject to many existing
and proposed federal, state and foreign regulations designed to
protect the environment. Presently, the Company has no knowledge of
any material pending or threatened litigation or administrative
proceeding against the Company involving environmental matters.
Management believes the Company's manufacturing facilities are in
compliance with applicable federal, state and foreign environmental
regulations, and is not presently aware of any fact or circumstance
which would require the expenditure of material amounts for
environmental compliance in the future.
EMPLOYEES
As of September 30, 2000, the Company employed approximately 1,150
full-time people, of which approximately 130 are represented by
collective bargaining agreements. The Company has never experienced
a significant work stoppage and considers its employee relations to
be good.
ITEM 2. PROPERTIES
The Company's principal processing plants and distribution facilities
are as follows:
Square Date Opened/
Plant Location Footage Acquired
Eminence, Kentucky 180,000 sq.ft. 1971
Portage, Indiana 242,000 sq.ft. 1987
Elkton, Maryland 60,000 sq.ft. 1989
Canton, Michigan 230,000 sq.ft. 1991
Monterrey, Mexico 80,000 sq.ft. 1994
Ghent, Kentucky 230,000 sq.ft. 1995
Puebla, Mexico 20,000 sq.ft. 1997
Clinton, No. Carolina 110,000 sq.ft. 1997
Willoughby, Ohio 75,000 sq.ft. 1998
Mexico City, Mexico 20,000 sq.ft. 1998
Huger, So. Carolina 84,000 sq.ft. 1999
Kennett, Missouri 53,000 sq.ft. 2000
Wurtland, Kentucky 47,000 sq.ft. 2000
Matamoros, Mexico 80,000 sq.ft. 2000
All of these facilities are owned by the Company except for the
Mexico City, Puebla and Wurtland facilities which are leased. In
1999, the Company purchased the real property used for processing in
North Carolina and Ohio. Prior to that, the company had lease
arrangements with these facilities subsequently purchased.
The engineering division, technical services located in Louisville,
Kentucky occupies an 11,000 square foot building leased by the
Company.
The Company's executive offices are located in Louisville, Kentucky
in a 30,000 square foot building owned by the Company.
Mi-Tech Steel currently operates two high volume steel slitting
operations and one high volume pickling and slitting operation. The
Murfreesboro, Tennessee plant and Greensburg, Indiana Plant consist
of 300,000 and 160,000 square feet respectively. The Mi-Tech Steel
Alabama facility, a wholly-owned subsidiary of Mi-Tech Steel, Inc.,
in Decatur, Alabama consists of two facilities comprising a total of
160,000 square feet.
All operating properties are in good repair and in suitable condition
for the purposes for which they are used. The Company's Elkton,
Maryland and Kennett, Missouri processing plants and the executive
office building are subject to outstanding mortgages covering certain
long-term financing arrangements.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists the names, positions held and ages of all
the executive officers of the Company:
Name Age Title
Merwin J. Ray 71 Chairman of the Board
Bradford T. Ray 42 Vice Chairman of the Board and Chief
Executive Officer
Michael J. Carroll 43 President and Chief Operating
Officer
Howard F. Bates, Jr. 54 Vice President-Technical Services
Joseph P. Bellino 50 Chief Financial Officer and Treasurer
Officers are elected annually by and serve at the discretion of the
Board of Directors. Messrs. Merwin J. Ray, Bradford T. Ray, Howard
F. Bates, Jr. and Michael J. Carroll are members of the Company's
Board of Directors.
Mr. Merwin J. Ray has served as Chairman of the Board of the Company
since its incorporation in 1971. He previously held the positions of
Chief Executive Officer from May 1985 until November 1999 and
President of the Company from 1971 until May 1985. Mr. Merwin J. Ray
is the father of Bradford T. Ray, Vice Chairman and Chief Executive
Officer of the Company.
Mr. Bradford T. Ray has served as Vice Chairman and Chief Executive
Officer since November 1999. He previously held the positions
President and Chief Operating Officer from November 1994 until
November 1999, Executive Vice President from April 1993 to November
1994 and Vice President-Manufacturing of the Company from January
1987 to April 1993.
Mr. Michael J. Carroll has served as President and Chief Operating
Officer since November 1999. He previously held the positions of
Executive Vice President from January 1995 until November 1999,
Senior Vice President-Sales from April 1993 to January 1995 and Vice
President-Sales from July 1987 to April 1993.
Mr. Howard F. Bates, Jr. has served as Vice President-Technical
Services since November 1981. From August 1977 to November 1981, he
held the position of Manager of Technical Services.
Mr. Joseph P. Bellino has served as Chief Financial Officer and
Treasurer of the Company since October 1997. He previously held the
position of President of Beacon Capital Advisors Company from 1996 to
1997. From 1989 to 1995, Mr. Bellino served as President of Rhawn
Enterprises, Inc.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The information required for Item 5 is incorporated by reference
herein, pursuant to General Instruction G(2), from the information
provided under the section entitled "Market Price and Dividend
Information" on page 6 of the Company's annual report to shareholders
for the year ended September 30, 2000.
ITEM 6. SELECTED FINANCIAL DATA
The information required for Item 6 is incorporated by reference
herein, pursuant to General Instruction G(2), from the information
provided under the section entitled "Selected Financial Data" on page
5 of the Company's annual report to shareholders for the year ended
September 30, 2000.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required for Item 7 is incorporated by reference
herein, pursuant to General Instruction G(2), from the information
provided under the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 7
through 11 of the Company's annual report to shareholders for the
year ended September 30, 2000.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risks related to changes in interest
rates. To manage interest rate exposures, the Company uses fixed and
variable debt. The Company does not enter into derivative financial
instrument transactions for speculative purposes.
The following table summarizes principal cash flows and related
interest rates of the Company's long-term debt at September 30, 2000
by expected maturity dates. The weighted average interest rate of the
fixed-rate debt is based on the actual average rates at September 30,
2000. The variable-rate debt is based on actual rates at September
30, 2000. The variable-rate debt consists primarily of the line of
credit of which $86,000,000 is outstanding at September 30, 2000.
While the line of credit matures during fiscal 2002, the company
anticipates extending this arrangement for the foreseeable future.
(In thousands except for interest rates) September 30, 2000
Fair
2001 2002 2003 2004 2005 Thereafter Total Value
-------------------------------------------------------------
Long-term debt
(fixed) $6,149 $ 6,183 $5,916 $5,900 $5,870 $1,525 $31,543 $30,275
Weighted average
interest rates 8.48% 8.47% 8.45% 8.42% 8.31%
Long-term debt
(variable) $ 100 $86,100 $ 100 $ 100 $ 100 $3,600 $90,100 $90,100
Weighted average
interest rates 6.92% 5.93% 5.60% 5.60% 5.60% 5.60%
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of Steel Technologies
Inc. and Subsidiaries on pages 12 through 24 and Report of
Independent Accountants on page 25 are included in the Company's
annual report to shareholders for the year ended September 30, 2000,
and the sections entitled "Quarterly Financial Data" and "Market
Price and Dividend Information" on page 6 thereof are incorporated
herein by reference.
Consolidated Balance Sheets - September 30, 2000 and 1999
Consolidated Statements of Income - Years ended September 30, 2000,
1999 and 1998
Consolidated Statements of Comprehensive Income -Years ended
September 30, 2000, 1999 and 1998
Consolidated Statements of Shareholders' Equity -Years ended
September 30, 2000, 1999 and 1998
Consolidated Statements of Cash Flows -Years ended September 30,
2000, 1999 and 1998
Notes to Consolidated Financial Statements
Report of Independent Accountants
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3), the information required by
Item 10 is incorporated by reference herein from the material under
the section entitled "Election of Directors" contained on pages 3
through 7, and "Election of Directors Section 16(a) Beneficial
Ownership Reporting Compliance" on page 7 in the Company's definitive
proxy statement filed with the Securities and Exchange Commission
related to the annual meeting of shareholders of Steel Technologies
Inc. to be held on January 25, 2001. The information regarding
Executive Officers required by Item 401 of Regulation S-K is included
in Part I hereof under the section entitled "Executive Officers of
the Registrant".
ITEM 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G(3), the information required by
Item 11 is incorporated by reference herein from the material under
the sections entitled "Election of Directors - Compensation of
Directors" contained on page 7 and "Executive Compensation" contained
on pages 8 through 11 in the Company's definitive proxy statement
filed with the Securities and Exchange Commission related to the
Company's annual meeting of shareholders to be held on January 25,
2001.
Information appearing in the sections entitled "Compensation
Committee Report on Executive Compensation" and "Performance Graph"
contained on pages 12 through 17 in the Company's definitive proxy
statement filed with the Securities and Exchange Commission related
to the Company's annual meeting of shareholders to be held on January
25, 2001 shall not be deemed to be incorporated by reference in this
report, notwithstanding any general statement contained herein
incorporating portions of such proxy statement by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Pursuant to General Instruction G(3), the information required by
Item 12 is incorporated by reference herein from the material under
the sections entitled "Voting Securities" contained on pages 2
through 3 and "Election of Directors" contained on pages 3 through 7
in the Company's definitive proxy statement filed with the Securities
and Exchange Commission related to the Company's annual meeting of
shareholders to be held on January 25, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G(3), the information required by
Item 13 is incorporated by reference herein from the material under
the sections entitled "Certain Transactions" contained on page 10 and
"Election of Directors" contained on pages 3 through 7 in the
Company's definitive proxy statement filed with the Securities and
Exchange Commission related to the Company's annual meeting of
shareholders to be held on January 25, 2001.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) (1) The response to this portion of Item 14 is submitted as a
separate section of this report--See List of Financial
Statements under Item 8.
(a) (2) The following consolidated financial statement schedule of
Steel Technologies Inc. and Subsidiaries is included in a
separate section of this report, following the index to
exhibits on page E-1:
Valuation and Qualifying Accounts - Schedule II
Report of Independent Accountants
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been
omitted.
(a) (3) Listing of Exhibits--See Index to Exhibits contained herein
on page E-1 of this report. The index to exhibits
specifically identifies each management contract or
compensatory plan required to be filed as an Exhibit to
this Form 10-K.
(b) No report on Form 8-K was filed for the quarter ended
September 30, 2000.
(c) Exhibits filed with this report are attached hereto.
Page E-1
STEEL TECHNOLOGIES INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 2000
Ref. Exhibit
# # Description
- --- ------- -------------------------------------------------------
3.1 Second Restated Articles of Incorporation of the
Registrant
3.2 Second Amended By-Laws of the Registrant
(h) 10.1(a) Second Amended and Restated Loan Agreement dated as of
December 31, 1998, between the Registrant and PNC
Bank, Kentucky, Inc., National City Bank of Kentucky,
NBD Bank, N.A., and SunTrust Bank, Nashville, N.A.
10.1(b) First Amendment dated September 30, 1999 to Second
Amended and Restated Loan Agreement
10.1(c) Credit Agreement by and between the Registrant and PNC
Bank, National Association dated as of April 27, 2000
(e) 10.2 Note Agreement dated as of March 1, 1995, between the
Registrant and Principal Mutual Life Insurance
Company, Lincoln National Investment Management
Company, Jefferson-Pilot Life Insurance Company and
Northern Life Insurance Company
(e) 10.2 Request for Consent to Amendment of Note Agreement
(e) 10.2 Request for Consent to Second Amendment of Note
Agreement
(b) 10.3(a) Incentive Stock Option Plan of the Registrant *
(a) 10.3(b) Amendment #1, dated April 7, 1987 to the Incentive
Stock Option Plan of the Registrant *
(e) 10.3(c) Registrant's 1995 Stock Option Plan *
10.3(d) Registrant's 2000 Stock Option Plan *
(f) 10.4 Stock Purchase Agreement between Registrant and
Shareholders of Atlantic Coil Processing, Inc.
effective April 1, 1997.
(c) 10.5(a) Revised Employee Bonus Plan of the Registrant *
10.5(b) Employment Agreement between Registrant and Vice
Chairman and Chief Executive Officer effective as of
March 16, 2000 and Promissory Note*
(a) 10.6(a) Joint Venture Agreement dated March 30, 1987 between
Mitsui & Co., LTD., Mitsui & Co. (U.S.A.), Inc.,
Mitsui Steel Development Co., Inc., and the Registrant
(c) 10.6(b) Amendment #1, dated February 28, 1989 to the Joint
Venture Agreement dated March 30, 1987 between Mitsui
& Co., LTD., Mitsui & Co. (U.S.A.), Inc., Mitsui Steel
Development Co., Inc., and the Registrant
(c) 10.7(a) Loan Agreement dated as of November 1, 1989 between
the County Commissioners of Cecil County, Maryland and
the Registrant relating to Economic Development
Revenue Bonds
(c) 10.7(b) Reimbursement, Credit and Security Agreement dated as
of November 1, 1989 between Citizens Fidelity Bank and
Trust Company and the Registrant relating to Economic
Development Revenue Bonds
(d) 10.8 Joint Venture Agreement dated October 16, 1990 among
Mitsui Steel Development Co., Inc. and LTV Steel
Company, Inc. and the Registrant
(d) 10.9 Form of Indemnification Agreement between the
Registrant and its Directors *
10.10(a)Steel Technologies Inc. Restated Retirement Savings
Plan
10.10(b)Amendment No. 1 to the Steel Technologies Inc.
Retirement Savings Plan
(h) 10.12 Amended and restated Nonemployee Directors Stock Plan *
(g) 10.13 Confirmation of Interest Rate Swap Transaction dated
July 31, 1998 between the Registrant and SunTrust
Bank, Atlanta.
(g) 10.14 Stock Purchase Agreement between Registrant and
Stockholders of Roberts Steel Company effective July
1, 1998.
13 2000 Annual Report to Shareholders, filed herewith.
The annual report shall not be deemed to be filed with
the Commission except to the extent that information
is specifically incorporated by reference herein
21.1 Subsidiaries of the Registrant
23.1 Consent of Independent Accountants
27 Financial Data Schedule
Page E-1 (Continued)
STEEL TECHNOLOGIES INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 2000
Alphabetic filed exhibit reference:
(a) Incorporated herein by reference to exhibits filed with the
Company's Annual Report on Form 10-K (file # 0-14061) for the
fiscal year ended September 30, 1987.
(b) Incorporated herein by reference to exhibits filed with the
Company's Form S-1 Registration Statement under the Securities
Act of 1933 (No. 2-98617), which became effective August 27,
1985.
(c) Incorporated herein by reference to exhibits filed with the
Company's Annual Report on Form 10-K (file # 0-14061) for the
fiscal year ended September 30, 1989.
(d) Incorporated herein by reference to exhibits filed with the
Company's Annual Report on Form 10-K (file # 0-14061) for the
fiscal year ended September 30, 1990.
(e) Incorporated herein by reference to exhibits filed with the
Company's Quarterly Report on Form 10-Q (file # 0-14061) for
the quarter ended March 31, 1995.
(f) Incorporated herein by reference to exhibits filed with the
Company's Quarterly Report on Form 10-Q (file # 0-14061) for
the quarter ended March 31, 1997.
(g) Incorporated herein by reference to exhibits filed with the
Company's Annual Report of Form 10K (file #0-14061) for the
fiscal year ended September 30, 1998.
(h) Incorporated herein by reference to exhibits filed with the
Company's Annual Report of Form 10K (file #0-14061) for the
fiscal year ended September 30, 1999.
* Indicates management contract or compensatory plan and
arrangement
STEEL TECHNOLOGIES INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Additions
Balance at Charged to Additions Charged to Balance at
Beginning Costs and Charged to Other End of
of Period Expenses Other Deductions Period
---------- ---------- ----------- ----------- ----------
Year Ended September 30, 2000:
(A) $1,046,558 $329,000 $ 85,108(B) $133,266(C) $1,327,400
Year Ended September 30, 1999:
(A) $ 938,837 $265,700 $ - $157,979(C) $1,046,558
Year Ended September 30, 1998:
(A) $ 928,958 $190,300 $ - $180,421(C) $ 938,837
(A) Allowance for doubtful accounts
(B) Related to acquired business.
(C) Uncollectible accounts charged off, less recoveries.
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
Board of Directors
Steel Technologies Inc.:
Our audits of the consolidated financial statements referred to in
our report dated November 17, 2000 appearing on page 25 of the 2000
Annual Report to Shareholders of Steel Technologies Inc. and
subsidiaries (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also
included an audit of the consolidated financial statement schedule
listed in Item 14(a)(2) of this Form 10-K. In our opinion, this
consolidated financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Louisville, Kentucky
November 17, 2000
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.
STEEL TECHNOLOGIES INC.
Dated: December 22, 2000 By:/S/Joseph P. Bellino
________________________
Joseph P. Bellino
Chief Financial Officer,
and Treasurer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Date Title
- --------- -------- -----
/s/ Merwin J. Ray 12/22/00 Chairman of the Board of Directors
___________________ (Principal Executive Officer)
Merwin J. Ray
/s/ Bradford T. Ray 12/22/00 Director, Vice Chairman and
____________________ Chief Executive Officer
Bradford T. Ray
/s/ Michael J. Carroll 12/22/00 Director, President and Chief
Operating Officer
___________________
Michael J. Carroll
/s/ Howard F. Bates, Jr. 12/22/00 Director and Vice President-
___________________ Technical Services
Howard F. Bates, Jr.
/s/ Ralph W. McIntyre 12/22/00 Director
___________________
Ralph W. McIntyre
/s/ William E. Hellmann 12/22/00 Director
___________________
William E. Hellman
/s/ Jimmy Dan Conner 12/22/00 Director
___________________
Jimmy Dan Conner
/s/ Andrew J. Payton 12/22/00 Director
___________________
Andrew J. Payton
/s/ Doug A. Bawel 12/22/00 Director
___________________
Doug A. Bawel
EXHIBIT 3.1
SECOND RESTATED ARTICLES OF INCORPORATION
OF
STEEL TECHNOLOGIES INC.
Pursuant to the applicable provisions of the Kentucky Business
Corporation Act, Steel Technologies Inc., a Kentucky corporation,
hereby adopts the following as its Second Restated Articles of
Incorporation:
ARTICLE I
The name of the Corporation is STEEL TECHNOLOGIES INC.
ARTICLE II
The purpose or purposes for which the Corporation is organized
are:
1. To engage in any lawful act or activity, for which
corporations may be formed, and to exercise any and all powers that
corporations have and may have now or hereafter exercise under the
Kentucky Business Corporation Act, whether or not specifically
enumerated herein.
2. To engage in, conduct, and carry on, either as principal or
agent, and upon commission or upon its own account, or otherwise, the
business of manufacturing, producing, preparing, buying, selling, and
otherwise dealing in and with crucible, tool, high speed, and high
grade steel of all kinds, for the manufacture of all kinds of
machinery, machine tools, and tool making machinery of all
descriptions, and to engage generally in the purchase, manufacture,
and sale of steel and steel products.
3. To sell, convey, mortgage, pledge, lease, exchange,
transfer and otherwise dispose of all or any part of its property and
assets.
4. To act as agent, broker or attorney-in-fact for others for
any purpose whatsoever.
5. To purchase, take, receive, subscribe for and otherwise
acquire, own, hold, vote, use, employ, sell, mortgage, discount, lend
upon, pledge, hypothecate, and otherwise dispose of, use and deal in
and with, shares, and other interests in, and promissory notes, bills
of exchange, trade acceptances and other obligations of itself or
other corporations (whether domestic or foreign), associations,
partnerships or individuals, and direct or indirect obligations of
the United States or of any other government, state, territory,
governmental district or municipality, or a governmental
instrumentality.
6. To make contracts and guarantees and incur liabilities,
borrow money at such rates of interests as the Corporation may
determine, issue its notes, bonds and other obligations and secure
them by mortgage or pledge of all or any of its property, franchises
and income, and to issue its notes, bonds or other evidences of
indebtedness convertible into common or preferred stock or other
securities of the Corporation.
7. To purchase or otherwise acquire, hold, sell, pledge,
transfer or otherwise dispose of, and to re-issue or cancel the
shares of its own capital stock or any securities or other
obligations of the Corporation in the manner and to the full extent
now or hereafter permitted by the laws of the Commonwealth of
Kentucky.
8. To pay pensions and establish pension plans, pension
trusts, profit sharing plans, stock bonus plans, stock option plans,
and other incentive plans for any or all of its directors, officers
and employees.
9. To make donations for the public welfare and for
charitable, scientific or educational purposes and in aid of the
United States government.
10. To lend its funds or credit from time to time to such
extent, to such persons, firms, associations, corporations,
governments, or subdivisions thereof, and on such terms and on such
security, if any, or without security, as the Board of Directors of
the Corporation may determine and as may be lawful.
11. To conduct its business, carry on its operations, have
offices and exercise its corporate powers in any state, territory,
district and possession of the United States and in any foreign
country.
12. To be a promoter, partner, limited partner, member,
associate or manager of any partnership, limited partnership, joint
venture, trust or other enterprise, and to do all things necessary or
proper in connection therewith as a natural person might or could do.
13. To acquire, in whole or in part, the assets, property,
rights and goodwill of any corporation, association, partnership or
individual and to assume and agree to pay the whole or any part of
the liabilities and obligations of the transferor.
14. To such extent as a corporation organized under the
Kentucky Business Corporation Act or the Kentucky Revised Statutes
may now or hereafter lawfully do, and either as principal or agent,
and either alone or in connection with other corporations, firms or
individuals, to do all and everything necessary, suitable, convenient
or proper for, or in connection with, or incident to, the
accomplishment of any of the purposes, or the attainment of any one
or more of the objects herein enumerate, or designed directly or
indirectly to promote the interests of the Corporation, or to
enhance the value of its properties; and in general to do any and all
things and exercise any and all powers, rights and privileges which a
corporation may now or hereafter be organized to do, or to exercise
under the Kentucky Business Corporation Act or under any laws
amendatory thereof, supplemental thereto, or substituted therefore;
and to do any or all of the things hereinabove set forth to the same
extent as natural persons might or could do.
The foregoing clauses shall be construed as powers, as well as
objects and purposes, and the matters expressed in each clause shall,
unless herein otherwise expressly provided, be in no ways limited by
reference to, or inference from, the terms of any other clause, but
shall be regarded as independent objects, purposes and powers, and
the enumeration of specific objects, purposes and powers shall not be
construed to limit or restrict in any manner the meaning of general
terms or the general powers of the Corporation; nor shall the
expression of one thing be deemed to exclude another not expressed,
although it be of like nature.
ARTICLE III
The period of duration of the Corporation is perpetual.
ARTICLE IV
The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is Fifty Million, Five
Hundred Thousand (50,500,000) shares consisting of 50,000,000 shares
of Common Stock and 500,000 shares of Preferred Stock; all of said
shares are to be without par value. Holders of shares of capital
stock of the Corporation shall have no pre-emptive right to acquire
unissued or treasury shares or securities convertible into such
shares, or carrying a right to subscribe to such shares.
The Common Stock shall be without distinction as to
designations, preferences, limitations or relative rights. Each
outstanding share of Common Stock shall be entitled to one vote on
each matter submitted to a vote at a meeting of shareholders.
The Board of Directors of the Corporation is expressly vested
with the authority by resolution to divide any or all of the
Preferred Stock into series and fix and determine the relative rights
and preferences of the shares of any series so established and to
change shares of one series that have been redeemed or reacquired
into shares of another series. All shares of Preferred Stock shall
be identical except as to the following relative rights and
preferences as to which there may be variations between difference
series:
(a) The dividend rate on the shares of such series, dividend payment
dates, whether such dividends shall be cumulative,
and, if cumulative, the date or dates from which
dividends shall accumulate;
(b) Whether or not the shares of such series shall be redeemable,
and, if redeemable, the redemption prices which the
shares of such series shall be entitled to receive
upon the redemption thereof;
(c) The preferences, if any, and the amounts thereof, which the
shares of such series shall be entitled to receive
upon the voluntary and involuntary dissolution of, or
upon any distribution of the assets of, the
Corporation;
(d) Whether or not the shares of such series shall be subject to the
operation of retirement and, if such retirement or
sinking fund or funds be established, the annual
amount thereof and the terms and provisions relative
to the operation thereof;
(e) Whether or not the shares of such series shall be convertible
into, or exchangeable for, shares of any other class
or classes of stock of the Corporation and the
conversion price or prices or ration or ratios or the
rate or rates at which such exchange may be made, with
such adjustments, if any, as shall be stated and
expressed or provided in such resolution or
resolutions;
(f) The voting power, if any, of the shares of such series; and
(g) Such other special rights and protective provisions as to the
board of directors may seem advisable.
All Preferred Stock of the Corporation which shall be redeemed,
purchased, converted, exchanged or retired shall have the status of
authorized but unissued shares, and such shares may be reissued by
resolution of the Board of Directors with such new an different
relative rights and preferences set forth in (a) through (g) above as
the Board of Directors by resolution or resolutions may determine.
Of the 500,000 shares of Preferred Stock authorized by Article
IV, 200,000 shall be designated Series A 1998 Junior Participating
Preferred Stock (hereinafter called this "Series"). Such number of
shares may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of
shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants
or upon the conversion of any outstanding securities issued by the
Corporation convertible into shares of this Series.
Dividends with respect to this Series shall be as follows:
(1) Subject to the prior and superior rights of the holders of
any shares of any other series of Preferred Stock or other class of
capital stock of the Corporation ranking prior and superior to the
shares of this Series with respect to dividends, the holders of
shares of this Series shall be entitled to receive, when and as
declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on March 31, June
30, September 30 and December 31 of each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of this Series, in
an amount per share (rounded to the nearest cent) equal to the
greater of (A) $1.00 or (B) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock of the
Corporation (the "Common Stock") since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of this Series. If the Corporation
shall at any time after April 24, 1998 (the "Rights Declaration
Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of this
Series were entitled immediately before such event under clause (B)
of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately before such event (the "Adjustment
Ratio").
(2) The Corporation shall declare a dividend or distribution on
this Series as provided in clause (A) of the preceding paragraph (1)
immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on this Series
shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(3) Dividends shall begin to accrue and be cumulative on
outstanding shares of this Series from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of this Series
unless the date of issue of such shares is before the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of this Series entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the
shares of this Series in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of this Series entitled to
receive payment of a dividend or distribution declared thereon, which
record date shall be no more than 30 days before the date fixed for
the payment thereof.
(4) No full dividends shall be declared or paid or set apart
for payment on the Preferred Stock of any series ranking, as to
dividends, on a parity with or junior to this Series for any period
unless full cumulative dividends have been or contemporaneously are
declared and a sum sufficient for the payment thereof set apart for
such payment on this Series for all dividend payment periods
terminating on or prior to the date of payment of such full
cumulative dividends. When dividends are not paid in full, as
aforesaid, upon the shares of this Series and any other Preferred
Stock ranking on a parity as to dividends with this Series, all
dividends declared upon shares of this Series and any other Preferred
Stock ranking on a parity as to dividends with this Series shall be
declared pro rata so that the amount of dividends declared per share
on this Series and such other Preferred Stock shall in all cases bear
to each other the same ratio that accrued dividends per share on the
shares of this Series and such other Preferred Stock bear to each
other. Holders of shares of this Series shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of
full cumulative dividends, as herein provided, on this Series. No
interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on this Series that may
be in arrears.
(5) So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to this Series as to dividends and upon liquidation
and other than as provided in this Article) shall be declared or paid
or set aside for payment or other distribution declared or made upon
the Common Stock or upon any other stock ranking junior to or on a
parity with this Series as to dividends or upon liquidation, nor
shall any Common Stock or any other stock of the Corporation ranking
junior to or on a parity with this Series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by
the Corporation (except by conversion into or exchange for stock of
the Corporation ranking junior to this Series as to dividends and
upon liquidation) unless, in each case, the full cumulative dividends
on all outstanding shares of this Series shall have been paid for all
past dividend payment periods.
The holders of shares of this Series shall not have any rights
to convert such shares into or exchange such shares for shares of any
other class or classes or of any other series of any class or classes
of capital stock of the Corporation.
The holders of shares of this Series shall have the following
voting rights:
(A) Each share of this Series shall entitle the holder thereof to a
number of votes equal to 100
multiplied by the Adjustment
Ratio on all matters
submitted to a vote of the
shareholders of the
Corporation.
(B) Except as otherwise required by law or the
Corporation's Articles of Incorporation, holders of shares of this
Series and the holders of shares of Common Stock and any other
capital stock of the Corporation having general voting rights shall
vote together as one voting group on all matters submitted to a vote
of shareholders of the Corporation.
(C) Except as otherwise required by law or the
Corporation's Articles of Incorporation, holders of shares of this
Series shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
Upon the dissolution, liquidation (voluntary or otherwise), or
winding up of the Corporation, the holders of the shares of this
Series shall be entitled to receive out of the assets of the
Corporation, before any payment or distribution shall be made on the
Common Stock, or on any other class of stock ranking junior to this
Series upon liquidation, the amount of $100.00 per share, plus a sum
equal to all dividends (whether or not declared) on such shares
accrued and unpaid thereon to the date of final distribution (the
"Liquidation Preference"). Following the payment of the full amount
of the Liquidation Preference, no additional distributions shall be
made to the holders of shares of this Series unless, prior thereto,
the holders of shares of Common Stock shall have received an amount
per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in this Article to reflect such
events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii), the
"Adjustment Number"). Following the payment of the full amount of
the Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of this Series and shares of Common Stock,
respectively, holders of this Series and holders of Common Stock
shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1
with respect to such Preferred Stock and Common Stock, on a per share
basis, respectively.
If the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the Adjustment Number in effect
immediately before such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock
that were outstanding immediately before such
event.
The sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all
the property and assets of the Corporation shall be deemed a
voluntary dissolution, liquidation or winding up of the Corporation
for the purposes of this Article, but the merger or consolidation of
the Corporation into or with another corporation or the merger or
consolidation of any other corporation into or with the Corporation,
shall not be deemed to be a dissolution, liquidation or winding up,
voluntarily or involuntarily, for the purposes of this
Article.
If the assets of the Corporation available for distribution to
the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full the Liquidation
Preference, no such distribution shall be made on account of any
shares of any other class or series of Preferred Stock ranking on a
parity with the shares of this Series upon such dissolution,
liquidation or winding up unless proportionate distributive amounts
shall be paid on account of the shares of this Series, ratably, in
proportion to the full distributable amounts for which holders of all
such parity shares are respectively entitled upon such dissolution,
liquidation or winding up. If, however, there are not sufficient
assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the
holders of Common Stock.
The shares of this Series shall not be redeemable.
Any stock of any class or classes of the Corporation shall be
deemed to rank:
(A) prior to the shares of this Series, either as to
dividends or upon liquidation, if the holders of such class or
classes shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the
holders of shares of this Series;
(B) on a parity with shares of this Series, either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share
or sinking fund provisions, if any, be different from those of this
Series, if the holders of such stock shall be entitled to the receipt
of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be, in
proportion to their respective dividend rates or liquidation prices,
without preference or priority, one over the other, as between the
holders of such stock and the holders of shares of this Series; and
(C) junior to shares of this Series, either as to dividends
or upon liquidation, if the holders of shares of this Series shall be
entitled to receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the
case may be, in preference or priority to the holders of shares of
such class or classes.
ARTICLE V
The business and affairs of the Corporation shall be managed and
conducted by or under the direction of the board of directors. The
number of directors of the Corporation shall be fixed from
time-to-time by or in the manner provided in the bylaws, but the
number thereof shall never be less than nine (9). The directors
shall be divided into three classes, each class to consist, as nearly
as may be, of one-third of the number of directors constituting the
whole board. The term of office of those of the first class shall
expire at the annual meeting of shareholders to be held in 1991. The
term of office of the second class shall expire at the annual meeting
of shareholders to be held in 1992. The term of office of the third
class shall expire at the annual meeting of shareholders to be held
in 1993. At each annual meeting of shareholders following such
initial classification and election, directors elected to succeed
those directors whose terms have expired shall be elected for a term
of office to expire at the third succeeding annual meeting of
shareholders following their election. Each director shall be
entitled to serve for the term for which he was elected or until his
successor shall be elected and qualified, whichever period is longer.
The corporation may make contracts or transact business with one
or more of its directors, officers or stockholders, or with any firm
with which one or more of them are members, or with any corporation
or association in which any of them is a stockholder, director or
officer, and such contract or transaction shall not be invalidated or
affected by the fact that such director, officer or stockholder has,
or may have, an interest therein which is or might be adverse to the
interests of the Corporation, even though the vote of the director,
officer or stockholder having such adverse interest shall be
necessary to obligate the Corporation upon such contract or
transaction; and no director, officer or stockholder having such
adverse interest shall be liable to the Corporation or to any
stockholder or creditor thereof, or to any person for any loss
incurred by it, or them, under or by reason of, any such contract or
transaction; nor shall any such director, officer or stockholder be
accountable for any gain or profit realized thereon; PROVIDED,
HOWEVER, that such contract or transaction shall, at the time it was
entered into, have been reasonable one to be entered into and shall
have been upon the terms that, at that time, were fair.
Any contract, transaction or act of the Corporation or of the
directors which shall be ratified by a majority of a quorum of the
stockholders, then entitled to vote at any annual meeting or at any
special meeting called for such purpose shall, insofar as permitted
by law and by these Articles of Incorporation, be as valid and
binding as those ratified by every stockholder of the Corporation.
The Board of Directors of the Corporation may, from time to
time, distribute to its stockholders out of capital surplus of the
Corporation a portion of its assets in cash or property.
Anything contained in these Articles of Incorporation to the
contrary notwithstanding (and notwithstanding that a lesser
percentage may be specified or permitted by law), the affirmative
vote of the holders of at least 66-2/3% of the voting power of all of
the then outstanding shares of the Corporation entitled to vote
generally in the election of directors, voting together as a single
class, shall be required to alter, amend or repeal any provision of
this Article V.
ARTICLE VI
The corporation shall, to the fullest extent permitted by
Kentucky law, indemnify any director, officer, employee or agent of
the Corporation from and against any and all reasonable costs and
expense (including, but not limited to, attorneys' fees) and any
liabilities (including, but not limited to, judgments, fines,
penalties and reasonable settlements) paid by or on behalf of, or
imposed against, such person in connection with any threatened,
pending or completed claim, action, suit or proceeding, whether
civil, administrative, investigative or other (including any appeal
relating thereto), whether formal or informal, and whether made or
brought by or in the right of the Corporation or otherwise, in which
such person is, was or at any time becomes a party or witness, or is
threatened to be made a party or witness, or otherwise, by reason of
the fact that such person is, was or at any time becomes a director,
officer, employee or agent of the Corporation or, at the
Corporation's request, a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
The indemnification authorized by this Article VI shall not be
exclusive of any other right of indemnification which any such person
may have or hereafter acquire under any provision of these Articles
or the Bylaws of the Corporation, agreement, vote of shareholders or
disinterested directors or otherwise. The corporation may take such
steps as may be deemed appropriate by the board of directors to
provide and secure indemnification between the Corporation to any
such person, including, without limitation, the execution of
agreements for indemnification between the Corporation and individual
directors, officers, employees or agents which may provide rights to
indemnification which are broader or otherwise different than the
rights authorized by this Article.
ARTICLE VII
(Formerly Article X)
(1) No director of the Corporation shall be personally liable
to the Corporation or its shareholders for monetary damages for any
breach of his or her duties as a director, except for liability (i)
for any transaction in which the director's personal financial
interested is in conflict with the financial interests of the
Corporation or its shareholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or are known to
the director to be a violation of law; (iii) for any vote for or
assent to an unlawful distribution to shareholders as prohibited
under KRS 271B.8-330; or (iv) for any transaction from which the
director derived an improper personal benefit.
(2) If the Kentucky Business Corporation Act is amended after
approval by the shareholders of this Article to authorize corporate
action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall
be eliminated or limited to the fullest extent permitted by the
Kentucky Business Corporation Act, as so amended, and without the
necessity for further shareholder action in respect thereof.
(3) Any repeal or modification of this Article by the
shareholders of the Corporation shall not adversely affect any right
or protection of a director of the Corporation hereunder in respect
of any act or omission occurring prior to the time of such repeal or
modification.
The foregoing Second Restated Articles of Incorporation
correctly set forth, without change, the corresponding provisions of
the Restated Articles of Incorporation, as previously amended, and
supersede the original Articles of Incorporation, and the Restated
Articles of Incorporation. This Second Restated Articles of
Incorporation was approved by resolution of the Board of Directors on
April 28, 2000.
IN TESTIMONY WHEREOF, these Second Restated Articles of
Incorporation have been executed on behalf of the undersigned
corporation, by and through its duly authorized officers, this _____
day of April, 2000.
STEEL TECHNOLOGIES INC.
__________________________________
Bradford T. Ray, Chief Executive Officer
__________________________________
Michael J. Carroll, President
__________________________________
John M. Baumann, Jr., Secretary
COMMONWEALTH OF KENTUCKY )
) SS.
COUNTY OF JEFFERSON )
The undersigned, a Notary Public in and for the State and County
aforesaid, does hereby certify that on this day personally appeared
before me Bradford T. Ray and Michael J. Carroll and John M. Baumann,
Jr., who being by me first duly sworn, declared that they are the
Chief Executive Officer, President and Secretary, respectively, of
Steel Technologies Inc., that they signed the foregoing Second
Restated Articles of Incorporation as the Chief Executive Officer,
President and Secretary, respectively, of the Corporation, and that
the statements therein contained are true.
Witness my signature this _____ day of April, 2000.
My Commission expires:
__________________________________________
__________________________________________
NOTARY PUBLIC
This Instrument Prepared By:
________________________________
EXHIBIT 3.2
SECOND AMENDED
BYLAWS
OF
STEEL TECHNOLOGIES INC.
(formerly Southern Strip Steel, Inc.)
ARTICLE I
OFFICES
The registered office of the corporation in the Commonwealth of
Kentucky shall be at the address stated in its Articles of
Incorporation but such address may be changed from time to time by
the board of directors.
The corporation shall have a principal office, and other
offices, either within or without the Commonwealth of Kentucky, as
the board of directors may designate or the business of the
corporation may be, but need not be, the same as its registered
office and, until otherwise determined, shall be located at 15415
Shelbyville Road in Jefferson County, Kentucky.
ARTICLE II
SHAREHOLDERS
SECTION 1.ANNUAL MEETING. The annual meeting of shareholders
shall be held on the fourth (4th) Thursday of January in each year,
beginning with the year 1986, at the hour of 9:00 A.M., local time,
for the election of directors and such other business as may properly
come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be
held on the day designated for any annual meeting, or at any
adjournment thereof, the board of directors shall cause the election
to be held at a special meeting of the shareholders as soon
thereafter as may be practicable.
SECTION 2.SPECIAL MEETINGS. Special meetings of the
shareholders may be called by the board of directors, by the
president or by the holders of not less than one-fifth of the
outstanding shares entitled to vote at such meeting.
SECTION 3.PLACE OF MEETING. The board of directors or the
president may designate any place, either within or without the
Commonwealth of Kentucky, as the place of meeting for any annual
meeting, or for any special meeting called by the board of directors
or by the president, respectively. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any place,
either within or without the Commonwealth of Kentucky, as the place
for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be
the principal office of the corporation, except as otherwise provided
in Section 5 of this Article.
SECTION 4.NOTICE OF MEETING. Written notice stating the place,
day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be
delivered not less than ten or more than fifty days before the date
of the meeting, either personally or by mail, by or at the direction
of the president, the secretary, or the persons calling the meeting.
If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail addressed to the shareholder at his address
as it appears on the stock transfer books of the corporation, with
postage thereon prepaid.
SECTION 5.MEETING OF ALL SHAREHOLDERS. If all of the
shareholders shall meet at any time and place, either within or
without the Commonwealth of Kentucky, and consent to the holding of a
meeting, such meeting shall be valid without call or notice and at
such meeting any corporate action may be taken.
SECTION 6.CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining shareholders entitled or any
adjournment thereof, or shareholders entitled to receive payment of
any dividend, or in order to make a determination of shareholders for
any other proper purpose, the board of directors of the corporation
may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, fifty days. If the
stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as
the record date for any such determination of shareholders, such date
in any case to be not more than fifty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which
the particular action, requiring such determination of shareholders,
is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled
to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the first date on which
notice of the meeting is mailed or the date on which the resolution
of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote
at any meeting of shareholders has been made as provided in this
section, such determination shall apply to any adjournment thereof.
SECTION 7.VOTING RECORD. The officer or agent having charge of
the stock transfer books for shares of the corporation at each
meeting of shareholders or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held
by each. Such record shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the books shall be prima facie
evidence as to who are the shareholders entitled to examine such list
or stock transfer books or to vote at any meeting of shareholders.
SECTION 8.QUORUM. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders. If less than
a majority of the outstanding shares are represented at a meeting, a
majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such meeting at which a
quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as
originally noticed. The shareholders present at a duly organized
meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
SECTION 9.PROXIES. At all meetings of shareholders, a
shareholder may vote in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact. Such proxy
shall be filed with the secretary of the corporation before or at the
time of the meeting. No proxy shall be valid after eleven months
from the date of its execution, unless otherwise provided in the
proxy. The revocation of a proxy shall not be effective until the
secretary of the corporation has received written notice of the
revocation.
SECTION 10. VOTING OF SHARES. Subject to the provisions of
Section 12, each outstanding share entitled to vote shall be entitled
to one vote upon each matter submitted to a vote at a meeting of
shareholders.
SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares
standing in the name of another corporation may be voted by either
the president of such corporation or by proxy appointed by him unless
the board of directors of such corporation should determine
otherwise, in which event any other person authorized to vote such
shares shall produce a certified copy of a resolution of the board of
directors of such corporation so indicating.
Shares held by an administrator, executor, guardian,
conservator, or committee may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares
standing in the name of a trustee may be voted by him, either in
person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the joint names of three or more fiduciaries
shall be voted in the manner determined by the majority of such
fiduciaries, unless the instrument or order appointing such
fiduciaries otherwise directs.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may
be voted by such receiver without the transfer thereof into his name
if authority so to do be contained in an appropriate order of the
court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of
the pledgee, and thereafter the pledgee shall be entitled to vote the
shares so transferred.
SECTION 12. CUMULATIVE VOTING. At each election for
directors each shareholder entitled to vote at such election shall
have the right to cast, in person or by proxy, as many votes in the
aggregate as he shall be entitled to vote under the corporation's
Articles of Incorporation, multiplied by the number of directors to
be elected at such election; and each shareholder may cast the whole
number of votes for one candidate, or distribute such votes among two
or more candidates.
SECTION 13. INFORMAL ACTION BY SHAREHOLDERS. Any action
required or permitted to be taken at a meeting of the shareholders
may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.
SECTION 14. NOTICE OF SHAREHOLDER BUSINESS AND NOMINATIONS.
(a) Annual Meetings of Shareholders.
(1) Nominations of persons for election to the Board of Directors of
the Corporation and the proposal of business to be considered by the
shareholders may be made at an annual meeting of shareholders (a)
pursuant to the Corporation's notice of meeting, (b) by or at the
direction of the Board of Directors, or (c) by any shareholder of the
Corporation who was a shareholder of record at the time of giving of
notice provided for in this Bylaw, who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this
Bylaw.
(2) For nominations or other business to be properly brought before
an annual meeting by a shareholder pursuant to clause (c) of
paragraph (a)(1) of the Bylaw, the shareholder must have given timely
notice thereof in writing to the Secretary of the Corporation, and
such other business must otherwise be a proper matter for shareholder
action. To be timely, a shareholder's notice shall be delivered to
the Secretary at the principal executive offices of the Corporation
not later than the close of business on the 60th day nor earlier than
the close of business on the 90th day prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by
the shareholder to be timely must be so delivered not earlier than
the close of business on the 90th day prior to such annual meeting
and not later than the close of business on the later of the 60th day
prior to such annual meeting or the 10th day following the day on
which public announcement of the date of such meeting is first made
by the Corporation. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the
giving of a shareholder's notice as described above. Such
shareholder's notice shall set forth (a) as to each person whom the
shareholder proposed to nominate for election or re-election as a
director, all information relating to such person that is required to
be disclosed in solicitations of proxies for election of directors in
an election contest, or is otherwise required, in each case pursuant
to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 14a-11 thereunder (including
such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (b) as to any
other business that the shareholder proposes to bring before the
meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the
meeting, and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf the
proposal is made; and (c) as to the shareholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such shareholder, as
they appear on the Corporation's books, and of such beneficial owner
and (ii) the class and number of shares of the Corporation which are
owned beneficially and of record by such shareholder and such
beneficial owner.
(b) Special Meetings of Shareholders. Only such business shall be
conducted at a special meeting of shareholders as shall have been
brought before the meeting pursuant to the Corporation's notice of
meeting. Nominations of persons for election to the Board of
Directors may be made at a special meeting of shareholders at which
directors are to be elected pursuant to the Corporation's notice of
meeting (a) by or at the direction of the Board of Directors or (b)
by any shareholder of the Corporation who is a shareholder of record
at the time of giving of notice provided for in this Bylaw, who shall
be entitled to vote at the meeting and who complies with the notice
procedures set forth in this Bylaw. In the event the Corporation
calls a special meeting of shareholders for the purpose of electing
one or more directors to the Board of Directors, any such shareholder
may nominate a person or persons (as the case may be) for election to
such position(s) as specified in the Corporation's notice of meeting,
if the shareholder's notice required by paragraph (a)(2) of this
Bylaw shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the close of business on
the 90th day prior to such special meeting and not later than the
close of business on the later of the 60th day prior to such special
meeting or the 10th day following the day on which public
announcement is first made of the date and purpose of the special
meeting and of the nominees proposed to be elected at such meeting.
In no event shall the public announcement of an adjournment of a
special meeting commence a new time period for the giving of a
shareholder's notice as described above.
(c) General. (1) Only such persons who are nominated in accordance
with the procedures set forth in this Bylaw shall be eligible to
serve as directors and only such business shall be conducted at a
meeting of shareholders as shall have been brought before the meeting
in accordance with the procedures set forth in this Bylaw. Except as
otherwise provided by law, the Chairman of the meeting shall have the
power and duty to determine whether a nomination or any other
business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set
forth in the Bylaw and, if any proposed nomination or business is not
in compliance with this Bylaw, to declare that such defective
proposal or nomination shall be disregarded.
(2) For purposes of this Bylaw, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service;
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of the Bylaw, a
shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to
the matters set forth in this Bylaw. Nothing in this Bylaw shall be
deemed to affect any rights (i) of shareholders to request inclusion
of proposals in the Corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act or (ii) of the holders of any class or
series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified
circumstances.
ARTICLE III
DIRECTORS
SECTION 1.GENERAL POWERS. The business and affairs of the
corporation shall be managed by its board of directors.
SECTION 2.NUMBER, TENURE AND QUALIFICATIONS. The number of
directors of the corporation shall be nine (9), but may be increased
or decreased from time to time by amendment of this bylaw, but the
number thereof shall never be less than nine (9). No decrease in the
number of directors shall have the effect of shortening the term of
any incumbent director. The directors shall be divided into three
classes, each class to consist, as nearly as may be, of one-third of
the number of directors constituting the whole board. The term of
office of those of the first class shall expire at the annual meeting
of shareholders to be held in 1991. The term of office of the second
class shall expire at the annual meeting of shareholders to be held
in 1992. The term of office of the third class shall expire at the
annual meeting of shareholders to be held in 1993. At each annual
meeting of shareholders following such initial classification and
election, directors elected to succeed those directors whose terms
have expired shall be elected for a term of office to expire at the
third succeeding annual meeting of shareholders following their
election. Each director shall be entitled to serve for the term for
which he was elected or until his successor shall be elected and
qualified, whichever period is longer. Directors need not be
residents of Kentucky nor shareholders of the corporation.
SECTION 3.REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without other notice than this Bylaw,
immediately after, and at the same place as, the annual meeting of
shareholders. The board of directors may provide, by resolution, the
time and place, either within or without the Commonwealth of
Kentucky, for the holding of additional regular meetings without
other notice than such resolution.
SECTION 4.SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the president or any
two directors. The person or persons authorized to call special
meetings of the board of directors may fix any place, either within
or without the Commonwealth of Kentucky, as the place for holding any
special meeting of the board of directors called by them.
SECTION 5.NOTICE. Notice of any special meeting shall be given
at least two days previously thereto by written notice delivered
personally or mailed to each director at this business address, or by
telegram. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail in a sealed envelope, so
addressed, with postage thereon prepaid. If notice be given by
telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any director may
waive notice of any meeting. The attendance of a director may waive
notice of any meeting. The attendance of a director at any meeting
shall constitute a waiver of notice of such meeting, except where a
director attends a meeting of the express purpose of objecting to the
transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board of
directors need be specified in the notice or waiver of notice of such
meeting.
SECTION 6.QUORUM. A majority of the board of directors fixed by
Section 2 of this Article III shall constitute a quorum for the
transaction of business at any meeting of the board of directors, but
if less than such majority is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time without
further notice.
SECTION 7.MANNER OF ACTING. The act of the majority of the
directors present at a meeting at which a quorum is present shall be
the act of the board of directors.
SECTION 8.ACTION WITHOUT A MEETING. Any action required or
permitted to be taken by the board of directors, or by a committee
thereof, at a meeting may be taken without a meeting if a consent in
writing, setting forth the action taken, shall be signed by all of
the directors, or by all of the members of the committee, as the case
may be. Such consent shall have the same effect as a unanimous vote.
SECTION 9.MEETING BY CONFERENCE TELEPHONE. Assuming separate
satisfaction of applicable notice and quorum requirements, members of
the board of directors or any committee established by the board of
directors may participate in a meeting of the board or committee by
means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear and
speak to each other at the same time. Participation in a meeting
pursuant to this section shall constitute presence in person at the
meeting and the secretary or acting secretary for the meeting may
record such presence in the minutes thereof.
SECTION 10. VACANCIES. Subject to the rights of holders of
any class or series of stock having a preference over the Common
Stock as to the dividends or upon liquidation to elect additional
directors under specified circumstances, newly created directorships
resulting from any increase in the authorized number of directors and
any vacancies on the Board of Directors resulting from death,
resignation, retirement, disqualification, removal or other cause
shall be filled by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of
the Board of Directors. Any director elected in accordance with the
preceding sentence shall hold office until the next meeting of
shareholders at which directors are elected and until such director's
successor shall have been duly elected and qualified. No decrease in
the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
SECTION 11. COMPENSATION. Directors, as such, shall not
receive a stated salary for their services but, by resolution of the
board of directors, each director may be paid his expenses, if any,
of attendance at each meeting of the board of directors or any
committee thereof, and may be paid a fixed sum for attendance at each
such meeting, or both. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving
compensation therefor.
SECTION 12. EXECUTIVE AND OTHER COMMITTEES. The board of
directors, by resolution adopted by a majority of the entire board of
directors, may designate from among its members an executive
committee and one or more other committees each of which, to the
extent provided in such resolution, shall have and may exercise all
the authority of the board of directors, but no such committee shall
have the authority of the board of directors in reference to amending
the Articles of Incorporation, adopting a plan of merger or
consolidation, recommending to the shareholders the sale, lease,
exchange or other disposition of all or substantially all the
property and assets of the corporation otherwise than in the usual
and regular course of business, recommending to the shareholders a
voluntary dissolution of the corporation or a revocation thereof, or
amending the Bylaws.
ARTICLE IV
OFFICERS
SECTION 1.NUMBER. The officers of the corporation shall be a
president, one or more vice-presidents (the number thereof to be
determined by the board of directors), a secretary, and a treasurer,
each of whom shall be elected by the board of directors. Such other
officers and assistant officers as may be deemed necessary may be
elected or appointed by the board of directors. Any two or more
offices may be held by the same person, except the offices of
president and secretary.
SECTION 2.ELECTION AND TERM OF OFFICE. The officers of the
corporation to be elected by the board of directors shall be elected
annually by the board of directors at the first meeting of the board
of directors held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election
shall be held as soon thereafter as practicable. Each officer shall
hold office until his successor shall have been duly elected and
shall have qualified or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided.
SECTION 3.REMOVAL. Any officer or agent may be removed by the
board of directors whenever in its judgment the best interests of the
corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself
create contract rights.
SECTION 4.VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by
the board of directors for the unexpired portion of the term.
SECTION 5.
(a) Chairman. The chairman shall be the chairman of the board of
directors and an executive officer. He shall, when present, preside
at all meetings of the board of directors and shall perform such
duties as may be prescribed by the board of directors from time to
time.
(b) Vice Chairman. The vice chairman shall be the vice chairman of
the board of directors and an executive officer. He shall, when the
chairman is not present, preside at meetings of the board of
directors and shall perform such other duties as may be prescribed by
the board of directors from time to time.
(c) Chief Executive Officer. The chief executive officer shall be
the chief executive officer of the corporation and, subject to the
control of the board of directors, shall in general supervise all of
the business and affairs of the operation. He shall preside at all
meetings of the shareholders. He shall, when the chairman and vice
chairman are not present, preside at meetings of the board of
directors and shall perform such other duties as may be prescribed by
the board of directors from time to time.
SECTION 6.PRESIDENT. The president shall be the chief operating
officer of the corporation and, subject to the control of the
chairman, vice chairman, and chief executive officer, shall in
general supervise and control all of the business and affairs of the
corporation. He may sign, with the secretary or any other proper
officer of the corporation thereunto authorized by the board of
directors, certificates for shares of the corporation, and deeds,
mortgages, bonds, contracts, or other instruments which the board of
directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the
board of directors or by these Bylaws to some other officer or agent
of the corporation, or shall be required by law to be otherwise
signed or executed; and in general shall perform all duties incident
to the office of president and such other duties as from time to time
may be assigned to him by the chairman or by the board of directors.
SECTION 7.VICE-PRESIDENT. In the absence of the president or in
the event of his death, inability or refusal to act, the
vice-president (or in the event there be more than one
vice-president, the vice-presidents in the order designated at the
time of their election, or in the absence of any designation, then in
the order of their election) shall perform the duties of the
president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. Any
vice-president may sign, with the secretary or an assistant
secretary, certificates for shares of the corporation; and shall
perform such other duties as from time to time may be assigned to him
by the chief executive officer, by the president or by the board of
directors.
SECTION 8.SECRETARY. The secretary shall: (a) keep the minutes
of the proceedings of the shareholders and the board of directors in
one or more books provided for that purpose; (b) see that all notices
are duly given in accordance with the provisions of these Bylaws or
as required by law; (c) be custodian of the corporate records and of
the seal of the corporation and see that the seal of the corporation
is affixed to all certificates for shares prior to the issue thereof
and to all documents, the execution of which on behalf of the
corporation under its seal is duly authorized; (d) keep a register of
the post office address of each shareholder which shall be furnished
to the secretary by such shareholder; (e) sign with the president, or
vice-president, certificates for shares of the corporation, the
issuance of which shall have been authorized by resolution of the
board of directors; (f) have general charge of the stock transfer
books of the corporation; and (g) in general perform all duties
incident to the office of secretary and such other duties as from
time to time may be assigned to him by the chief executive officer,
by the president or by the board of directors.
SECTION 9.TREASURER. The treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the
corporation; (b) receive and give receipts for moneys due and payable
to the corporation from any source whatsoever, and deposit all such
moneys in the name of the corporation in such banks, trust companies
or other depositaries as shall be selected in accordance with the
provisions of Article V of these Bylaws; and (c) in general perform
all the duties incident to the office of treasurer and such other
duties as from time to time may be assigned to him by the chief
executive officer, by the president or by the board of directors. If
required by the board of directors, the treasurer shall give a bond
for the faithful discharge of his duties in such sum and with such
surety or sureties, as the board of directors shall determine.
SECTION 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURER.
The assistant secretaries, when authorized by the board of directors,
may sign with the president or a vice-president certificates for
shares of the corporation, the issuance of which shall have been
authorized by a resolution of the board of directors. The assistant
treasurers shall respectively, if required by the board of directors,
give bonds for the faithful discharge of their duties in such sums
and with such sureties as the board of directors shall determine.
The assistant secretaries and assistant treasurers, in general, shall
perform such duties as shall be assigned to them by the secretary or
the treasurer, respectively, or by the chief executive officer, by
the president or by the board of directors.
SECTION 11. SALARIES. The salaries of the executive officers
shall be fixed from time to time by the board of directors and no
officer shall be prevented from receiving such salary by reason of
the fact that he is also a director of the corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1.CONTRACTS. The board of directors may authorize any
officer or officers, agent or agents, to enter into any contract or
execute and deliver any instrument in the name of and on behalf of
the corporation, and such authority may be general or confined to
specific instances.
SECTION 2.LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its
name unless authorized by a resolution of the board of directors.
Such authority may be general or confined to specific instances.
SECTION 3.CHECKS, DRAFTS, ETC. All checks, drafts, or other
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation shall be signed by
such officer or officers, agent or agents, of the corporation and in
such manner as shall from time to time be determined by resolution of
the board of directors.
SECTION 4.DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies, or other depositaries as
the board of directors may select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1.CERTIFICATES FOR SHARES. Certificates representing
shares of the corporation shall be in such form as shall be
determined by the board of directors. Such certificates shall be
signed by the president or a vice-president and by the secretary or
an assistant secretary and sealed with the corporate seal or a
facsimile thereof. The signatures of such officers upon a
certificate may be facsimiles if the certificate is manually signed
on behalf of a transfer agent or a registrar, other than the
corporation itself or one of its employees. Each certificate for
shares shall be consecutively numbered or otherwise identified. The
name and address of the person to whom the shares represented thereby
are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be
cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered
and cancelled, except that in case of a lost, destroyed, or mutilated
certificate a new one may be issued therefor upon such terms and
indemnity to the corporation as the board of directors may prescribe.
SECTION 2.TRANSFER OF SHARES. Transfer of shares of the
corporation shall be made only on the stock transfer books of the
corporation by the holder of record thereof or by his legal
representative, who shall furnish proper evidence of authority to
transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the secretary of the
corporation, and on surrender for cancellation of the certificate for
such shares. The person in whose name shares stand on the books of
the corporation shall be deemed by the corporation to be the owner
thereof for all purposes.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall begin on the first
(1st) day of October, and end on the thirtieth (30th) day of September
in each year.
ARTICLE VIII
DIVIDENDS
The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and its
Articles of Incorporation.
ARTICLE IX
CORPORATE SEAL
The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name
of the corporation and the state of incorporation and the words
"Corporate Seal."
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder
or director of the corporation under the provisions of these Bylaws,
or under the provisions of the Articles of Incorporation, or under
the provisions of the Kentucky Business Corporation Act, a waiver
thereof in writing signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.
ARTICLE XI
INDEMNIFICATION
The corporation shall, to the fullest extent permitted by
Kentucky law, indemnify any director, officer, employee or agent of
the corporation from and against any and all reasonable costs and
expense (including, but not limited to, attorneys' fees) and any
liabilities (including, but not limited to, judgments, fines,
penalties and reasonable settlements) paid by or on behalf of, or
imposed against, such person in connection with any threatened,
pending or completed claim, action, suit or proceeding, whether
civil, criminal, administrative, investigative or other (including
any appeal relating thereto), whether formal or informal, and whether
made or brought by or in the right of the corporation or otherwise,
in which such person is, was or at any time becomes a party or
witness, or is threatened to be made a party or witness, or
otherwise, by reason of the fact that such person is, was or at any
time becomes a director, officer, employee or agent of the
corporation or, at the corporation's request, a director, officer,
partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise.
The indemnification authorized by this Article XI shall not be
exclusive of any other right of indemnification which any such person
may have or hereafter acquire under any provision of these Bylaws or
the Articles of Incorporation of the corporation, agreement, vote of
the shareholders or disinterested directors or otherwise. The
corporation may take such steps as may be deemed appropriate by the
board of directors to provide and secure indemnification to any such
person, including, without limitation, the execution of agreements
for indemnification between the corporation and individual directors,
officers, employees or agents which may provide rights to
indemnification which are broader or otherwise different than the
rights authorized by this Article.
ARTICLE XII
AMENDMENTS
The shareholders may alter, amend or repeal the Bylaws at any
annual or special meeting of shareholders at which a majority of the
outstanding shares of the corporation is present by the vote of such
majority, provided that the notice of such meeting shall have
included notice of such proposed amendment. The board of directors
shall have the power and authority to alter, amend or repeal Bylaws
of the corporation at any regular or special meeting at which a
quorum is present by the vote of a majority of the entire board of
directors, subject always to the power of the shareholders under
Kentucky law to repeal or change such Bylaws.
HISTORICAL TABLE
Bylaws initially adopted on : May 15, 1985.
AMENDMENTS
Date Article and Section Number
October 25, 1985 Article II, Section 1
November 11, 1988 Article III, Section 2
November 17, 1989 Article III, Section 2
January 25, 1990 Article XI
November 7, 1997 Article II, Section 14
November 7, 1997 Article III, Section 10
November 12, 1999 Article IV, Section 5
April 28, 2000 Article IV, Sections 6, 7, 8, 9, 10, 11
EXHIBIT 10.1(b)
FIRST AMENDMENT
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED LOAN
AGREEMENT (this "Amendment") is made and entered into as of September
30, 1999, by and among (i) STEEL TECHNOLOGIES INC., a Kentucky
corporation having an office and place of business in Louisville,
Kentucky (the "Borrower"), (ii) (a) PNC BANK, NATIONAL ASSOCIATION, a
national banking association having an office and place of business
in Louisville, Kentucky ("PNC") that is successor by merger to PNC
Bank, Kentucky, Inc., a Kentucky banking corporation, (b) NATIONAL
CITY BANK OF KENTUCKY, a national banking association having an
office and place of business in Louisville, Kentucky ("National
City"), (c) BANK ONE, INDIANA, N.A., a national banking association
having an office and place of business in Indianapolis, Indiana
("Bank One") that is successor by merger to NBD Bank, N.A., a
national banking association, (d) SUNTRUST BANK, NASHVILLE, N.A., a
national banking association having an office and place of business
in Nashville, Tennessee ("SunTrust"), and (e) FIRSTAR BANK, N.A., a
national banking association having an office and place of business
in Louisville, Kentucky ("Firstar") that is successor by merger to
Star Bank, N.A., a national banking association (each of PNC,
National City, NBD, SunTrust and Star is hereinafter individually
referred to as a "Bank," and all of the same are hereinafter
collectively referred to as the "Banks"), and (iii) PNC BANK,
NATIONAL ASSOCIATION, in its capacity as agent for the Banks (in such
capacity, the "Agent").
PRELIMINARY STATEMENTS
A. Borrower, the Banks and the Agent are parties to that
certain Second Amended and Restated Loan Agreement dated as of
December 31, 1998 (the "Loan Agreement") (certain capitalized terms
used herein having the same meanings set forth for such capitalized
terms in the Loan Agreement unless expressly otherwise defined
herein), pursuant to which the [i] Banks established in favor of
Borrower the Revolver, a revolving credit facility in the maximum
aggregate principal amount at any one time outstanding of One Hundred
Million Dollars ($100,000,000) and [ii] PNC has established the Swing
Line Loan Commitment in favor of Borrower in accordance with which
PNC has agreed to make swing loans to Borrower in a maximum aggregate
principal amount at any one time outstanding of Five Million Dollars
($5,000,000).
B. Borrower has requested, in its letter of September
16, 1999 (a copy of which is attached hereto as Exhibit A), [i] the
consent of the Banks and the Agent to an organizational restructuring
(as hereinafter more fully described, the "Restructuring") of
Borrower's Subsidiaries, [ii] the waiver by the Banks and the Agent of
any Event of Default under the Loan Instruments, and [iii] the
consent of the Banks and the Agent to certain amendments to the Loan
Agreement relating to the Restructuring as hereinafter set forth.
The Banks and the Agent have agreed to each of the foregoing requests
in accordance with [i] their letters to the Borrower of September 27
and September 28, 1999 (copies of which are attached hereto as
Exhibits B and C, respectively, together referred to as the "Banks'
Consent") and [ii] the provisions of this Amendment.
C. The term "Restructuring" as used in this Amendment
means Borrower's completion of all steps required to implement the
post-restructuring organizational structure and property ownership
structure hereinafter set forth:
(i) Post-Restructuring Organizational Structure. The
Borrower has been transformed into a holding company with
holdings of the following ownership interests:
(a) 100% of Steel Technologies Corp., an Ohio corporation,
that (x) was formerly Roberts Steel Company and (y)
which holds a 100% ownership interest in Steel
Technologies, LLC, an Ohio limited liability company,
(hereinafter, "Steel Technologies, LLC (Ohio)");
(b) 100% of the newly formed subsidiary Steel
Technologies, LLC, a South Carolina limited liability
company (hereinafter, "Steel Technologies, LLC (South
Carolina)"), that resulted from merging Steel
Technologies Carolinas, Inc. into Steel Technologies
South Carolina, Inc., then which was merged into a
limited liability company and which is the 99%
limited partner in Steel Technologies, L.P., a
Delaware limited partnership;
(c) a 1% general partnership interest in Steel
Technologies, Ltd;
(d) 100% of Wabash Steel Corporation, an Indiana
corporation;
(e) 90% of Steel Technologies de Mexico, a Mexican
corporation; and
(f) 50% joint venture interest (the other 50% being owned
by Mitsui Steel Development Co., Inc.) in Mi-Tech
Steel, Inc., a Delaware corporation owning (x) 100%
of Mi-Tech Steel Alabama, Inc., an Alabama corporation
and (y) a 1% general partnership interest in Mi-Tech
Steel International, Ltd. of which the 99% limited
partner is Mi-Tech Steel Alabama, Inc,.
(ii) Post-Restructuring Property Ownership. As a result of
the Restructuring, the following Subsidiaries now own the
Borrower's former interests in the following locations:
(a) Steel Technologies, L.P. - Louisville, Shelbyville,
Eminence and Ghent, Kentucky and Portage, Indiana;
(b) Steel Technologies Corp. - Willoughby, Ohio;
(c) Steel Technologies, LLC (Ohio) - Canton, Michigan and
eventually Elkton, Maryland;
(d) Steel Technologies, LLC (South Carolina) - Clinton,
North Carolina and Huger, South Carolina;
(e) Mi-Tech Steel International, Ltd. - Greensburg,,
Indiana and Murfreesboro, Tennessee;
(f) Mi-Tech Steel Alabama, Inc. - Decatur, Alabama;
(g) Steel Technologies de Mexico - Monterrey, Mexico; and
(h) Wabash Steel Corporation - Peru, Indiana.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, it is hereby agreed
as follows:
ARTICLE 1
Amendments to Loan Agreement
Subject to delivery to the Agent of each of the "Amendment
Documents" more particularly described in Article 2 of this Amendment
and the fulfillment and satisfaction to of the Agent to each of the
other conditions described in Article 2 of this Amendment, the Loan
Agreement is hereby amended as follows:
1.1 Section 1.33 of the Loan Agreement is amended and restated
in its entirety as follows:
1.33. "Consolidated Subsidiaries" means Wabash Steel
Corporation, Steel Technologies de Mexico, Steel
Technologies, LLC (Ohio), Steel Technologies, LLC (South
Carolina), Steel Technologies Corp., Steel Technologies,
L.P., together with all other Subsidiaries of the Borrower
whose accounts are or should be consolidated with those of
the Borrower in accordance with GAAP. The Joint Ventures
shall not be deemed to be Consolidated Subsidiaries for
purposes of this Loan Agreement.
1.2 New Sections 1.129, 1.130, 1.131 and 1.132 are added to the
Loan Agreement immediately after Section 1.128, as follows:
1.129. "Steel Technologies, LLC (Ohio)" means
Steel Technologies, L.L.C., an Ohio limited
liability company.
1.130. "Steel Technologies, LLC (South
Carolina)" means Steel Technologies, L.L.C., a
South Carolina limited liability company.
1.131. "Steel Technologies, Corp." means Steel
Technologies Corp., an Ohio corporation.
1.32. "Steel Technologies, L.P." means Steel
Technologies, L.P., a Delaware limited
partnership of which the Borrower is general
partner and Steel Technologies, LLC (South
Carolina) is the limited partner.
ARTICLE 2
Conditions Precedent
2.1 The amendments to the Loan Agreement described in Article 1
of this Amendment shall become effective on that date (the "Effective
Date") on which each of the following documents (collectively, the
"Amendment Documents") has been executed by each of the parties to
them and delivered to the Agent, on behalf of the Banks, and when the
Agent determines to its satisfaction that each other condition set
forth below has been fulfilled:
A. This Amendment, duly executed by the Borrower, Agent
and each of the Banks;
B. The Guaranty Agreements, in the forms of Exhibits D,
E, F and G to this Agreement, of Steel Technologies, LLC (Ohio); Steel
Technologies, LLC(South Carolina); Steel Technologies Corp.; and
Steel Technologies, L.P.;
C. Incumbency certificate and certified copies of
resolutions of the Board of Directors of the Borrower authorizing the
execution and delivery of this Amendment, the actions necessary for
the completion of the Restructuring and the execution and delivery of
each of the Amendment Documents executed and delivered by the
Borrower;
D. Incumbency certificates and certified copies of
resolutions of the Board of Directors, authorizing the actions
necessary for the completion of the Restructuring, of each of :
Steel Technologies Carolinas, Inc., and Roberts Steel Company;
E. Incumbency certificate and certified copies of
resolutions of the Borrower, as General Partner of Steel
Technologies, L.P., authorizing the actions necessary for the
completion of the Restructuring and the execution and delivery of its
Guaranty Agreement, and the Certificate
of Limited Partnership, the Partnership Agreement and a Certificate
of Existence of Steel Technologies, L.P.;
F. Incumbency certificates and certified copies of [i]
resolutions of the Board of Directors, Members or Partners, as the
case may be, authorizing the execution and delivery of its respective
Guaranty Agreement, and the organizational documents and Certificates
of Existence, of each of : Steel Technologies, LLC, an Ohio limited
liability company; Steel Technologies, LLC, a South Carolina limited
liability company; and Steel Technologies Corp., an Ohio corporation;
G. Opinion of John M. Baumann, Esq., as counsel for the
Borrower and the Guarantors, addressed to each of the Banks;
H. Fourth Amendment, dated as of October 1, 1999, to Note
Agreement, dated as of March 1, 1995, among Borrower and each of the
Note Purchasers signatories thereto (and as defined in the Second
Amended and Restated Loan Agreement dated as of December 31, 1998)
entered into among Borrower and each of the Note Purchasers; and
I. Fourth Amendment to Intercreditor Agreement, dated as of
March 1, 1995, entered into among each of the Banks and each of the
Note Purchasers, dated as of October , 1999, entered into among each
of the Banks and each of the Note Purchasers. ARTICLE 3
Other Stipulations
3.1 Upon the Effective Date, the provisions of and Exhibits
referenced in Article 1 of this Amendment shall become effective and
modify or supersede and replace, as applicable, the applicable
provisions and Exhibits of the Loan Agreement recited as being
modified by them. From and after the Effective Date each reference
to the "Loan Agreement" or words of like import shall mean and be
deemed a reference to the Loan Agreement as modified by this
Amendment but, except as modified by this Amendment and the other
Amendment Documents, the Loan Agreement and the other Loan
Instruments shall remain in full force and effect in the same form as
existed immediately prior to the Effective Date.
3.2 If each of the Amendment Documents has not been fully
executed and delivered to the Agent on or before October 29, 1999,
the Banks' Consent and this Amendment shall be voidable at any time
prior to the delivery of each of such Amendment Documents upon notice
to the Borrower given by the Agent, acting at the direction of the
Requisite Banks,.
3.3 This Amendment and the other Amendment Documents contain
the final, complete and exclusive agreement of the parties to them
with regard to their subject matter, may not be amended except in
writing signed by each of the parties to them, shall be binding upon
and inure to the benefit of the respective successors and assigns of
each of the parties to them (subject to applicable provisions of the
Loan Agreement), and shall be construed in accordance with and
otherwise governed in all respects by the laws of the Commonwealth of
Kentucky. This Amendment may be executed in counterparts, and all
counterparts collectively shall constitute but one original
document. Borrower hereby agrees to reimburse the Agent for all
costs and expenses incurred by the Agent in connection with the
preparation, negotiation, documentation, execution and delivery of
this Amendment and the other Amendment Documents, including but not
limited to the reasonable fees of legal counsel to Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed as of the day and year first above
written.
(the "Borrower")
STEEL TECHNOLOGIES INC.
By:________________________________
(signature)
Name: John M. Baumann
Title: Secretary
("PNC")
PNC BANK, NATIONAL ASSOCIATION
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
Address: PNC Bank, National Association
Energy, Metals and Mining
249 Fifth Avenue
P1-POPP-03-3
Pittsburgh, PA 15222-2707
Attn: David W. Mendel
Senior Vice President
Telephone: (412) 762-2524
Telecopy: (412) 705-3232
("National City")
NATIONAL CITY BANK OF KENTUCKY
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
Address: 101 South Fifth Street
Louisville, KY 40202
Attn: Deroy Scott
Vice President
Telephone: (502) 581-7821
Telecopy: (502) 581-4424
("Bank One")
Bank One, Indiana, N.A.
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
Address: One Indiana Square
Suite 7028
Indianapolis, IN 46266
Attn: Randall K. Stephens
First Vice President
Telephone: (317) 266-6704
Telecopy: (317) 266-6042
("SunTrust")
SUNTRUST BANK, NASHVILLE, N.A.
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
Address: 201 Fourth Avenue North
Nashville, TN 37219
Attn: Scott T. Corley
Group Vice President
Telephone: (615) 748-5579
Telecopy: (615) 748-5296
("Firstar")
FIRSTAR BANK, N.A.
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
Address: One Financial Square
Louisville, KY 40202-3322
Attn: Mr. Phillip L. Marshall
Telephone: (502) 562-6486
Telecopy: (502) 560-8111
(collectively, the "Banks")
(the "Agent")
PNC BANK, NATIONAL ASSOCIATION, in its
capacity as Agent
By:________________________________
(signature)
Name:______________________________
(type or print)
Title:_____________________________
(type or print)
- i -
EXHIBIT 10.1(c)
CREDIT AGREEMENT
BY AND BETWEEN
STEEL TECHNOLOGIES INC.,
a Kentucky corporation,
as Borrower
AND
PNC BANK, NATIONAL ASSOCIATION,
as the Bank
Dated as of April 27, 2000
- ii -
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 1
ARTICLE II. AMOUNT AND TERMS OF CREDIT 6
Section 2.1. Revolving Credit Advances 6
Section 2.2. Commitment Fee 7
Section 2.3. Use of Proceeds 7
Section 2.4. Single Loan 7
Section 2.5. Interest on the Revolving Credit Loan 7
Section 2.6. Special Provisions Relating to Euro-Rate Options 8
Section 2.7. Interest Payment Dates 9
Section 2.8. Calculation of Interest 9
Section 2.9. Capital Adequacy 9
Section 2.10. Taxes 10
Section 2.11. Accounting 10
Section 2.12. Indemnity 10
Section 2.13. Access 11
ARTICLE III. CONDITIONS PRECEDENT 11
Section 3.1. Execution and Delivery of Agreement 11
Section 3.2. Documents and other Agreements 11
Section 3.3. Absence of Material Adverse Change 12
Section 3.4. Conditions to the Initial Revolving
Credit Advance 12
Section 3.5. Conditions to Each Revolving Credit Advance 12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES 13
Section 4.1. Organization, Standing, etc. 13
Section 4.2. Qualification 13
Section 4.3. Use of Proceeds 13
Section 4.4. Intellectual Property 13
Section 4.5. Contracts, Labor Disputes 13
Section 4.6. Accuracy of Financial Reports. 13
Section 4.7. Disclosure 13
Section 4.8. Tax Returns and Payments 13
Section 4.9. Indebtedness, etc. 14
Section 4.10. Operating Leases 14
Section 4.11. Litigation, etc 14
Section 4.12. Authorization; Compliance with Other
Instruments, etc 14
Section 4.13. Enforceability 14
Section 4.14. Governmental Consent 14
Section 4.15. Investment Company Act Status 14
Section 4.16. Regulation G, etc. 14
Section 4.17. Holding Company Act 14
Section 4.18. Employee Retirement Income Security Act of 1974 15
Section 4.19. Environmental Matters 15
Section 4.20. Year 2000 15
Section 4.21. Events of Default 15
Section 4.22. Incorporation of Representations and
Warranties by Reference. 15
ARTICLE V. FINANCIAL STATEMENTS AND INFORMATION 15
Section 5.1. Reports and Notices 15
Section 5.2. Communication with Accountants 16
ARTICLE VI. AFFIRMATIVE COVENANTS 16
Section 6.1 Incorporation of Affirmative Covenants 16
Section 6.2. Supplemental Disclosure 17
Section 6.3. Tax Returns 17
ARTICLE VII. NEGATIVE COVENANTS 17
Section 7.1 Incorporation of Negative Covenants 17
Section 7.2. ERISA 17
Section 7.3. Liens 18
ARTICLE VIII.TERM AND TERMINATION 18
Section 8.1. Term of Revolving Credit Commitment 18
Section 8.2. Reduction of Revolving Credit Commitment 18
Section 8.3 Refinancing of Agented Credit Line 18
ARTICLE IX. EVENTS OF DEFAULT; RIGHTS AND REMEDIES 18
Section 9.1. Events of Default 18
Section 9.2. Remedies 20
Section 9.3. Waivers by Borrower 20
Section 9.4. Right of Set-Off 20
ARTICLE X. MISCELLANEOUS 21
Section 10.1. Complete Agreement and Modification of Agreement21
Section 10.2. Fees and Expenses 21
Section 10.3. No Waiver by the Bank 21
Section 10.4. Remedies 22
Section 10.5. MUTUAL WAIVER OF JURY TRIAL 22
Section 10.6. Severability 22
Section 10.7. Parties 22
Section 10.8. Conflict of Terms 22
Section 10.9. GOVERNING LAW 22
Section 10.10. Notices 22
Section 10.11. Survival 23
Section 10.12. Headings 23
Section 10.13. Counterparts 23
Section 10.14. Interest Limitation 23
Section 10.15. Participation 23
Section 10.16. Holiday Payments 24
EXHIBITS
Exhibit "A" Request for Advance of Revolving Credit Loan
Exhibit "B" Revolving Credit Note
SCHEDULES
Schedule 4.9 Indebtedness
Schedule 4.12 Litigation
Schedule 4.19 Employee Pension Plan
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of April 27, 2000, by and
between STEEL TECHNOLOGIES INC., a Kentucky corporation having an
office at 15415 Shelbyville Road, Louisville, Kentucky 40253
("Borrower"), and PNC BANK, NATIONAL ASSOCIATION, having an office at
One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707
(the "Bank").
WITNESSETH:
WHEREAS, the Borrower desires to obtain revolving credit
loans from the Bank pursuant to this Agreement in an aggregate amount
not to exceed Fifteen Million ($15,000,000.00) Dollars at any one
time outstanding, and the Bank hereby agrees to make such loans upon
the terms and conditions as hereinafter set forth.
NOW, THEREFORE, in consideration of mutual promises
contained herein and other valuable consideration and with the intent
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
In addition to the defined terms appearing above,
capitalized terms used in this Agreement shall have (unless otherwise
provided elsewhere in this Agreement) the following respective
meanings when used herein:
"Affiliate" shall mean with respect to any Person (i) each
person that, directly or indirectly, owns or controls, whether
beneficially, or as a trustee, guardian or other fiduciary, 5% or
more of the Stock having ordinary voting power in the election of
directors of such Person, (ii) each Person that controls, is
controlled by or is under common control with such Person or any
Affiliate of such Person, or (iii) each of such Person's officers,
directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting
securities, by contract or otherwise.
"Agented Agreement" shall mean that certain Second Amended
and Restated Loan Agreement dated as of December 31, 1998 by and
among Steel Technologies Inc. and PNC Bank, National Association,
National City Bank of Kentucky, Bank One, Indiana, N.A. (successor by
merger to NBD Bank, N.A.), Suntrust Bank (formerly Suntrust Bank,
Nashville, N.A.) and Firstar Bank, N.A. (successor by merger to Star
Bank, N.A.) as "Banks" and PNC Bank, National Association in its
capacity as agent for the Lenders (the "Agent") (as the same may be
amended, modified and supplemented from time to time).
"Agreement" shall mean this Credit Agreement, including all
amendments, modifications and supplements hereto and any appendices,
exhibits or schedules to any of the foregoing, and shall refer to
this Agreement as the same may be in effect at the time such
reference becomes operative.
"Applicable Revolving Loan Margin" shall mean for any
Euro-Rate Portion of the Revolving Credit Loan an interest rate per
annum equal to one ninety-seven and one-half (97.5) basis points
(.975%).
"Bank" shall mean PNC Bank, National Association, and its
successors and assigns.
"Base Rate" shall mean the Bank's Prime Rate.
"Base Rate Option" shall mean the interest rate options, as
applicable, described in Subsection 2.5(a)(i) of this Agreement.
"Base Rate Portion" shall mean the portion of any Loans
bearing interest under the Base Rate Option.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed
in the Commonwealth of Pennsylvania.
"CERCLA" shall mean the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
"Charges" shall mean all Federal, state, county, city,
municipal, local, foreign or other governmental (including, without
limitation, PBGC) taxes at the time due and payable, levies,
assessments or charges upon or relating to (i) the Obligations
hereunder or under the Note, (ii) Borrower's employees (other than
taxes not required to be withheld) payroll, income or gross receipts,
(iii) Borrower's ownership or use of any of its assets, or (v) any
other aspect of Borrower's business.
"Closing" shall mean the making of the initial Revolving
Credit Advance and the making of each subsequent Revolving Credit
Advance.
"Closing Date" shall mean the date on which a Closing takes
place.
"Code" shall mean the Uniform Commercial Code of the
jurisdiction with respect to which such term is used, as in effect
from time to time.
"Commitment Fee" shall mean the fee described in Section
2.2 hereof.
"Commitment Termination Date" shall mean the earliest of
(i) December 31, 2000, (ii) the date of termination of the commitment
to make further Revolving Credit Advances pursuant to Article VIII
hereof, and (iii) the date of termination of the commitment to make
further Revolving Credit Advances pursuant to Sections 8.2, 8.3 or
9.2 hereof.
"Default" shall mean any event which, with the passage of
time or notice or both, would, unless cured or waived, become an
Event of Default.
"Defined Contribution Plan" shall mean, with respect to
Borrower or any ERISA Affiliate, at any time, an employee pension
benefit plan as defined in Section 3(2) of ERISA that is not covered
by Title IV of ERISA, that is not subject to the minimum funding
standards under Section 412 of the IRC and that is maintained for the
employees of Borrower or any ERISA Affiliate.
"Environmental Laws" shall have the meaning ascribed to it
in Section 4.19 hereof.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any regulations
promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Borrower, all
trades or businesses (whether or not incorporated) which, together
with Borrower, are treated as a single employer under Section 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to Borrower or any
ERISA Affiliate, (a) a Reportable Event (other than a Reportable
Event not subject to the provision for 30-day notice to the PBGC
under regulations issued under Section 4043 of ERISA), (b) the
withdrawal of Borrower or any ERISA Affiliate from a Plan during a
plan year in which it was a "substantial employer" as defined in
Section 4001 (a) (2) of ERISA, (c) the filing of a notice of intent
to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC under Section 4042 of
ERISA, or (e) any other event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Plan or to cause the imposition of any liability in excess of
$250,000.00 under Title IV of ERISA.
"Euro-Rate" shall mean with respect to any portion of the
Loans to which the Euro-Rate Option applies for any Euro-Rate
Interest Period, the interest rate per annum determined by the Bank
by dividing (the resulting quotient rounded upward to the nearest
1/100th of 1% per annum) (i) the rate of interest determined by the
Bank in accordance with its usual procedures (which determination
shall be conclusive and binding upon the Borrower, absent manifest
error on the part of the Bank) to be the average of London interbank
offered rates for U.S. Dollars quoted by the British Bankers
Association as set forth on Dow Jones Markets Service (formerly known
as Telerate) (or appropriate successor or, if British Banker's
Association or its successor ceases to provide such quotes a
comparable replacement determined by the Bank) display page 3750 (or
such other display page on the Dow Jones Markets Service system
replacing page 3750), two (2) Business Days prior to the first day of
such Euro-Rate Interest Period for an amount comparable to the
applicable Euro-Rate Portion and having a borrowing date and a
maturity comparable to such Euro-Rate Interest Period by (ii) a
number equal to 1.00 minus the Euro-Rate Reserve Percentage. Such
Euro-Rate may also be expressed by the following formula:
Euro-Rate = Average of London interbank offered rates
quoted by BBA as shown on Dow Jones Markets
Service display page 3750 or appropriate successor
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option
outstanding on the effective date of any change in the Euro-Rate
Reserve Percentage as of such effective date. The Bank shall give
prompt notice to the Borrower of the Euro-Rate as determined or
adjusted in accordance herewith, which determination shall be
conclusive absent manifest error.
"Euro-Rate Interest Period" shall mean any individual
period of one month, two months, three months or six months;
provided, however, that any Euro-Rate Interest Period which would
otherwise end on a day which is not a Business Day shall be extended
to the next Business Day unless such Business Day falls in the
succeeding calendar month in which case such Euro-Rate Interest
Period shall end on the next preceding Business Day; and provided
further that any Euro-Rate Interest Period which begins on the last
day of a calendar month or on a day for which there is no numerically
corresponding day in the subsequent calendar month during which such
Euro-Rate Interest Period is to end shall end on the last Business
Day of such subsequent month.
"Euro-Rate Option" shall mean the ability of the Borrower
to have all or any portion of the Loans then outstanding bear
interest at a fixed rate of interest related to the Euro-Rate, all as
more fully set forth in Subsection 2.5(a)(ii).
"Euro-Rate Portion" shall mean the portion of any Loans
then outstanding bearing interest under the Euro-Rate Option.
"Euro-Rate Reserve Percentage" shall mean, for each
Euro-Rate Interest Period, that percentage (expressed as a decimal),
as determined by the Bank as to the Euro-Rate Portion as to which the
rate is then being set, which is in effect on the first day of such
Euro-Rate Interest Period, (i)as prescribed by the Board of
Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirements (including without
limitation supplemental, marginal or emergency reserve requirements)
with respect to eurocurrency funding (currently referred to as
"Eurocurrency Liabilities") of a member bank in such system; and (ii)
to be maintained by a Bank as required for reserve liquidity, special
deposit, or a similar purpose by any governmental or monetary
authority of any country or political subdivision thereof (including
any central bank), against (A)any category of liabilities that
includes deposits by reference to which a Euro-Rate is to be
determined, or (B)any category of extension of credit or other
assets that includes Loans Euro-Rate Portions to which a Euro-Rate
applies. The Euro-Rate shall be adjusted automatically with respect
to any Euro-Rate Portion outstanding on the effective date of any
change in the Euro-Rate Reserve Percentage, as of such effective date.
"Event of Default" shall have the meaning assigned to it in
Section 9.1 hereof.
"Fiscal Quarter" shall mean a fiscal quarter of the
Borrower. The Fiscal Quarters of the Borrower currently end on the
last day of December, March, June and September.
"Fiscal Year" shall mean the twelve month period (or
shorter period with respect to the first Fiscal Year within the Term
hereof) that ends on September 30 of each year. The Borrower shall
not change the term "Fiscal Year," unless the Bank shall consent in
writing to such changes.
"GAAP" shall mean generally accepted accounting principles
in the United States of America as in effect from time to time.
"Governmental Person" shall mean and include any nation,
state, government, jurisdiction or jurisdictional authority, any
political subdivision thereof, and any governmental,
quasi-governmental, judicial, public, statutory, administrative or
regulatory body, agency, department, bureau, authority,
instrumentality or entity of any of the foregoing exercising
executive, legislative, judicial, regulatory, administrative, public
or other functions of or pertaining to government or any law,
including without limiting the generality of the foregoing, the
United States of America, or any locality therein, together with the
Federal Deposit Insurance Corporation, the OCC, the Federal Reserve
Board, the Securities and Exchange Commission, any state securities
commission or authority, or any comparable authority or entity.
Unless the context clearly requires otherwise, the term "Governmental
Person" shall include each of the foregoing in existence at each,
every and any of the times in question, including any successors or
replacements or reorganizations thereto or thereof, and whether or
not in existence at the date of the Agreement.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease,
dividend, or other obligation ("primary obligations") of any other
Person (the "primary obligor") in any manner including, without
limitation, any obligation or arrangement of such Person (a) to
purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (c)
to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation
against loss in respect thereof.
"Guarantor" shall have the meaning given to it in the
Guaranty Agreement.
"Guaranty Agreement" shall mean that certain subsidiary
guaranty agreement dated as of even date herewith by and between
Steel Technologies, L.P. as "Guarantor" and PNC Bank, National
Association as the "Bank".
"Hazardous Substance" shall have the meaning ascribed to it
in Section 4.19 hereof.
"Indebtedness" shall mean all liabilities, obligations and
indebtedness of any and every kind and nature, including, without
limitation, all liabilities and all obligations to trade creditors,
whether now or hereafter owing, arising, due or payable, from
Borrower to any Person and howsoever evidenced, created, incurred,
acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise. Without in any way limiting the generality of
the foregoing, Indebtedness shall specifically include the following
without duplication:
(a) amounts outstanding under this Agreement,
including, without limitation, amounts outstanding under
the Revolving Credit Note;
(b) all obligations or liabilities of any Person
that are secured by any Lien upon property owned by
Borrower, even though Borrower shall not have assumed or
become liable for the payment thereof;
(c) all obligations and indebtedness of Borrower
for borrowed money or for notes, bonds, debentures and
other debt securities;
(d) all obligations or liabilities created or
arising under any lease or conditional sale or other title
retention agreement with respect to property used or
acquired by Borrower, even though the rights and remedies
of the lessor, seller or lender thereunder are limited to
repossession of such property;
(e) all obligations or liabilities under
Guaranteed Indebtedness; and
(f) all Charges.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto, and any regulations or notices
promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, security
interest, easement or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any lease intended as
security or any title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of
any jurisdiction).
"Loan Documents" shall mean this Agreement and the Note,
together with all Supplemental Documentation and all other
agreements, instruments and documents, including, without limitation,
notes, guarantees, mortgages, deeds of trust, chattel mortgages,
pledges, powers of attorney, consents, assignments, contracts,
notices, security agreements, leases, financing statements,
subordination agreements, trust account agreements and all other
written matter whether heretofore, now, or hereafter executed by or
on behalf of Borrower and delivered to the Bank or any Person
participating with Bank in the loans made hereunder.
"Margin Stock" shall have the meaning assigned to that term
in Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.
"Material Adverse Effect" shall mean material adverse
effect on (i) the business, assets, operations or financial or other
condition of Borrower or the Guarantor, (ii) the Borrower's ability
to pay the obligations hereunder or under the Note in accordance with
the terms thereof, or (iii) the Guarantor's ability to pay the
obligations under the Guaranty in accordance with the terms thereof.
"Maximum Revolving Credit Loan" shall mean, at any
particular time, an amount equal to $15,000,000.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Sections 4001(a) (3) and 3(37) (A) of ERISA, and to which
Borrower or any ERISA Affiliate is making, or is obligated to make,
contributions or has made, or been obligated to make, contributions.
"Obligations" shall mean all loans, advances, debts,
liabilities, and obligations, for monetary amounts (whether or not
such amounts are liquidated or determinable) owing by Borrower to the
Bank, and all covenants and duties regarding such amounts, of any
kind or nature, present or future, whether or not evidenced by any
note, agreement or other instrument, arising under any of the Loan
Documents. This term includes, without limitation, all interest,
fees, charges, expenses, attorneys' fees and any other sum chargeable
to Borrower under any of the Loan Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation,
entity or government (whether Federal, state, county, city, municipal
or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof)
"Plan" shall mean, with respect to Borrower or any ERISA
Affiliate, at any time, an employee pension benefit plan as defined
in Section 3(2) of ERISA (including a Multiemployer Plan) that is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the IRC and is maintained for the
employees of Borrower or any ERISA Affiliate.
"Portion" shall mean any Euro-Rate Portion and Base Rate
Portion.
"Prime Rate" shall mean the rate of interest announced from
time to time by the Bank at its principal office as its prime rate,
which rate may not be the lowest interest rate then being charged
commercial borrowers by the Bank.
"Release" shall have the meanings assigned to it in CERCLA.
"Reportable Event" shall mean any of the events set forth
in Section 4043(b) of ERISA or the regulations thereunder.
"Request for Advance of Revolving Credit Loan" shall mean a
notice in the form attached hereto as Exhibit "A".
"Revolving Credit Advance" shall have the meaning assigned
to it in Section 2.1(a) hereof.
"Revolving Credit Loan" or "Loan" shall mean the aggregate
amount of Revolving Credit Advances outstanding at any time.
"Revolving Credit Loan Commitment" shall have the meaning
assigned to it in Section 2.1(a) hereof.
"Revolving Credit Note" or "Note" shall have the meaning
assigned to it in Section 2.1(b) hereof.
"Solvent" shall mean, when used with respect to any Person,
that:
(a) the fair value and present fair saleable value of such
Person's assets is in excess of the total amount of such
Person's stated liabilities including identified contingent
liabilities;
(b) the present fair saleable value of such Person's
assets is in excess of the amount that will be required to pay
such Person's probable liability on such Person's debts as they
become absolute and mature;
(c) such Person does not have unreasonably small capital
to carry on the business in which such Person is engaged and all
businesses in which such Person is about to engage; and
(d) such Person has not incurred debts beyond such Person's
ability to pay such debts as they mature.
"Subsidiary" shall mean, with respect to any Person, any
corporation of which an aggregate of more than 50% of the outstanding
Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the
time, Stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person and/or one or more Subsidiaries of such
Person.
"Term" shall mean that period from and including the
initial Closing Date through the Termination Date.
"Termination Date" shall mean the date on which all
Obligations hereunder and under the Note have been completely
discharged and Borrower shall have no further right to borrow any
monies hereunder.
"Welfare Plan" shall mean, with respect to Borrower or any
ERISA Affiliate, at any time, an employee welfare benefit plan as
defined in Section 3(l) of ERISA that is maintained for the employees
of Borrower or any ERISA Affiliate.
"Work Fee" shall have the meaning given to this term in
Section 2.2(b) hereof.
Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning
customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed, unless otherwise
specifically provided herein, in accordance with GAAP consistently
applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed
to limit the foregoing. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the
meanings provided for by the Code as in effect in the Commonwealth of
Pennsylvania to the extent the same are used or defined therein. The
words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended,
modified or supplemented and not to any particular section,
subsection or clause contained in this Agreement.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular
and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, the feminine and the
neuter.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
Section 2.1. Revolving Credit Advances. (a) The aggregate
principal amount of the Revolving Credit Loan Commitments is
$15,000,000.00. Upon and subject to the terms and conditions hereof,
the Bank agrees to make available, from time to time, on and after
the initial Closing Date and until the Commitment Termination Date,
for Borrower's use and upon the request of Borrower therefor,
advances (each, a "Revolving Credit Advance"), in an aggregate amount
outstanding which shall not at any given time exceed Maximum
Revolving Credit Loan. Subject to the provisions of Section 2.2,
Section 8.1 and Section 9.2 hereof and until all amounts outstanding
in respect of the Revolving Credit Loan shall become due and payable
on the Commitment Termination Date, Borrower may from time to time
borrow, repay and reborrow under this Subsection 2.1(a). Each
Revolving Credit Advance shall be made on notice, given not later
than 11:30 A.M. (Pittsburgh, Pennsylvania time) on the Business Day
of the proposed Revolving Credit Advance by Borrower to Bank
(provided that if the portion of the proposed Revolving Credit
Advance shall bear interest at the Euro-Rate Option, then such notice
shall be given by the Borrower to the Bank not later than 11:30 a.m.
(Pittsburgh, Pennsylvania time) on the third Business Day prior to
the date of the proposed Revolving Credit Advance). Each such notice
(a "Request for Advance of Revolving Credit Loan") shall be in
writing or by telephone to Bank at (412) 762-3627 confirmed
immediately in writing, in substantially the form of Exhibit "A"
hereto, specifying therein the requested date and amount of such
Revolving Credit Advance. The Bank shall, before 2:00 P.M.
(Pittsburgh, Pennsylvania time) on the date of the proposed Revolving
Credit Advance, upon fulfillment of the applicable conditions set
forth in Article III hereof, disburse the Revolving Credit Advance by
the deposit of immediately available funds to the demand deposit
account of the Borrower maintained with the Bank.
(b) The Revolving Credit Loan shall be evidenced by a
promissory note to be executed and delivered by Borrower concurrently
with the execution of this Agreement, the form of which is attached
hereto and made a part hereof as Exhibit "B" (the "Revolving Credit
Note" or the "Note"). The Revolving Credit Note shall be payable to
the order of the Bank and shall represent the obligation and
liability of Borrower to pay the amount of the Revolving Credit Loan
Commitment or, if less, the aggregate unpaid principal amount of all
Revolving Credit Advances made by the Bank to the Borrower with
interest thereon as prescribed in Section 2.5(a). The date and
amount of the any Revolving Credit Advance by the Bank and the
payment of principal with respect thereto shall be recorded on the
books and records of the Bank, which books and records shall
constitute prima facie evidence of the accuracy of the information
therein recorded. The entire unpaid balance of the Revolving Credit
Loan shall be due and payable on the Commitment Termination Date.
Section 2.2. Fees. (a) Beginning on the last day of the
quarter after the date of the Note and continuing on the last day of
each quarter thereafter until the Termination Date, the Borrower
shall pay a commitment fee to the Bank, in arrears, at the rate of
one-quarter of one percent (.25%) per annum on the average daily
balance of the Revolving Credit Loan Commitment which is undisbursed
during the preceding quarter. The commitment fee shall be computed
on the basis of a year of 360 days and paid on the actual number of
days elapsed.
(b) Work Fee. Concurrently with the execution hereof, the
Borrower shall pay to the Bank a work fee of $10,000.00 in
immediately available funds.
Section 2.3. Use of Proceeds. Borrower shall apply the
proceeds of the Revolving Credit Advances for general corporate
purposes.
Section 2.4. Single Loan. The Revolving Credit Advances and
all of the other Obligations of Borrower arising under this Agreement
and the other Loan Documents shall constitute one general obligation
of Borrower.
Section 2.5. Interest on the Revolving Credit Loan.
(a) Interest Rate Options. During the term hereof and prior to
the Commitment Termination Date, in accordance with the provisions of
Subsection 2.5(c), the Borrower shall have the option of electing
from time to time one or more of the interest rate formulas set forth
below to be applied by the Bank to amounts then outstanding under the
Revolving Credit Loan. The actual interest rates hereunder shall
also be adjusted in accordance with Section 2.5(b) hereof.
(i) Base Rate Option. Interest under this
Option shall accrue at a rate per annum equal to the Base
Rate. The actual interest rate in effect under this Option
shall be adjusted on the effective date of any change in
the Base Rate.
(ii) Euro-Rate Option. Interest under this
Option shall accrue for any Euro-Rate Interest Period
selected at a rate per annum equal to the sum of the
related Euro-Rate plus the Applicable Revolving Loan Margin.
(b) Interest Rate Upon Default.
(i) (A) Upon the occurrence of an Event of Default under
Section 9.1, and during the continuance of such Event of
Default, or (B) upon the acceleration of the Obligations
hereunder or under the Note for any reason, interest under the
Base Rate Option and the Euro-Rate Option shall be 2% per annum
(200 basis points) in excess of the applicable interest rate
then in effect.
(ii) The provisions of the immediately preceding item (i)
to the contrary notwithstanding, if (A) the Borrower has not
given notice to the Bank of an Event of Default in accordance
with the provisions hereof and (B) the Bank, after becoming
aware of such Event of Default and based on such Event of
Default, wishes to impose the default rate of interest in
accordance the preceding item (i) such default rate of interest
shall be effective as of the first day on which such default
rate would have been in effect had the Borrower given such
notice in accordance with the provisions hereof.
(c) Interest Rate Option Elections. The Borrower shall have
the option to elect to have all, or a portion, of the Revolving
Credit Loan bear interest at either the Base Rate Option or the
Euro-Rate Option, subject, however to the other provisions of this
Agreement. Notice of the Borrower's election shall be made to the
Bank orally or in writing by 10:00a.m. (Pittsburgh, Pennsylvania
time) at least (i) on the proposed effective date of such election,
if such election is the election of the Base Rate Option; and, (ii)
three (3) Business Days prior to the proposed effective date of such
election, if such election is the election of the Euro-Rate Option.
Each such notice of election shall specify the Option selected, the
amount of the applicable Portion and, in the case of the selection
of the Euro-Rate Option, the Interest Period therefor. Any oral
notice of election hereunder shall be followed immediately by the
Borrower's written confirmation of such interest rate election.
Elections of or conversions to the Base Rate Option shall continue in
effect until converted as herein set forth. Elections of,
conversions to or renewals of the Euro-Rate Option shall expire as to
each such Option at the expiration of the applicable Interest Period;
provided, however, that no Interest Period for the Euro-Rate Option
may be elected, converted or renewed if such Interest Period will
extend beyond the Termination Date or so long as an Event of Default
has occurred and is continuing. Upon expiration of any Euro-Rate
Option, unless the Borrower has already selected another Euro-Rate
Option in accordance with the terms hereof, all amounts outstanding
under this Agreement shall bear interest at the Base Rate Option.
(d) Interest on Overdue Amounts. All overdue payments of
principal, interest, fees, expenses and other amounts payable by the
Borrower hereunder and under the other Loan Documents shall bear
interest at a rate per annum equal to the Base Rate plus 2% (200
basis points). Any sum payable pursuant to this Subsection 2.5(e)
shall not duplicate any sum due under Section 2.5(b) hereof. Any sum
payable pursuant to this Subsection 2.5(e) shall be payable by the
Borrower upon demand by the Bank until paid in full.
Section 2.6. Special Provisions Relating to Euro-Rate
Options. (a) In the event that on any date on which a Euro-Rate
would otherwise be set, the Bank shall have determined in good faith
(which determination shall be final and conclusive) that by reason of
circumstances affecting the interbank eurodollar or eurocurrency
market adequate and reasonable means do not exist for ascertaining
the Euro-Rate, the Bank shall give prompt notice of such
determination to the Borrower, and until the Bank notifies the
Borrower a that the circumstances giving rise to such determination
no longer exist, the right of the Borrower to borrow under or renew
under the Euro-Rate Option shall be suspended. Any notice of
borrowing under or renewal of the Euro-Rate Option which was to
become effective during the period of such suspension shall be
treated as a request to borrow under or renew the Base Rate Option
with respect to the principal amount therein specified.
(b) Illegality of Offering Euro-Rate. If the Bank shall
determine in good faith (which determination shall be final and
conclusive) that compliance by the Bank with any applicable law,
treaty or governmental rule, regulation, guideline, order, request or
directive (whether or not having the force of law), or the
interpretation or application thereof by any governmental or monetary
authority, adopted after the date hereof, has made it unlawful for
the Bank to make or maintain its Loans under the Euro-Rate Option,
the Bank shall give notice of such determination to the Borrower.
Notwithstanding any provision of this Agreement to the contrary,
unless and until the Bank shall have given notice that the
circumstances giving rise to such determination no longer apply:
(i) with respect to any Euro-Rate Interest Periods
thereafter commencing, interest shall be computed and payable in
Dollars under the Base Rate Option; and
(ii) on such date, if any, as shall be required by law, the
amount, then outstanding shall be automatically renewed at the
Base Rate Option in Dollars and the Borrower shall pay to the
Bank the accrued and unpaid interest on the amount outstanding
to (but not including) such renewal date.
The Borrower shall pay the Bank any additional amounts
reasonably necessary to compensate the Bank (on an after-tax basis)
for any out-of-pocket costs incurred by the Bank as a result of any
renewal pursuant to clause (ii) above on a day other than the last
day of the relevant Interest Period, including, but not limited to,
any interest or fees payable by the Bank to lenders of funds obtained
by it to loan or maintain the lending of the Loans so converted. The
Bank shall furnish to the Borrower and the Bank a certificate showing
the calculation of the amount necessary to compensate the Bank (on an
after-tax basis) for such costs (which certificate, in the absence of
manifest error, shall be conclusive), and the Borrower shall pay such
amount to the Bank, as additional consideration hereunder, within ten
(10) days of the Borrower's receipt of such certificate.
(c) Inability to Offer Euro-Rate. In the event that the Bank
shall determine, in its reasonable discretion, that it is unable to
obtain deposits in the interbank eurodollar market in sufficient
amounts and with maturities related to the amount outstanding which
would enable the Bank to fund such amounts using the Euro-Rate, then
the Bank shall immediately notify the Borrower of such inability.
Upon receipt of such notice, the right of the Borrower to borrow
under, convert to or renew the Euro-Rate Option from the Bank shall
be suspended. Following notification of the suspension of the
Euro-Rate Option with respect to the Bank, the Borrower agrees to
negotiate with the Bank for a modified Euro-Rate which will allow the
Bank to realize its anticipated and bargained for yield. In the
event that the Borrower and the Bank cannot agree on a modified
Euro-Rate, any notice of borrowing under, conversion to or renewal of
the Euro-Rate Option which was to become effective during the period
of suspension shall be treated as a request to borrow under, convert
to or renew the Base Rate Option in Dollars with respect to the
principal amount specified therein attributable to the Bank.
(d) Yield Protection. If any law, rule, regulation, treaty or
official directive or the interpretation or application thereof by
any Governmental Person charged with the administration thereof or
the compliance with any guideline or request from any central bank or
other Governmental Person, adopted after the date hereof, (whether or
not having the force of law):
(i) subjects the Bank to any tax, levy, impost, charge,
fee, duty, deduction or withholding of any kind hereunder (other
than any tax imposed or based upon the income of the Bank and
payable to any governmental or taxing authority in the United
States of America or any state thereof or any foreign
jurisdiction) or changes the basis of taxation of the Bank with
respect to payments by the Borrower of principal, interest or
other amounts due from the Borrower hereunder (other than any
change which affects, and to the extent that it affects, the
taxation by the United States or any state thereof or any
foreign jurisdiction of the total net income of the Bank), or
(ii) imposes, modifies or deems applicable any reserve,
special deposit, special assessment or similar requirements
against assets held by, deposits with or for the account of or
credit extended by the Bank (other than such requirements which
are included in the determination of the Euro-Rate hereunder), or
(iii)imposes upon the Bank any other condition with respect
to this Agreement,
and the result of any of the foregoing is to increase the cost to the
Bank, reduce the income receivable by the Bank, reduce the rate of
return on the Bank's capital, or impose any expense upon the Bank
with respect to portion of the loans bearing interest at the
Euro-Rate by an amount which the Bank in its sole but reasonable
discretion deems to be material, the Bank shall from time to time
notify the Borrower of the amount determined by the Bank (which
determination, absent error, shall be conclusive) to be reasonably
necessary to compensate the Bank (on an after-tax basis) for such
increase in cost, reduction in income, reduction in rate of return,
or additional expense, setting forth the calculations therefor, and
the Borrower shall pay such amount to the Bank, as additional
consideration hereunder, within ten (10) days of the Borrower's
receipt of such notice.
(e) Breakage Costs. In addition to the provisions of
Subsections 2.6(b) and 2.6(d) hereof, the Borrower hereby agrees to
reimburse the Bank against any loss or expense which the Bank may
sustain or incur as a consequence of any default by the Borrower (i)
in failing to accept any borrowing or renewal hereunder to bear
interest at the Euro-Rate Option on the scheduled date, or (ii) in
failing to make when due (whether by declaration, acceleration or
otherwise) any payment of any Euro-Rate Portion of the Loans, or
(iii) in making any payment or prepayment of any Euro-Rate Portion of
the Loans or any part thereof on any day other than the last day of
the relevant Interest Period; including, in each case, but not
limited to, any loss of profit, premium or penalty incurred by the
Bank in respect of funds borrowed by it for the purpose of making or
maintaining any Loan as determined by the Bank in the exercise of its
sole but reasonable discretion. The Bank shall furnish to the
Borrower and the Bank a certificate showing the calculation of the
amount of any such loss or expense (which certificate, absent error,
shall be conclusive), and the Borrower shall pay such amount within
ten (10) days of the Borrower's receipt of such certificate.
(f) Method of Calculation. In determining the amount due the
Bank hereunder by reason of the application of this Section 2.6, the
Bank may use any reasonable averaging or attribution method;
provided, however, the Bank must use reasonable efforts to minimize
such losses and costs.
Section 2.7. Interest Payment Dates. Interest due on the
outstanding Revolving Credit Loan hereunder shall be payable in
arrears: (i) with respect to each Base Rate Portion, (A) on the last
Business Day of each month during the term hereof, (B) at maturity
whether by acceleration or otherwise, and (C) after maturity, on
demand until paid in full; and (ii) with respect to each Euro-Rate
Portion, (A) on the last day of each Euro-Rate Interest Period
(provided, however, if the Interest Period chosen for any Euro-Rate
Portion exceeds three (3) months, interest on that Euro-Rate Portion
shall be due and payable every three (3) months during such Interest
Period and on the last day of such Interest Period), (B) at maturity,
whether by acceleration or otherwise, and (C) after maturity, on
demand until paid in full.
Section 2.8. Calculation of Interest. The interest rate
calculated pursuant to the Base Rate Option shall be calculated on
the basis of the actual number of days elapsed using a year of
365-366 days. The interest rate calculated pursuant to the Euro-Rate
Option shall be calculated on the basis of the actual number of days
elapsed during a year of 360 days.
Section 2.9. Capital Adequacy. If (i) any adoption of or any
change in or in the interpretation of any law, rule or regulation, or
(ii) compliance with any guideline, request or directive of any
Governmental Person or quasi-governmental authority exercising
control over banks or financial institutions generally, including but
not limited to regulations set forth at 12 C.F.R. Part 208 (Appendix
A) and 12 C.F.R. Part 225 (Appendix A), or any court requires that
the credit commitments of the Bank hereunder (including, without
limitation, commitments and obligations in respect of revolving
loans) be treated as an asset or otherwise be included for purposes
of calculating the appropriate amount of capital to be maintained by
the Bank or any corporation controlling the Bank or changes the
current treatment of the credit commitments of the Bank hereunder
with respect to capital adequacy requirements (a "Change in Law"),
the result of which is to reduce the rate of return on Bank's capital
as a consequence of such commitments to a level below that which the
Bank could have achieved but for such Change in Law, taking into
consideration the Bank's policies with respect to capital adequacy,
by an amount which the Bank deems to be material, the Bank shall
deliver to the Borrower a statement of the amount necessary to
compensate the Bank for the reduction in the rate of return on its
capital attributable to such commitments (the "Capital Compensation
Amount"). The Bank shall determine the capital compensation amount
in good faith, using reasonable attribution and averaging methods.
The Bank shall from time to time notify the Borrower of the amount so
determined. such amount shall be due and payable by the Borrower to
the Bank ten (10) Business Days after such notice is given.
Section 2.10. Taxes.
(a) No Deductions. All payments made by the Borrower hereunder
and under the Note shall be made free and clear of and without
deduction for any present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on the net income of the Bank and
all income and franchise taxes applicable to the Bank organized and
existing under the United States or any state thereof (all such
non-excluded taxes, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect to any sum payable hereunder or under the
Note, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions
applicable to additional sums payable under this Subsection 2.10(a))
the Bank receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall timely pay the full amount
deducted to the relevant tax authority or other authority in
accordance with applicable law.
(b) Stamp Taxes. In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or
registration, or otherwise with respect to, this Agreement or the
Note (hereinafter referred to as "Other Taxes").
(c) Indemnification for Taxes Paid by the Bank. The Borrower
shall indemnify the Bank for the full amount of Taxes or Other Taxes
(including without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Subsection 2.10(c))
paid by the Bank and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty (30) days from the date
the Bank makes written demand therefor.
(d) Certificate. Within 30 days after the date of any payment
of any Taxes by the Borrower, the Borrower shall furnish to the Bank,
at its address referred to herein, the original or a certified copy
of a receipt evidencing payment thereof. If no Taxes are payable in
respect of any payment by the Borrower, the Borrower shall, if so
requested by the Bank, provide a certificate of an officer of the
Borrower to that effect.
(e) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations
of the Borrower contained in this Section 2.10 shall survive the
payment in full of principal and interest hereunder and under any
instrument delivered hereunder.
Section 2.11. Accounting. The Bank may open and maintain on
its books a loan account in the Borrower's name with respect to Loans
made, repayments, prepayments, the computation and payment of
interest, fees and other amounts due and sums paid to the Bank
hereunder and under the other Loan Documents. Except in the case of
manifest error in computation, such records shall be conclusive and
binding on the Borrower as to the amount at any time due to the Bank
from the Borrower.
Section 2.12. Indemnity. Borrower hereby indemnifies the Bank
and its directors, officers, employees, Affiliates and agents
(collectively, "Indemnified Persons") against, and agrees to hold
each such Indemnified Person harmless from, any and all losses,
claims, damages and liabilities, including claims brought by any
stockholder or former stockholder of Borrower, and related expenses,
including reasonable counsel fees and expenses, incurred by such
Indemnified Person arising out of any claim, litigation,
investigation or proceeding (whether or not such Indemnified Person
is a party thereto) relating to any transactions, services or matters
that are the subject of the Loan Documents; provided, however, that
such indemnity shall not apply to any such losses, claims, damages,
or liabilities or related expenses determined by a court of competent
jurisdiction to have arisen from the gross negligence or willful
misconduct of such Indemnified Person. If any litigation or
proceeding is brought against any Indemnified Person in respect of
which indemnity may be sought against Borrower pursuant to this
Section 2.12, such Indemnified Person shall promptly notify Borrower
in writing of the commencement of such litigation or proceeding, but
the omission so to notify Borrower shall not relieve Borrower from
any other obligation or liability which it may have to any
Indemnified Person otherwise than under this Section 2.12. Failure
of the Indemnified Person to timely notify Borrower of the
commencement of such litigation of proceeding shall not relieve
Borrower of its obligations under this Section 2.12, except where
such failure irrevocably prejudices Borrower's ability to defend such
litigation or proceeding and to hold such Indemnified Person harmless
therefrom. In case any such litigation or proceeding shall be
brought against any Indemnified Person and such Indemnified Person
shall notify Borrower of the commencement of such litigation or
proceeding, Borrower shall be entitled to participate in such
litigation or proceeding and, after written notice from Borrower to
such Indemnified Person, to assume the defense of such litigation or
proceeding with counsel of its choice at its expense, provided that
such counsel is satisfactory to the Indemnified Person in the
exercise of its reasonable judgment. Notwithstanding the election of
Borrower to assume the defense of such litigation or proceeding, such
Indemnified Person shall have the right to employ separate counsel
and to participate in the defense of such litigation or proceeding,
and Borrower shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by Borrower to
represent such Indemnified Person would present such counsel with a
conflict of interest; (ii) the defendants in, or targets of, any such
litigation or proceeding include both an Indemnified Person and
Borrower, and such Indemnified Person shall have reasonably concluded
that there may be legal defenses available to it which are different
from or additional to those available to Borrower (in which case
Borrower shall not have the right to direct the defense of such
action on behalf of the Indemnified Person) (iii) Borrower shall not
have employed counsel satisfactory to such Indemnified Person in the
exercise of the Indemnified Person's reasonable judgment to represent
such Indemnified Person within a reasonable time after notice of the
institution of such litigation or proceeding; or (iv) Borrower shall
authorize such Indemnified Person to employ separate counsel at the
expense of Borrower, provided that Borrower shall not be liable for
the fees, costs and expenses of more than one separate counsel at the
same time for all such Indemnified Persons in connection with the
same action and any separate but substantially similar or related
action in the same jurisdiction. Borrower shall not consent to the
entry of any judgment or enter into any settlement in any such
litigation or proceeding unless such judgment or settlement includes
as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Person of a release from all liability
in respect to such claim or litigation.
The agreements of Borrower in this Section 2.12 shall be in
addition to any liability that Borrower may otherwise have. All
amounts due under this Section 2.12 shall be payable as incurred upon
written demand therefor.
Section 2.13. Access. The Bank and any of its officers,
employees and/or agents shall have the right, exercisable as
frequently the Bank determines to be reasonably appropriate during
normal business hours (or at such other times as may reasonably be
requested by the Bank), to inspect the properties and facilities of
Borrower and to inspect, audit and make extracts from all of
Borrower's records, files and books of account. Borrower shall
deliver any document or instrument reasonably necessary for the Bank,
as it may request, to obtain records from any service bureau
maintaining records for Borrower, and shall maintain duplicate
records or supporting documentation on media, including, without
limitation, computer tapes and discs owned by Borrower. Borrower
shall instruct its banking and other financial institutions to make
available to the Bank such information and records as the Bank may
reasonably request. The Bank will utilize reasonable, good faith
efforts to maintain as confidential any information obtained from
Borrower (other than information which (i) at the time of disclosure
or thereafter is generally available to and known by the public
(other than as a result of a disclosure directly or indirectly by the
Bank or any of its representatives) (ii) is available to the Bank on
a non-confidential basis from a source other than Borrower, provided
that such source was not at the time bound by a confidentiality
agreement with Borrower, or (iii) has been independently developed by
the Bank) but in no event (other than willful misconduct) shall the
Bank be liable for damages resulting from the disclosure of any such
confidential information obtained from Borrower.
ARTICLE III. CONDITIONS PRECEDENT
This Agreement shall become effective upon the satisfaction of
the following conditions precedent:
Section 3.1. Execution and Delivery of Agreement. This
Agreement or counterparts thereof shall have been duly executed by,
and delivered to, Borrower and the Bank.
Section 3.2. Documents and other Agreements. The Bank shall
have received all of the following, each in form and substance
satisfactory to the Bank and its counsel:
A. Revolving Credit Note of Borrower payable to the Bank
as required by Section 2.1(b);
B. A Certificate of the Secretary of Borrower, together
with true and correct copies of the Articles of Incorporation
and Bylaws of Borrower, and all amendments thereto, true and
correct copies of the resolutions of the Board of Directors of
Borrower authorizing or ratifying the execution, delivery and
performance of this Agreement and the Note and the names of the
officer or officers of Borrower authorized to sign this
Agreement and the Note, together with a sample of the true
signature of each such officer;
C. Certified copies of all documents evidencing any other
necessary corporate action, consents and governmental approvals
(if any) with respect to this Agreement, or the Note;
D. The opinion of John Baumann, Esquire, counsel for
Borrower, addressed to the Bank in the form and substance
satisfactory to the Bank and its counsel;
E. The Certificate of Incorporation of Borrower certified
by the Secretary of the Commonwealth of Kentucky;
F. Good Standing Certificates for Borrower from the
Secretaries of State of the Commonwealth of Kentucky and the
States of Indiana, Ohio and South Carolina;
G. Satisfactory evidence of payment in full of all fees
due and owing to Tucker Arensberg, P.C., counsel to the Bank, in
connection with this Agreement and any previous transactions
between Borrower and the Bank;
H. The Guaranty Agreement;
I. Payment of the Work Fee set forth in Section 2.2(b)
above; and
J. Such other executed documents, instruments and
approvals as the Bank may reasonably request.
Section 3.3. Absence of Material Adverse Change. No material
and adverse change in the business, operations or condition,
financial or otherwise, of Borrower shall have occurred or be
continuing. Borrower shall have paid its Indebtedness in accordance
with good business and historical practices.
Section 3.4. Conditions to the Initial Revolving Credit
Advance. It shall be a condition to the initial Revolving Credit
Advance that the conditions contained in Sections 3.1, 3.2 and 3.3
shall have been fulfilled, and that Borrower shall have delivered to
Bank a Request for Advance of Revolving Credit Loan.
Section 3.5. Conditions to Each Revolving Credit Advance. It
shall be a further condition to the funding of the initial Revolving
Credit Advance and each subsequent Revolving Credit Advance after the
initial Revolving Credit Advance that the following statements shall
be true on the date of each such funding or advance:
(a) All of the representations and warranties of Borrower
contained herein or in any of the Loan Documents shall be correct in
all material respects as to Borrower taken as a whole on and as of
the date of each such Revolving Credit Advance as though made on and
as of such date, except (i) to the extent that any such
representation or warranty expressly relates to an earlier date, and
(ii) for changes therein permitted or contemplated by this
Agreement. All of the representations and warranties of Borrower
contained in any of the other Loan Documents shall be correct in all
material respects as of the date delivered, except to the extent that
any such representation or warranty expressly relates to an earlier
date.
(b) No event shall have occurred and be continuing, or
would result from the funding of the Revolving Credit Advance, which
constitutes or would constitute a Default or an Event of Default.
(c) The aggregate unpaid principal amount of the Revolving
Credit Loan after giving effect to such Revolving Credit Advance,
shall not exceed the Maximum Revolving Credit Loan.
(d) All amounts available to the Borrower under the
revolving credit commitment set forth in the Agented Agreement, shall
be fully drawn and no unused portion of the revolving credit
commitment under the Agented Agreement remains available to Borrower.
The acceptance by Borrower of the proceeds of any Revolving
Credit Advance shall be deemed to constitute, as of the date of such
acceptance, a representation and warranty by Borrower that the
conditions in this Section 3.5 have been satisfied.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
To induce the Bank to establish the Revolving Credit Commitment
and to make the Revolving Credit Loan Advances, each as herein
provided for, Borrower makes the following representations and
warranties to the Bank:
Section 4.1. Organization, Standing, etc. The Borrower is a
corporation duly organized and validly existing under the laws of the
Commonwealth of Kentucky. The Borrower has all requisite power and
authority to own and operate its properties, to cam, on its business
as now, conducted and proposed to be conducted, to execute and
deliver this Agreement and the other Loan Documents to which it is a
party, and to carry out the terms hereof and thereof. The Borrower
has delivered to the Bank a true and complete copy of its Articles of
Incorporation and Bylaws as in effect on the date hereof.
Section 4.2. Qualification. The Borrower is duly qualified to
transact business as a foreign corporation and is in good standing as
a foreign corporation in each jurisdiction in respect of which the
failure to be so qualified would have a Material Adverse Effect.
Section 4.3. Use of Proceeds. The Borrower's uses of the
Loans made to the Borrower (a) will at all times be legal and proper
corporate uses of the Borrower, and such uses are consistent with all
applicable laws and statutes as in effect as of the date hereof, and
(b) will not violate or result in a violation of Regulations U, T or
X of the Board of Governors of the Federal Reserve System.
Section 4.4. Intellectual Property. The Borrower owns or
possesses such assets, licenses, patents, patent applications,
copyrights, trademarks, trademark applications, trade names,
franchises, consents, authorizations and service marks and rights
with respect to the foregoing which are necessary to be owned or
possessed by the Borrower to prevent a Material Adverse Effect.
Section 4.5. Contracts, Labor Disputes. The Borrower is not a
party to any contract or agreement, or subject to any charge,
corporate restriction, judgment, decree or order, which has or could
be reasonably foreseen to have a Material Adverse Effect. There are
no strikes or walkouts relating to any labor contracts binding upon
the Borrower.
Section 4.6. Accuracy of Financial Reports. The audited
financial statements of the Borrower for its Fiscal Year 1999 and the
interim unaudited financial statements of the Borrower which have
been delivered to the Bank, have been prepared in accordance with
GAAP and fairly and accurately present the financial condition of the
Borrower on a consolidated basis as of the dates and for the periods
ended reflected in such financial statements; provided, such interim
financial statements shall be without footnotes and shall be subject
to normal year-end adjustments. There have been no material adverse
changes in the financial condition of the Borrower on a consolidated
basis subsequent to the periods ended reflected in such financial
statements.
Section 4.7. Disclosure. Neither this Agreement nor any other
Loan Document furnished to the Bank by or on behalf of the Borrower
in connection with the transactions contemplated hereby taken as a
whole contains any statement of any material fact which is untrue or
omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading. There is no
fact known to the Borrower (other than which is hereafter disclosed
in any document filed by the Borrower with the Securities and
Exchange Commission or is otherwise disclosed by the Borrower in
writing to the Bank) which materially adversely affects the financial
condition of the Borrower on a consolidated basis which has not been
set forth in this Agreement or in the other Loan Document furnished
to the Bank by or on behalf of the Borrower in connection with the
transactions contemplated hereby. The Borrower is currently solvent,
and neither the issuance and delivery of the Note to the Bank, nor
the performance of the transactions contemplated hereunder, will
render the Borrower insolvent, inadequately capitalized to undertake
the transactions contemplated hereunder or to undertake the business
in which it is presently engaged or about to engage or render the
Borrower unable to pay its debts as they become due. The Borrower is
not currently contemplating either the filing of a petition by it or
the commencement of a case by it under the Bankruptcy Code or any
other insolvency laws or the liquidation of all or a major portion of
its property, and the Borrower does not have any knowledge of any
Person contemplating the filing of any such petition or commencement
of any such case against the Borrower.
Section 4.8. Tax Returns and Payments. The Borrower has filed
all tax returns required by law to be filed by it and has paid all
taxes, assessments and other governmental charges levied upon its
properties, assets, income and franchises, other than those not yet
delinquent and those taxes, assessments and other governmental
charges the non-payment of which would not have a Material Adverse
Effect. The charges, accruals and reserves on the books of the
Borrower in respect of its taxes are adequate in the opinion of the
Borrower. The Borrower does not know of any unpaid assessment for
additional taxes.
Section 4.9. Indebtedness, etc. As of the date of this
Agreement, and without regard to the transactions contemplated
hereunder, the Borrower does not have any outstanding Indebtedness
other than the Indebtedness identified on Schedule 4.9 annexed hereto
and other Indebtedness the principal amount of which exceeds One
Million Dollars ($1,000,000.00) in the aggregate.
Section 4.10. Operating Leases. The Borrower enjoys quiet
possession under all operating leases to which it is a party as
lessee, and all of such operating leases are to the best knowledge of
the Borrower, after due inquiry, validly existing and in full force
and effect, and, to the best knowledge of the Borrower, after due
inquiry, neither the lessor nor the Borrower as lessee is in default
under any of such operating leases to an extent which has or could be
reasonably foreseen to have a Material Adverse Effect. None of such
operating leases contains any provision restricting the incurrence of
Indebtedness by the lessee or any unusual or burdensome provision
which has or could be reasonably foreseen to have a Material Adverse
Effect.
Section 4.11. Litigation, etc. Except as described on Schedule
4.12 annexed hereto (as the same may be updated in writing from time
to time by the Borrower), there is no action, proceeding or
investigation pending or, to the best knowledge of the Borrower,
threatened (or any basis therefor known to the Borrower) which
questions the validity of this Agreement, the Note or the other Loan
Documents or any action taken or to be taken pursuant hereto or
thereto or which i f determined adversely to the Borrower would in
the Borrower's reasonable judgment result, either in any case or in
the aggregate, in any Material Adverse Effect.
Section 4.12. Authorization; Compliance with Other Instruments,
etc. The execution, delivery and performance of this Agreement, the
Note and the other Loan Documents to which the Borrower is a party
have been duly authorized by all necessary corporate action on the
part of the Borrower, will not result in any violation of or be in
conflict with or constitute a default under the Articles of
Incorporation or By-Laws of the Borrower or any agreement,
instrument, judgment, decree, order, statute, law, rule or
governmental regulation applicable to the Borrower, or result in the
creation of any Lien upon any of the properties or assets of the
Borrower. The Borrower is not in material violation of its Articles
of Incorporation or By-Laws or any agreement or instrument to which
it is a party, or, to the Borrower's best knowledge, any judgment,
decree, order, statute, law, rule or governmental regulation
applicable to the Borrower. Without limiting the generality of the
foregoing, to the best knowledge of the Borrower, the Borrower is in
compliance with all federal and state laws and all rules, regulations
and administrative orders of all state and local commissions or
authorities which are applicable to the Borrower or to the operation
of its business the non-compliance of which could result in a
Material Adverse Effect.
Section 4.13. Enforceability. This Agreement, the Note and the
other Loan Documents to which the Borrower is a party constitute the
valid and binding obligations of the Borrower, legally enforceable
against the Borrower in accordance with their respective terms,
except to the extent the enforceability of this Agreement, the Note
and the other Loan Documents is subject to the effect of applicable
laws affecting the rights of creditors generally and equitable
principles.
Section 4.14. Governmental Consent. To the best knowledge of
the Borrower, the Borrower is not currently required to obtain any
order, consent, approval or authorization of, and is not currently
required to make any declaration or filing with any Governmental
Person in connection with the execution and delivery of this
Agreement or the negotiation, offer, issue, sale and delivery of the
Note, or in connection with the execution, delivery and performance
of the other Loan Documents, and the failure to so obtain any such
order, consent, approval or authorization or to make any such
declaration or filing would result in a Material Adverse Effect.
Section 4.15. Investment Company Act Status. The Borrower is
not an "investment company", as such term is defined in the
Investment Company Act of 1940, as amended.
Section 4.16. Regulation U, etc. None of the Loans will be
used, directly or indirectly, by the Borrower for the purpose of
reducing or retiring any Indebtedness which was originally incurred
to purchase or carry any Margin Stock or for any other purpose which
might constitute the transactions contemplated hereby a "purpose
credit" within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System, or cause this Loan Agreement to
violate Regulation U, Regulation T, Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System or
the Securities Exchange Act of 1934.
Section 4.17. Holding Company Act. The Borrower is not a
"Holding Company" or a "Subsidiary Company" of a "Holding Company",
or an "Affiliate" of a "Holding Company" or of a "Subsidiary Company"
of a "Holding Company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
Section 4.18. Employee Retirement Income Security Act of 1974.
The Borrower (a) has not incurred any material accumulated funding
deficiency within the meaning of ERISA, (b) has not incurred any
material liability to the Pension Benefit Guaranty Corporation
established under ERISA (or any successor thereto under ERISA) in
connection with any employee benefit plan established or maintained
by the Borrower, nor has the Borrower had any tax assessed against it
by the Internal Revenue Service for any alleged violation under
Section 4975 of the Internal Revenue Code, and (c) has not and does
not participate in any Multi-Employer Pension Plan within the meaning
of Section 3(37) of ERISA except as approved by the Bank and set
forth on Schedule 4.19 attached hereto. Further, to the Borrower's
knowledge, each employee benefit plan established or maintained by
the Borrower is in compliance in all material respects with ERISA and
all other applicable laws, and no prohibited transaction within the
meaning of Section 4975 of the Internal Revenue Code has occurred
with respect to any such employee benefit plan established or
maintained by the Borrower.
Section 4.19. Environmental Matters.
4.19A. As used herein, the term "Environmental Law(s)"
means any federal, state or local statute, law, ordinance, code,
rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning any Hazardous
Substance, as now or at any time hereafter in effect. As used
herein, the term "Hazardous Substance(s)" shall have the meaning
ascribed in any Environmental Law to any hazardous, toxic or
dangerous waste, substance, pollutant or material.
4.19B. The Borrower represents and warrants, to its
knowledge, and except as otherwise disclosed in writing to the Bank
prior to the date of this Agreement, that neither the Borrower nor
any other Person within the Borrower's knowledge or control,
including any lessee of the Borrower's property, has ever caused or
permitted any Hazardous Substance to be released, spilled or disposed
of on, under or at the Borrower's property nor any part thereof which
has resulted in or could reasonably be foreseen to result in a
Material Adverse Effect. Further, to the Borrower's knowledge, no
portion of the Borrower's property has ever been used by the Borrower
or any other person as a dump site or storage site, whether permanent
or temporary, for any Hazardous Substance, except in substantial
compliance with all Environmental Laws or except as otherwise
disclosed in writing to the Bank prior to the date of this Agreement.
4.19C. The Borrower shall, except as otherwise
separately disclosed in writing to the Bank prior to the date of this
Agreement, give the Bank prompt written notice of any litigation or
administrative proceeding involving a claim against the Borrower
which (i) asserts or alleges that (a) the Borrower has violated any
Environmental Law, (b) the Borrower is required to clean up or take
other response action due to the release or threatened release or
transportation of any Hazardous Substance, or (c) the Borrower is
required to pay all or a portion of the cost of any past, present or
future cleanup or other response action which anises out of or is
related to the release or threatened release or transportation of any
Hazardous Substance, and (ii) if true, would have a Material Adverse
Effect.
Section 4.20. Year 2000. The Borrower and its Subsidiaries
have reviewed the areas within their business and operations which
could be adversely affected by, and have developed or are developing
a program to address on a timely basis, the risk that certain
computer applications used by the Borrower or its Subsidiaries (or
any of their respective material suppliers, customers or vendors) may
be unable to recognize and perform properly date-sensitive functions
involving dates prior to and after December 31, 1999 (the "Year 2000
Problem"). Except as disclosed to the Bank in writing by the
Borrower, the Borrower has no reason to believe that the Year 2000
Problem will result in any Material Adverse Effect.
Section 4.21. Events of Default. There are no Defaults or
Events of Default existing as of the Closing Date.
Section 4.22. Incorporation of Representations and Warranties
by Reference. The Borrower hereby makes to the Bank the same
representations and warranties as are made by the Borrower and set
forth in the other Loan Documents, which representations and
warranties, as well as the related defined terms contained therein,
are hereby incorporated by reference with the same effect as if each
and every such representation and warranty and defined term were set
forth herein in its entirety. No amendment to such representations
and warranties or defined terms made pursuant thereto shall be
effective to amend such representations and warranties and defined
terms as incorporated by reference herein without the consent of the
Bank.
ARTICLE V. FINANCIAL STATEMENTS AND INFORMATION
Section 5.1. Reports and Notices. Borrower covenants and
agrees that from and after the initial Closing Date and until the
Termination Date, it shall deliver to the Bank:
(a) As soon as reasonably possible, and in any event
within one hundred twenty (120) days after the end of each Fiscal
Year, the audited balance sheet of the Borrower as at the end of such
Fiscal Year, and the related audited statements of income and cash
flows of the Borrower for such Fiscal Year. on a consolidated basis,
together with statements in comparative form for the previous Fiscal
Year, all in reasonable detail and accompanied by the opinion thereon
of independent public accountants selected by the Borrower and
reasonably acceptable to the Bank (the Bank acknowledges and agrees
that Coopers & Lybrand or any other "Big 6" accounting firm hereafter
selected by the Borrower shall be acceptable to the Bank), which
opinion shall be in a form generally recognized as unqualified and
shall state that such financial statements have been prepared in
accordance with GAAP applied on a basis consistent with that of the
preceding Fiscal Year (except for such changes, if any, as shall be
specified and approved by such accountants in such opinion) and that
the audit by such accountants in connection with such financial
statements has been made in accordance with GAAP relating to auditing;
(b) As soon as reasonably possible, and in any event
within forty-five (45) days after the end of each Fiscal Quarter in
each Fiscal Year, an unaudited balance sheet of the Borrower as at
the end of such Fiscal Quarter, and related unaudited statements of
income and cash flows of the Borrower for such Fiscal Quarter, on a
consolidated basis, all in reasonable detail, prepared in accordance
with GAAP consistently applied and certified to be true, accurate and
complete by the Chief Financial Officer of the Borrower; provided,
such interim financial statements shall be without footnotes and
shall be subject to normal year-end adjustments;
(c) Together with each delivery of financial statements
pursuant to subdivisions (a) and (b) above, a Compliance Certificate
stating that the Chief Financial Officer of the Borrower has reviewed
the relevant terms of this Loan Agreement and has no knowledge of any
event or condition which constitutes a Default or an Event of Default
hereunder, or, if any such Default or Event of Default existed or
exists, specifying the nature and period of existence thereof and
what action the Borrower has taken or is taking or proposes to take
with respect thereto;
(d) Upon receipt thereof by the Borrower, copies of any
letter or report with respect to the management, operations or
properties of the Borrower submitted to the Borrower by its
accountants in connection with any annual or interim audit of the
Borrower's accounts, and a copy of any written response of the
Borrower to any such letter or report;
(e) As soon as possible and in any event within 30 days
after receipt of notice thereof, notice of any pending or threatened
litigation, investigation or other proceeding involving the Borrower
(i) which could have a material adverse effect on the operations or
financial condition of the Borrower or (ii) wherein the potential
damages, in the reasonable judgment of the Borrower based upon the
advice of counsel experienced in such matters, are material and are
not fully covered by the insurance policies maintained by the
Borrower (except for the deductible amounts applicable to such
policies);
(f) As soon as possible, notice of any event which in the
opinion of the Borrower's management, would cause a material adverse
change in the operations or financial condition of the Borrower;
(g) As soon as possible and in any event within 15 days
after the occurrence of any Event of Default or any Default, a
statement of an officer of the Borrower setting forth the details of
such Event of Default or Default and the action which the Borrower
proposes to take with respect thereto; and
(h) Such other information respecting the operations and
assets of the Borrower as the Bank may from time to time reasonably
request.
Section 5.2. Communication with Accountants. Borrower
authorizes the Bank to communicate directly with its independent
certified public accountants and authorizes those accountants to
disclose to the Bank any and all financial statements and other
supporting financial documents and schedules. At or before the
initial Closing Date, Borrower shall deliver a letter addressed to
such accountants instructing them to comply with the provisions of
this Section 5.2.
ARTICLE VI. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless the Bank shall
otherwise consent in writing, from and after the initial Closing Date
and until the Termination Date:
Section 6.1 Incorporation of Affirmative Covenants. The
covenants and agreements of the Borrower set forth in Sections 5.1
through and including 5.11 (collectively, the "Incorporated
Affirmative Covenants", and individually, an "Incorporated
Affirmative Covenant") of the Agented Agreement, shall be
incorporated herein mutatis mutandis by this reference thereto, and
shall be deemed to have been made by Borrower in favor of, and for
the benefit of the Bank. For all purposes herein (i) references in
the Incorporated Affirmative Covenants to the term "Borrower" shall
be deemed to be references to the Borrower hereunder and (ii)
references on the Incorporated Affirmative Covenants to the terms
"Agent" or "Banks" shall be deemed to be references to the Bank.
Notwithstanding the foregoing, (a) all capitalized terms set forth in
the Incorporated Affirmative Covenants and defined in the Agented
Agreement, as well as other capitalized terms set forth in any such
definitions therein, shall also be deemed to be incorporated herein
mutatis mutandis and shall have the meanings given to such terms in
the Agented Agreement for the purposes hereof, and (b) to the extent
any of the Incorporated Affirmative Covenants, or any incorporated
definition contains any cross-reference to, or incorporates by
reference any terms of, any provision, section, schedule or exhibit
of the Agented Agreement, such cross-reference or incorporation shall
be incorporated herein mutatis mutandis for the purposes hereof.
Furthermore, for the purposes of this Article VI, in the event that
any amendment, modification or supplement to the Agented Agreement is
consented to in writing by the Bank, then any affected Incorporated
Affirmative Covenant shall, upon such consent becoming effective, be
deemed to be revised for the purposes of this Article VI. The
incorporation of the Incorporated Affirmative Covenants herein in
favor of the Bank shall not be affected in any way by the termination
or expiration of the Agented Agreement and such Incorporated
Affirmative Covenants are hereby deemed to survive any such
termination or expiration of the Agreement. In the event of a
conflict between the express terms of this Agreement and any
Incorporated Affirmative Covenant, the express terms of this
Agreement shall control.
Section 6.2. Supplemental Disclosure. From time to time as
may be necessary (in the event that such information is not otherwise
delivered by Borrower to the Bank pursuant to this Agreement) so long
as there are Obligations outstanding hereunder or under the Note,
Borrower will, as promptly as is reasonable under the circumstances
after any executive officer of Borrower has knowledge with respect
thereto, and at least quarterly, supplement or amend and deliver to
the Bank each Schedule or representation herein with respect to any
matter hereafter arising which, if existing or occurring at the date
of this Agreement, would have been required to be set forth or
described in such Schedule or as an exception to such representation
or which is necessary to correct any information in such Schedule or
representation which has been rendered inaccurate thereby.
Section 6.3. Tax Returns. The Borrower will file all required
tax returns, pay when due all taxes imposed on its operations,
assets, income or properties, and, upon request, provide to the Bank
copies of such returns and receipts for payment of such taxes;
provided, however, the Borrower shall have the right to contest in
good faith the payment of such taxes so long as it shall have set up
on its books such reserve with respect thereto as shall be dictated
by sound accounting practices.
ARTICLE VII. NEGATIVE COVENANTS
Borrower covenants and agrees that, unless the Bank shall
otherwise consent in writing, from and after the initial Closing Date
and until the Termination Date:
Section 7.1 Incorporation of Negative Covenants. The
covenants and agreements of Borrower set forth in Sections 6.1
through and including 6.13 (collectively, the "Incorporated Negative
Covenants", and individually, an "Incorporated Negative Covenant") of
the Agented Agreement, shall be incorporated herein mutatis mutandis
by this reference thereto, and shall be deemed to have been made by
Borrower in favor of, and for the benefit of the Bank. For all
purposes herein (i) references in the Incorporated Negative Covenants
to the term "Borrower" shall be deemed to be references to the
Borrower hereunder; and (ii) reference in the Incorporated Negative
Covenants to the terms "Agent" or "Banks" shall be deemed to be
references to the Bank. Notwithstanding the foregoing, (a) all
capitalized terms set forth in the Incorporated Negative Covenants
and defined in the Agented Agreement, as well as other capitalized
terms set forth in any such definitions therein, shall also be deemed
to be incorporated herein mutatis mutandis and shall have the
meanings given to such terms in the Agented Agreement for the
purposes hereof, and (b) to the extent any of the Incorporated
Negative Covenants, or any incorporated definition contains any
cross-reference to, or incorporates by reference any terms of, any
provision, section, schedule or exhibit of the Agented Agreement,
such cross-reference or incorporation shall be incorporated herein
mutatis mutandis for the purposes hereof. Furthermore, for the
purposes of this Article VII, in the event that any amendment,
modification or supplement to the Agented Agreement is consented to
in writing by the Bank, then any affected Incorporated Negative
Covenant shall, upon such consent becoming effective, be deemed to be
revised for the purposes of this Article VII. The incorporation of
the Incorporated Negative Covenants herein in favor of the Bank shall
not be affected in any way by the termination or expiration of the
Agented Agreement and such Incorporated Negative Covenants are hereby
deemed to survive any such termination or expiration of the Agented
Agreement. In the event of a conflict between the express terms of
this Agreement and any Incorporated Negative Covenant, the express
terms of this Agreement shall control.
Section 7.2. ERISA. Neither the Borrower nor any ERISA
Affiliate will (a) voluntarily terminate any employee pension
benefit plan covered by Title IV of ERISA, so as to cause material
liability of the Borrower to PBGC, to a trust established pursuant
to Section 4049 of ERISA, or to a trustee appointed pursuant to
Section 4042(b) or (c) of ERISA; (b) enter into any Prohibited
Transaction (as defined in Section 4975 of the Code or in Section 406
of ERISA) involving an employee benefit plan, within the meaning of
Section 3(3) of ERISA which, in the Bank's reasonable opinion, may
result in material liability of the Borrower to the Internal Revenue
Service or the United States Department of Labor; (c) cause the
occurrence of any Reportable Event (as defined in Title IV of ERISA)
which, in the Bank's reasonable opinion, may result in material
liability of the Borrower to the Internal Revenue Service or the
United States Department of Labor; (d) allow or suffer to exist any
other event or condition known to the Borrower or any ERISA Affiliate
with respect to an employee benefit plan, within the meaning of
Section 3(3) of ERISA which may result in material liability of the
Borrower to PBGC, the Internal Revenue Service or the United States
Department of Labor; or (e) make a complete or partial withdrawal
(within the meaning of Section 4201 of ERISA) from any Multiemployer
Plan so as to result in any liability to Borrower or any ERISA
Affiliate which could reasonably be expected to have a Material
Adverse Effect. The Borrower will give prompt written notice to the
Bank of each Prohibited Transaction, Reportable Event, complete or
partial withdrawal from a Multiemployer Plan, or event or condition
described in clause (d) of the preceding sentence, relating to an
employee benefit plan maintained for employees of the Borrower or
any ERISA Affiliate within the meaning of Section 3(3) of ERISA.
Section 7.3. Liens. The Borrower shall not create, assume or
permit to exist any mortgage, pledge, encumbrance or other security
interest in or lien upon any assets now owned or hereafter acquired
in order to secure any of the obligations under the Agented Agreement
owed to the Banks (as defined in the Agented Agreement) unless,
concurrently therewith, a mortgage, pledge, encumbrance or other
security interest or lien of equal or greater priority upon
comparable assets is established in favor of the Bank hereunder, pari
passu to secure the Obligations of the Borrower to the Bank hereunder.
ARTICLE VIII. TERM, TERMINATION AND REDUCTION
Section 8.1. Term of Revolving Credit Loan Commitment. The
agreement of Bank to extend one or more Revolving Credit Advances to
Borrower to borrow money from the Bank pursuant to this Agreement and
the Revolving Credit Note shall continue from the initial Closing
Date until but not including December 31, 2000 ("Original Term")
unless (i) terminated by either party hereto as hereinafter provided,
or (ii) terminated by the Bank upon Borrower's default under this
Agreement and/or the Revolving Credit Note.
Section 8.2. Reduction of Revolving Credit Loan Commitment.
At any time and from time to time upon at least five (5) Business
Days' prior written notice to the Bank, the Borrower may terminate,
in whole or in part, without penalty, the then unused portion of the
Revolving Credit Loan Commitment; provided, however, that (i) the
Borrower may not terminate an unused portion of the Revolving Credit
Loan Commitment such that the Revolving Credit Loan Commitment is
reduced below the principal amount of the Revolving Credit Loan then
outstanding and (ii) the Revolving Credit Loan Commitment shall
terminate without the necessity for further action on behalf of the
Borrower or the Bank if such commitment is reduced to $0. Each such
reduction shall be in a minimum principal amount of $1,000,000 or, if
in excess of $1,000,000, in integral multiples of $100,000. Notice
of termination once given shall be irrevocable and the portion of the
Revolving Credit Loan Commitment so terminated shall not be available
for borrowing once such notice has been given under the terms
hereof. No reduction in the Revolving Credit Loan Commitment
pursuant to this Section 8.2 will give rise to any obligation by the
Bank to rebate any portion of any origination fee or facility fee
paid by the Borrower in connection herewith.
Section 8.3 Refinancing of Agented Credit Line. If, at any
time during the term hereof, the Borrower shall refinance the loans
under the Agented Agreement, all amounts due hereunder shall become
immediately due and payable and the Revolving Credit Loan Commitment
shall terminate.
ARTICLE IX. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 9.1. Events of Default. The occurrence of any one or
more of the following events (regardless of the reason therefor)
shall constitute an "Event of Default" hereunder:
(a) Borrower shall fail to make any payment of principal
of the Revolving Credit Loan or any of the other Obligations
hereunder or under the Note, or any obligations of Borrower under the
Agented Agreement when due and payable or declared due and payable.
(a) Borrower shall fail to make any payment of interest
on, or any other amount owing in respect of, the Revolving Credit
Loan or any of the other Obligations hereunder or under the Note, or
any obligations of Borrower under the Agented Agreement when due and
payable or declared due and payable, and such failure shall have
remained unremedied for a period of five (5) days.
(c) Borrower shall fail or neglect to perform, keep or
observe any of the provisions of Article VI or Article VII of this
Agreement.
(d) Borrower shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other
Loan Documents, and the same shall remain unremedied for a period
ending on the first to occur of 30 days after Borrower shall receive
written notice of any such failure from the Bank or 30 days after the
chief executive officer, chief operating officer or chief financial
officer of Borrower shall become aware thereof; provided, however,
that if such failure cannot be remedied during such 30 day period
despite all reasonable efforts of Borrower, then such 30 day period,
as the case may be, shall be extended by an additional 30 days or
such longer period of time (but not more than 60 days without the
consent of the Bank) as is necessary to cure such failure as long as
Borrower is proceeding diligently to cure such failure and the delay
could not reasonably be expected to have a Material Adverse Effect.
(e) A default shall occur under any other agreement,
document or instrument to which Borrower is a party or by which
Borrower or Borrower's property is bound and such default is not
cured within any applicable grace period or waived in writing and
such default either (i) involves the failure to make any payment when
due of an amount in excess of $50,000 (whether of principal, interest
or otherwise and whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) in respect of any Indebtedness of
Borrower, or (ii) causes (or permits any holder of such Indebtedness
or a trustee to cause) such Indebtedness or a portion thereof in an
aggregate amount exceeding $50,000 to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment.
(f) Any representation or warranty herein or in any Loan
Document or in any written statement pursuant thereto or hereto,
report, financial statement or certificate made or delivered to the
Bank by Borrower shall be untrue or incorrect in any material respect
as to Borrower as of the date when made or deemed made (including
those made or deemed made pursuant to Section 3.5).
(g) Any of the assets of Borrower shall be attached,
seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of Borrower and shall remain
unstayed or undismissed for 30 consecutive days; or any Person shall
apply for the appointment of a receiver, trustee or custodian for any
of the assets of Borrower and shall remain unstayed or undismissed
for 30 consecutive days; or Borrower, shall have concealed, removed
or permitted to be concealed or removed, any part of its property
with intent to hinder, delay or defraud its creditors or any of them
or made or suffered a transfer of any of its property or the
incurring of an obligation which may be fraudulent under any
bankruptcy, fraudulent conveyance or other similar law.
(h) A case or proceeding shall have been commenced against
Borrower in a court having competent jurisdiction seeking a decree or
order in respect of Borrower (i) under title 11 of the United States
Code, as now constituted or hereafter amended or any other applicable
Federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Borrower or of any substantial
part of its properties, or (iii) ordering the winding-up or
liquidation of the affairs of Borrower and such case or proceeding
shall remain undismissed or unstayed for 30 consecutive days or such
court shall enter a decree or order granting the relief sought in
such case or proceeding.
(i) Borrower shall (i) file a petition seeking relief
under title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal, state or foreign
bankruptcy, insolvency or other similar law, (ii) consent to the
institution of proceedings thereunder or to the filing of any such
petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) of Borrower or of any substantial part of its
properties, (iii) fail generally to pay its debts as such debts
become due, or (iv) take any corporate action in furtherance of any
such action.
(j) Final judgment or judgments (after the expiration of
all times to appeal therefrom) for the payment of money in excess of
$250,000 in the aggregate shall be rendered against Borrower and the
same shall not (i) be fully covered by insurance in accordance with
the terms hereof, or (ii) within thirty days after the entry thereof,
have been discharged or execution thereof stayed pending appeal, or
shall not have been discharged within five days after the expiration
of any such stay.
(k) With respect to any Plan: (i) or any Defined
Contribution Plan or Welfare Plan, Borrower or any ERISA Affiliate or
any other party-in-interest or disqualified person shall engage in
any transactions which in the aggregate would reasonably result in a
final assessment to Borrower or any ERISA Affiliate in excess of
$750,000 under Section 409 or 502 of ERISA or IRC Section 4975, which
assessment has not been paid within 30 days of final assessment and
which is not being contested; (ii) Borrower or any ERISA Affiliate
shall incur any accumulated funding deficiency, as defined in IRC
Section 412, in the aggregate in excess of $750,000, or request a
funding waiver from the IRS for contributions in the aggregate in
excess of $750,000; (iii) Borrower or any ERISA Affiliate shall not
pay any withdrawal liability which involves annual withdrawal
liability payments which exceed $750,000, as a result of a complete
or partial withdrawal within the meaning of Section 4203 or 4205 of
ERISA, within 30 days after the date such payment becomes due, unless
such payment is being; (iv) Borrower or any ERISA Affiliate shall
fail to make a required contribution by the due date under Section
412 of the IRC or Section 302 of ERISA which would result in the
imposition of a lien under Section 412 of the IRC or Section 302 of
ERISA within 30 days after the date such payment becomes due, unless
such payment is being contested; or (v) an ERISA Event with respect
to a Plan has occurred, and within the time period described below,
such ERISA Event has not been corrected, with the time periods to
correct such ERISA Event being as follows: (A) with respect to an
event described clause (a) of the definition of ERISA Event, within
60 days after the occurrence of such event; (B) with respect to an
event described in clause (b) of the definition of ERISA Event,
within 30 days after the date on which withdrawal liability under
Section 4063 becomes due and owing; (C) with respect to an event
described in clause (c) of the definition of ERISA Event, before the
final distribution of the assets from the plan that was terminated;
or (d) with respect to an event described in clause (d) or clause (e)
of the definition of ERISA Event, within 30 days after the
institution of proceedings by the PBGC to terminate such Plan or the
Borrower or any ERISA Affiliate has incurred liability under Title IV
of ERISA; provided, however, that an ERISA Event shall not constitute
an event of default if the maximum liability (determined after the
time periods for correction described above) which Borrower or any
ERISA Affiliate could incur under Section 4062, 4063, 4064, 4201,
4219 or 4243 of ERISA, or any other provision of law with respect to
a Plan, as a result of such event does not exceed $750,000 (computed
by the actuary for the Plan taking into account any applicable rules
or regulations of the PBGC and based on actuarial assumptions used by
the Plan), or the ERISA Event is being contested.
(l) There exists any uncorrected violation by Borrower of
any Environmental Laws which requires, or may require, a "response",
as defined under CERCLA, or other remedial action by Borrower under
any Environmental Laws, such uncorrected violation could reasonably
be expected to have a Material Adverse Effect, and such "response" or
other remedial action is not completed within 90 days from the date
of written notice from the Bank to Borrower of the violation, or such
longer period of time as is necessary to cure such violation as long
as Borrower is proceeding diligently to cure such violation and the
delay could not reasonably be expected to have a Material Adverse
Effect.
(m) The occurrence of a Default or an Event of Default
under the Agented Agreement.
(n) The occurrence of a default under any other loan,
credit or reimbursement agreement between the Borrower (or an
Affiliate or Subsidiary of the Borrower) and the Bank.
(o) Any material provision of
the Guaranty shall at any time cease to be valid or binding on the
Guarantor, or shall be declared to be null and void, or shall be
violative of any applicable Law relating to a maximum amount of
interest permitted to be contracted for, charged or received, or the
validity or enforceability thereof shall be contested by the
Borrower, any Guarantor or any Governmental Person, or the Guarantor
shall deny that it has any or further liability under the Guaranty.
Section 9.2. Remedies. If any Event of Default shall have
occurred and be continuing, the Bank may, without notice, (i)
terminate this facility with respect to further Revolving Credit
Advances, whereupon no Revolving Credit Advances may be made
hereunder, and/or (ii) declare all Obligations hereunder or under the
Note to be forthwith due and payable, whereupon all Obligations shall
become and be due and payable, without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by
Borrower; provided, however, that upon the occurrence of an Event of
Default specified in Sections 9.1(h) or (i) hereof, the Obligations
shall become due and payable without declaration, notice or demand by
the Bank.
The Bank may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best
interests of the Bank, including any action (or the failure to act)
pursuant to the Loan Documents.
Section 9.3. Waivers by Borrower. Except as otherwise
provided for in this Agreement and applicable lain, Borrower waives
presentment, demand and protest and notice of presentment, dishonor,
notice of intent to accelerate, notice of acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties
at any time held by the Bank on which Borrower may in any way be
liable and hereby ratifies and confirms whatever the Bank may do in
this regard. Borrower acknowledges that it has been advised by
counsel of its choice with respect to this Agreement, the other Loan
Documents and the transactions evidenced by this Agreement and the
other Loan Documents.
Section 9.4. Right of Set-Off. Upon-the occurrence and during
the continuance of any Event of Default and the Bank's termination of
this facility or the Bank's declaring all Obligations to be forthwith
due and payable pursuant to the provisions of Section 9.2 hereof, the
Bank is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by the Bank
to or for the credit or the account of Borrower against any and all
of the obligations of Borrower now or hereafter existing under this
Agreement, and the Note held by the Bank irrespective of whether or
not the Bank shall have made any demand under this Agreement or any
such Note and although such obligations may be unmatured. The Bank
agrees promptly to notify Borrower after any such set-off and
application made by the Bank; provided, however, that the failure to
give such notice shall not affect the validity of such set-off and
application. The rights of the Bank under this Section 9.4 are in
addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Bank may have.
ARTICLE X. MISCELLANEOUS
Section 10.1. Complete Agreement and Modification of
Agreement. The Loan Documents constitute the complete agreement
between the parties with respect to the subject matter hereof and may
not be modified, altered or amended except by an agreement in writing
signed by Borrower and the Bank. Borrower may not sell, assign or
transfer any of the Loan Documents or any portion thereof, including
without limitation, Borrower's rights, title, interests, remedies,
powers and duties hereunder or thereunder. Borrower hereby consents
to the Bank's sale of participations, assignment, transfer or other
disposition, at any time or times, of any of the Loan Documents or of
any portion thereof or interest therein, including, without
limitation, the Bank's rights, title, interests, remedies, powers or
duties thereunder, whether evidenced by a writing or not; Borrower
agrees that it will use its best efforts to assist and cooperate with
the Bank in any manner reasonable requested by the Bank to effect the
sale of participations in or assignments of any of the Loan Documents
or of any portion thereof or interest therein.
No amendment or waiver of any provision of this Agreement
or the Note or any other Loan Document, nor consent to any departure
by Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Bank, and then such waiver
or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section 10.2. Fees and Expenses. Borrower shall pay all
reasonable out-of-pocket expenses of the Bank in connection with the
preparation of the Loan Documents (including the reasonable fees and
expenses of all of its counsel retained in connection with the Loan
Documents and the transactions contemplated thereby) If, at any time
or times, regardless of the existence of any Event of Default, the
Bank shall employ counsel for advice or other representation in
connection with or shall incur reasonable legal or other costs and
expenses in connection with:
(i) any amendment, modification, termination, or waiver, or
consent with respect to, any of the Loan Documents;
(ii) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by the Bank, Borrower or any other
Person) in any way relating to the Collateral, any of the Loan
Documents or any other agreements to be executed or delivered in
connection herewith;
(iii)any attempt to enforce any rights of the Bank against
Borrower or any other Person, that may be obligated to the Bank
by virtue of any of the Loan Documents;
then, and in any such event, the reasonable attorneys' fees arising
from such services, including those of any appellate proceedings, and
all reasonable expenses, costs, charges and other fees incurred by
such counsel in any way or respect arising in connection with or
relating to any of the events or actions described in this Section
10.2 shall be payable, on demand, by Borrower to the Bank and shall
be additional Obligations secured under this Agreement and the other
Loan Documents.
Section 10.3. No Waiver by the Bank. The Bank's failure, at
any time or times, to require strict performance by Borrower of any
provisions of this Agreement and any of the other Loan Documents
shall not waive, affect or diminish any right of the Bank thereafter
to demand strict compliance and performance therewith. Any
suspension or waiver by the Bank of an Event of Default by Borrower
under the Loan Documents shall not suspend, waive or affect any other
Event of Default by Borrower under this Agreement and any of the
other Loan Documents whether the same is prior or subsequent thereto
and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations
of Borrower contained in this Agreement or any of the other Loan
Documents and no Event of Default by Borrower under this Agreement
and no defaults by Borrower under any of the other Loan Documents
shall be deemed to have been suspended or waived by the Bank, unless
such suspension or waiver is by an instrument in writing signed by an
officer of the Bank and directed to Borrower specifying such
suspension or waiver.
Section 10.4. Remedies. The Bank's rights and remedies under
this Agreement shall be cumulative and nonexclusive of any other
rights and remedies which the Bank may have under any other
agreement, including without limitation, the Loan Documents, by
operation of law or otherwise. Recourse to the Collateral shall not
be required.
Section 10.5. MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES
ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST
QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON
AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE
JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT, ANY OF
THE OTHER LOAN DOCUMENTS.
Section 10.6. Severability. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 10.7. Parties. This Agreement and the other Loan
Documents shall be binding upon, and inure to the benefit of, the
successors of Borrower, the Bank and the assigns, transferees and
endorsees of the Bank. Nothing in this Agreement or the other Loan
Documents, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, any benefit or any
legal or equitable right, remedy or claim under this Agreement.
Section 10.8. Conflict of Terms. Except as otherwise provided
in this Agreement or any of the other Loan Documents by specific
reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any of the other Loan Documents,
the provision contained in this Agreement shall govern and control.
Section 10.9. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND
THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF
LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THE
BANK AND BORROWER AGREE TO SUBMIT TO PERSONAL JURISDICTION AND TO
WAIVE ANY OBJECTION AS TO VENUE IN THE COUNTY OF ALLEGHENY,
COMMONWEALTH OF PENNSYLVANIA. SERVICE OF PROCESS ON BORROWER, THE
BANK IN ANY ACTION ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS SHALL BE EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS
LISTED IN SECTION 10.10 HEREOF. BORROWER AGREES NOTHING HEREIN SHALL
PRECLUDE THE BANK OR BORROWER FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION.
Section 10.10. Notices. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by another, or whenever
any of the parties desires to give or serve upon another any
communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other
communication shall be in writing and shall be delivered in person
(by personal delivery, delivery service or overnight courier service)
with receipt acknowledged, or telecopied and confirmed immediately in
writing by a copy mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as hereafter set forth,
or mailed by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to the Bank, at
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue, 3rd Floor
Pittsburgh, Pennsylvania 15222-2707
Attention:Lynn Koncz
Vice President
Telecopier No: (412) 705-3232
(b) If to Borrower, at
Steel Technologies Inc.
15415 Shelbyville Road
Louisville, Kentucky 40253
Attention: John M. Baumann, Esquire
Secretary/Corporate Counsel
Telecopier No: (502) 245-0322
(502) 245-0542
or at such other address as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Every
notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly given or
served on the date on which personally delivered, in person, by
delivery service or by overnight courier service, with receipt
acknowledged, or the date of the telecopy transmission, or three (3)
Business Days after the same shall have been deposited in the United
States mail. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall
in no way adversely affect the effectiveness of such notice, demand,
request, consent, approval, declaration or other communication.
Section 10.11. Survival. The representations and warranties of
Borrower set forth in this Agreement shall survive the execution,
delivery and acceptance hereof by the parties hereto and the closing
of the transactions described herein or related hereto. The
indemnification agreements and obligations of the Borrower contained
in this Agreement and the other Loan Documents shall survive the
payment in full of principal and interest hereunder and under any
instrument delivered hereunder.
Section 10.12. Headings. The Article, Section and Subsection
titles and Table of Contents contained in this Agreement are and
shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties
hereto.
Section 10.13. Counterparts. This Agreement may be executed in
any number of separate counterparts, and by the parties hereto on
separate counterparts, each of which shall, collectively and
separately, constitute one agreement.
Section 10.14. Interest Limitation. Notwithstanding anything to
the contrary herein contained, the total liability of the Borrower
for payment of interest pursuant hereto shall not exceed the maximum
amount, if any, of such interest permitted by applicable law to be
contracted for, charged or received, and if any payments by the
Borrower to the Bank include interest in excess of such a maximum
amount, the Bank shall apply such excess to the reduction of the
unpaid principal amount due pursuant hereto, or if none is due, such
excess shall be refunded to the Borrower; provided that, to the
extent permitted by applicable law, in the event the interest is not
collected, is applied to principal or is refunded pursuant to this
sentence and interest thereafter payable pursuant hereto shall be
less than such maximum amount, then such interest thereafter so
payable shall be increased up to such maximum amount to the extent
necessary to recover the amount of interest, if any, theretofore
uncollected, applied to principal or refunded pursuant to this
sentence. Any such application or refund shall not cure or waive any
Event of Default. In determining whether or not any interest payable
under this Agreement exceeds the highest rate permitted by law, any
non-principal payment (except payments specifically stated in this
Agreement to be "interest") shall be deemed, to the extent permitted
by applicable law, to be an expense, fee, premium or penalty rather
than interest.
Section 10.15. Participation. Notwithstanding any other
provision of this Agreement, the Borrower understands that the Bank
may at any time enter into participation agreements with one or more
other participating banks (such other participating banks are
hereinafter referred to as "Participating Banks") whereby the Bank
will allocate to the Participating Banks certain percentages of the
payment obligations of the Borrower under this Agreement and the
funding obligations of the Bank hereunder. The Borrower acknowledges
that, for the convenience of all parties, the Borrower's obligations
under this Agreement are and will be undertaken for the benefit of,
and as an inducement to, the Participating Banks as well as the
Bank. Without limiting the foregoing, the Borrower acknowledges that
Sections 2.6, 2.9, 2.10 and 2.12 are for the benefit of the
Participating Banks as if such sections specifically referred to the
Participating Banks and their participations in the payment
obligations of the Borrower and the funding obligations of the Bank,
and the Borrower agrees to make payments required by such provisions
for the account of any one or more Participating Banks to the Bank on
demand of the Bank. The Borrower hereby grants to each Participating
Bank, to the extent of its participation and to the extent permitted
by applicable law, the right to set off deposit accounts maintained
by the Borrower with such bank.
Section 10.16. Holiday Payments. If any payments to be made by
the Borrower hereunder shall become due on a date not a Business Day,
such payments shall be made on the next succeeding Business Day and
such extension of time shall be included in computing any interest in
respect to such payment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Agreement has been duly executed as a
document under as of the date first written above.
BORROWER:
ATTEST (SEAL) STEEL TECHNOLOGIES INC., a Kentucky
corporation
By: By:
Name: Michael J. Carroll
Title: President
BANK:
PNC BANK, NATIONAL ASSOCIATION
By:
Lynn Koncz
Vice President
EXHIBIT "A"
REQUEST FOR ADVANCE
OF REVOLVING CREDIT LOAN
Advance Number _____
Reference is hereby made to that certain Credit Agreement dated
as of April ___, 2000 (such Credit Agreement, as it may be amended,
modified or supplemented from time to time herein referred to as the
"Credit Agreement"), by and between Steel Technologies Inc., a
Kentucky corporation (the "Borrower") and PNC Bank, National
Association (the "Bank"). Initially capitalized words and terms used
herein without definition shall have the respective meanings assigned
to them in the Credit Agreement.
The Borrower hereby requests an advance in the amount of
$_________________ under the Revolving Credit Note executed by the
Borrower and delivered to the Bank, dated April ___, 2000 (the
"Note") and issued to the Bank pursuant to the terms of the Credit
Agreement.
To induce the Bank to make such advance, the Borrower hereby
represents and agrees as follows:
1. The advance hereby requested is for the following purpose:
____ Working Capital Purposes
____ Capital Expenditures Described on the Attached Schedule
____ Other -- Describe Below
________________________________________________________________________________
2. No Event of Default exists and no event has occurred which
with the passage of time, notice or both would constitute an Event of
Default.
3. The approval of this Request for Advance by the Bank will
not be deemed to be a waiver by the Bank of any Event of Default.
4. The Borrower has performed all of its obligations under the
Loan Documents, and all of the representations and warranties made by
the Borrower in the Loan Documents are true and correct as of the
date hereof.
5. The undersigned has been duly authorized by the Borrower to make
this request for advance.
WITNESS the due execution hereof with the intent to be legally
bound hereby as of this _____ day of ____________________, 2000.
STEEL TECHNOLOGIES INC.
By:
(SEAL)
Print Name:
Title:
EXHIBIT "B"
FORM OF REVOLVING CREDIT NOTE
$15,000,000.00 Pittsburgh, Pennsylvania
April ___, 2000
This Revolving Credit Note (the "Note") is executed and
delivered under and pursuant to the terms of that certain Credit
Agreement dated as of April ___, 2000 (together with all extensions,
renewals, amendments, substitutions or replacements, the "Agreement")
by and between STEEL TECHNOLOGIES, INC., a Kentucky corporation (the
"Borrower") and PNC BANK, NATIONAL ASSOCIATION (the "Bank").
FOR VALUE RECEIVED, the Borrower promises to pay to the
order of the Bank, at the office of the Bank at One PNC Plaza, 249
Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707 on the Commitment
Termination Date, the lesser of the principal sum of FIFTEEN MILLION
and 00/100 DOLLARS ($15,000,000.00) or the aggregate unpaid principal
amount of all outstanding advances and readvances made by the Bank to
the Borrower pursuant to Section 2.1 of the Agreement and reflected
on the loan account maintained by the Bank pursuant to Section 2.11
of the Agreement.
Interest on the unpaid principal balance hereof shall be
due and payable and calculated in accordance with the terms of the
Agreement. The interest rate will be adjusted, when necessary and if
appropriate, in accordance with the terms of the Agreement. Interest
shall accrue at the interest rate or interest rates per annum
specified in the Agreement until payment in full, notwithstanding
entry of judgment on this Note. Interest payments shall be made at
the office of the Bank set forth in the Agreement.
This Note is the Revolving Credit Note referred to in the
Agreement. Reference is made to the Agreement for provisions for the
repayment hereof and the acceleration of the maturity hereof. All of
the terms, conditions, covenants, representations and warranties of
the Agreement are incorporated herein by reference as if same were
fully set forth herein. All capitalized terms which are used herein
as defined terms but not defined herein and which are defined in the
Agreement shall have the meanings given them in the Agreement.
Upon the declaration of any Event of Default specified in
the Agreement, the principal hereof and accrued interest hereon may
become forthwith due and payable, all as provided in the Agreement.
Demand, presentation, protest and notice of dishonor are
hereby waived.
This Note is made under and governed by the laws of the
Commonwealth of Pennsylvania.
WITNESS the due execution of this Revolving Credit Note as
an instrument under seal, with the intent to be legally bound hereby,
this ____ day of April, 2000.
ATTEST: (SEAL)
STEEL TECHNOLOGIES, INC., a
Kentucky corporation
By By
Name Michael J. Carroll
Title President
Exhibit 10.3(d)
STEEL TECHNOLOGIES INC.
2000 STOCK OPTION PLAN
1. Purpose. The name of this plan is the Steel Technologies
Inc. 2000 Stock Option Plan (the "Plan"). The purpose of the Plan is
to further the best interests of Steel Technologies Inc. (the
"Company") by encouraging its key employees and key employees of its
Subsidiaries (as hereinafter defined) and Related Entities (as
hereinafter defined) to remain as employees and by providing them
with additional incentive for unusual industry and efficiency by
offering them an opportunity to acquire a proprietary stake in the
Company and its future growth through compensation that is determined
by reference to the increase in value of the Company's stock.
2. Definitions.
As used in this Plan, the following terms shall have the
meanings set forth below:
(a) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor thereto.
(b) "Committee" shall mean the Compensation Committee of
the Board of Directors of the Company, or any other committee the
Board of Directors may subsequently appoint to administer the Plan.
The Committee shall be composed of not less than three directors,
each of whom is a Non-Employee Director.
(c) "Disabled" or "Disability" shall have the meaning
assigned thereto in section 22(e)(3) of the Code.
(d) "Eligible Employee" shall mean an employee of the
Company or any Subsidiary or Related Entity as described in Section 5
hereof.
(e) "Fair Market Value" shall mean, as of any given date,
with respect to any stock options granted hereunder, the mean of the
high and low trading price of the stock on such date as reported on
the National Association of Securities Dealers Automated Quotation
System or, if the stock is admitted to trade on a national securities
exchange, on such exchange; provided, however, that if any such
quotation system or exchange is closed on any day on which Fair
Market Value is to be determined, Fair Market Value shall be
determined as of the first day immediately preceding such day on
which such exchange or quotation system was open for trading.
(f) "Incentive Stock Option" shall mean any stock option
intended to qualify as an "incentive stock option" within the meaning
of Section 422 of the Code.
(g) "Non-Employee Director" shall have the meaning
assigned thereto in Rule 16b-3 of the Securities Exchange Act of
1934, as amended.
(h) "Nonqualified Stock Option" means any stock option
granted under the Plan that is not designated as an Incentive Stock
Option.
(i) "Parent" shall have the meaning assigned thereto in
section 424 of the Code and the regulations promulgated thereunder.
(j) "Participant" shall mean any Eligible Employee
selected by the Committee to receive a Stock Option under the Plan.
(k) "Related Entity" shall mean any corporation,
partnership, joint venture, limited liability company or other
entity, domestic or foreign, other than a Subsidiary, in which the
Company owns, directly or indirectly, at least a 20% equity
interest. A "Related Entity" shall include any entity which becomes
a Related Entity after the date of adoption of this Plan.
(l) "Stock" shall mean the common stock, no par value, of
the Company.
(m) "Stock Option" shall mean any option to purchase
shares of Stock granted pursuant to Section 6 of the Plan.
(n) "Stock Ownership," whenever necessary to determine a
person's stock ownership in the Company, its Parent or any
Subsidiary, shall include stock actually owned and stock indirectly
owned by application of the rules of attribution contained in section
424(d) of the Code.
(o) "Subsidiary" shall have the meaning assigned thereto
in section 424 of the Code and the regulations promulgated
thereunder. A "Subsidiary" shall include any entity which becomes a
Subsidiary after the date of adoption of this Plan.
3. Administration of the Plan. The Plan shall be administered
by the Committee.
The Company, by action of the Committee, and subject to
other provisions and limitations of this Plan, may from time to time
grant Stock Options to such Eligible Employees as the Committee may
in its sole discretion determine, for such number of shares of the
Company's Stock and on such terms and conditions as the Committee may
determine in its sole discretion.
The Committee may make, publish, amend, and rescind such
rules and practices as it may in its sole discretion deem necessary
or helpful to the administration of the Plan and the issuance and
exercise of Stock Options pursuant to the Plan.
All decisions made by the Committee pursuant to the
provisions of the Plan and as to the terms and conditions of any
Stock Option (and any agreements relating thereto) shall be final and
binding on all persons, including the Company and the Participants.
4. Option Shares. The aggregate maximum number of shares of
Stock reserved and available for issuance under this Plan shall be
five hundred thousand (500,000). However, the number of shares that
may be issued under this Plan may be increased by action of the Board
of Directors of the Company (the "Board") but only when such increase
is merely to prevent the enlargement or dilution of rights that would
occur were the adjustment not made, such as in the case of a change
in capitalization of the Company by way of a stock dividend or stock
split. Any shares of Stock subject to an option granted under this
Plan that terminates, is cancelled, or expires unexercised for any
reason may again be available for option grants.
5. Employees Eligible to Participate in the Plan. All
salaried employees of the Company, its Parent, if any, its
Subsidiaries and its Related Entities shall be eligible to receive
Stock Options pursuant to this Plan. (Such employees shall
hereinafter be referred to as "Eligible Employees.") The
Participants under the Plan shall be selected, from time to time, by
the Committee, in its sole discretion, from among those Eligible
Employees.
6. Stock Options.
(a) Form. The Stock Options granted pursuant to this Plan
shall be in such form as the Committee may from time to time
approve. Each grant of a Stock Option pursuant to this Plan shall be
made in writing upon such terms and conditions as may be determined
by the Committee at the time of grant, subject to the terms,
conditions, and limitations set forth in this Plan. The grant of an
option shall be evidenced by written notice executed by the Secretary
of the Company.
(b) Nature of Options. The Committee shall have the
authority to grant any Participant either Incentive Stock Options or
Nonqualified Stock Options, or both. Whether an option is to be an
Incentive Stock Option or a Nonqualified Stock Option shall be
determined by the Committee in its sole discretion. Each option that
the Committee intends to constitute an Incentive Stock Option shall
be specifically designated as such and each option that is not
intended to constitute an Incentive Stock Option shall specifically
state, "This option is not an incentive stock option." If any option
is issued without a specific designation, it shall be deemed to
constitute a Nonqualified Stock Option. The Committee may, however,
specifically provide that a Stock Option shall constitute an
Incentive Stock Option to the extent of its exercise as to any
particular number of shares and a Nonqualified Stock Option to the
extent of the remainder of the shares, provided the Committee
specifically provides that the Stock Option shall be deemed an
Incentive Stock Option to the extent of the first shares exercised up
to the number of shares as to which the option is intended to
constitute an Incentive Stock Option, and that the option shall be
considered a Nonqualified Stock Option as to the remainder of the
shares as to which it is exercised.
(c) Exercise Price. The Stock Options granted pursuant to
this Plan shall provide a specified price at which the shares subject
to the option may be purchased (hereinafter called the "Exercise
Price"). If any Stock Option issued pursuant to this Plan is
designated as an Incentive Stock Option, the Exercise Price for each
share of Stock subject to the Incentive Stock Option shall, except as
hereinafter provided, be an amount at least equal to the Fair Market
Value of one share of Stock of the Company as of the date of grant of
the Incentive Stock Option. Notwithstanding the above, in the event
that on the date of grant of the Incentive Stock Option, an Eligible
Employee owns stock (taking into account all classes of stock which
are then outstanding) in the Company which possesses more than 10% of
the total combined voting power of all classes of stock of the
Company or owns stock of a Parent or a Subsidiary of the Company
which possesses more than 10% of the total combined voting power of
all classes of stock of the Company's Parent or its Subsidiary, the
Exercise Price for each share of Stock subject to the Incentive Stock
Option (to the extent required by the Code at the time of grant)
shall be an amount equal to at least 110% of the Fair Market Value of
one share of Stock of the Company as determined as of the date of
grant of the Incentive Stock Option. (For purposes of this
paragraph, the rules of attribution contained in section 424(d) of
the Code (relating to the attribution of Stock Ownership) shall be
applied to determine Stock Ownership.)
(d) Exercise Period. Each Stock Option by its terms shall
provide the period during which it is exercisable, provided, however,
no Stock Option shall be exercisable until the expiration of at least
one year from the date the Stock Option is granted. Each Stock
Option granted under this Plan shall provide an expiration date which
date shall be set by the Committee but in no event shall the
expiration date of any Stock Option that is designated an Incentive
Stock Option be a date later than ten years from the date of grant of
the Incentive Stock Option or, if the grantee of the Incentive Stock
Option, at the time of grant, owns stock (taking into account all
classes of stock then outstanding) possessing more than 10% of the
total combined voting power of all classes of stock of the Company,
its Parent, or any Subsidiary, the expiration date of each such
Incentive Stock Option (to the extent required by the Code at the
time of grant) shall not be more than five years from the date of
grant. (For purposes of this paragraph, the rules of attribution
contained in section 424(d) of the Code (relating to the attribution
of Stock Ownership) shall be applied to determine Stock Ownership.)
Each Incentive Stock Option issued under this Plan shall provide for
expiration within three months after the termination of the Eligible
Employee's employment with the Company due to retirement. Each
Incentive Stock Option issued pursuant to this Plan may provide that
it shall be exercisable within one year after termination of
employment if the employee is Disabled. Further, each Incentive
Stock Option issued pursuant to this Plan may provide that in the
case of termination of employment by reason of the employee's death,
the Incentive Stock Option may be exercised by the employee's estate
or other person who receives the option by bequest or the laws of
descent and distribution for a period of twelve months after the
employee's death. In no event shall the exercise period be extended
beyond the time which the employee would have been required to
exercise the Incentive Stock Option had he not become disabled or
died. The Committee shall, except as specifically restricted herein,
in its own discretion, determine the term of Nonqualified Stock
Options that are issued pursuant to this Plan and the circumstances
in which such Nonqualified Stock Options shall be exercisable beyond
the termination, disability or death of the Eligible Employee;
provided, that if the Nonqualified Stock Option does not specifically
state when it may be exercised after the termination of the grantee's
employment, death or disability, the option shall be governed by the
provisions stated above for Incentive Stock Options. Except as
otherwise provided in this Section 6 or Section 14 of the Plan, or as
determined by the Committee in its sole discretion, if a
Participant's employment with the Company, any Subsidiary or any
Related Entity terminates (including termination for cause, voluntary
resignation or other termination under mutually agreeable
circumstances), all Stock Options held by the Participant will
terminate immediately upon the effective date and time of the
Participant's termination of employment.
(e) Transferability of Options. Each Stock Option granted
under this Plan shall provide that such option shall be exercisable
during the grantee's lifetime only by the grantee and that such
option shall not be transferable by the grantee other than by will or
the laws of descent and distribution. Stock Options granted pursuant
to this Plan may, but need not, provide for exercise by the
Participant's estate or other person who obtains the right to
exercise the option by bequest or pursuant to the laws of descent and
distribution.
(f) Method of Exercise. Stock Options may be exercised by
giving written notice of exercise delivered in person or by mail at
the Company's principal executive office, specifying the number of
shares of Stock with respect to which the option is being exercised,
accompanied by payment in full of the Exercise Price. Each Stock
Option shall provide that payment of the Exercise Price may be made
in cash or, if the owner of the Stock Option and the Committee agree
in advance, in a number of shares of Stock of the Company having an
aggregate Fair Market Value (as of the date of exercise of the
option) equal to the Exercise Price. Each Stock Option shall provide
that the Exercise Price shall be payable upon or before the issuance
of the Stock of the Company to be received pursuant to the exercise
of the Stock Option.
(g) Statement as to Withholding of Federal Income or Other
Taxes. Each option granted pursuant to this Plan shall contain a
statement to the effect that if the exercise of the option is an
event that would give rise to a federal income tax deduction to the
Company (or its Parent or any Subsidiary or Related Entity), but only
if the Company (or its Parent or a Subsidiary or Related Entity) at
the time of exercise or such other required time withholds federal
income or other taxes from the Eligible Employee, then the Company
shall have the right to withhold from the Eligible Employee, from the
sources and in the manner required, such amounts as may be required
to entitle the Company, its Parent or a Subsidiary or Related Entity
to the deduction.
(h) Exercise of Incentive Stock Options. No stock option
that is designated an Incentive Stock Option shall be issued pursuant
to terms under which the right to exercise the Incentive Stock Option
is affected by the exercise of another stock option or the right to
exercise another stock option is affected by exercise of the
Incentive Stock Option.
(i) Annual Limit on Incentive Stock Options. The
Committee shall not grant to any Eligible Employee any Incentive
Stock Options (or any further Incentive Stock Options) if the grant
of the Incentive Stock Option would cause the Employee to own
Incentive Stock Options which are first exercisable in any one year
as to more than $100,000 in Fair Market Value of Stock of the
Company, its Parent and its Subsidiaries as of the date of grant of
the Incentive Stock Option.
7. Termination of Employment. The employment of an Eligible
Employee by the Company shall not be deemed to have terminated for
purposes of this Plan if the Eligible Employee is transferred to and
becomes an employee of a Subsidiary or Parent of the Company or an
employee of a Related Entity. Further, the Eligible Employee's
employment by the Company shall not be considered terminated if he
becomes an employee of another corporation (the "Other Company")
which assumes the Stock Options issued pursuant to this Plan or
issues its own stock option in substitution of an option issued under
this Plan in a transaction to which section 424(a) of the Code
applies, provided he becomes an employee of the Other Company, its
Subsidiary or its Parent at the time of the transaction. Absence on
leave, whether paid or unpaid, approved by the management of the
Company shall not constitute the termination of employment for any
purpose of this Plan, provided the leave does not exceed ninety (90)
days. If the period of leave of absence exceeds ninety (90) days,
the leave of absence shall be considered a termination of employment
unless the employee's right to return is guaranteed by statute or
contract. If the employee's right to return is not so guaranteed,
the employee shall be considered to have terminated his employment,
for purposes of this Plan, as of the end of the ninetieth (90th) day
of such absence.
8. Requirements of Law. If any law, any regulation of the
Securities and Exchange Commission, or any regulation of any other
commission or agency having jurisdiction shall require the Company or
the exercising optionee to take any action with respect to the shares
of Stock to be acquired upon exercise of an option, then the date
upon which the Company shall deliver or cause to be delivered the
certificate or certificates for the shares of Stock shall be
postponed until full compliance has been made with all such
requirements of law or regulations. Further, if the Company shall so
require at or before the time of the delivery of the shares with
respect to which the exercise of an option has been made, the
exercising optionee shall deliver to the Company his written
statement that he intends to hold the shares so acquired by him on
exercise of the option for investment only and not with a view to
resale or other distribution thereof to the public. Further, in the
event the Company shall have determined that in compliance with the
Securities Act of 1933 or other applicable statute or regulation, it
is necessary to register any of the shares of Stock with respect to
which the exercise of an option has been made, or qualify such shares
for exemption from any requirements of the Securities Act of 1933 or
other applicable statutes or regulations, then the Company shall take
such action at its own expense, but not until such action has been
completed shall the option shares be delivered to the exercising
optionee Further, in the event at the time of exercise of the option
the shares of Stock of the Company shall be listed on any stock
exchange, then if required to do so, the Company shall register the
option shares with respect to which exercise is so made in accordance
with the provisions of the Securities Act of 1933 or any other
applicable law or regulations, and the Company shall make prompt
application for the listing of option shares on such stock exchange,
again at the expense of the Company.
9. Dilution or Other Agreement. In the event that additional
shares of Stock are issued pursuant to a stock split or a stock
dividend, the number of shares of Stock then covered by each
outstanding option granted hereunder shall be increased
proportionately with no increase in the total purchase price of the
shares then so covered, and the number of shares of Stock reserved
for the purpose of this Plan shall be increased by the same
proportion. In the event that the shares of Stock of the Company
from time to time issued and outstanding are reduced by a combination
of shares, the number of shares of Stock then covered by each
outstanding option granted hereunder shall be reduced proportionately
with no reduction in the total purchase price of the shares then so
covered, and the number of shares of Stock reserved for the purposes
of the Plan shall be reduced by the same proportion. In the event
that the Company should transfer assets to another corporation and
distribute the stock of such other corporation without the surrender
of stock of the Company, and if such distribution is not taxable as a
dividend and no gain or loss is recognized by reason of Section 355
of the Code, or some similar section, then the total purchase price
of the shares covered by each outstanding option shall be reduced by
an amount which bears the same ratio to the total purchase price then
in effect as the market value of the stock distributed in respect of
a share of Stock of the Company, immediately following the
distribution, bears to the aggregate of the fair market value at such
time of a share of the Stock of the Company and the stock distributed
in respect thereof. All such adjustments shall be made by the
Committee, whose determination upon the same shall be final and
binding upon the optionees. No fractional shares shall be issued,
and any fractional shares resulting from the computations pursuant to
this Section 11 shall be eliminated from the respective option. No
adjustment shall be made for cash dividends or the issuance to
stockholders of rights to subscribe for additional stock or other
securities.
10. Amendment or Discontinuance of the Plan. The Committee may
amend, suspend, or discontinue this Plan at any time without
restriction; provided, however, that the Committee may not alter,
amend, or discontinue or revoke or otherwise impair any outstanding
option which has been granted pursuant to this Plan and which remains
unexercised (except as may be required to make the adjustments
referred to in Section 9 above or in the event that there is secured
the written consent of the holders of the outstanding options
proposed to be so altered or amended), or, without shareholder
approval, (i)increase the number of shares which may be issued
pursuant to the Plan (except as may be necessary merely to prevent
the enlargement or dilution of rights which would occur were the
change not made, such as in the case of a stock dividend or stock
split), (ii) extend the period or periods during which options may be
granted or exercised, (iii) change the class of Eligible Employees as
to whom options may be granted or otherwise materially modify the
requirements for eligibility for participation in the Plan, (iv)
change the provision with respect to adjustments to be made upon
changes in capitalization, (v)change the method as to the selection
of the Committee (except as provided below), or (vi) materially
increase the benefits accruing to participants in the Plan. (Nothing
in this section, however, shall prevent the termination of an option,
which may be required, as hereinabove provided by references made to
termination of employment of an optionee.) The Committee shall be
entitled to amend this Plan by the deletion of the prohibition
against the issuance of Incentive Stock Options that would cause an
Eligible Employee to own options that are first exercisable in any
year as to Stock having a fair market value of greater than $100,000,
but only provided the requirement that such a provision be included
in incentive stock option plans is deleted by amendment to section
422 of the Code. The Board of Directors of the Company may also
terminate or suspend this Plan or vest the administration of the Plan
in persons other than the Committee provided one member of any body
that is vested with the power to administer this plan shall be a
member of the Board of Directors of the Company and all members of
such body shall be "Non-Employee Directors." In the event that the
authority to administer the Plan is vested in any body other than the
Committee, the references herein to the Committee shall be considered
to be references to that body.
11. Company's Right to Terminate Employees Not Impaired.
Notwithstanding the provisions of this Plan or the provisions of
options granted pursuant to this Plan, the right of the Company (or
its Parent or any Subsidiary) to terminate any employee shall not be
in any manner affected or impaired by the adoption of this Plan or by
the grant of options pursuant to this Plan.
12. Liquidation of the Company. In the event of the complete
liquidation or dissolution of the Company, any options granted
pursuant to this Plan remaining unexercised shall be deemed
cancelled, without regard to or limitation by any other provisions of
this Plan.
13. Shareholder Approval. This Plan shall be submitted to a
meeting of the shareholders of the Company, either at the regular
annual meeting thereof or at a special meeting called for the purpose
of the consideration of this Plan, and this Plan shall not become
effective unless its adoption is approved by the shareholders of the
Company within twelve (12) months of its adoption by the Board of
Directors of the Company. Upon approval by the shareholders, this
Plan shall take effect without further action by the Company,
provided such approval is obtained within twelve (12) months of the
adoption of this Plan by the Board.
14. Change in Control. The following acceleration and
valuation provisions shall apply in the event of a Change in Control
notwithstanding other provisions of the Plan or any provisions of any
applicable agreement to the contrary:
(a) In the event of a Change in Control:
(i) any Stock Option awarded under the Plan not
previously exercisable in full shall become fully exercisable;
and
(ii) any Participant holding a Stock Option who
is terminated by the Company or any Subsidiary for any reason
within the two year period immediately following a Change in
Control shall be permitted to exercise any Stock Option after
such termination of employment at any time (x) within the three
month period commencing on the later of the date of termination
of his or her employment or the date on which such Stock Option
would first be exercisable in accordance with the terms of the
Plan had such termination not occurred or (y) until the stated
term of such Stock Option, whichever period is shorter.
(b) For purposes of the Plan, "Change in Control" shall
mean a Change in Control of the Company which shall be deemed to have
occurred if:
(i) any Person (as defined in this Section 15)
is or becomes the Beneficial Owner (as defined in this Section
15) of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding
securities (unless (A) such Person is the Beneficial Owner of
25% or more of such securities as of January 29, 2000 or (B) the
event causing the 25% threshold to be crossed is an acquisition
of securities directly from the Company);
(ii) during any period of two consecutive years
beginning after January 29, 2000, individuals who at the
beginning of such period constitute the Board and any new
director (other than a director designated by a person who has
entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of this
Change in Control definition) whose election or nomination for
election was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved cease for any reason to
constitute a majority of the Board;
(iii) the shareholders of the Company approve a
merger or consolidation of the Company with any other
corporation (other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the entity surviving such merger or
consolidation), in combination with voting securities of the
Company or such surviving entity held by a trustee or other
fiduciary pursuant to any employee benefit plan of the Company
or such surviving entity or of any Subsidiary of the Company or
such surviving entity, at least 75% of the combined voting power
of the securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation); or
(iv) the shareholders of the Company approve a
plan of complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(c) For purposes of the definition of Change in Control,
"Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act as supplemented by Section 13(d)(3) of
the Exchange Act; provided, however, that Person shall not include
(i) the Company, any Subsidiary or any other Person controlled by the
Company, (ii) any trustee or other fiduciary holding securities under
any employee benefit plan of the Company or of any Subsidiary, or
(iii) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of securities of the Company.
(d) For purposes of the definition of Change of Control, a
Person shall be deemed the "Beneficial Owner" of any securities which
such Person, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" (within the meaning of Rule 13d-3
under the Exchange Act) of, including pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided,
however, that: (i) a Person shall not be deemed the Beneficial Owner
of any security as a result of an agreement, arrangement or
understanding to vote such security (x) arising solely from a
revocable proxy or consent given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
Exchange Act and the applicable rules and regulations thereunder or
(y) made in connection with, or to otherwise participate in, a proxy
or consent solicitation made, or to be made, pursuant to, and in
accordance with, the applicable provisions of the Exchange Act and
the applicable rules and regulations thereunder; in either case
described in clause (x) or clause (y) above, whether or not such
agreement, arrangement or understanding is also then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable
or successor report); and (ii) a Person engaged in business as an
underwriter of securities shall not be deemed to be the Beneficial
Owner of any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration
of forty days after the date of such acquisition.
15. Qualification of Options Issued Under this Plan as
Incentive Stock Options. It is the intention of the Company that
those options that are issued pursuant to this Plan that are
designated as Incentive Stock Options shall constitute "incentive
stock options" within the meaning of section 422 of the Code.
However, in the event that any option granted hereunder does not
constitute an "incentive stock option" within the meaning of section
422 of the Code for any reason whatsoever, none of the Company, its
shareholders, directors, officers or employees, shall be under any
obligation to any person. If the characterization of any option as
an "incentive stock option" within the meaning of section 422 of the
Code is challenged by the Internal Revenue Service, the Company may,
but shall not be required to, pay the reasonable legal and accounting
expenses incurred in an attempt to establish the characterization of
the options issued under this Plan as "incentive stock options"
within the meaning of section 422 of the Code. In all events,
however, the Company shall make available to any optionee such
factual information which is reasonably necessary to establish the
characterization of the options for federal income tax purposes.
It is intended that any option granted under this Plan that
is not specifically designated as an "incentive stock option" shall
not constitute an incentive stock option.
16. Effective Date of the Plan. The Plan shall be effective on
the date it is approved by the shareholders of the Company.
17. Term of the Plan. Options may be issued pursuant to this
Plan from the date of its approval by the shareholders of the Company
until the earlier of (i) its termination by action of the Board or
(ii) ten years from the earlier of the date of adoption of this Plan
by the Board or its approval by the shareholders of the Company.
EXHIBIT 10.5(b)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") made as of this sixteenth
day of March, 2000, by and between STEEL TECHNOLOGIES INC., a
Kentucky corporation, with offices at 15415 Shelbyville Road,
Louisville, Kentucky 40245 (the "Company") and BRADFORD T. RAY, an
individual residing at 14401 Champion Woods Place, Louisville,
Kentucky 40245 (the "Executive").
WHEREAS, the Executive has made and is expected to continue to make a
major contribution to the profitability, growth and financial
strength of the Company; and
WHEREAS, the Company considers the continued services of the
Executive to be in the best interests of the Company and its
stockholders and desires to assure the continued services of the
Executive on behalf of the Company; and
NOW, THEREFORE, in consideration of the conditions and covenants set
forth in this Agreement, the parties hereto agree as follows:
1. AGREEMENT OF EMPLOYMENT. The Company agrees to, and hereby
does, employ the Executive, and the Executive agrees to, and hereby
accepts, employment by the Company, as Chief Executive Officer, and
Vice Chairman of the Board of Directors of the Company, to perform
such executive duties and responsibilities as may be assigned from
time to time by the Board of Directors of the Company (the "Board")
subject, at all times, to the control of the Board. It is
contemplated that the Executive will continue to serve as Chief
Executive Officer and Vice Chairman of the Board.
2. EXECUTIVE'S DUTIES AND BENEFITS.
(a) Duties. During the period of his employment under this
Agreement, the Executive shall devote sufficient time and energies to
the supervision and management of the business and affairs of the
Company, and to the furtherance of its interests. The Executive may
become a director or trustee of any Company or entity that does not
compete with the business of the Company or constitute a Competitive
Operation as defined in Section 7 hereof.
(b) Vacation. The Executive shall be entitled to reasonable vacation
periods during each full year of the Executive's employment hereunder.
(c) Benefits. The Company shall pay the premiums for policies of
life, medical, disability, travel and accident, and directors' and
officers' liability insurance providing coverage and benefits
comparable to the policies of insurance maintained for the benefit of
the Executive during the duration of the this Agreement with the
Executive making the same contribution as each Company benefits plan
requires at that time. The Executive shall be entitled to
participate in all pension and profit sharing plans, bonus plans,
stock option plans and other employee benefit plans and receive such
other employment benefits as the Company may from time to time
maintain for the benefit of or provide to its executive officers.
3. REIMBURSEMENT FOR EXPENSES. The Company shall reimburse the
Executive for all reasonable expenses which the Executive may from
time to time incur on behalf of the Company in the performance of his
responsibilities and duties under this Agreement, provided that the
Executive accounts to the Company for such expenses in a manner
prescribed by the Company.
4. COMPENSATION.
(a) Salary. During the period of the Executive's employment
hereunder, the Company shall pay to the Executive an annual salary
(the "Base Salary") of not less than Two Hundred and Fifty Thousand
Dollars ($250,000) payable in equal installments according to the
payroll schedule of the Company. The Board, through its
Compensation Committee, shall in good faith review the Base Salary of
the Executive, on an annual basis, and increase the Base Salary of
the Executive if, in the Board's judgment, such increase is advisable.
(b) Bonuses. The Executive shall be entitled to participate in the
Steel Technologies' Bonus Plan, and receive bonuses in accordance
with the terms thereof. The Board, in its discretion, may amend or
change the Bonus Plan or may award such additional bonuses to the
Executive as it may from time to time determine.
(c) Execution Bonus. The Executive shall be entitled upon execution
of this Employment Agreement to a Two Hundred and Fifty Thousand
Dollars ($250,000.00) Execution Bonus (the "Execution Bonus"). If
the Executive's employment is terminated pursuant to Section 5(b)(v),
the Executive shall be required to reimburse the Company a pro-rata
share of the Execution Bonus within fourteen (14) days of said
termination.
(d) Loan. The Company shall provide to the Executive, within ten
(10) business days of full execution of the Employment Agreement and
a Promissory Note in the form as attached, a four-year loan in the
amount of Seven Hundred Thousand Dollars ($700,000.00) (the "Loan")
which shall be due and payable, with interest at a rate of Six and
Fifty-Six Hundredths percent (6.56%) annually, subject to the
following:
(i) In the event that the Executive remains employed by the
Company up to and including March 15, 2001, the Executive shall not
be required to pay the interest due on the Loan through such date,
and the Executive's compensation shall be Grossed-up as defined in
Section 8 to account for any imputed income from the forgiving of the
accrued interest.
(ii) In the event that the Executive remains employed by the
Company up to and including March 15, 2002, the Executive shall not
be required to pay the interest due on the Loan through such date,
and the Executive's compensation shall be Grossed-up as defined in
Section 8 to account for any imputed income from the forgiving of the
accrued interest.
(iii) In the event that the Executive remains employed by the
Company up to and including March 15, 2003, the Executive shall not
be required to pay the interest due on the Loan through such date,
and the Executive's compensation shall be Grossed-up as defined in
Section 8 to account for any imputed income from the forgiving of the
accrued interest.
(iv) In the event that the Executive remains employed by the
Company up to and including March 15, 2004, the Executive shall not
be required to pay the interest due on the Loan through such date,
and the Executive's compensation shall be Grossed-up as defined in
Section 8 to account for any imputed income from the forgiving of the
accrued interest.
(e) Retention Bonus. The Company shall provide to the Executive
retention bonuses in the amount of One Hundred Seventy-Five Thousand
Dollars ($175,000) on each of the following four dates payable if,
and only if, Executive is employed on the corresponding date: March
15, 2001; March 15, 2002; March 15, 2003; March 15, 2004.
Any Repayment called for under this Agreement shall be made to the
Company within fourteen (14) days of the Executive's last day of
employment by the Company; alternatively, at the Company's sole
discretion, any required loan repayment or interest payment may be
satisfied, in whole or in part, by the Company offsetting that
obligation against any amounts owing to the Executive by the Company.
5. TERM OF EMPLOYMENT; TERMINATION.
(a) Term. The term of this Agreement shall commence effective as of
March 16, 2000 ("Effective Date") and continue to March 15, 2004.
The term of this Agreement shall be automatically extended for
successive twelve-month periods unless, at least ninety (90) days
prior to the expiration of the then current term, either party gives
notice to the other that the term of this Agreement will not be so
extended.
(b) Termination. Notwithstanding anything to the contrary contained
in this Agreement, the Executive's employment under this Agreement
may be terminated as follows:
(i) Death. The Executive's employment hereunder shall
terminate upon his death.
(ii) Disability. In the event that two (2) licensed physicians
shall have certified in writing that the Executive has been unable
or will be unable to perform his duties hereunder by reason of
illness, incapacity or other physical or mental disability for a
period of twelve (12) consecutive months, the Company may terminate
the Executive's employment hereunder by reason of disability.
(iii) Cause. The Company may terminate the Executive's
employment hereunder for cause. For the purposes of this Agreement,
the Company shall have "cause" to terminate the Executive's
employment hereunder upon the Executive's (A) willful and continued
failure to substantially perform his duties hereunder, other than any
such failure resulting from the Executive's incapacity due to
physical or mental illness; (B) fraud, embezzlement, or other
intentional misappropriation from the Company; (C) conviction of a
felony involving moral turpitude; (D) any other conduct involving
fraud, gross negligence or willful misconduct, or other action which
materially damages the reputation of the Company; or (E) default of
any material obligations under this Agreement, which default is not
cured within thirty (30) days after the date on which the Company
gives the Executive written notice of such default.
(iv) Without Cause. The Executive's employment under this
Agreement may be terminated upon the affirmative vote of a majority
of the Board at a duly held meeting thereof.
(v) By Executive. The Executive may terminate his employment
hereunder at any time by delivering written notice of termination to
the Company at least ninety (90) days prior to the effective date of
such termination. Any termination by the Company pursuant to Section
5(b)(ii), 5(b)(iii) or 5(b)(iv) hereof shall be communicated by
written Notice of Termination to the Executive. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice
which shall indicate the specific termination provision in this
Agreement relied upon, the date on which the termination shall be
effective (the "Termination Date"), and, if applicable, shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under
the provision so indicated.
6. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) Death Benefits. If the Executive dies during the term of his
employment hereunder, in addition to any death benefits payable under
the terms of any life insurance policies maintained by the Company on
the life of the Executive, and in addition to any death benefits
payable on account of the death of the Executive under the terms of
any tax qualified retirement plans maintained by the Company, (1) the
Company shall pay to the estate of the Executive a death benefit
equal to 50% of the Executive's Base Salary at the rate in effect on
the date of the Executive's death to be paid in equal installments at
two week intervals over the six months following the Executive's
death, plus an amount equal to all the bonuses the Executive would
have received under Section 4 hereof assuming his employment had
continued through the end of the next four fiscal quarters following
the death to be paid on or about the date that said bonuses have
historically been paid and (2) the Executive's estate shall not be
required to pay any accrued interest on the Loan, and the
Executive's compensation shall be Grossed-up as defined in Section 8
to account for any imputed income due to the forgiving of any accrued
interest..
(b) Disability. If the Executive's employment shall be terminated
pursuant to Section 5(b)(ii), the Executive shall not be required to
pay any accrued interest on the Loan, and the Executive's
compensation shall be Grossed-up as defined in Section 8 to account
for any resulting imputed income due to the forgiving of any accrued
interest.
(c) Cause. If the Executive's employment shall be terminated
pursuant to Section 5(b)(iii), (1) the Company shall pay the
Executive any monthly installment of his Base Salary which is accrued
and unpaid as of the Termination Date at the rate then in effect,
and, thereafter, the Company shall have no further obligation to pay
the Executive any additional compensation or bonuses, to provide any
medical, life, disability or other insurance benefits to the
Executive hereunder, to pay any retirement benefits to the Executive
in excess of those provided for by the terms of the tax qualified
retirement plans maintained by the Company as required by Section
6(f) hereof or to pay any other benefits provided to the Executive
hereunder and (2) principal and interest of the remaining Section
4(d) loan shall be due and payable within fourteen (14) days of the
Executive's last day of employment;
(d) Without Cause. If the Executive's employment shall be terminated
pursuant to Section 5(b)(iv), (1) the Company shall pay to the
Executive in one lump sum payment, an amount equal to one (1) times
the sum of (i) his Base Salary at the rate then in effect and (ii) an
amount equal to all bonuses paid by the Company to the Executive
during the twelve (12) month period ending on the Termination Date
and, thereafter, except as otherwise provided in this Agreement, the
Company shall have no further obligation to pay the Executive any
additional compensation or bonuses, to pay any retirement benefits to
the Executive in excess of those provided for by the terms of the tax
qualified retirement plans maintained by the Company as required by
Section 6(f) hereof or to pay any other benefits provided to the
Executive hereunder and (2) the Executive shall not be required to
pay any accrued interest on the Loan, and the Executive's
compensation shall be Grossed-up as defined in Section 8 to account
for any resulting imputed income due to the forgiving of any accrued
interest.
(e) By Executive. If the Executive's employment shall be terminated
pursuant to Section 5(b)(v), (1) the Company shall pay the Executive
any monthly installment of his Base Salary accrued and unpaid as of
the effective date of such termination at the rate then in effect,
and, thereafter, the Company shall have no further obligation to pay
the Executive any additional compensation or bonuses, to provide any
medical, life, disability or other insurance benefits to the
Executive hereunder, to pay any retirement benefits to the Executive
in excess of those provided for by the terms of the tax qualified
retirement plans maintained by the Company as required by Section
6(f) hereof or to pay any other benefits provided to the Executive
hereunder, and (2) principal and interest of the remaining Section
4(d) loan shall be due and payable within fourteen (14) days of the
Executive's last day of employment.
(f) Insurance. If the Executive's employment with the Company is
terminated pursuant to the provisions of Sections 5(b)(i), or
5(b)(ii) hereof, the Company shall pay all premiums, with the
beneficiary of the policy making the same contributions as the
benefit plan requires at the time the benefit is provided, to
maintain policies of (i) medical and life insurance for the benefit
of the Executive for the remainder of the term of this Agreement;
(ii) medical insurance for the benefit of the Executive's spouse for
the remainder of the term of this Agreement; and (iii) medical
insurance for the benefit of the Executive's dependents during the
term of this Agreement until each such dependent reaches age 21.
Subject to the provisions of the last sentence of this Section 6(f),
if the Executive's employment with the Company is terminated pursuant
to the provisions of Section 5(b)(iv) hereof, the Company shall pay
all premiums, with the beneficiary of the policy making the same
contributions as the benefit plan requires at the time the benefit is
provided, to maintain policies of (i) medical and life insurance for
the benefit of the Executive until March 15, 2004 (ii) medical
insurance for the benefit of the Executive's spouse until March 15,
2004 and (iii) medical insurance for the benefit of the Executive's
dependents until each such dependent reaches age 21 or March 15,
2004, whichever occurs first for each dependent. The amount of
medical and life insurance coverage provided to the Executive, and
the amount of medical insurance coverage provided to the Executive's
spouse and dependents shall be the same as the insurance coverage in
effect for such individuals on the Termination Date. If the Executive
dies during the term of this Agreement and his spouse or dependents
are still living, the Company shall continue to pay all premiums
needed to continue to provide medical insurance coverage for the
Executive's spouse for the remainder of the Executive's spouse's
life, or March 15, 2004, whichever occurs first and for each of the
Executive's dependents until each such dependent reaches age 21 or
March 15, 2004, whichever occurs first, at the same level of medical
insurance coverage in effect for such individuals prior to the date
of the Executive's death. For purposes of this Section 6(f), the term
"dependents" shall have the same meaning as contained in Section 152
of the Code. The level of benefits provided hereunder (and the amount
of premiums required to provide such benefits) shall be adjusted to
reflect similar benefits provided from time to time to the Executive,
his spouse or his dependents from all other sources, including from
other employers.
7. NON-COMPETITION. In the event that the Company terminates the
Executive's employment under this Agreement pursuant to Section
5(b)(iii) hereof or in the event the Executive terminates his
employment pursuant to Section 5(b)(v) hereof, the Executive agrees
that during a period of two (2) years after the date of termination
or September 15, 2004, whichever first occurs, the Executive will
not, directly or indirectly, own, manage, operate, control or
participate in the ownership, management, operation or control of, or
be connected as an officer, employee, partner, director or otherwise
with, or have any financial interest in, or aid or assist anyone else
in the conduct of, any business (a "Competitive Operation") which
competes with any business conducted by the Company or with any
group, division or subsidiary of the Company in any geographic area
where such business is being conducted at the time of such
termination. It is understood and agreed that, for the purposes of
the foregoing provisions of this Section 7:
(a) No business shall be deemed to be a business conducted by the
Company or any group, division or subsidiary of the Company, unless
not less than 10% of the Company's consolidated gross sales and
operating revenues, or net income, is derived from, or not less than
10% of the Company's consolidated assets are devoted to, such
business; No business conducted by any entity which employs the
Executive or in which he is interested or with which he is connected
or associated shall be deemed competitive with any business conducted
by the Company or any group, division, or subsidiary of the Company
unless such business is one from which 10% or more of the Company's
consolidated assets are devoted; and
(b) No business which is conducted by the Company at the time of the
Executive's termination and which subsequently is sold or
discontinued by the Company shall, subsequent to the date of such
sale or discontinuance, be deemed to be a Competitive Operation
within the meaning of this Section 7. Ownership by the Executive of
2% or less of the voting stock of any publicly held Company shall not
constitute a violation hereof.
8. ADDITIONAL PAYMENTS
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by
the Company to or for the benefit of the Executive has been
designated herein as entitled to a Gross-up, then the Executive shall
be entitled to receive an additional payment (a "Gross-up") in an
amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such
taxes) the Executive retains an amount equal to the amounts entitled
to the Gross-up.
(b) All determinations required to be made under this Section 8,
including the amount of such Gross-up, shall be made by any
nationally recognized firm of certified public accountants (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 60 business
days. When calculating the amount of the Gross-up, the Executive
shall be deemed to pay:
(i) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in
which the Gross-up is to be made; and
(ii) any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the calendar
year in which the Gross-up is to be made, net of the maximum
reduction in Federal income taxes which could be obtained from
deduction of such state and local taxes if paid in such year.
Any determination by the Accounting Firm shall be binding
upon the Company and the Executive.
9. AMENDMENTS. This Agreement may not be amended or modified
orally, and no provision hereof may be waived, except in a writing
signed by the parties hereto.
10. ASSIGNMENT. This Agreement cannot be assigned by either party
hereto except with the written consent of the other.
11. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the personal representatives and successors in
interest of the Executive. In addition, this Agreement shall be
binding upon any successor (whether direct or indirect, by purchase,
merger, amalgamation or otherwise) to all or substantially of the
business and/or assets of the Company. The Company expressly agrees
that it shall have no right, power or authority to consummate any
sale of all or substantially all the business and/or assets of the
Company or to consummate any merger, consolidation or other
transaction as a result of which all or substantially all the
business and/or assets of the Company are not owned by the Company or
any of its direct or indirect wholly owned subsidiaries unless the
party that will own all or substantially all the business and/or
assets of the Company following the consummation of such transaction
executes and delivers an agreement with the Company expressly
providing for the assumption by such party of all of the Company's
obligations under this Agreement; provided that, notwithstanding the
foregoing, no such agreement shall be necessary to make the
obligations of the Company under the terms of this Agreement binding
on such successor to the business and/or assets of the Company.
12. CHOICE OF LAW. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Kentucky applicable
to contracts made and to be performed wholly within such slate except
with respect to the internal affairs of the Company and its
stockholders, which shall be governed by the Kentucky General
Corporate Law.
13. NOTICES. All notices and other communications given pursuant to
this Agreement shall be deemed to have been properly given or
delivered if hand-delivered, or if mailed, by certified mail or
registered mail postage prepaid, or by recognized overnight delivery
service addressed to the Executive at the address set forth above or
if to the Company, at the address set forth above with a copy to the
attention of John M. Baumann, Corporate Counsel, 15415 Shelbyville
Road, Louisville, Kentucky 40245. From time to time, either party may
designate by written notice any other address or party to which such
notice or communication or copies thereof shall be sent.
14. SEVERABILITY OF PROVISIONS. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not
in any way be affected or impaired thereby and this Agreement shall
be interpreted as if such invalid, illegal or unenforceable provision
was not contained herein.
IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed effective as of the day and year set forth
above.
STEEL TECHNOLOGIES INC.
By:
_____________________________
Merwin J. Ray,
Chairman of the Board
On behalf of the Board of Directors
of Steel Technologies Inc.
_____________________________
Ralph W. McIntyre, Director
Chairman of the Compensation Committee
of the Board of Directors
_____________________________
Michael J. Carroll, Director
President and Chief Operating Officer
BRADFORD T. RAY (the "Executive")
______________________________
Bradford T. Ray
PROMISSORY NOTE
$700,000.00
LOUISVILLE, KENTUCKY
March 20, 2000
FOR VALUE RECEIVED, the undersigned Bradford T. Ray
(hereinafter "Bradford T. Ray") hereby promises to pay to the
order of Steel Technologies Inc., 15415 Shelbyville Road,
Louisville, Kentucky 40245 (hereinafter called "Steel
Technologies") the principal amount of SEVEN HUNDRED THOUSAND
dollars ($700,000.00), with interest at a rate of 6.56% per
annum, in the manner set forth in this Promissory Note
(hereinafter "Note").
This Note and the indebtedness evidenced hereby are
being provided pursuant to the terms of the employment agreement
dated March 16, 2000 between Bradford T. Ray and Steel
Technologies (the "Employment Agreement").
Principal of $175,000 and all accrued interest not forgiven
pursuant to the terms of the Employment Agreement shall be due
and payable on March 15, 2001.
Principal of $175,000 and all accrued interest not forgiven
pursuant to the terms of the Employment Agreement shall be due
and payable on March 15, 2002.
Principal of $175,000 and all accrued interest not forgiven
pursuant to the terms of the Employment Agreement shall be due
and payable on March 15, 2003.
Principal of $175,000 and all accrued interest not forgiven
pursuant to the terms of the Employment Agreement shall be due
and payable on March 15, 2004.
The following shall apply to accrued interest repayment:
(i) In the event that Bradford T. Ray remains
employed by Steel Technologies up to and including March
15, 2001, Bradford T. Ray shall not be required to pay any
accrued interest due on the Note as of that date.
(ii) In the event that Bradford T. Ray remains
employed by Steel Technologies up to and including March
15, 2002, Bradford T. Ray shall not be required to pay any
accrued interest due on the Note as of that date.
(iii) In the event that Bradford T. Ray remains employed by
Steel Technologies up to and including March 15, 2003,
Bradford T. Ray shall not be required to pay any accrued
interest due on the Note as of that date.
(iv) In the event that Bradford T. Ray remains employed by
Steel Technologies up to and including March 15, 2004,
Bradford T. Ray shall not be required to pay any accrued
interest due on the Note as of that date.
Any repayment called for under the Employment Agreement or
this Note shall be made to Steel Technologies within fourteen
(14) business days of Bradford T. Ray's last day of employment by
Steel Technologies or March 15, 2004, whichever first occurs;
alternatively, at Steel Technologies' sole discretion, any
required Note repayment or interest payment may be satisfied, in
whole or in part, by Steel Technologies offsetting that
obligation against any amounts owing to Bradford T. Ray by Steel
Technologies including, but not limited to, any Retention Payment
as defined in the Employment Agreement. Steel Technologies shall
have the right to set off any amounts which Bradford T. Ray owes
Steel Technologies hereunder against any monies which Steel
Technologies or any of its subsidiaries may owe to Bradford T.
Ray, of any nature whatsoever, including without limitation, any
compensation and any severance owed under the Employment
Agreement or any other benefit owed to or held by Bradford T. Ray
as an employee of Steel Technologies or any of its subsidiaries,
and Bradford T. Ray hereby agrees to and authorizes any such
setoff.
If payment of the principal on this Note is not paid in
accordance with the terms aforementioned, then this Note shall be
deemed to be in default and if suit is brought to collect this
Note, Steel Technologies shall be entitled to collect, in
addition to any principal outstanding, all reasonable costs and
expenses to include, but not necessarily be limited to,
reasonable attorneys' fees and expenses.
Presentment, notice of dishonor and protest are hereby
waived by Bradford T. Ray. This Note shall be binding upon
Bradford T. Ray and his heirs, executors, administrators, and
legal representatives.
No delay or omission on the part of Steel Technologies
in exercising any rights hereunder shall operate as a waiver of
such rights or of any other right of Steel Technologies, nor
shall any delay, omission or waiver on any one occasion be deemed
as a bar to or waiver of the same or any other right on any
future occasion. This Note may not be changed or terminated
orally.
Bradford T. Ray shall have the right to prepay the
principal of this Note, in whole or in part, at any time or
times, without penalty.
All rights and obligations hereunder shall be governed
by, and construed and enforced in accordance with, the
substantive laws of The Commonwealth of Kentucky, and this Note
is executed as, and shall have effect of, a sealed instrument. If
any provision of this transaction is inconsistent with the laws
and statutes of The Commonwealth of Kentucky, the rest of the
transaction shall not be affected, and that part that is not in
accord with the said laws shall be adjusted to so comply.
IN WITNESS WHEREOF, the undersigned has executed this
Note as an instrument under seal effective the 20th day of March,
2000.
BRADFORD T. RAY
______________________________
Bradford T. Ray
NOTARY PUBLIC
Sworn and subscribed before me this _____ day of __________, 2000
_______________________________
EXHIBIT 10.10(a)
Steel Technologies, Inc. Retirement Savings Plan
The Steel Technologies, Inc. Retirement Savings Plan is designed to
encourage and assist Employees in a long range program of savings.
This program may be used by Employees to supplement their retirement
income and may also serve to help Employees in meeting certain
financial emergencies. The Plan is hereby designated a
profit-sharing plan.
The Effective Date of the Plan is August 1, 1993. The Plan is hereby
amended and restated as of April 1, 1999, except as otherwise
specifically indicated herein. The Plan was previously restated on
December 1, 1997.
INDEX
The provisions of this Plan are set forth in the following order:
Article 1. DEFINITIONS
Article 2. ELIGIBILITY AND PARTICIPATION
2.1 Entry Dates and Eligibility Requirements
2.2 Re-Employment of an Employee
2.3 Re-Employment of a Former Participant
2.4 Amended and Restated Plan
Article 3. CONTRIBUTIONS
3.1 Elective Contributions
3.2 Matching Contributions
3.3 Non-Elective Contributions and Forfeitures
3.4 Rollover Amounts
3.5 Contributions Subject to Employer Discretion
3.6 Annual Deductible Limits
3.7 Omission of Eligible Employee
3.8 Inclusion of Ineligible Employee
Article 4. ANNUAL ADDITIONS
4.1 Limitations
4.2 Qualified Plans Included in the Determination
4.3 Maximum Permissible Amount
4.4 Allocations Included in Annual Additions
4.5 Allocations Not Included in Annual Additions
4.6 Combined Plan Limitations
4.7 Adjustments to Participant's Allocations
4.8 Correction of Excess Annual Additions
4.9 Compliance with Code Section 415
Article 5. NONDISCRIMINATION TESTING
5.1 Requirements
5.2 Actual Deferral Percentage Test
5.3 Actual Contribution Percentage Test
5.4 Special Rules
5.5 Aggregate Family Group
5.6 Multiple Use Limitation
5.7 Corrective Actions
5.8 Distribution of Excess Contributions and Excess
Aggregate Contributions
5.9 Adjustment for Income or Loss on Excess Amounts
5.10 Additional Requirements
Article 6. TOP HEAVY PROVISIONS
6.1 Top Heavy Determination
6.2 Aggregation Group
6.3 Super Top Heavy Plans
6.4 Key Employee and Non-Key Employee
6.5 Minimum Contributions
6.6 Top Heavy Vesting
Article 7. PARTICIPANT ACCOUNTS AND DIRECTED INVESTMENTS
7.1 Participant Accounts
7.2 Allocation of Contributions and Rollover Amounts
7.3 Investment Election
7.4 Transfer of Amounts between Funds
7.5 Crediting and Debiting of Investments
7.6 Valuation of Participant Accounts
7.7 Administrative and Expense Charges
7.8 Maintenance of Participant Accounts
Article 8. VESTING, FORFEITURES, AND BREAK IN SERVICE
8.1 Vesting Schedule
8.2 Amendment of Vesting Schedule
8.3 Vesting Formula after a Distribution
8.4 Non-Vested Interest upon Termination
8.5 Application of Forfeitures
8.6 Restoration of Forfeitures
8.7 Suspension of Payment of Benefits
Article 9. WITHDRAWALS AND LOANS DURING PARTICIPATION
9.1 Withdrawal Procedures
9.2 Withdrawal of Rollover Amounts
9.3 Hardship Withdrawals
9.4 Amounts Cannot Be Repaid
9.5 Loan Program
Article 10. TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT DATE
10.1 General
10.2 Election of Timing of Distribution
10.3 Earliest Distribution Date
10.4 Automatic Immediate Distribution
10.5 Death of a Former Participant
10.6 Cancellation of a Participant's Account
10.7 Unclaimed Account
Article 11. RETIREMENT BENEFITS
11.1 Retirement Dates
11.2 Automatic Form of Distribution
Article 12. DEATH BENEFITS
12.1 Value of Death Benefit
12.2 Election to Waive Pre-Retirement Surviving Spouse Death Benefit
12.3 Pre-Retirement Death Benefit for Unmarried Participants
12.4 Distribution Options of a Beneficiary
Article 13. BENEFIT OPTIONS AND DISTRIBUTION RULES
13.1 Payment Option
13.2 Events Triggering Distribution
13.3 Timing of Distribution Rules
13.4 Direct Rollovers
13.5 Minimum Distribution Requirements - General Rules
13.6 Death Distribution Provisions
13.7 Precedence of Minimum Distribution Rules
Article 14. AMENDMENTS, TERMINATION, AND MERGERS
14.1 Amendments
14.2 Termination
14.3 Merger, Consolidation, Etc., with Another Plan
Article 15. PLAN ADMINISTRATION
15.1 Appointment By the Employer
15.2 Authority
15.3 Duties
15.4 Delegation of Duties
15.5 Application of Funds
15.6 Compensation and Expenses
15.7 Information From Employer
15.8 Resignation, Removal, and Appointment of Successor
Article 16. BENEFIT CLAIMS PROCEDURE
16.1 Filing a Claim for Benefits
16.2 Timing of Decisions
16.3 Denial of Claim
16.4 Review Procedure
Article 17. GENERAL PROVISIONS
17.1 No Employment Rights Created
17.2 Return of Contributions Under Certain Circumstances
17.3 Exclusive Benefit Rule
17.4 Standard of Conduct for Fiduciaries
17.5 Gender
17.6 Construction of Plan
Article 18. PARTICIPATING EMPLOYERS
18.1 Election to Become a Participating Employer
18.2 Requirements
18.3 Designation of Agent
18.4 Plan Administrator's Authority
18.5 Withdrawal of a Participating Employer
Article 1. DEFINITIONS
Whenever used in the Plan, the following terms shall have the
respective meanings hereinafter set forth or indicated, unless the
context otherwise requires.
1.1 Affiliated Employer: The Employer and any corporation which is a
member of a controlled group of corporations as defined in Code
section 414(b) which includes the Employer, any trade or business
(whether or not incorporated) which is under common control as
defined in Code section 414(c) with the Employer, or any service
organization (whether or not incorporated) which is a member of an
affiliated service group as defined in Code section 414(m) which
includes the Employer and any other entity required to be aggregated
with the Employer pursuant to regulations under Code section 414(o).
1.2 Age: Age at nearest birthday.
1.3 Beneficiary: The person(s) designated by the Employee as a
Beneficiary under the Plan to receive death benefits. Subject to the
consent requirements of Article 12, a Participant shall have the
right to designate a Beneficiary for the receipt of any death
benefits payable under the terms of the Plan and to change the
Beneficiary from time to time. If a Beneficiary has not been so
designated or if no Beneficiary survives the Participant, the
Participant's Account shall be distributed in accordance with the
terms of the Plan. Any designation of a Beneficiary shall also be in
accordance with Code section 401(a)(9).
1.4 Benefit Starting Date: The first day on which all events have
occurred which entitled the Participant to a benefit.
1.5 Board: The Employer's Board of Directors or other comparable
governing body.
1.6 Code: The Internal Revenue Code of 1986, as now in effect and as
hereinafter amended. Reference to any section or subsection of the
Code includes reference to any comparable or succeeding provisions of
any legislation which amends, supplements or replaces such section or
subsection.
1.7 Compensation: The Participant's total Standard 415 Compensation from
the Employer during the Plan Year for Services rendered, such as
wages, salary, overtime, commissions, bonuses and other remuneration
that is reportable to the federal government for the purpose of
withholding federal income taxes.
For purposes of allocating Contributions, Compensation shall also
include any amount that would be reportable if it were not otherwise
deferred by the Participant's election to have it contributed to a
plan of the Employer as an Elective Contribution.
For a Participant's first year of participation, Compensation shall
be recognized as of the date the Participant enters the Plan.
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
Code section 401(a)(17)(B). 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 Code section 401(a)(17) 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.
Prior to October 1, 1997, the family member aggregation rules of Code
section 414(q)(6) shall apply with respect to an affected
Participant, such Participant's Spouse and such Participant's lineal
ascendants and descendants and their spouses.
1.8 Computation Period:
For the purpose of determining an Employee's eligibility to
participate in the Plan, the initial eligibility Computation Period
shall be the 12-consecutive month period beginning with an Employee's
Employment Commencement Date (or, if applicable, his Re-Employment
Commencement Date). The succeeding eligibility Computation Period
shall shift to the current Plan Year which includes the anniversary
of an Employee's Employment Commencement Date (or, if applicable, his
Re-Employment Commencement Date). Thereafter, the eligibility
Computation Period shall be the 12-consecutive month period ending on
the last day of the Plan Year.
For the purpose of determining a Participant's vested interest, as
described in Article 8, the vesting Computation Period shall be the
12-consecutive month period ending on the last day of the Plan Year.
1.9 Contributions: Employer Contributions.
1.10 Deposit Account: An account in which the Employer shall hold any
funds released in connection with the reduction, adjustment, or
termination of any Participant's Account, or other transaction
involving the Plan and to which no Participant, former Participant or
Beneficiary shall be entitled.
1.11 Disability: A Participant's total and permanent disability as a
result of disease or bodily injury so as to render the Participant
incapable of engaging in any substantial gainful activity by reason
of any medically determinable physical or mental impairment or
impairments that can be expected to result in death or that has
lasted or can be expected to last for a continuous period of not less
than twelve (12) months, provided that the Participant is eligible
for and receives disability benefits under the Social Security Act.
The Plan Administrator shall have the exclusive right of determining,
with the assistance of a competent physician whether a Participant
has suffered Disability. A certificate to that effect, executed by
the Plan Administrator and supported by the affidavit of an examining
physician, shall be sufficient evidence of such fact and may be so
accepted by the Plan Administrator without further inquiry, provided
that all Participants under similar circumstances shall be treated
alike.
1.12 Disability Retirement Date: The first day of the calendar month
following the month during which the Plan Administrator makes a
determination that a Participant's incapacity is a Disability.
1.13 Early Retirement Date: The first day of the calendar month (prior to
his Normal Retirement Age) coincident with or next following the
termination of Service of a Participant who has attained age 55 and
completed 10 Years of Service.
1.14 Effective Date: August 1, 1993.
1.15 Elective Contributions: Employer Contributions made to the Plan at
the election of the Participant in lieu of cash compensation pursuant
to a written salary reduction agreement. Elective Contributions are
subject to the dollar limitation contained in Code section 402(g),
are nonforfeitable when made, are distributable only as described in
Regulation 1.401(k)-1(d), and are required to satisfy the
nondiscrimination requirements of Regulation 1.401(k)-1(b)(3), the
provisions of which are specifically incorporated herein by
reference. With respect to any taxable year, a Participant's
Elective Contributions are the sum of all Employer contributions made
on behalf of such Participant pursuant to an election to defer under
any qualified cash or deferred arrangement as described in Code
section 401(k), any simplified employee pension cash or deferred
arrangement as described in Code section 402(h)(1)(B), any eligible
deferred compensation plan under Code section 457, any plan as
described under Code section 501(c)(18), and any Employer
contributions made on behalf of a Participant for the purchase of an
annuity contract under Code section 403(b) pursuant to a salary
reduction agreement. Elective Contributions shall not include any
deferrals properly distributed as excess annual additions.
1.16 Employee: An individual currently employed by the Employer. To the
extent necessary to meet the requirements of Code section 414(n) or
(o), the term "Employee" shall include a Leased Employee.
1.17 Employee in the Eligible Class: An Employee who is not an Excluded
Employee.
1.18 Employer: Steel Technologies, Inc. or any successor thereto, and any
other member of the Affiliated Employer group which adopts this Plan.
1.19 Employer Contributions: Elective Contributions, Qualified
Non-Elective Contributions, Matching Contributions and Non-Elective
Contributions made on behalf of a Participant.
1.20 Employment Commencement Date: The first date on which the Employee
is credited with an Hour of Service.
1.21 Entry Date: January 1, April 1, July 1 and October 1 of every year.
1.22 ERISA: The Employee Retirement Income Security Act of 1974, as
amended to date.
1.23 Excess Elective Contributions: Those Elective Contributions (as
defined in Regulation 1.402(g)-1(e)) that are includible in a
Participant's gross income under Code section 402(g) to the extent
such Participant's Elective Contributions for a taxable year exceed
the dollar limitation under such Code section. Excess Elective
Contributions shall be treated as annual additions under the Plan,
unless such amounts are distributed no later than the first April 15
following the close of the Participant's taxable year.
1.24 Excluded Employee: An Employee who is a Leased Employee.
1.25 Fiscal Year: The 12-month period beginning on each October 1 and
ending on the next following September 30.
1.26 Five Percent Owner: Any individual within the meaning of Code
section 416(i)(l)(B)(iii) who owns (or is considered as owning within
the meaning of Code section 318) more than five percent of the
outstanding stock of the Employer or stock possessing more than five
percent of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any
individual who owns more than five percent of the capital or profits
interest in the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated under Code
sections 414(b), (c), (m) and (o) shall be treated as separate
employers.
1.27 Forfeiture: A Participant's non-vested interest in his Participant's
Account upon his termination of Service as described in Article 8.
1.28 414(s) Compensation: For the purpose of testing nondiscrimination in
the Plan, 414(s) Compensation shall mean a Participant's Compensation
plus any amounts that would be paid to the Employee during the
applicable period except for the Employee's election to defer such
compensation under a cafeteria plan described in Code section 125, a
cash or deferred arrangement described in Code section 402(e)(3), a
simplified employee pension plan described in Code section
402(h)(i)(B), a tax exempt plan described in Code section 403(b), an
eligible deferred compensation plan under Code section 457(b), and an
employee contribution pick-up plan under Code section 414(h)(2). The
amount of 414(s) Compensation with respect to an Employee shall
include 414(s) Compensation for the applicable period, except that
the Employer may limit the period taken into account under this
method to that portion of the Plan Year in which the Employee was an
"eligible Employee", provided this limit is applied uniformly to all
eligible Employees under the Plan (or portion thereof). For purposes
of Code section 401(k) or 401(m), "eligible Employee" is as described
in Regulations 1.402(k)-1(g)(4) and 1.401(m)-(f)(4).
1.29 415 Compensation: Compensation used to determine (a) the maximum
permissible annual additions with respect to a Participant for a
Limitation Year under Code section 415 pursuant to Article 4 of the
Plan, (b) the identity of a Highly Compensated Employee as described
in Code section 414(q), (c) the identity of a key Employee as
described in Code section 416(i)(l) pursuant to Article 6 of the
Plan, and (d) the required Minimum Contribution as described in Code
section 416(c)(2). Effective January 1, 1998, 415 Compensation shall
include deferrals under Code section 402(g)(3) and amounts
contributed or deferred under Code section 125 or Code section 457 by
the Employer at the Employee's election that are not includible in
the Employee's gross income.
415 Compensation for any Limitation Year is the compensation
actually paid or includible in gross income during such year.
Prior to January 1, 1998, 415 Compensation shall exclude
deferrals under Code section 402(g)(3) and amounts contributed
or deferred under Code section 125 or Code section 457.
1.30 Hardship Withdrawal:
A distribution from a Participant's Account that is necessary to
satisfy an immediate and heavy financial need of a Participant. The
Employer shall, in accordance with uniform and non-discriminatory
standards herein set forth in the Plan, determine the existence of
financial hardship and the amount to be withdrawn to alleviate such
hardship. A withdrawal will be deemed to be made on account of an
immediate and heavy financial need if it is made on account of:
Expenses for medical care (as described in Code section 213(d))
incurred by the Participant, his Spouse or any of his dependents (as
defined in Code section 152) or necessary for these persons to obtain
such medical care; or
Costs directly related to the purchase (excluding mortgage payments)
of a principal residence for the Participant; or
Payment of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, his Spouse,
children or dependents; or
The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
Any other expense deemed a hardship by the Commissioner of Internal
Revenue as set forth in a Revenue Ruling, Notice or other document of
general applicability.
A withdrawal will be deemed to be necessary to satisfy the
Participant's financial need if all the following requirements are
satisfied:
The withdrawal is not in excess of the amount of the Participant's
immediate and heavy financial need (including amounts necessary to
pay any federal, state or local income taxes or penalties reasonably
anticipated to result from the distribution);
The Participant has obtained all distributions, other than hardship
distributions, and all non-taxable loans currently available under
all plans maintained by the Employer;
Elective Contributions and Employee Contributions made on behalf of
the Participant under the Plan and all other plans (as described in
Regulation 1.401(k)-1(d)(2)(iv)(B)(4)) maintained by the Affiliated
Employer are suspended for a period of 12 months commencing as of the
date of receipt of the Hardship Withdrawal; and
The amount of Elective Contributions made on behalf of a Participant
under the Plan and all other plans maintained by the Affiliated
Employer during the Participant's taxable year immediately following
the taxable year in which he has made a Hardship Withdrawal does not
exceed the applicable dollar limit under Code section 402(g) for such
next taxable year, less the amount of Elective Contributions made on
his behalf during the taxable year in which he made the Hardship
Withdrawal.
1.31 Highly Compensated Employee
Effective for years beginning after December 31, 1996, a Highly
Compensated Employee is an Employee who:
was at any time during the look-back year or the determination year a
Five Percent Owner; or
an Employee who during the look-back year received 415 Compensation
from the Employer (and all other entities aggregated with the
Employer under Code sections 414 (b), (c), (m) and (o)) in excess of
$80,000 (plus cost of living adjustments permitted under Code section
414(q)(1)).
For the purpose of identifying a Highly Compensated Employee the
"determination year" shall be the Plan Year. The "look-back year"
shall be the twelve-month period immediately preceding the
determination year.
(c) A former Highly Compensated Employee is based on the rules
applicable to determining Highly Compensated Employee status as
in effect for that determination year, in accordance with
proposed Regulation 1.414(q)-IT, A-4 and Notice 97-45.
(d) In determining whether an Employee is a Highly Compensated
Employee for years beginning in 1997, the amendments to Code
section 414(q) stated above are treated as having been in effect
for years beginning in 1996.
(e) Prior to October 1, 1997 the definition of Highly Compensated
Employee conformed with the requirements described in Code
section 414(q) as then in effect.
1.32 Hour of Service: An Hour of Service which must, as a minimum, be
counted for the purposes of determining a Year of Service and a
1-Year Break in Service means:
Each hour for which an Employee is paid or entitled to payment, for
the performance of duties for the Employer during the applicable
Computation Period during which the duties are performed; and
Each hour for which an Employee is paid, or entitled to payment by
the Employer on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty or leave of
absence, provided no more than 501 Hours of Service are required to
be credited under this paragraph to an Employee on account of any
single continuous period (whether or not such period occurs in a
single Computation Period). Hours under this paragraph will be
calculated and credited pursuant to Department of Labor regulation
2530.200b-2 which is incorporated herein by reference; and
Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. Such hours will be
credited to the Employee for the Computation Period or Periods to
which the award or agreement pertains rather than the Computation
Period in which the award agreement or payment is made. The same
Hours of Service shall not be credited under both subparagraph (a) or
subparagraph (b) as the case may be, and under this subparagraph
(c). Hours of Service will be credited for employment with the
Affiliated Employer. Hours of Service will also be credited for any
individual considered an Employee for purposes of this Plan under
Code section 414(n) or Code section 414(o) and the Regulations
thereunder.
For purposes of determining whether a 1-Year Break in Service for
participation and vesting purposes has occurred in a Computation
Period, the Plan must also treat as an Hour of Service each hour for
which an Employee is absent due to a paid or unpaid maternity or
paternity absence from work if such absence is caused by pregnancy of
the Employee, birth of a child of the Employee, placement of a child
with the Employee in connection with the adoption of such child by
such Employee, or caring of such child for a period beginning
immediately following such birth or placement. Up to 501 Hours of
Service may be credited only in the year in which the maternity or
paternity absence begins if the Employee would be prevented from
incurring a 1-Year Break in Service by sole virtue of these service
credits or, in any other case, in the immediately following year. No
credit will be given for a maternity or paternity absence unless the
Employee furnishes to the Plan Administrator such timely information
as the Plan Administrator may reasonably require to establish that
the absence from work is due to one of the reasons listed above, and
the number of days for which there was such an absence.
The provisions of Department of Labor regulation 2530.2006-2 are
incorporated herein by reference.
Hours of Service shall be determined on the basis of actual hours for
which an Employee is paid or entitled to payment. Any records of the
Employer, such as payroll records, which accurately reflect Hours of
Service may be used to determine the Hours of Service creditable to a
particular Employee.
1.33 Investment Fund: Any fund in which investment is permitted by the
Plan.
1.34 Leased Employee: Any individual (other than an Employee of the
Employer) who, pursuant to an agreement between the Employer and any
other entity ("leasing organization"), has performed services for the
Employer (or for the Employer and related persons determined in
accordance with Code section 414(n)(6)) on a substantially full time
basis for a period of at least one year, and, effective for years
beginning after December 31, 1996, such services are performed under
the primary direction or control of the Employer.
Contributions or benefits provided for a Leased Employee by the
leasing organization which are attributable to services performed for
the Employer shall be treated as provided by the Employer.
A Leased Employee shall not be considered an Employee of the Employer
if:
such Employee is covered by a money purchase pension plan providing a
nonintegrated employer contribution rate of at least 10 percent of
415 Compensation, including amounts contributed pursuant to a salary
reduction agreement which are excludable for the Employee's gross
income under section 125, section 402(e)(3), section 402(h)(1)(B) or
section 403(b) of the Code; immediate participation; and full and
immediate vesting; and
Leased Employees do not constitute more than 20 percent of the
Affiliated Employer's non-highly compensated work force (as set forth
in Code section 414(n)(5)(C)). Clause (1) shall not apply to any
individual whose 415 Compensation from the leasing organization in
each Plan Year during the four-year period ending with the relevant
Plan Year is less than $1,000.
(c) Prior to October 1, 1997, such services were of a type
historically performed by employees in the business field of the
employer.
1.35 Limitation Year: The Plan Year.
1.36 Matching Contributions: Employer Contributions made on behalf of a
Participant on account of a Participant's Elective Contributions, in
accordance with Article 3. Matching Contributions are subject to the
vesting schedules described in Article 8 and Article 6 and are
required to satisfy the actual contribution percentage test described
in Article 5. Any Forfeitures reallocated as Matching Contributions
will be considered a Matching Contribution for purposes of the Plan.
1.37 Minimum Contributions: Non-Elective Contributions required to be
made in accordance with Article 6 on behalf of certain eligible
Participants who are non-key Employees in any Plan Year in which the
Plan is top heavy.
1.38 Net Profits: The Employer's income or profits for a year as shown
upon the statement of the independent auditors of the Employer for
said year without any reduction for taxes based upon income or for
Employer Contributions to this Plan and any other qualified plan.
1.39 Non-Elective Contributions: Employer Contributions made on behalf of
a Participant in accordance with Article 3 and Article 6.
Non-Elective Contributions are subject to the vesting schedules
described in Article 8 and Article 6. Any Forfeitures reallocated as
Non-Elective Contributions will be considered a Non-Elective
Contribution for purposes of the Plan.
1.40 Non-Highly Compensated Employee: An Employee of the Affiliated
Employer who is not a Highly Compensated Employee.
1.41 Normal Retirement Age:
Age 60 with respect to a Participant who accrued monies under the
Atlantic Coil Processing Profit Sharing 401(k) Plan; and
Age 65 with respect to all other Participants.
1.42 Normal Retirement Date: The first day of the calendar month
coincident with or next following the date a Participant attains his
Normal Retirement Age.
1.43 1-Year Break in Service: An eligibility Computation Period or
vesting Computation Period during which the Participant does not
complete more than 500 Hours of Service.
1.44 Participant: Any Employee or former Employee who is participating in
the Plan in accordance with its provisions. The term "Participant"
shall include an inactive Participant, if applicable, a former
Participant and an alternate payee as described in Code section
414(p), except that such Participant or alternate payee shall not be
entitled
to have any Contributions and, if applicable, Forfeitures made on his
behalf. For the purpose of a nondiscrimination test as described in
Article 5, if an Elective Contribution or, if applicable, an Employee
Contribution is required as a condition of participation in the Plan,
then any Employee who could be a Participant in the Plan shall be
treated as an eligible Participant on behalf of whom no Contributions
have been made.
1.45 Participant's Account: The individual account maintained for a
Participant in accordance with the terms of the Plan, as described in
Article 7.
1.46 Plan: Steel Technologies, Inc. Retirement Savings Plan.
The Plan is designed to qualify as a profit-sharing plan for purposes
of Code section 401(a) and include a qualified cash or deferred
arrangement under Code section 401(k).
1.47 Plan Administrator: The Employer or any individual(s) or entity
designated in writing by the Employer and any successor thereto.
1.48 Plan Year: The 12 consecutive month period beginning on October 1
and ending on the next following September 30.
1.49 Postponed Retirement Date: The first day of the month coinciding
with or next following the date a Participant is separated from
Service with the Employer after his Normal Retirement Date for any
reason other than death.
1.50 Qualified Domestic Relations Order: Any judgment, decree or order
made pursuant to a state's domestic relations law (within the meaning
of Code section 414(p)), which relates to provision of child support,
alimony payments or marital property rights to an alternate payee of
a Participant. Upon receipt of a domestic relations order, the Plan
Administrator shall promptly notify the Participant and any other
alternate payee of the receipt of such order and the Plan's
procedures for determining the qualified status of the domestic
relations order. An alternate payee is a Spouse, former Spouse,
child or other dependent of a Participant who is recognized by a
domestic relations order as having a right to receive all or a
portion of the benefits payable under a plan with respect to such
Participant. Distributions to an alternate payee pursuant to a
Qualified Domestic Relations Order shall be made without respect to
the age or employment status of the Participant.
1.51 Qualified Non-Elective Contributions: Employer Contributions made to
the Plan in Article 5. Qualified Non-Elective Contributions are
nonforfeitable when made and are distributable only as described in
Regulation 1.401(k)-1(d). If necessary, the Employer may elect to
use Qualified Non-Elective Contributions to satisfy either the actual
deferral percentage test or the actual contribution percentage test,
if applicable, both of which are described in Article 5.
1.52 Re-Employment Commencement Date: The first day following a 1-Year
Break in Service on which the Employee is credited with an Hour of
Service.
1.53 Regulation: An Income Tax Regulation as promulgated by the Secretary
of the Treasury or his delegate, and as amended from time to time.
1.54 Retirement Date: The date a Participant attains his Normal
Retirement Date, Postponed Retirement Date, Early Retirement Date or
Disability Retirement Date, whichever is applicable to a Participant.
1.55 Rollover Amounts: Any contributions made to the Plan pursuant to
Code sections 402(c) and 408(d), in accordance with Article 3.
1.56 Service: A period of uninterrupted employment with the Employer.
Unless employment is actually terminated, temporary absence for a
period authorized by the Employer because of disability, sickness or
injury, or absence for any period during an authorized vacation,
leave of absence or layoff, or by reason of jury duty, or by reason
of service with the armed forces of the United States of America to
the extent provided below, shall not be construed as interrupting
Service and shall be included in determining length of Service with
the Employer. The Employer's leave of absence policy shall be
granted in a uniform and nondiscriminatory manner with respect to all
Participants under similar circumstances.
If the employment of an Employee is actually terminated or
interrupted for any reason other than for service with the armed
forces of the United States of America to the extent provided below,
and if at any time he subsequently resumes employment with the
Employer, he shall be treated as any other new Employee for the
purposes of the Plan, except that his prior period of uninterrupted
employment with the Employer shall be included in determining the
length of his Service.
Effective December 12, 1994, and notwithstanding any provision of
this Plan to the contrary, Contributions, benefits and Service
credits with respect to qualified military service will be provided
in accordance with Code section 414(u).
Any service as a sole proprietor or partner of a predecessor business
organization prior to becoming an Employee of the Employer shall not
be taken into consideration as Service with the Employer for the
purposes of the Plan.
Any period of employment with an Affiliated Employer prior to
becoming an Employee of the Employer shall be taken into
consideration as Service with the Employer for purposes of the Plan.
1.57 Short Plan Year: A Plan Year of less than a twelve month period.
The following rules shall apply in the event that the Plan has a
Short Plan Year.
In determining whether an Employee has completed a Year of Service
for allocation purposes, the number of Hours of Service shall be
proportionately reduced based on the number of days in the Short Plan
Year.
The determination of whether an Employee has completed a Year of
Service for vesting and eligibility purposes shall be made in
accordance with Department of Labor regulation 2530.203-2(c).
1.58 Spouse: The Spouse or surviving Spouse of the Participant. A former
Spouse may be treated as the Spouse or surviving Spouse to the extent
provided under a Qualified Domestic Relations Order as described in
Code section 414(p).
1.59 Standard 415 Compensation: A Participant's earned income, wages,
salaries, fees for professional services and other amounts received
for personal services actually rendered in the course of employment
with the Employer maintaining the Plan (including, but not limited
to, commissions paid salesmen, compensation for Services on the basis
of a percentage of profits, commissions on insurance premiums, tips,
and bonuses) and excluding the following:
Employer contributions to a plan of deferred compensation which are
not includible in the Employee's gross income for the taxable year in
which contributed, or Employer contributions under a simplified
employee pension plan to the extent such contributions are excludible
from the Employee's gross income, or any distributions from a plan of
deferred compensation;
Contributions made by the Employer to a plan of deferred compensation
to the extent that all or a portion of such contributions are
recharacterized as a voluntary Employee contribution;
Amounts realized from the exercise of a non-qualified stock option,
or when restricted stock (or property) held by an Employee becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture;
Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
Other amounts which received special tax benefits, or contributions
made by an Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity contract described in
Code section 403(b) (whether or not the contributions are excludible
from the gross income of the Employee).
1.60 Trust Agreement: The agreement, as amended from time to time,
entered into between the Employer and the Trustees to carry out the
purposes of the Plan.
1.61 Trust Fund: The cash and other investments held and administered by
the Trustees in accordance with the provisions of the Plan and the
Trust Agreement.
1.62 Trustees: Trustees of the Plan.
1.63 Valuation Date: Except as provided in Article 6, the last day of the
Plan Year and such other dates as provided in Article 7 for valuing
the assets under the Plan.
1.64 Year of Service:
An Employee shall be considered to have rendered a Year of Service if
he completes at least 1,000 Hours of Service during the applicable
Computation Period.
If an Employee's Service is terminated and if at any time he
subsequently resumes his employment with the Employer, his prior
Years of Service shall be taken into account in computing his Years
of Service subject to the following rules:
Any former Participant who, under the Plan, does not have a
nonforfeitable right to any interest in the Plan resulting from
Employer Contributions shall lose credits if his consecutive 1-Year
Breaks in Service equal or exceed the greater of (A) five or (B) the
aggregate number of his pre-break Years of Service. Such aggregate
number of Years of Service before such breaks shall not include any
Years of Service which are not required to be taken into account by
reason of any prior break in Service.
In the case of a Participant who has five consecutive 1-Year Breaks
in Service, Years of Service completed after such 5 year period shall
not be taken into account for purposes of determining the
nonforfeitable percentage of his account balance derived from
Employer Contributions which accrued before such 5 year period.
An Employee who becomes an Excluded Employee but who remains in the
employ of the Employer and who completes at least 1,000 Hours of
Service during a vesting Computation Period shall accrue a Year of
Service for each such vesting Computation Period.
Article 2. ELIGIBILITY AND PARTICIPATION
2.1 Entry Dates and Eligibility Requirements.
Each Employee in the Eligible Class shall become a Participant on the
first Entry Date coincident with or next following his completion of
one year of Service.
Notwithstanding the requirements set forth above, an Employee in the
Eligible Class may become a Participant in the Plan solely for the
purpose of contributing a Rollover Amount.
In the event that an Excluded Employee becomes an Employee in the
Eligible Class, he shall become a Participant in the Plan immediately
if he has satisfied the eligibility requirements set forth above.
2.2 Re-Employment of an Employee. An Employee in the Eligible Class who
was not previously a Participant and who has had a 1-Year Break in
Service and who, prior to that break, had satisfied the Service
requirement shall become a Participant on the first Entry Date on
which he again becomes an Employee in the Eligible Class.
2.3 Re-Employment of a Former Participant. An Employee in the Eligible
Class who was previously a Participant whose Service with the
Employer terminated shall become a Participant on the day on which he
resumes Service with the Employer.
2.4 Amended and Restated Plan. All Participants under the Plan as in
effect on March 31, 1999 shall continue to be Participants hereunder
on April 1, 1999.
Article 3. CONTRIBUTIONS
3.1 Elective Contributions. The Employer shall contribute to the Plan
during the Plan Year on behalf of each Participant, as an Elective
Contribution, that portion of Compensation otherwise payable by the
Employer to the Participant that such Participant has elected to be
deferred and contributed to the Plan in that Plan Year. In no event
shall the portion of Compensation to be deferred be less than 1% of
the Participant's Compensation nor more than 15% of the Participant's
Compensation up to the maximum described below.
The percentage of Elective Contributions to be deferred shall be
elected by the Participant in a written salary reduction agreement
between the Participant and the Employer. The salary reduction
agreement shall be in such form and subject to such rules as the
Employer shall prescribe. Such agreement shall specify the
percentage the Participant has elected to defer and contribute to the
Plan, and may be amended or terminated prospectively during the Plan
Year at such times and in such manner as determined by the Employer.
The amount of Elective Contributions for any Participant under this
Plan, together with the Elective Contributions (as defined in Code
section 402(g)(3)) made on behalf of a Participant in any other
qualified plan maintained by the Employer, shall not exceed the
dollar limitation contained in Code section 402(g) in effect at the
beginning of each calendar year. The Plan shall distribute to the
Participant, upon notification from the Participant of the amount of
Excess Elective Contributions received by the Plan, any amount in
excess of such limit. Such amount shall be adjusted for gain or loss
in accordance with the method used for excess contributions as
described in Article 5. Notwithstanding any other provision of the
Plan, such excess amount shall be distributed not later than the
April 15th following the calendar year in which such excess amount is
made. A Participant is deemed to notify the Plan Administrator of
any Excess Elective Contributions that arise by taking into account
only those Elective Contributions made to this Plan and any other
plans of the Affiliated Employer.
3.2 Matching Contributions.
With respect to Participants who are Employees of Steel Technologies,
Inc., the Employer shall make matching contributions each Plan Year
equal to the sum of 100% of that portion of the Participant's
Elective Contributions which do not exceed 3% of the Participant's
Compensation plus 50% of that portion of the Participant's Elective
Contributions which exceed 3% of the Participant's Compensation, but
does not exceed 4.5% of the Participant's Compensation.
With respect to Participants who are Employees of Steel Technologies
Carolinas, Inc., the Employer shall make matching contributions equal
to 50% of that portion of the Participant's Elective Contributions
which do not exceed 4% of the Participant's Compensation.
In no event shall the Matching Contribution be made on behalf of a
Participant who is an Employee of the Canton, Michigan facility and
whose employment is governed by a collective bargaining agreement.
3.3 Non-Elective Contributions.
The Employer may make a Non-Elective Contribution each Plan Year of
an amount that shall be determined and authorized by resolution of
the Board of Directors and announced to all Participants.
Such Non-Elective Contribution shall be allocated to each Participant
in the same ratio that each Participant's Compensation bears to the
total Compensation of all such Participants.
In no event shall a Non-Elective Contribution be made on behalf of a
Participant who is an Employee of the Canton, Michigan facility and
whose employment is governed by a collective bargaining agreement.
3.4 Rollover Amounts. The Plan may accept a Rollover Amount from a
Participant provided that such amount qualifies as a Rollover Amount
pursuant to Code sections 402(c) and 408(d).
The Participant shall be 100% vested in any such Rollover Amount.
The Plan may require, as a condition of accepting a Rollover Amount
on behalf of a Participant, an opinion of counsel that such amount
qualifies as a permitted Rollover Amount and the Employer may rely on
such opinion.
The Plan may require that a Participant pay the cost of such opinion
as a condition of accepting such amount.
3.5 Contributions Subject to Employer Discretion. Employer Contributions
shall be made, subject to the Employer's discretion, but without
regard to the Employer's current or accumulated Net Profits.
3.6 Annual Deductible Limits. In no event shall Employer Contributions
made hereunder during a taxable year of the Employer exceed the
annual deductible limit for Employer Contributions to a qualified
profit-sharing plan as set forth in Code section 404(a)(3) as limited
by Code section 404(j).
3.7 Omission of Eligible Employee. If, in any Plan Year, any Employee
who should be included as a Participant is erroneously omitted and
discovery of such omission is not made until after an Employer
Contribution has been made, the Employer shall make a subsequent
Employer Contribution, so that the omitted Employee receives a total
amount which the said Employee would have received had he not been
omitted. Such contribution shall be made regardless of whether or
not it is deductible in whole or in part in any taxable year under
applicable provisions of the Code.
3.8 Inclusion of Ineligible Employee. If, in any Plan Year, any person
who should not have been included as a Participant in the Plan is
erroneously included and discovery of such incorrect inclusion is not
made until after an Employer Contribution for the year has been made,
the Employer shall not be entitled to recover such Employer
Contribution made with respect to the ineligible person regardless of
whether or not a deduction is allowable with respect to such
contribution. In such event, the amount contributed with respect to
the ineligible person shall constitute a Forfeiture for the Plan Year
in which the discovery is made.
Article 4. ANNUAL ADDITIONS
4.1 Limitations. In no event shall the amount of annual additions
credited to a Participant's accounts under all qualified plans
maintained by the Affiliated Employer, or a welfare benefit fund (as
defined in Code section 419(e)) maintained by the Affiliated
Employer, or an individual medical account (as defined in Code
section 415(1)(2)) maintained by the Affiliated Employer, exceed the
maximum permissible amount (as described below) for any Limitation
Year. Affiliated Employers will be determined pursuant to the
modifications made by Code section 415(h).
4.2 Qualified Plans Included in the Determination. In determining the
maximum permissible amount, the following rules shall apply with
respect to multiple qualified plans:
All defined contribution plans of the Affiliated Employer (whether
terminated or not) will be considered one plan.
All defined benefit plans of the Affiliated Employer (whether
terminated or not) will be considered one plan.
4.3 Maximum Permissible Amount. The maximum annual additions that may be
credited to a Participant's Account in a Limitation Year is the
lesser of (a) $30,000, as adjusted under Code section 415(d), or (b)
25% of the Participant's 415 Compensation for the Limitation Year.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different 12 consecutive month
period, the maximum permissible amount will not exceed the defined
contribution maximum dollar amount multiplied by the following
fraction:
number of months in the short Limitation Year
twelve
4.4 Allocations Included in Annual Additions. Amounts included in
determining the annual additions for a Limitation Year shall mean the
sum of the following allocations and contributions:
Affiliated Employer contributions;
Employee contributions, if applicable;
Forfeitures, if applicable;
Amounts allocated, after March 31, 1984, to an individual medical
account as defined in Code section 415(l)(2) which is part of a
pension or annuity plan maintained by the Affiliated Employer, if
applicable; and
Additions to a separate medical benefit account which provides
post-retirement benefits to key Employees (as defined in Code section
419A(d)(3)) maintained under a welfare benefit fund (as defined in
Code section 419(e)) for a Participant by an Affiliated Employer, if
applicable, provided that such amount is not subject to the maximum
limit of 25% of 415 Compensation.
4.5 Allocations Not Included in Annual Additions. The following
allocations to a Participant's Account shall not be included in
determining annual additions:
Rollover Amounts;
Loan repayments made by a Participant to the Plan;
Distributions from the Plan that a re-employed Participant repays to
the Plan under Code section 411(a)(7)(B);
Distributions of a Participant's mandatory contributions that a
Participant repays to a plan under Code section 411(a)(3)(D);
Employee contributions to a simplified employee pension plan
excludible from gross income under Code section 408(k)(6);
Transfer of funds from one qualified plan to another; and
Earnings on Contributions.
4.6 Combined Plan Limitations. If a Participant is also participating in
a tax-qualified defined benefit plan maintained by the Affiliated
Employer, the sum of the Participant's defined contribution plan
fraction and defined benefit plan fraction, as described below, will
not exceed 1.0 for any Limitation Year.
The numerator of the defined contribution fraction is the sum of the
annual additions to the Participant's accounts under all defined
contribution plans (whether or not terminated) maintained by the
Affiliated Employer for the current and all prior Limitation Years.
The numerator also includes the annual additions attributable to the
Participant's nondeductible voluntary employee contributions to any
defined benefit plans, whether or not terminated, maintained by the
Affiliated Employer; the annual additions attributable to all welfare
benefit funds as defined in Code section 419(e) maintained by the
Affiliated Employer; and the annual additions attributable to an
individual medical account, as defined in Code section 415(l)(2)
maintained by the Affiliated Employer. The denominator of the
defined contribution fraction is the sum of the maximum aggregate
amounts for the current and all prior Limitation Years of Service
with the Affiliated Employer (regardless of whether a defined
contribution plan was maintained by the Affiliated Employer). The
maximum aggregate amount in any Limitation Year is the lesser of 125
percent of the defined contribution dollar limitation or 35 percent
of the Participant's 415 Compensation for such year.
The numerator of the defined benefit fraction is the sum of the
Participant's projected annual benefits under all defined benefit
plans (whether or not terminated) maintained by the Affiliated
Employer and the denominator of which is the lesser of 125 percent of
the dollar limitation determined for the Limitation Year under Code
sections 415(b) and (d) or 140 percent of a Participant's highest
average 415 Compensation for three consecutive Years of Service,
including any adjustments under Code section 415(b).
4.7 Adjustments to Participant's Allocations. If the annual additions
with respect to a Participant under other defined contribution plans
and welfare benefit funds maintained by the Affiliated Employer are
less than the maximum permissible amount and the Employer
Contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the annual
additions for the Limitation Year to exceed this limitation, the
amount contributed or allocated will be reduced so that the annual
additions under all such plans and funds for the Limitation Year will
equal the maximum permissible amount. If the annual additions with
respect to the Participant under such other defined contribution
plans and welfare benefit funds in the aggregate are equal to or
greater than the maximum permissible amount, no amount will be
contributed or allocated to the Participant's Account under this Plan
for the Limitation Year.
4.8 Correction of Excess Annual Additions. If the annual additions made
with respect to a Participant in any Limitation Year would exceed the
Code section 415 limitation due to a reasonable error in the
estimation of a Participant's 415 Compensation, or a reasonable error
in determining the amount of Elective Contributions that may be made
with respect to an individual under the limits of Code section 415,
or the allocation of Forfeitures, or other limited facts and
circumstances that the Commissioner of Internal Revenue Service finds
justify the availability of this Section, then the following steps
shall be taken, in the order indicated, until such excess ceases to
exist:
Any unmatched nondeductible Employee contributions (with any gains
thereon), to the extent such contributions would reduce the excess
amount, will be returned to the Participant;
Any unmatched Elective contributions (with any gains thereon), to the
extent such contributions would reduce the excess amount, will be
returned to the Participant;
Any matched nondeductible Employee Contributions (with any gains
thereon), to the extent such contributions would reduce the excess
amount, will be returned to the Participant. Simultaneously, any
Employer matching contributions (with any gains thereon) that relate
to these nondeductible Employee contributions, to the extent such
contributions would reduce the excess amount, will be treated as
follows: if the Participant is covered by the Plan at the end of the
Limitation Year, such excess amount in the Participant's Account will
be used to reduce Employer Contributions for such Participant in the
next Limitation Year, and succeeding Limitation Years, as necessary.
If the Participant is not covered by the Plan at the end of the
Limitation Year, such excess amount will be held unallocated in a
suspense account and used to reduce Employer Contributions for the
next Limitation Year (and succeeding Limitation Years, as necessary)
for all of the remaining Participants in the Plan;
Any matched Elective Contributions (with any gains thereon), to the
extent such contributions would reduce the excess amount, will be
returned to the Participant. Simultaneously, any Employer matching
contributions (with any gains thereon) that relate to these Elective
Contributions, to the extent such contributions would reduce the
excess amount, will be treated in accordance with the same procedure
which is applied to the Employer matching contributions (with any
gains thereon) under the preceding subparagraph (c);
If, after the application of subparagraphs (a), (b), (c), and (d), an
excess amount still exists and the Participant is covered by the Plan
at the end of the Limitation Year, the excess amount in the
Participant's Account will be used to reduce Employer Contributions
for such Participant in the next Limitation Year, and each succeeding
Limitation Year, as necessary;
If, after the application of subparagraphs (a), (b), (c), and (d), an
excess amount still exists and the Participant is not covered by the
Plan at the end of the Limitation Year, the excess amount will be
held unallocated in a suspense account, and used to reduce Employer
Contributions for the next Limitation Year, and succeeding Limitation
Years, as necessary, for all of the remaining Participants in the
Plan;
If a suspense account is in existence at any time during a Limitation
Year pursuant to this Section, it will not participate in the
allocation of investment gains and losses. If a suspense account is
in existence at any time during a particular Limitation Year, all
amounts in the suspense account must be allocated and reallocated to
Participants' Accounts before any Employer Contributions or any
Employee contributions, if applicable, which would constitute annual
additions may be made to the Plan for that Limitation Year. Excess
amounts attributable to Employer Contributions (other than Elective
Contributions) may not be distributed to Participants or former
Participants.
4.9 Compliance with Code Section 415. Notwithstanding anything contained
in this Article to the contrary, the limitations, adjustments and
other requirements prescribed in this Article shall at all times
comply with the provisions of Code section 415 and the Regulations
thereunder, the terms of which are specifically incorporated herein
by reference.
Article 5. NONDISCRIMINATION TESTING
5.1 Requirements. In order that Contributions made under the Plan do not
discriminate in favor of Highly Compensated Employees, the actual
deferral percentage test in Code section 401(k)(3) and, if
applicable, the actual contribution percentage test in Code section
401(m) shall be met each year. Insofar as is permissible, the
provisions of Code sections 401(k)(3) and 401(m) and the Regulations
thereof are incorporated herein by reference. The determination and
treatment of the actual deferral percentage and the actual
contribution percentage shall satisfy such other requirements as may
be prescribed by the Secretary of Treasury.
5.2 Actual Deferral Percentage Test. The actual deferral percentage for
the Highly Compensated Employee group is limited as follows:
(a) Employer Contributions on behalf of the Highly Compensated
Employee group in any Plan Year shall be limited as
provided below, so that the actual deferral percentage for
the Highly Compensated Employee group for the current Plan
Year does not exceed the actual deferral percentage for the
Non-Highly Compensated Employee group for the current Plan
Year by the greater of:
(1) one hundred twenty five percent (125%); or
(2) the lesser of two (2) percentage points or two hundred
percent (200%).
(b) If the Employer wishes to change the testing method of the
Non-Highly Compensated Employee group provided for under
Section 5.2(a), such testing method may only be changed if
the Plan meets the requirements for changing to prior year
testing set forth in Notice 98-1 (or any superseding
guidance).
(c) Employer Contributions shall include:
(1) Any Elective Contributions (including Excess Elective
Contributions of Highly Compensated Employees) that arise
solely from Elective Contributions made under this Plan
or other plans of the Employer.
(2) Elective Contributions that are taken into account in
the actual contribution percentage test provided the
actual deferral percentage test is satisfied both with
and without including such Elective Contributions.
(3) At the election of the Employer, any Qualified
Non-Elective Contributions or qualified matching
contributions.
5.3 Actual Contribution Percentage Test. The actual contribution
percentage for the Highly Compensated Employee group is limited as
follows:
Employer Contributions on behalf of the Highly Compensated Employee
group in any Plan Year shall be limited as provided below, so that
the actual contribution percentage for the Highly Compensated
Employee group for the current Plan Year does not exceed the actual
contribution percentage for the Non-Highly Compensated Employee group
for the current Plan Year by the greater of:
one hundred twenty five percent (125%); or
the lesser of two (2) percentage points or two hundred percent (200%).
If the Employer wishes to change the testing method of the Non-Highly
Compensated Employee group provided for under Section 5.3(a), such
testing method may only be changed if the Plan meets the requirements
for changing to prior year testing set forth in Notice 98-1 (or any
superceding guidance).
The "contribution percentage amounts" shall mean the sum of any
employee contributions, matching contributions, and qualified
matching contributions (to the extent not taken into account for
purposes of the actual deferral percentage) made under the Plan on
behalf of a Participant for the Plan Year.
Such contribution percentage amounts shall not include matching
contributions that are forfeited either to correct excess aggregate
contributions (as described below) or because the contributions to
which they relate are Excess Elective Contributions, excess
contributions or excess aggregate contributions.
Such contribution percentage amounts may include Elective
Contributions and Qualified Non-Elective Contributions that meet the
applicable requirements of the Regulations under Code section
401(k). The actual deferral percentage test must be met before
Elective Contributions can be used as contribution percentage amounts.
Plans may be aggregated in order to satisfy Code section 401(m) only
if they have the same plan year and use the same actual contribution
percentage testing method.
5.4 Special Rules.
The actual deferral percentage for any eligible Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to
have Elective Contributions and any other contributions necessary to
satisfy the tests allocated to his accounts under two or more
arrangements described in Code section 401(k) that are maintained by
the Affiliated Employer shall be determined as if all such
contributions were made under a single arrangement.
If a Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different plan years, all cash or
deferred arrangements ending with or within the same calendar year
shall be treated as one cash or deferred arrangement with respect to
such Employee. Notwithstanding the foregoing, certain plans shall be
treated as separate if mandatorily disaggregated in Regulations under
Code section 401(k).
In the event that the Plan satisfies the requirements of Code
sections 401(a)(4), 401(k) and/or 401(m), or 410(b) only if
aggregated with one or more other plans or, if one or more other
plans satisfy the requirements of Code sections 401(a)(4), 401(k)
and/or 401(m), or 410(b) only if aggregated with this Plan, the
actual deferral percentages and/or the actual contribution
percentages of eligible Participants shall be determined as if all
such plans were a single plan. Plans may be aggregated to satisfy
Code sections 401(k) and 401(m) only if they have the same plan year.
The actual contribution percentage for any Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to
have Employee contributions, matching contributions (or, as
applicable, qualified matching contributions or Qualified
Non-Elective Contributions or Elective Contributions treated as
matching contributions for the Plan Year) allocated to his accounts
under two or more plans maintained by the Affiliated Employer, shall
be determined as if the total of such contribution percentage amounts
was made under one plan, unless disaggregation is required by
Regulations under Code section 401(m). If a Highly Compensated
Employee participates in two or more plans that have different plan
years, this Subsection (b) is applied by treating all plans whose
plan years end with or within the same calendar year as a single plan.
5.5 Multiple Use Limitation. In order to prevent the multiple use of the
alternative limit as described in Code section 401(m)(9)(A), the
provisions of Regulation 1.401(m)-2(b) are incorporated herein by
reference. In the event that the multiple use limitation is not met,
the required reduction shall be treated as an excess contribution.
The amount of the reduction of the actual deferral percentage of the
entire group of Highly Compensated Employees eligible in the
arrangement subject to Code section 401(k) shall be calculated in the
manner described in Regulation 1.401(k)-1(f)(2). Instead of making
this reduction, the Employer may eliminate such multiple use by
making Qualified Non-Elective Contributions in accordance with
Regulation 1.401(k)-1(b)(5) and (f)(1).
5.6 Corrective Actions. In any Plan Year in which the Employer
determines that Contributions in excess of the above limitations of
this Article 5 have been made to the Plan, the Employer shall correct
such excess by either of the following methods, or a combination
thereof:
The Employer may make a Qualified Non-Elective Contribution on behalf
of any or all Non-Highly Compensated Employees who are eligible
Employees under the cash or deferred arrangement or Plan being
tested. Such contribution shall be allocated to the Participant's
Account of such an individual in the same ratio that his 414(s)
Compensation bears to the total 414(s) Compensation of all Non-Highly
Compensated Employees eligible to participate in the Plan. For
purposes of this allocation, the term "eligible Employee" is as
defined in Regulations under Code section 401(k) or 401(m), as
applicable.
Any contribution made on behalf of a Participant who is a Highly
Compensated Employee that is designated by the Employer as an excess
contribution or excess aggregate contribution (as described below),
adjusted for gain or loss, shall within 2 1/2 months, but in no event
later than 12 months following the close of the Plan Year in which
the Employer determines such excess contribution or excess aggregate
contribution was made, be distributed to the Participant; or, if
forfeitable, be forfeited.
5.7 Distribution of Excess Contributions and Excess Aggregate
Contributions. In the event that an Employer does not correct a
deficient actual deferral percentage test or actual contribution
percentage test, if applicable, by means of a Qualified Non-Elective
Contribution and notwithstanding any other provisions of this Plan,
the following rules shall apply:
Excess contributions, plus any income and minus any loss allocable
thereto, shall be distributed no later than the last day of each Plan
Year to Participants to whose accounts such excess contributions were
allocated for the preceding Plan Year. Excess aggregate
contributions, plus any income and minus any loss allocable thereto,
shall be forfeited if forfeitable; or, if not forfeitable,
distributed no later than the last day of each Plan Year to
Participants to whose accounts such excess aggregate contributions
were allocated for the preceding Plan Year. If such excess
contributions and, if applicable, excess aggregate contributions are
distributed more than 2 1/2 months after the last day of the Plan
Year in which such excess amounts arose, a ten percent excise tax
will be imposed with respect to such amounts on the Employer
maintaining the plan.
Effective with the 1997 Plan Year, excess contributions and/or excess
aggregate contributions are allocated to the Highly Compensated
Employees with the largest amounts of such applicable contributions
taken into account in calculating the actual deferral percentage test
and actual contribution percentage test for the year in which the
excess arose, beginning with the Highly Compensated Employee with the
largest amount of such applicable contributions and continuing in
descending order until all the excess contributions and/or excess
aggregate contributions have been allocated. For purposes of the
preceding sentence, the "largest amount" is determined after
distribution of any excess contributions and/or excess aggregate
contributions.
Excess contributions and excess aggregate contributions shall be
treated as annual additions under the Plan.
Such excess amounts shall have the following meanings:
"Excess contributions" shall mean, with respect to any Plan Year, the
excess of:
the aggregate amount of Employer Contributions actually taken into
account in computing the actual deferral percentage of Highly
Compensated Employees for such Plan Year, over
the maximum amount of such contributions permitted by the actual
deferral percentage test (determined by reducing contributions made
on behalf of Highly Compensated Employees in order of the actual
deferral percentages, beginning with the highest of such percentages).
"Excess aggregate contributions" shall mean, with respect to any Plan
Year, the excess of:
The aggregate contribution percentage amounts taken into account in
computing the numerator of the contribution percentage actually made
on behalf of Highly Compensated Employees for such Plan Year, over
The maximum contribution percentage amounts permitted by the actual
contribution percentage test (determined by reducing contributions
made on behalf of Highly Compensated Employees in order of the actual
contribution percentages beginning with the highest of such
percentages).
Excess contributions (with any gains thereon) with regard to a Plan
Year shall be distributed as follows:
first, from unmatched Elective Contributions; and then, if applicable,
from any matched Elective Contributions; any matching contributions
(even if qualified) that relate to such Elective Contributions shall
be forfeited; and finally, if applicable,
from any Qualified Non-Elective Contributions only to the extent that
excess contributions exceed the balance in the Participant's Account
attributable to Elective Contributions and matching contributions.
Excess aggregate contributions (with any gains thereon) with regard
to a Plan Year, shall be distributed (or, where indicated below,
forfeited) as follows:
first, if applicable, any matching contributions (even if qualified)
that relate to Elective Contributions distributed pursuant to the
above subsection shall be forfeited; and then, if applicable,
from any unmatched Employee contributions; and then, if applicable,
from any unmatched Elective Contributions used to satisfy the actual
contribution percentage test; and then, if applicable,
from any matched Employee contributions; any matching contributions
(even if qualified) that relate to such matched Employee
contributions shall be forfeited; and then, if applicable,
from any remaining matching contributions (even if qualified); and
then, if applicable,
from any Qualified Non-Elective Contributions.
The amount of excess contributions to be distributed with respect to
an Employee for a Plan Year shall be reduced by any Excess Elective
Contributions previously distributed to the Employee for the
Employee's taxable year ending with or within the same Plan Year in
accordance with Code section 402(g)(3). The amount of Excess
Elective Contributions to be distributed for a taxable year will be
reduced by excess contributions previously distributed for the Plan
Year beginning with or within such taxable year.
5.8 Adjustment for Income or Loss on Excess Amounts. Excess
contributions or, if applicable, excess aggregate contributions shall
be adjusted for any income or loss up to the date of distribution or
Forfeiture, if applicable. Any amounts distributed in accordance
with this Article shall include a proportionate share of gain or loss
(hereinafter referred to as allocable income) for the Plan Year in
which the excess amounts arose and for the period measured from the
beginning of the next Plan Year to the date of distribution or
Forfeiture, if applicable (hereinafter referred to as "gap period").
Allocable income for the "gap period" shall be deemed to equal ten
percent of the income allocable to excess contributions or, if
applicable, excess aggregate contributions for the Plan Year of the
Participant multiplied by the number of calendar months in the "gap
period". For purposes of determining the number of calendar months
in the "gap period", a distribution occurring on or before the
fifteenth day of the month shall be treated as having been made on
the last day of the preceding month and a distribution occurring
after such fifteenth day shall be treated as having been made on the
first day of the next subsequent month.
5.9 Additional Requirements. Any Contributions used in the
nondiscrimination tests set forth in this Article and allocated to a
Participant's Account under the terms of the Plan as of any date
within the Plan Year must be actually paid to the Trust before the
last day of the twelve-month period immediately following the Plan
Year to which such Contributions relate. The Plan Administrator
shall maintain records sufficient to demonstrate satisfaction of the
tests and the amount of Qualified Non-Elective Contributions or
qualified matching contributions, or both, used to satisfy the actual
deferral percentage test and, if applicable, the actual contribution
percentage test.
Article 6. TOP HEAVY PROVISIONS
6.1 Top Heavy Determination. This Plan or the aggregation group of which
it is a member will be considered a top heavy plan or top heavy group
for the Plan Year if the top-heavy ratio exceeds 60%. This Plan or
the aggregation group of which it is a member will be considered a
super top heavy plan or group for the Plan Year if the top-heavy
ratio exceeds 90%.
The top-heavy ratio is the total present value of accrued benefits
for key Employees under this Plan and all plans of an aggregation
group (as described below) as a percentage of the total present value
of accrued benefits for all Employees under this Plan and all plans
of an aggregation group.
The "determination date" and "valuation date" for a Plan in its first
Plan Year will be as of the last day of the Plan Year. For any Plan
Year other than the first Plan Year, the determination date and the
valuation date will be as of the last day of the preceding Plan Year.
The top heavy determination will be made without regard to (1) any
non-key Employee who was formerly a key Employee and (2) any
individual who has not been credited with at least one Hour of
Service with the Employer at any time during the five year period
ending on the determination date.
For the purpose of determining whether the Plan is top heavy, the
accrued benefit of a Participant who is a non-key Employee in a
defined benefit plan will be determined under a uniform accrual
method which applies in all defined benefit plans maintained by the
Employer or, where there is no such method, as if such benefit
accrued not more rapidly than the slowest rate of accrual permitted
under the fractional rule of Code section 411(b)(1)(C). The present
value of accrued benefits includes (to the extent required by Code
section 416 and the Regulations thereunder) distributions, rollovers,
Employee non-deductible contributions and transfers from plans of the
Employer made during the Plan Year and the preceding four Plan Years,
including any distribution from a terminated plan (as described in
Regulation 1.416-1,T-4) which, if it had not been terminated, would
have been required to be in the aggregation group.
In determining whether this Plan is top heavy, all members of the
Affiliated Employer that are aggregated under Code
sections 414(b),(c), and (m) must be taken into account as a single
employer for the Plan Year in question.
6.2 Aggregation Group. An aggregation group is a required aggregation
group or a permissive aggregation group.
A required aggregation group is each qualified plan of the Employer
in which a key Employee participates or participated at any time
during the determination period (regardless of whether or not the
plan has terminated) and each other qualified plan of the Employer
that enables the plan in which the key Employee participates to meet
the requirements of Code section 401(a)(4) or 410. In the case of a
required aggregation group, each plan in the group will be considered
a top heavy plan if the group is top heavy. No plan in the required
aggregation group will be top heavy if the group is not top heavy.
A permissive aggregation group is all plans of the Employer that are
required to be aggregated, plus one or more plans that are not part
of a required aggregation group but that satisfy the requirements of
Code sections 401(a)(4) and 410 when considered together with the
required aggregation group. In the case of a permissive aggregation
group, only a plan that is part of the required aggregation group
will be considered a top heavy plan if the permissive aggregation
group is a top heavy group. No plan in the permissive aggregation
group will be considered a top heavy plan if the permissive
aggregation group is not a top heavy group.
When aggregating plans, the value of account balances and accrued
benefits will be calculated with reference to the determination dates
that fall within the same calendar year.
A top heavy group means an aggregation group in which, as of the
determination date, the sum of:
the present value of accrued benefits of key Employees under all
defined benefit plans included in the group and
the Participant accounts of key Employees under all defined
contribution plans included in the group
exceeds sixty percent of a similar sum determined for all
Participants.
6.3 Super Top Heavy Plans. If the Plan is super top heavy and if a
Participant is also participating in a defined benefit plan of the
Employer, in no event shall the annual additions under this Plan and
the defined benefit plan made with respect to such a Participant in
any Plan Year exceed 1.0 of the defined contribution plan fraction
and the defined benefit plan fraction, as described in Article 4.
The above limitation shall also apply if the Plan, although not in a
super top heavy group is, in fact, top heavy, unless the Plan
provides a Minimum Contribution equal to 7 1/2% of a Participant's
415 Compensation for each Plan Year the Plan is top heavy.
6.4 Key Employee and Non-Key Employee.
In determining whether or not this Plan is a top heavy plan or a
member of a top heavy group, the term "key Employee" shall mean any
Employee or former Employee (and the Beneficiaries of such
Employees), who at any time during the Plan Year containing the
determination date or the preceding four Plan Years is:
An officer of the Employer if such individual's annual 415
Compensation exceeds 50 percent of the dollar limitation under Code
section 415(b)(1)(A);
An owner (or considered an owner under Code section 318) of one of
the ten largest interests in the Employer if such individual's 415
Compensation exceeds 100 percent of the dollar limitation in effect
under Code section 415(c)(1)(A));
A Five Percent Owner of the Employer; or
A one percent owner of the Employer who has annual 415 Compensation
from the Employer of more than $150,000 as indexed.
The determination period is the Plan Year containing the
determination date and the four preceding Plan Years.
The determination of who is a key Employee shall be made in
accordance with Code section 416(i)(1) and the Regulations thereunder.
A "non-key Employee" is any Employee who is not a key Employee.
Non-key Employees include former key Employees.
6.5 Minimum Contributions. For any Plan Year in which this Plan is a top
heavy plan:
Except as otherwise provided in this Section 6.5, Employer
Contributions and Forfeitures, if applicable, allocated on behalf of
any Participant who is not a key Employee shall not be less than the
lesser of: 3% of such Participant's 415 Compensation or, in the case
where the Employer has no defined benefit plan which designates this
Plan to satisfy Code section 401, the largest percentage of Employer
Contributions and Forfeitures, as a percentage of the key Employee's
415 Compensation allocated on behalf of any key Employee for that
year. The Minimum Contribution is determined without regard to any
Social Security contribution. The Minimum Contribution shall be made
even if, under other Plan provisions, such Participant would not
otherwise be entitled to receive an allocation, or would have
received a lesser allocation for the year, because of:
the Participant's failure to complete 1000 Hours of Service (or any
equivalent provided in the Plan), or
415 Compensation of less than a stated amount, or
the Participant's failure to make Elective Contributions.
The Minimum Contribution shall not be subject to the availability of
current or accumulated Net Profits.
Except as authorized by Regulation 1.416-1, no contributions used to
satisfy the actual deferral percentage test or the actual
contribution percentage test, both of which tests are described in
Article 5, shall be used in determining whether a non-key Employee
has received the required minimum allocation.
No Minimum Contribution will be required for a non-key Employee under
this Plan for any Plan Year if the Affiliated Employer maintains
another qualified plan under which a minimum benefit or contribution
is being accrued or made for such Employee in accordance with Code
section 416(c).
6.6 Top Heavy Vesting.
For any Plan Year and all succeeding Plan Years after the Plan or
aggregation group is determined to be top heavy, a Participant's
vested interest in that portion of his Participant's Account that is
attributable to Matching Contributions and Non-Elective Contributions
shall be 100% after the completion of 3 Years of Service with the
Employer.
In no event shall a Participant's vested interest be less than the
percentage vested under Article 8 as of the date the top heavy
provisions become effective.
Article 7. PARTICIPANT ACCOUNTS AND DIRECTED INVESTMENTS
7.1 Participant Accounts. A Participant's Account shall be maintained
for or with respect to each Participant under the Plan. The Plan
Administrator shall maintain a separate accounting record with
respect to Elective Contributions, Qualified Non-Elective
Contributions, Matching Contributions, Non-Elective Contributions and
Rollover Amounts credited to each Participant's Account, as well as
of any income, expenses, gains or losses on each such separately
recorded amounts.
7.2 Allocation of Contributions and Rollover Amounts. The amount of
Contributions and Rollover Amounts made on each Participant's behalf
shall be deposited by the Employer (except for any portion of such
amounts which may be retained as an administrative or expense charge)
and shall be allocated to the appropriate Investment Funds in
multiples of whole percentages.
7.3 Investment Election. The Participant shall elect in writing on the
prescribed form the percentage of Contributions and Rollover Amounts
which shall be allocated to each Investment Fund. The Participant
may change his election by the method prescribed by the Plan
Administrator.
7.4 Transfer of Amounts between Funds. The Participant may elect to
transfer monies to or from any Investment Fund in accordance with the
rules applicable to such Investment Fund and by the method prescribed
by the Plan Administrator.
7.5 Crediting and Debiting of Investments. Amounts allocated to said
accounts on behalf of a Participant shall be credited to his
Participant's Account. Any other credits (including any income,
gains, dividends or interest credits, if applicable), debits
(including any expenses or losses, if applicable), transfers or
withdrawals to or from any such account shall be appropriately and
equitably allocated to the Participant's Account of each Participant.
7.6 Valuation of Participant Accounts. As of the last day of each Plan
Year (and at such additional times as the Employer shall determine in
accordance with the provisions of the Plan and, if applicable, the
Trust), each Participant's Account shall be appropriately and
equitably adjusted to reflect any dividends, interest credits, other
credits or other gains, or losses on the investments and any changes
in the value of investments. The value of the monies standing to the
credit of a Participant in his Participant's Account shall reflect
the total value of his interest in said accounts.
7.7 Administrative and Expense Charges. Administrative and expense
charges incurred in connection with the operation of the Plan shall
be paid accordingly.
7.8 Maintenance of Participant Accounts. A Participant's Account shall
be maintained for or with respect to each Participant under the Plan
unless or until cancelled in accordance with the provisions of
Article 10 or Article 13.
Article 8. VESTING, FORFEITURES, AND BREAK IN SERVICE
8.1 Vesting Schedule. A Participant shall have a vested interest of 100%
in that portion of his Participant's Account equal to the value of
Elective Contributions, Qualified Non-Elective Contributions and
Rollover Amounts standing to his credit in such account. Upon death,
Disability or attainment of his Normal Retirement Age, a Participant
shall also have a vested interest of 100% in that portion of his
Participant's Account equal to the value of any Matching
Contributions and Non-Elective Contributions standing to his credit
in such account. In all other cases, a Participant's vested interest
in that portion of his Participant's Account attributable to Matching
Contributions and Non-Elective Contributions shall be based on his
Years of Service in accordance with the following schedule:
Completed Years Percentage of
of Service Vested Interest
Less than 5 None
5 or more 100%
8.2 Amendment of Vesting Schedule. If the vesting provisions of the Plan
should be amended, each Participant who has completed 3 Years of
Service may elect during the election period to have his vested
percentage determined without regard to such amendment. The election
period shall begin on the date the Plan amendment is adopted and
shall end on the latest of the following dates:
The date which is 60 days after the day the Plan amendment is adopted;
The date which is 60 days after the day the Plan amendment becomes
effective;
The date which is 60 days after the day the Participant is issued
written notice of the Plan amendment by the Employer or Plan
Administrator.
8.3 Vesting Formula after a Distribution. In the event a Participant
receives a distribution from his Participant's Account prior to being
100% vested in that portion of his Participant's Account attributable
to Matching Contributions and Non-Elective Contributions, then any
future determination of his vested interest in that portion of his
Participant's Account derived from such Employer Contributions shall
be determined in accordance with the following formula until the
Participant is 100% vested in such Employer Contributions:
X = P (AB + D) - D
P = vested percent at relevant time
AB = balance of Participant's Account at relevant time
D = amount of a prior distribution.
8.4 Non-Vested Interest upon Termination. The value of any portion of a
Participant's Account which is not vested as of a Participant's
termination of Service shall be forfeited and credited to the Deposit
Account on the earlier of (i) the date the former Participant
receives a distribution of his vested interest or (ii) the date he
incurs five consecutive 1-Year Breaks in Service. A Participant who
has no vested interest in his Participant's Account shall be deemed
to have received an immediate distribution.
8.5 Application of Forfeitures.
Funds held in the Deposit Account which are attributable to a former
Participant's non-vested interest shall be applied as follows:
To restore a Participant's Account in accordance with the provisions
of Section 8.6;
To reduce expenses of the Employer incurred in the operation of the
Plan, as applicable; and
To reduce future Matching Contributions and Non-Elective
Contributions, as applicable.
In the event of the termination of the Plan, any funds attributable
to a former Participant's non-vested interest shall be allocated to
each Participant on the date of the termination of the Plan in the
same ratio as each Participant's Compensation bears to the total
Compensation of all Participants.
Funds attributable to forfeited Matching Contributions credited to
the Deposit Account pursuant to Article 5 and held in the Deposit
Account at the end of each Plan Year, or at the date of termination
of the Plan, if earlier, shall be allocated to each Non-Highly
Compensated Employee who is a Participant as of the end of such Plan
Year, or earlier date of termination of Plan, in the same ratio that
each Non-Highly Compensated Employee's Compensation bears to the
total Compensation of all such Non-Highly Compensated Employees.
8.6 Restoration of Forfeitures
Upon resumption of employment as a Participant under the Plan before
5 consecutive 1-Year Breaks in Service and before having received a
distribution, such former Participant's Account shall be
re-established with respect to him as a Participant and the non-vested
portion of such Participant's Account, adjusted as to gains or
losses, shall be reinstated.
Upon resumption of employment as a Participant under the Plan after
having received a total or partial distribution, such former
Participant's Account shall be re-established with respect to him as
a Participant and the non-vested portion of such former Participant's
Account, unadjusted as to gains or losses, shall be reinstated to his
Participant's Account provided that such Participant makes full
repayment of the distributed amount before the earlier of:
the close of the first period of 5 consecutive 1-Year Breaks in
Service commencing after the distribution, or
within 5 years following his resumption of employment with the
Employer.
8.7 Suspension of Payment of Benefits. The payment of any benefits under
the Plan shall be suspended for such period as the Employee is
re-employed by the Employer subsequent to the commencement of payment
of such benefits.
Article 9. WITHDRAWALS AND LOANS DURING PARTICIPATION
9.1 Withdrawal Procedures. A Participant may elect to make withdrawals
from his Participant's Account by written notice to the Plan
Administrator on its prescribed form at least thirty days prior to
the effective date stated in the notice, unless a Participant elects
to waive the thirty days as described in Section 13.3.
9.2 Withdrawal of Rollover Amounts. A Participant may withdraw from his
Participant's Account all or a portion of the dollar amount and
earnings thereon of his Rollover Amounts.
9.3 Hardship Withdrawals. A Participant may elect to make a Hardship
Withdrawal from his Participant's Account.
Such amount shall not exceed the sum of the dollar amount of his
Elective Contributions standing to his credit in such account,
without Forfeiture of the non-vested portion of his Participant's
Account, subject to the conditions and limitations described in the
definition of Hardship Withdrawal in Article 1.
Any Participant who elects to make such Hardship Withdrawal in any
amount may not make Elective Contributions to the Plan and all other
plans (defined in Regulation 1.401(k)-1(d)(2)(iv)(B)(4)) of the
Affiliated Employer for a period of one year from the Participant's
receipt of such withdrawal.
9.4 Amounts Cannot Be Repaid. Any withdrawals made by a Participant
pursuant to this Article may not be repaid to the Plan.
9.5 Loan Program. The Employer, as the Plan fiduciary responsible for
investing Plan assets, is explicitly authorized to establish a
Participant loan program under the Plan.
Such Participant loan program shall be contained in a separate
written document which, when properly executed, is hereby
incorporated by reference and made a part of the Plan. Such
Participant loan program may be modified or amended in writing from
time to time without the necessity of amending this Section of the
Plan.
Anything to the contrary notwithstanding, loans made under the
Participant loan program shall comply with Code section 401(a)(13),
Code section 401(k) and the Regulations thereunder, and Department of
Labor regulation 2550.408(b)-1. No loan to any Participant or
Beneficiary will be made to the extent that such loan, when added to
the outstanding balance of all other loans to the Participant or
Beneficiary would exceed the lesser of:
$50,000 reduced by the excess (if any) of the highest outstanding
balance of loans during the one year period ending on the day before
the loan is made, over the outstanding balance of loans from the plan
on the date the loan is made, or
one-half the present value of the nonforfeitable accrued benefit of
the Participant.
For the purpose of the above limitation, all loans from all plans of
the Employer and other members of a group of employers described in
Code sections 414(b), 414(c), and 414(m) and (o) are aggregated.
Furthermore, any loan from the Plan shall by its terms require that
repayment (principal and interest) be amortized in level payments,
not less frequently than quarterly, over a period not extending
beyond five years from the date of the loan, unless such loan is used
to acquire a dwelling unit which within a reasonable time (determined
at the time the loan is made) will be used as the principal residence
of the Participant.
Loan repayments will be suspended under the Plan as permitted under
Code section 414(u)(4).
Article 10. TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT DATE
10.1 General. If a Participant terminates employment with the Employer
prior to his Retirement Date, he shall be entitled to receive the
value of the vested portion in his Participant's Account in
accordance with Article 13.
10.2 Election of Timing of Distribution . A Participant shall, as of the
date of his termination of employment, elect by written notice to the
Plan Administrator on its prescribed form, that the value of the
vested portion of his Participant's Account be used to provide a Plan
distribution to him in accordance with the payment options described
in Article 13, or, except as provided below, left on deposit until,
at any time before, as of, or after his Normal Retirement Date, he
elects to receive a distribution in accordance with the payment
options in Article 13. Any funds left on deposit are subject to the
distribution rules set forth in Article 13. In the event that a
Participant's election is not received by the Plan Administrator as
of the date of his termination of employment, the Participant shall
be deemed to have elected to leave his Participant's Account on
deposit until such time as a distribution is elected or required.
10.3 Earliest Distribution Date. A Participant may not elect that the
distribution of his Participant's Account commence prior to the
thirty day period following his termination of employment unless the
Participant elects to waive the thirty day period as described in
Section 13.3.
10.4 Automatic Immediate Distribution. Notwithstanding any other
provision of the Plan to the contrary, in the event that the vested
portion of a Participant's Account does not exceed $5,000, as of the
date of a Participant's termination, then the distribution of such
vested portion shall be made in the form of a lump sum payment as
soon as administratively practicable. Any nonvested portion will be
treated as a Forfeiture.
10.5 Death of a Former Participant. Upon the death of a former
Participant prior to the application of his Participant's Account to
provide a Plan distribution to him, the value of the vested portion
of his Participant's Account shall be applied in accordance with the
provisions of Article 12 and, if applicable, Article 13.
10.6 Cancellation of a Participant's Account. Upon the total application
of the Participant's Account to provide a Plan distribution with
respect to the former Participant, such Participant's Account shall
be cancelled and be of no further force or effect under the Plan. In
no event will any Contributions or Rollover Amounts be made to the
Plan on behalf of a former Participant unless the former Participant
again becomes an Employee and a Participant under the Plan.
10.7 Unclaimed Account. In the event that all or any portion of the
distribution payable to a Participant or his Beneficiary hereunder
shall at his Normal Retirement Date remain unpaid solely by reason of
the inability of the Plan Administrator, after sending a registered
letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such
Participant or his Beneficiary, the amount so distributable shall be
treated as a Forfeiture pursuant to the Plan. In the event a
Participant or Beneficiary is located subsequent to his benefit being
reallocated, such benefit shall be restored, first from Forfeitures,
if any, and then from an additional Employer contribution if
necessary.
Article 11. RETIREMENT BENEFITS
11.1 Retirement Dates. Each Participant may terminate his employment with
the Employer and retire for the purposes hereof on and after his
Retirement Date. Upon such event, a Participant is entitled to
receive his vested Participant's Account. Upon a Participant's
Retirement Date, or as soon thereafter as practical, the Plan
Administrator shall direct the distribution of all amounts in
accordance with Article 13.
11.2 Automatic Form of Distribution. A Participant shall receive his
retirement benefit in the form of a cash distribution.
Article 12. DEATH BENEFITS
12.1 Value of Death Benefit.
Upon the death of a Participant prior to his Benefit Starting Date,
the deceased Participant's Beneficiary shall be entitled to receive
the Participant's nonforfeitable Participant's Account balance
(reduced by any security interest held by the Plan by reason of a
loan outstanding to such Participant) in accordance with the payment
options described in Section 13.1 and limited by the death
distribution requirements described in Section 13.6. Any designation
of a Beneficiary by a married Participant shall comply with Section
12.2 below.
Upon the death of a former Participant after his Benefit Starting
Date, the deceased former Participant's Beneficiary shall be
entitled to receive the remaining value, if any, of his Participant's
Account (reduced by any security interest held by the Plan by reason
of a loan outstanding to such Participant) in accordance with the
payment options described in Section 13.1 and limited by the death
distribution requirements described in Section 13.6.
12.2 Election to Waive Pre-Retirement Surviving Spouse Death Benefit.
Each married Participant shall be deemed to have designated his
Spouse as the sole Beneficiary of his pre-retirement surviving Spouse
death benefit.
A Participant may waive the pre-retirement surviving Spouse death
benefit by designating a specific non-Spouse Beneficiary and
obtaining the signed and written consent of the Participant's Spouse,
witnessed by a Plan representative or notary public, to such
non-Spouse Beneficiary. Notwithstanding the foregoing, the non-Spouse
Beneficiary need not be acknowledged, provided the consent of the
Spouse acknowledges that the Spouse has the right to limit consent
only to a specific non-Spouse Beneficiary and the Spouse voluntarily
elects to relinquish such right. Any consent obtained under this
provision will be valid only with respect to the Spouse who signs the
consent and will be treated as being irrevocable with respect to that
Spouse.
The Participant may designate a non-Spouse Beneficiary without the
consent of his Spouse if it is established to the satisfaction of a
Plan representative that there is no Spouse or that the Spouse cannot
be located.
A Participant may, at any time prior to his Benefit Starting Date,
revoke his prior waiver of the pre-retirement surviving Spouse death
benefit by filing written notice of such revocation with the Plan
Administrator. The number of revocations shall not be limited.
12.3 Pre-Retirement Death Benefit for Unmarried Participants. If a
Participant is unmarried at death prior to his Benefit Starting Date,
a death benefit shall be paid in a lump sum to his Beneficiary. The
amount of his death benefit shall be the total value of his
Participant's Account determined as of the date of payment.
12.4 Distribution Options of a Beneficiary. The surviving Spouse may
direct that payment of the death benefit be made within a reasonable
period of time after the death of the Participant, but shall not be
required to receive the payment prior to the date on which the
Participant would have attained Normal Retirement Age.
Article 13. BENEFIT OPTIONS AND DISTRIBUTION RULES
13.1 Payment Option. Subject to the distribution rules of this Article, a
Participant or, if applicable, a Beneficiary may elect, by written
notice to the Plan Administrator on its prescribed form, that the
distribution of his Participant's Account be made in a lump sum cash
payment.
13.2 Events Triggering Distributions.
The only events which may trigger a distribution of Elective
Deferrals (and any Qualified Non-Elective Contributions and Qualified
Matching Contributions, if applicable) and the income allocable
thereto are:
Death;
Disability;
Termination of employment;
Termination of the Plan without establishment or maintenance of
another defined contribution plan, other than an employee stock
ownership plan (as defined in Code section 4975(e) or Code section
409) or a simplified employee pension plan (as defined in Code
section 408(k)), but not before the time such distribution is
permitted under the terms of the applicable group annuity contract or
other funding vehicle;
The date of the sale or other disposition by a corporation to an
unrelated corporation of substantially all of the assets (within the
meaning of Code section 409(d)(2)) used in a trade or business of
such corporation if such corporation continues to maintain the Plan
after disposition, but only with respect to Employees who continue
employment with the corporation acquiring such assets;
The disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary (within the meaning of Code
section 409(d)(3)) if such corporation continues to maintain the
Plan, but only with respect to Employees who continue employment with
such subsidiary;
The attainment of age 59 1/2, to the extent permitted under Article 9
of the Plan; or
The hardship of a Participant, to the extent permitted under Articles
1 and 9 of the Plan.
Distributions that are permitted by this Plan and that are triggered
by any of the events enumerated in subsections (4), (5) and (6),
shall be made in a lump sum.
13.3 Timing of Distribution Rules.
Unless a Participant otherwise elects, in no event will the
distribution of benefits under the Plan begin later than the 60th day
after the close of the Plan Year in which the latest of the following
occurs: (a) the date on which the Participant attains age 65 (or the
Normal Retirement Age, if earlier), (b) the 10th anniversary of the
Participant's commencement of participation in the Plan, or (c) the
date on which the Participant terminates his Service with the
Employer. Notwithstanding the foregoing, the failure of a
Participant and, if required, the Spouse to consent to a distribution
while a benefit is immediately distributable, within the meaning of
Regulation 1.417(e)-1, shall be deemed to be an election to defer
commencement of payment of any benefit sufficient to satisfy the
timing of distribution rules.
If a distribution is one to which Code sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the
notice required under Regulation 1.411(a)-11(c) is given, provided
that:
the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution
option), and
the Participant, after receiving the notice, affirmatively elects a
distribution.
13.4 Direct Rollovers.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified
by the distributee in a direct rollover.
Definitions:
An "eligible rollover distribution" is any distribution of all or any
portion of the balance to the credit of the distributee, except that
an eligible rollover distribution does not include:
any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the
life (or life expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the distributee's
designated Beneficiary, or for a specified period of ten years or
more;
any distribution to the extent such distribution is required under
Code section 401(a)(9); and
the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities).
An "eligible retirement plan" is an individual retirement account
described in Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan described in Code
section 403(a), or a qualified trust described in Code section
401(a), that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving Spouse, an eligible retirement plan is
an individual retirement account or individual retirement annuity.
A "distributee" includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving Spouse and
the Employee's or former Employee's Spouse or former Spouse who is
the alternate payee under a Qualified Domestic Relations Order, as
defined in Code section 414(p), are distributees with regard to the
interest of the Spouse or former Spouse.
A "direct rollover" is a payment by the Plan to the eligible
retirement plan specified by the distributee.
13.5 Minimum Distribution Requirements - General Rules.
The entire interest of a Participant must be distributed or begin to
be distributed no later than the Participant's "required beginning
date", in accordance with Code section 401(a)(9) and other applicable
IRS guidance. As of the first distribution calendar year (as defined
in proposed Regulations under Code section 401(a)(9)), distributions,
if not made in a single sum, may only be made over one of the
following periods (or a combination thereof):
The life of the Participant;
The life of the Participant and Beneficiary;
A period certain not extending beyond the life expectancy of the
Participant; or
A period certain not extending beyond the joint and last survivor
expectancies of the Participant and Beneficiary.
The life expectancies of a Participant and a Participant's Spouse
(other than in the case of a life annuity) shall be redetermined
annually in accordance with Regulations. Life expectancy and joint
and last survivor expectancy shall be computed using the return
multiples in Tables V and VI of Regulation 1.72-9.
For purposes of Sections 13.5 through 13.7 and pursuant to applicable
Regulations, any amount paid to a child shall be treated as if it had
been paid to the surviving Spouse if such amount will become payable
to the surviving Spouse upon such child reaching majority (or other
designated event permitted under such Regulations).
13.6 Death Distribution Provisions.
If the Participant dies after distribution of his or her interest has
begun, the remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of distribution
being used prior to the Participant's death.
If the Participant dies before distribution of his or her interest
begins, distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death except to the extent that an
election is made to receive distributions in accordance with (1) or
(2) below.
If any portion of the Participant's interest is payable to a
Beneficiary, distributions may be made over the life of the
Beneficiary or over a period certain not greater than the life
expectancy of the Beneficiary commencing on or before December 31 of
the calendar year immediately following the calendar year in which
the Participant died; or
If the Beneficiary is the Participant's surviving Spouse, the date
distributions are required to begin in accordance with (1) above
shall not be earlier than the later of
December 31 of the calendar year immediately following the calendar
year in which the Participant died, and
December 31 of the calendar year in which the Participant would have
attained 70 1/2.
If the Participant has not made an election pursuant to (b) above by
the time of his or her death, the Participant's Beneficiary must
elect the method of distribution no later than the earlier of (1)
December 31 of the calendar year in which distributions would be
required to begin under this Section, or (2) December 31 of the
calendar year which contains the fifth anniversary of the date of
death of the Participant. If the Participant has no Beneficiary, or
if the Beneficiary does not elect a method of distribution,
distribution of the Participant's entire interest must be completed
by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
For purposes of this Section, if the surviving Spouse dies after the
Participant but before payments to such Spouse begin, the provisions
of this Section, with the exception of paragraph (b)(2) therein,
shall be applied as if the surviving Spouse were the Participant.
13.7 Precedence of Minimum Distribution Rules. Notwithstanding any other
provision of the Plan to the contrary, distributions will be made in
accordance with Regulations issued under Code section 401(a)(9),
including the minimum incidental death benefit requirement of
Regulation 1.401(a)(9)-2. Any provisions of the Plan reflecting Code
section 401(a)(9) shall take precedence over any distribution options
in the Plan that are inconsistent with Code section 401(a)(9).
ARTICLE 14. AMENDMENTS, TERMINATION, AND MERGERS
14.1 Amendments. The Employer may, by action of its Board at any time,
and from time to time, amend in whole or in part any or all of the
provisions of the Plan. No such amendment shall reduce any
Participant's benefit attributable to his Employee Contributions or
to Employer Contributions made for him before the amendment took
effect unless the amendment is necessary to qualify the Plan. Nor
shall any amendment be made by which any funds attributable to
Contributions hereunder can be used except for the exclusive benefit
of Participants and their beneficiaries. Except as permitted by
Regulations, including Regulation 1.411(d)-4, no Plan amendment or
transaction having the effect of a Plan amendment (such as a merger,
plan transfer or similar transaction) shall be effective if it
eliminates or reduces any "Section 411(d)(6) protected benefit" or
adds or modifies conditions related to any "Section 411(d)(6)
protected benefit", the result of which would be a further
restriction on such benefit unless such protected benefits are
preserved with respect to benefits accrued as of the later of the
adoption date or effective date of the amendment. "Section 411(d)(6)
protected benefits" are described in Regulation 1.411(d)-4.
14.2 Termination. While it is the intention of the Employer to
permanently continue the Plan, the Employer reserves the right to
terminate the Plan at any time by written notice to the Plan
Administrator and the Trustees specifying the effective date of
termination. Anything in the preceding sentence to the contrary
notwithstanding, the Plan shall terminate upon complete
discontinuance of Employer Contributions under the Plan. No
Employee, Participant or Beneficiary shall have any right of
consultation or approval of termination of this Plan.
Upon termination of the Plan, or partial termination with respect to
a group of Participants, all funds in each affected Participant's
Account (as well as any funds thereafter credited to any
Participant's Account) shall be fully vested and nonforfeitable.
Such funds shall remain on deposit until a method of distribution is
elected in accordance with, and as permitted by, the provisions of
Article 13 of the Plan. Distributions in accordance with Article 13
shall be made as soon as administratively feasible.
The rights of any Participant whose Retirement Date coincides with
the date of termination of the Plan (and those of his Beneficiary, if
any,) shall be determined solely in accordance with the terms of
Articles 11, 12 and 13. If, upon the date of termination of the
Plan, a Participant's Account is being held with respect to a former
Participant, then such former Participant's rights (and those of his
Beneficiary, if any,) shall be determined solely in accordance with
the terms of Articles 11, 12 and 13.
14.3 Merger, Consolidation, Etc. with Another Plan.
At no time shall there occur any merger or consolidation of this Plan
with, or transfer of the assets or liabilities of this Plan to, any
other plan unless, if such plan then terminated, each Participant and
each Beneficiary would be entitled to a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than
the benefit which such Participant or Beneficiary would have been
entitled to receive immediately before the merger, consolidation or
transfer if this Plan had then terminated.
In the event that a money purchase plan merges or consolidates or
transfers its assets to this Plan, then the assets accrued under the
money purchase plan shall continue to be subject to the distribution
restrictions and requirements of the money purchase plan.
Article 15. PLAN ADMINISTRATOR
15.1 Appointment by the Employer. The Plan Administrator shall be
appointed by the Employer and be subject to the terms of the Plan and
Trust. The Plan Administrator shall have general supervision of the
administration of the Plan.
15.2 Authority. The Plan Administrator shall administer the Plan in a
nondiscriminatory manner for the exclusive benefit of Participants
and their Beneficiaries.
15.3 Duties. The Plan Administrator shall perform all such duties as are
necessary to administer and manage the Plan in accordance with the
terms thereof, including but not limited to the following:
To determine all questions relating to a Participant's coverage under
the Plan;
To maintain all necessary records for the administration of the Plan;
To compute and authorize the payment of benefits to eligible
Participants and Beneficiaries;
To interpret and construe the provisions of the Plan and to make
rules which are not inconsistent with the terms thereof; and
To advise or assist Participants regarding any rights, benefits, or
elections available under the Plan.
The Plan Administrator shall take all such actions as are
necessary to administer and manage the Plan as a retirement
program which is at all times in full compliance with any law or
regulation affecting the Plan. The Plan Administrator (and
those to whom it has delegated its authority) shall have vested
in it under the terms of the Plan full discretionary and final
authority when exercising its duties hereunder.
15.4 Delegation of Duties. The Plan Administrator shall have the power,
to the extent permitted by law, to delegate the performance of such
fiduciary and non-fiduciary duties, responsibilities and functions as
the Plan Administrator shall deem advisable for the proper management
and administration of the Plan in the best interests of the
Participants and their Beneficiaries.
15.5 Application of Funds. The Plan Administrator may authorize any
person or persons having duties in connection with administration of
the Plan or any agent to execute or deliver any instrument or make
any payment on its behalf. A request for funds from, or a direction
for, the payment or application of funds shall be signed by the Plan
Administrator or its duly authorized representative.
15.6 Compensation and Expenses. The Plan Administrator shall serve
without compensation for any services hereunder. All reasonable and
necessary costs, expenses and liabilities incurred by the Plan
Administrator in the supervision of the administration of the Plan
and the Trust shall be paid by the Employer separate and apart from
any Employer Contributions.
15.7 Information from Employer. To enable the Plan Administrator to
perform its functions, the Employer shall supply full and timely
information to the Plan Administrator on all matters relating to the
Plan, as the Plan Administrator may require.
15.8 Resignation, Removal, and Appointment of Successor. The Plan
Administrator may resign at any time by delivering to the Employer a
written notice of resignation, to take effect at a date specified
therein, which shall not be less than 30 days after the delivery
thereof, unless such notice shall be waived. The Plan Administrator
may be removed with or without cause by the Employer by delivery of
written notice of removal, to take effect at a date specified
therein, which shall be not less than 30 days after delivery thereof,
unless such notice shall be waived. The Employer, upon receipt of,
or giving notice of, the resignation or removal of the Plan
Administrator, shall promptly designate a successor Plan
Administrator who must signify acceptance of this position in
writing. In the event no successor is appointed, the Board of
Directors of the Employer will function as the Plan Administrator.
Article 16. BENEFIT CLAIMS PROCEDURES
16.1 Filing a Claim for Benefits. A Participant or Beneficiary shall
notify the Plan Administrator of a claim of benefits under the Plan.
Such request shall be in writing to the Plan Administrator and shall
set forth the basis of such claim and shall authorize the Plan
Administrator to conduct such examinations as may be necessary to
determine the validity of the claim and to take such steps as may be
necessary to facilitate the payment of any benefits to which the
Participant or Beneficiary may be entitled under the terms of the
Plan.
16.2 Timing of Decision. The Plan Administrator shall notify the affected
Participant or Beneficiary (hereinafter referred to as "claimant") of
its decision within 90 days after the receipt of the claimant's
benefit request. In the event that, due to special circumstances,
the Plan Administrator requires more than 90 days to process the
benefit request, the Plan Administrator shall inform the claimant by
written notice of the extension prior to the expiration of such 90
day period. The notice shall indicate the special circumstances
requiring the extension and the date by which the Plan Administrator
expects to reach a decision on the claim. In no event shall such
extension exceed 180 days following the initial receipt of the
claimant's benefit request.
16.3 Denial of Claim. Whenever a claim for benefits by any Participant or
Beneficiary has been denied in whole or in part by the Plan
Administrator, a written notice prepared in a manner calculated to be
understood by such Participant or Beneficiary must be provided. The
written notice must set forth:
The specific reason(s) for the denial,
Specific reference to pertinent Plan provisions on which the denial
is based,
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
An explanation of the Plan's review procedure with respect to the
denial of benefits.
16.4 Review Procedure.
The claimant, or his duly authorized representative, may request a
review of the benefit denial by a written application to the Plan
Administrator within 60 days of the claimant's receipt of the written
notice of benefit denial. Should the claimant or his duly authorized
representative deem it necessary to review pertinent documents in
order to prepare the issues and comments for review, the claimant or
representative may make a request to review such pertinent documents
within the 60 day period after receipt of the written notice of
benefit denial. The Plan Administrator and the claimant or
representative shall establish a mutually agreeable time during
normal business hours of the Employer to review such documents.
The claimant may request a 30 day extension in writing to the Plan
Administrator in the event that the 60 day period is an insufficient
amount of time for the claimant to prepare the issues and comments
for review.
The Plan Administrator shall notify the claimant in writing not later
than 60 days after its receipt of a request for review. In the event
that special circumstances require an extension of the time for
processing the benefit claim, a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of a request for
review. The Plan Administrator will notify the claimant in writing
prior to the commencement of the extension period. The Plan
Administrator's decision on the claims appeal review shall be in
writing and shall include specific reasons for the decision, written
in a manner calculated to be understood by the claimant with specific
references to the pertinent Plan provisions on which the decision is
based. If the Plan Administrator does not furnish its decision on
review within the times specified in this Section 16.4(c), the claim
shall be deemed denied on review.
Article 17. GENERAL PROVISIONS
17.1 No Employment Rights Created. Nothing contained in the Plan shall be
deemed or construed to enlarge or otherwise affect the employment
rights of any Employee. The establishment and continuation of the
Plan and the payment of any benefits shall not be construed as giving
any Employee any legal or equitable right as against the Employer,
except as may be expressly provided in the Plan, or as in any manner
or degree conferring any rights upon any Employee for continuation of
employment by the Employer or limiting in any way the right of the
Employer to treat the Employee without regard to the effect which
such treatment will have upon him as a Participant under the Plan.
17.2 Return of Contributions under Certain Circumstances. Contributions
may be returned to the Employer under the following circumstances:
In the event that the Commissioner of Internal Revenue determines
that the Plan is not initially qualified under the Code, the Trust
may return to the Employer in a single sum any Contributions made by
the Employer that were conditioned on initial qualification of the
Plan under Code section 401(a) or Code section 403(a), provided the
application for determination is made within the time prescribed by
law for filing the Employer's return for the taxable year in which
such Plan was adopted, or such later date as the Secretary of the
Treasury shall prescribe. Such return may only occur within one year
after the adverse determination by the Internal Revenue Service.
In the event the Employer shall make a Contribution by a mistake of
fact, then the Employer may demand repayment of such Contribution at
any time within one year following the time of payment and the Trust
may return such amount to the Employer, provided the one year period
has not then expired. Earnings attributable to the Contribution may
not be returned to the Employer but any losses attributable thereto
must reduce the amount so returned.
If a Contribution is conditioned upon the deductibility of the
Contribution under Code section 404 then, to the extent the deduction
is disallowed and the Trust receives the necessary documentation
regarding that fact, the Trust may, on written request of the Plan
Administrator, return to the Employer the amount of such Contribution
(to the extent disallowed) or, if less, its value, within one year
after the disallowance of the deduction.
17.3 Exclusive Benefit Rule.
No benefit or interest hereunder will be subject to assignment or
alienation, either voluntarily or involuntarily. The preceding
sentence shall also apply to the creation, assignment, or recognition
of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is
determined to be a Qualified Domestic Relations Order, as defined in
Code section 414(p), or any domestic relations order entered before
January 1, 1985.
Notwithstanding Section 17.3(a) above, a Participant's benefit will
be offset against any amount he or she is ordered or required to pay
to the Plan pursuant to an order or requirement which:
arises under a judgment of conviction for a crime involving the Plan,
under a civil judgment entered by a court in an action brought in
connection with a violation (or alleged violation) of part 4 or
Subtitle B of Title 1 of ERISA, or pursuant to a settlement agreement
between the Participant and the Department of Labor or Pension
Benefit Guaranty Corporation in connection with a violation (or
alleged violation) of part 4 of Subtitle B of Title 1 of ERISA by a
fiduciary or any other person;
the judgment, order, decree, or settlement agreement expressly
provides for the offset of all or part of the amount ordered or
required to be paid to the Plan against the Participant's benefits
provided under the Plan, and
in any case in which the survivor annuity requirements of Code
section 401(a)(11) apply with respect to distributions from the Plan
to the Participant, the applicable requirements of Code sections
401(a)(13)(C)(iii) and 401(a)(13)(D) shall also apply.
Any such offset shall be made pursuant to Code section 401(a)(13).
The preceding paragraph applies to orders, decrees and judgments
issued, and settlement agreements entered into, on or after August 5,
1997.
17.4 Standard of Conduct for Fiduciaries. The Employer is the named
fiduciary of the Plan for the purposes of managing and controlling
the operation of the Plan. The Trustees are the named fiduciaries of
the Plan for the purposes of managing and controlling the assets of
the Plan held in the Trust Fund. The Plan Administrator is the named
fiduciary of the Plan for the purpose of managing and controlling the
administration of the Plan, as well as the appropriate named
fiduciary for conducting the claims appeal procedure as described in
Article 16. Each such fiduciary of the Plan shall discharge his
fiduciary duties with respect to the Plan solely in the interest of
the Participants and their Beneficiaries for the exclusive purpose of
providing benefits to Participants and their Beneficiaries and
defraying reasonable expenses of administering the Plan. Each such
fiduciary shall discharge such duties with the care, skill, prudence
and diligence under the circumstances then prevailing which a prudent
man acting in like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with like
aims.
17.5 Gender. Masculine pronouns include the feminine as well as the
masculine gender. Feminine pronouns include the masculine as well as
the feminine gender.
17.6 Construction of Plan. The Plan shall be construed, enforced and
administered according to any federal law or regulation governing the
provisions or administration of the Plan and the laws of the State in
which it is issued. This Plan is intended to comply with all
requirements for qualification under the Code. If any provision
hereof is subject to more than one interpretation or any term used
herein is subject to more than one construction, such ambiguity shall
be resolved in favor of that interpretation or construction which is
consistent with the Plan being so qualified. If any provision of the
Plan is held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions, and this Plan
shall be construed and enforced as if such provision had not been
included.
Article 18. PARTICIPATING EMPLOYERS
18.1 Election to Become a Participating Employer. With the consent
of the sponsoring Employer, any Affiliated Employer may adopt
this Plan and all of the provisions hereof, and participate
herein and be known as a Participating Employer, by a properly
executed document evidencing said intent and will of such
Participating Employer.
18.2 Requirements.
Each such Participating Employer shall be required to use the same
funding instruments as provided in this Plan.
The transfer of any Participant from or to an Employer participating
in this Plan, whether he be an Employee of the sponsoring Employer or
an Affiliated Employer, shall not affect such Participant's rights
under the Plan, and all amounts credited to a Participant's Account
as well as his Years of Service with the transferor or predecessor,
and his length of participation in the Plan, shall continue to his
credit.
Any expenses of the Plan which are to be paid by the Employer or
borne by the Trust Fund shall be paid by each Participating Employer
in the same proportion that the total amount standing to the credit
of all Participants employed by such Employer bears to the total
standing to the credit of all Participants.
18.3 Designation of Agent. Each Participating Employer shall be
deemed to be a part of this Plan; provided, however, that with
respect to all of its relations with the Trustee and Plan
Administrator for the purpose of this Plan, each Participating
Employer shall be deemed to have designated irrevocably the
sponsoring Employer as its agent. Unless the context of the
Plan clearly indicates the contrary, the word "Employer" shall
be deemed to include each Participating Employer as related to
its adoption of the Plan.
18.4 Plan Administrator's Authority. The Plan Administrator shall
have the authority to make any and all necessary rules or
regulations, binding upon all Participating Employers and all
Participants, to effectuate the purpose of this Article.
18.5 Withdrawal of a Participating Employer. Any Participating
Employer may withdraw from participation under the Plan without
terminating the Plan upon making a transfer of the funds
attributable to the accounts of its Participants in the Plan to
another comparable plan which protects all of the benefit
options, rights and features of such Participant's accounts. If
a Participating Employer does not provide for the continuation
of a comparable plan, its withdrawal shall constitute a
termination of the Plan only with respect to the Participants of
that Participating Employer. The sponsoring Employer may, in
its sole and absolute discretion, terminate any Participating
Employer's participation at any time.
IN WITNESS WHEREOF, the Employer hereby causes this Plan to be
executed on the day of ____ day of ______________________, 19__.
EMPLOYER:
Steel Technologies, Inc.
By: __________________________________
PARTICIPATING EMPLOYER
Steel Technologies Carolinas, Inc. _____
By: __________________________________
EXHIBIT 10.10(b)
Amendment No. 1 to the
Steel Technologies, Inc. Retirement Savings Plan
Pursuant to the provisions of Section 14.1 of Article 14 of the Plan,
the Steel Technologies, Inc. Retirement Savings Plan is hereby
amended, effective October 1, 1999, by the substitution of the
following for Section 1.7 which appears in Article 1. DEFINITIONS:
"1.7 Compensation: The Participant's total Standard 415
Compensation from the Employer during the Plan Year for Services
rendered, such as wages, salary, overtime, commissions, bonuses and
other remuneration that is reportable to the federal government for
the purpose of withholding federal income taxes.
(a) For purposes of allocating Contributions, Compensation
shall also include any amount that would be reportable if it
were not otherwise deferred by the Participant's election to
have it contributed to a plan of the Employer as an Elective
Contribution, but shall exclude (even if includible in gross
income) reimbursements or other expense allowances, fringe
benefits (cash or non-cash), moving expenses, deferred
compensation, and welfare benefits. "
In witness whereof, the Employer hereby causes this amendment to be
executed on this ____________ day of __________________, ____.
Employer: Steel Technologies, Inc.
By:________________________________
EXHIBIT 13
2000 ANNUAL REPORT TO SHAREHOLDERS
Steel Technologies Inc.
Selected Financial Data
(In thousands, except per share results)
Years Ended September 30
------------------------
INCOME STATEMENT DATA 2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------
Sales $461,297 $411,389 $383,907 $345,624 $294,161
Cost of goods sold 410,724 353,782 339,811 308,448 253,845
Gross profit 50,573 57,607 44,096 37,176 40,316
Selling, general and
administrative expenses 28,251 26,108 22,144 19,989 18,811
Equity in net income of
unconsolidated corporate
joint venture 898 1,095 537 1,609 1,672
Operating income 23,220 32,594 22,489 18,796 23,177
Income before income taxes 16,177 25,233 16,410 13,123 18,169
Net income 10,212 15,572 9,803 8,502 11,686
Diluted earnings per common share $ 0.94 $ 1.38 $ 0.82 $ 0.71 $ 0.97
Diluted weighted average number
of common shares outstanding 10,857 11,256 11,989 12,057 12,064
Basic earnings per common share $ 0.94 $ 1.39 $ 0.82 $ 0.71 $ 0.98
Basic weighted average number of
common shares outstanding 10,818 11,230 11,942 11,976 11,980
Cash dividends per common share $ 0.12 $ 0.11 $ 0.10 $ 0.10 $ 0.09
September 30
--------------------------------------------
BALANCE SHEET DATA 2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------
Working capital $ 97,428 $ 89,418 $ 80,319 $ 90,317 $ 65,265
Total assets 315,389 289,105 266,481 257,510 217,141
Long-term debt 115,394 90,209 88,300 97,190 67,260
Shareholders' equity 127,032 124,439 113,676 108,829 101,361
Years Ended September 30
------------------------
OTHER DATA 2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------
Capital expenditures, including
acquisitions and investments in
joint ventures $ 32,010 $ 18,304 $ 25,414 $ 25,341 $ 6,473
Shareholders' equity per common
share 12.14 11.17 9.81 9.07 8.47
Depreciation and amortization 13,929 12,852 11,860 10,500 9,535
Steel Technologies Inc.
Selected Quarterly Financial Data
(In thousands, except per share results)
Fiscal Year 2000 First Second Third Fourth
- ------------------------------------------------------------------------
Sales $104,890 $120,910 $121,936 $113,561
Gross profit 13,221 14,620 12,587 10,145
Net income 3,651 3,294 2,552 715
Diluted earnings per common share $ 0.33 $ 0.30 $ 0.24 $ 0.07
Basic earnings per common sharee $ 0.33 $ 0.30 $ 0.24 $ 0.07
Fiscal Year 1999 First Second Third Fourth
- ------------------------------------------------------------------------
Sales $ 98,203 $106,891 $109,248 $ 97,047
Gross profit 12,954 14,524 16,112 14,017
Net income 2,991 3,893 4,482 4,206
Diluted earnings per common share $ 0.26 $ 0.35 $ 0.40 $ 0.38
Basic earnings per common share $ 0.26 $ 0.35 $ 0.40 $ 0.38
Market Price and Dividend Information:
The Company's common stock trades on The Nasdaq Stock Market under the
symbol STTX. At October 31, 2000, there were approximately 506 shareholders of
record. The Company's current dividend policy provides for semiannual payments
of cash dividends. The following table shows cash dividends and high and low
prices for the common stock for each quarter of fiscal 2000 and 1999. Nasdaq
National Market System quotations are based on actual transactions.
Stock Price
------------------------------------
Fiscal Year 2000 High Low Dividends
- --------------------------------------------------------------------------------
First Quarter $14.875 $ 9.750 $ 0.06
Second Quarter $15.250 $ 7.625
Third Quarter $ 8.688 $ 6.000 $ 0.06
Fourth Quarter $ 7.563 $ 5.375
Stock Price
------------------------------------
Fiscal Year 1999 High Low Dividends
- --------------------------------------------------------------------------------
First Quarter $ 9.250 $ 6.063 $ 0.05
Second Quarter $ 8.688 $ 6.938
Third Quarter $10.188 $ 6.875 $ 0.06
Fourth Quarter $12.813 $ 9.188
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
When used in the following discussion, the word "expects" and other
similar expressions are intended to identify forward-looking
statements, which are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from those projected. Specific risks and uncertainties include, but
are not limited to, general business and economic conditions;
cyclicality of demand in the steel industry, specifically in the
automotive market; work stoppages; risk of business interruptions
affecting automotive manufacturers; competitive factors such as
pricing and availability of steel; reliance on key customers; and
potential equipment malfunctions. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only
as of the date thereof. The Company undertakes no obligation to
republish revised forward-looking statements to reflect the
occurrence of unanticipated events or circumstances after the date
hereof.
RESULTS OF OPERATIONS - FISCAL 2000 COMPARED TO FISCAL 1999
Steel Technologies posted record sales of $461,297,000 in fiscal
2000, an increase of 12% from 1999 sales of $411,389,000. Tons
shipped of Company-owned steel products in fiscal 2000 increased
approximately 10% compared to fiscal 1999 while the average selling
price of Company-owned steel products for the year increased
approximately 2% from the previous year. Custom Steel Inc. and
Custom Steel Processing Corp., collectively Custom Steel (now wholly
owned subsidiaries of the Company), acquired on January 12, 2000,
added $17,091,000 of revenues in 2000. Sales of existing Steel
Technologies steel processing operations increased by approximately
$32,817,000 or 8% from a year ago.
The Company focuses significant resources on the automotive industry
and generates a major portion of business from selling manufacturing
component parts to the automotive industry. The Company continues to
increase market share and to develop a substantial amount of new
business with both existing and new customers.
The gross profit margin was 11.0% in 2000 compared to 14.0% in 1999
as increases in sales prices were not sufficient to offset
significant increases in raw material costs. Strong demand for steel
products and the efforts of the domestic steel industry to curtail
alleged unfair trade practices of certain foreign steel importers
resulted in the domestic steel producers significantly increasing raw
material prices in 2000 over 1999. Recently, raw material costs have
abated and the Company does not expect future raw material cost
increases in the next two quarters. Should raw material costs
increase, gross margins could be negatively impacted in the event
that the Company is unable to pass along corresponding sales price
increases to its customers. In general, production cost efficiencies
and product mix improvements may positively impact gross margins and
somewhat offset rising raw material costs.
Sales, general and administrative costs increased 8% in fiscal 2000,
while sales increased 12% for the current year. The increase in
selling, general and administrative expenses was primarily
attributable to additional expenses from the addition of Custom Steel
and additional marketing expenses to support recent capacity
expansions in Ohio and South Carolina and sales growth in Mexico.
Steel Technologies continues to actively manage the level at which
selling, general and administrative expenses are added to the cost
structure. Sales, general and administrative expenses were 6.1% and
6.4% of sales in 2000 and 1999, respectively.
The Company's share of the income of Mi-Tech Steel, Inc., an
unconsolidated corporate joint venture, was $898,000 in 2000 and
$1,096,000 in 1999. An increase in raw material costs and a weaker
steel market in the southeastern United States region serviced by the
Decatur, Alabama operation have adversely impacted Mi-Tech's
profitability for fiscal 2000 as compared to fiscal 1999.
Net interest expense decreased from $7,361,000 in 1999 to $7,043,000
in 2000. Although average borrowings and the interest rate for
borrowings increased during fiscal 2000, net interest expense
decreased because of the amortization of a gain generated by
terminating an interest rate swap agreement in the third quarter of
fiscal 1999, foreign currency transaction gains generated from
operations in Mexico and interest capitalized from construction in
progress in Matamoros, Mexico. The Company's effective income tax
rate was approximately 36.9% in 2000 and 38.2% in 1999. The decrease
is attributable primarily to a higher percentage of overall earnings
from the Mi-Tech joint venture, which are not fully taxable to the
Company, and a reduction in state income taxes realized from
restructuring the Company in fiscal 2000.
RESULTS OF OPERATIONS - FISCAL 1999 COMPARED TO FISCAL 1998
Steel Technologies posted sales of $411,389,000 in fiscal 1999, an
increase of 7% from 1998 sales of $383,907,000. The Roberts Steel
Company acquired on July 1, 1998 added $21,300,000 of sales for
fiscal year 1999 compared to $5,000,000 for the three months of
operations during fiscal 1998 following the date of acquisition.
Sales of existing Steel Technologies core steel processing operations
increased approximately $11,182,000 or 3% compared to the previous
year. Tons shipped in 1999 increased by 12% while the average selling
price of steel products declined approximately 5% from a year ago.
The gross profit margin was 14.0% in 1999 compared to 11.5% in 1998
as a result of product mix improvements, productivity increases and
operating cost reductions including a reduction in raw material
prices.
Sales, general and administrative costs increased 18% in fiscal 1999,
while sales increased 7% for the current year. Sales, general and
administrative expenses were 6.4% and 5.8% of sales in 1999 and 1998,
respectively. The increase was primarily attributable to the
additional expenses from the addition of Roberts Steel Company, and
additional marketing expenses to support sales growth of Steel
Technologies Carolinas and Steel Technologies de Mexico.
The Company's share of the income of Mi-Tech Steel, Inc., an
unconsolidated corporate joint venture, was $1,096,000 in 1999 and
$537,000 in 1998. Improvements in demand for Mi-Tech products and
services positively impacted Mi-Tech's profitability for fiscal 1999
as compared to fiscal 1998.
Interest expense increased to $7,361,000 in 1999 from $6,079,000 in
1998. The increase is the result of higher average borrowings used to
finance capital projects, the acquisition of Roberts Steel Company
and the charges from an interest rate swap valuation.
The effective income tax rate was approximately 38.2% in 1999 and
40.3% in 1998. The net decrease arises from an increase in the
benefit due to a higher percentage of overall earnings from the
Mi-Tech Steel joint venture, which are not fully taxable to the
Company, a reduction due to higher portion of income generated in
Mexico which is taxed at a lower rate, and partially offset by an
increase in the effective U.S. federal income tax rate as a result of
more income being taxed at the higher tax bracket.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, Steel Technologies had $97,428,000 of working
capital, maintained a current ratio of 2.7:1 and had total debt at
49% of total capitalization. The Company continues to manage the
levels of accounts receivable, inventories and other working capital
items in relation to the trends in sales and overall market. In
fiscal 2000, net income offset by higher accounts receivable to
support sales growth contributed to the generation of $10,080,000 of
cash flows from operations. Cash flows from operations and available
borrowing capabilities are expected to meet the needs of the Company.
Capital expenditures excluding acquisition for 2000 totaled
$19,888,000. The major expenditures were for the construction of the
new Matamoros, Mexico facility, the completion of the Ohio plant
expansion and other capacity expansion projects. Cash flows from
operations and proceeds from long-term debt financed the 2000 capital
expenditures. Steel Technologies continues to expand production
capacity and processing facilities to serve the growing needs of
customers. For fiscal 2001, the capital additions for all
facilities, including the completion of the construction of the
Matamoras, Mexico facility and expansion of Steel Technologies
processing capabilities are expected to approximate $14,000,000.
On January 12, 2000 the Company completed the purchase of Custom
Steel for approximately $12,122,000 in cash and assumption of
$5,792,000 of liabilities. Additional contingent payments of up to
$3,540,000 may also be made during the next three years.
On July 1, 1998, the Company completed the purchase of Roberts Steel
Company (Roberts) for approximately $11,228,000 in cash, issuing a
$1,200,000 note payable to a former Roberts shareholder and assuming
$2,382,000 in liabilities of Roberts. During 2000 and 1999,
respectively, the Company paid the previous shareholders of Roberts
$500,000 in additional consideration recorded as additional goodwill
in accordance with Emerging Issue Task Force Issue No. 95-8,
"Accounting for Contingent Consideration Paid to the Shareholders of
an Acquired Enterprise in a Purchase Business Combination".
The Company financed the acquisitions with existing credit
facilities. The excess of the purchase price over the acquired net
assets has been recorded as goodwill and is being amortized over 30
years. The acquisitions have been recorded under the purchase method
of accounting, with the operating results of Custom and Roberts being
included in the Company's consolidated financial statements since the
date of acquisition.
In 2000, Steel Technologies increased its equity investment in its
Mexican subsidiary to approximately $18,565,000. In fiscal 1998, the
Company increased the ownership from 80% to 90%. The Company invested
approximately $4,700,000 and $4,900,000 in 2000 and 1999,
respectively, for additional production equipment and the start up of
the new Matamoras, Mexico facility.
As of January 1, 1999, the Mexican subsidiary uses the peso as the
functional currency and the assets and liabilities of the Mexican
subsidiary are translated into U.S. dollars at the year-end rate of
exchange, and revenues and expenses are translated at average rates
of exchange in effect during the period. Resulting translation
adjustments are reported as a component of comprehensive income.
Foreign currency transaction gains and losses are included in net
income when incurred. Prior to January 1, 1999, the Mexican economy
was considered hyper-inflationary. Accordingly, the Company used the
monetary/non-monetary method of accounting for foreign currency
translation. Under the monetary/non-monetary method, non-monetary
assets and liabilities were translated at historical rates of
exchange and the functional currency was the U.S. dollars.
The Company maintains an investment of approximately $1,000,000,
principally in the preferred stock of Processing Technology, Inc., a
corporate joint venture accounted for using the cost method.
Pursuant to a joint venture agreement, Steel Technologies has
guaranteed $8,250,000 of the bank financing required for working
capital purposes of Mi-Tech Steel, Inc. In October 1998, the Company
contributed an additional $600,000 in equity to Mi-Tech Steel for the
start-up of a steel processing facility in San Diego, California.
Additional equity contributions to the joint venture are not expected
for the foreseeable future, but if required would be financed with
available funds from the Company's bank line of credit.
The Company has a $100,000,000 line of credit agreement expiring on
December 31, 2001, with various variable options on the interest
rate, none of which are greater than the bank's prime. During 2000,
the Company borrowed $49,000,000 for the purchase of Custom Steel,
construction of the Matamoros, Mexico facility and for working
capital needs. At September 30, 2000 and 1999, there was $86,000,000
and $57,000,000, respectively, outstanding on the credit facility.
In April 2000, the Company entered into an additional $15,000,000
line of credit agreement expiring on December 31, 2000, with various
variable options on the interest rate, none of which are greater than
the bank's prime. As of September 30, 2000, there were no borrowings
outstanding on this credit facility.
The lines of credit and cash flows generated from operations are
expected to be sufficient to finance the capital expenditure plans as
well as the working capital needs for fiscal 2001. At this time, the
Company has no known material obligations, commitments or demands
that must be met beyond the next twelve months other than the
ten-year private placement notes and the unsecured bank lines of
credit. The ten-year notes require principal payments through March
2005 and the $100,000,000 line of credit is expected to be renewed at
the end of the term. The Company expects to retire the additional
$15,000,000 line of credit upon maturity. Any additional funds will
be used for growth, including strategic acquisitions, investment in
joint ventures, construction of new plant capacity, and investment in
production and processing capabilities. The form of such financing
may vary depending upon the prevailing market and related conditions,
and may include short or long-term borrowings or the issuance of debt
or equity securities.
At September 30, 2000, Steel Technologies had $115,394,000 in
long-term debt outstanding. Under various debt agreements, the
Company agreed to maintain specified levels of working capital and
net worth, maintain certain ratios and limit the addition of
substantial debt. The Company is in compliance with all of its loan
covenants, and none of these covenants would restrict the completion
of currently planned capital expenditures or acquisitions.
On June 30, 1999 Steel Technologies terminated its long-term interest
rate swap agreement, which was entered into to reduce the risk of
interest rate variability. Under the contract, the Company agreed
with another party to exchange quarterly the difference between
variable-rate and fixed-rate amounts calculated on a notional
principal amount of $30,000,000. The termination generated a deferred
gain of $958,000, which is being amortized over a period of 30 months
as a reduction of interest expense beginning in July 1999 and ending
December 2001.
On January 22, 1998, the Board of Directors approved a plan under
which Steel Technologies may repurchase up to 500,000 shares of its
common stock. Subsequently, the Board of Directors authorized
repurchase of an additional 1,000,000 shares on September 30, 1998
and another additional 1,000,000 shares on April 30, 2000 for a total
of 2,500,000 shares. Shares may be purchased from time to time at
prevailing prices in open market transactions, subject to market
conditions, share price and other considerations. The Company has
purchased to date 1,570,000 shares for an aggregate of $13,811,000 as
of September 30, 2000. During fiscal 2000 and 1999, the Company
repurchased approximately 690,000 and 459,000 shares of common stock
for $6,688,000 and $3,331,000, respectively.
Steel Technologies believes all manufacturing facilities are in
compliance with applicable federal and state environmental
regulations. The Company is not presently aware of any facts or
circumstances which would require the expenditure of material amounts
for environmental compliance.
IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133"). In
general, SFAS No. 133 as amended requires that all derivatives be
recognized as either assets or liabilities in the balance sheet at
their fair value, and set forth the manner in which gains and losses
thereon are to be recorded. The treatment of such gains or losses is
dependent upon the type of exposure, if any, for which the derivative
is designated as a hedge. This standard is effective for the
Company's financial statements beginning October 1, 2001, with early
adoption permitted. Management of the Company plans to adopt SFAS
No. 133 on October 1, 2001 and anticipates the adoption will not have
a material impact on the Company's results of operations or its
financial position.
In December 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101 (SAB 101), "Revenue
Recognition in Financial Statements". SAB 101 summarizes some of the
staff's interpretations of the application of generally accepted
accounting principles to revenue recognition. The Company is
expected to apply the accounting and disclosure requirements that are
described in SAB 101 no later than July 1, 2001. Management of the
Company is currently analyzing the impact of SAB 101 but anticipates
the adoption of SAB 101 will not have a material impact on the
Company's results of operations or its financial position.
STEEL TECHNOLOGIES INC.
Consolidated Balance Sheets
(In thousands, except shares)
September 30
--------------------------
2000 1999
- ----------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents.................... $ 4,469 $ 12,578
Trade accounts receivable, less
allowance for doubtful accounts:
$1,327 in 2000 and $1,047 in 1999.......... 67,039 54,389
Inventories.................................. 79,925 80,625
Deferred income taxes........................ 2,579 2,426
Prepaid expenses and other assets............ 1,043 474
--------- ---------
Total current assets .................... 155,055 150,492
--------- ---------
Property, plant and equipment (at cost), net of
accumulated depreciation 118,214 107,953
--------- ---------
Investments in corporate joint ventures 20,756 19,858
Goodwill, net of amortization ................. 19,613 9,664
Other assets .................................. 1,751 1,138
--------- ---------
$ 315,389 $ 289,105
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................... $ 44,645 $ 44,649
Accrued liabilities ........................ 6,734 9,139
Income taxes payable ....................... -- 595
Long-term debt due within one year ......... 6,248 6,691
--------- ---------
Total current liabilities ............... 57,627 61,074
Long-term debt ................................ 115,394 90,209
Deferred income taxes ......................... 15,240 12,904
Other long term liabilities ................... 96 479
--------- ---------
Total liabilities ........................ 188,357 164,666
--------- ---------
Commitments and contingencies ................. -- --
Shareholders' equity:
Preferred stock, no par value;
authorized shares: 500,000 shares;
none issued or outstanding ............... -- --
Common stock, no par value;
authorized shares: 50,000,000 in 2000 and
20,000,000 in 1999; issued and
outstanding shares: 10,460,325 in 2000 and
11,137,421 in 1999 ....................... 17,287 17,140
Treasury stock at cost: 1,570,000 shares in
2000 and 880,000 shares in 1999 .......... (13,811) (7,123)
Additional paid-in capital ................. 4,909 4,909
Retained earnings .......................... 120,125 111,311
Accumulated other comprehensive loss ....... (1,478) (1,798)
--------- ---------
Total stockholders' equity ............... 127,032 124,439
--------- ---------
$ 315,389 $ 289,105
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
STEEL TECHNOLOGIES INC.
Consolidated Statements of Income
(In thousands, except per share results)
For the Years Ended September 30
--------------------------------
2000 1999 1998
- --------------------------------------------------------------------------
Sales .................................. $461,297 $411,389 $383,907
Cost of goods sold ..................... 410,724 353,782 339,811
-------- -------- --------
Gross profit ......................... 50,573 57,607 44,096
Selling, general and administrative
expenses ............................. 28,251 26,108 22,144
Equity in net income of unconsolidated
corporate joint venture .............. 898 1,095 537
-------- -------- --------
Operating income ..................... 23,220 32,594 22,489
Interest expense ....................... 7,043 7,361 6,079
-------- -------- --------
Income before income taxes ........... 16,177 25,233 16,410
Provision for income taxes ............. 5,965 9,661 6,607
-------- -------- --------
Net income ........................... $ 10,212 $ 15,572 $ 9,803
======== ======== ========
Weighted average number of common shares
outstanding-diluted .................. 10,857 11,256 11,989
-------- -------- --------
Diluted earnings per common share ...... $ 0.94 $ 1.38 $ 0.82
-------- -------- --------
Weighted average number of common shares
outstanding-basic .................... 10,818 11,230 11,942
-------- -------- --------
Basic earnings per common share ........ $ 0.94 $ 1.39 $ 0.82
-------- -------- --------
Consolidated Statements of Comprehensive Income
(In thousands)
For the Years Ended September 30
--------------------------------
2000 1999 1998
- ---------------------------------------------------------------------------
Net income ............................. $ 10,212 $ 15,572 $ 9,803
Foreign currency translation
adjustment ........................... 320 (358) --
-------- -------- -------
Comprehensive income ................... $ 10,532 $ 15,214 $ 9,803
======== ======== =======
The accompanying notes are an integral part of the consolidated financial
statements.
STEEL TECHNOLOGIES INC.
Consolidated Statements of Shareholders' Equity
(In thousands, except per share amounts)
For the Years Ended September 30, 2000, 1999 and 1998
-----------------------------------------------------------------------------------------------
Common Stock Treasury Stock Accumulated
------------------ -------------------- Additional Other
Paid-In Retained Comprehensive
Shares Amount Shares Amount Capital Earnings Loss Total
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, September 30, 1997 ...... 11,995 $ 16,893 -- -- $ 4,909 $ 88,467 $ (1,440) $108,829
Net income ........................ 9,803 9,803
Net issuance of common stock under
incentive stock option plan..... 8 35 35
Repurchase of common stock under
stock repurchase program........ (421) 421 $ (3,792) (3,792)
Cash dividends on common stock
($.10 per share)................. (1,199) (1,199)
------- -------- ----- -------- -------- --------- -------- --------
Balances, September 30, 1998 ...... 11,582 16,928 421 (3,792) 4,909 97,071 (1,440) 113,676
Net income ........................ 15,572 15,572
Net issuance of common stock under
incentive stock option plan .... 14 212 (92) 120
Repurchase of common stock under
stock repurchase program ....... (459) 459 (3,331) (3,331)
Cash dividends on common stock
($.11 per share) ................ (1,240) (1,240)
Foreign currency translation
adjustment ...................... (358) (358)
------- -------- ----- -------- -------- -------- -------- --------
Balances, September 30, 1999 ...... 11,137 $ 17,140 880 $ (7,123) $ 4,909 $111,311 $ (1,798) $124,439
Net income ........................ 10,212 10,212
Net issuance of common stock under
incentive stock option plan ..... 13 147 (87) 60
Repurchase of common stock under
stock repurchase program ....... (690) 690 (6,688) (6,688)
Cash dividends on common stock
($.12 per share)................. (1,311) (1,311)
Foreign currency translation
adjustment ...................... 320 320
------- -------- ----- -------- -------- -------- --------- --------
Balances, September 30, 2000 ...... 10,460 $ 17,287 1,570 $(13,811) $ 4,909 $120,125 $ (1,478) $127,032
======= ======== ===== ======== ======== ======== ======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
STEEL TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(In thousands)
For the Years Ended September 30
--------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ....................................................... $ 10,212 $ 15,572 $ 9,803
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ................................................. 13,306 12,468 11,573
Amortization ................................................. 623 384 287
Deferred income taxes ........................................ 1,924 (1,148) 1,805
Equity in net income of corporate joint venture .............. (898) (1,095) (537)
Loss (gain) on sale of property plant and equipment .......... 23 (276) 5
Increase (decrease) in cash resulting
from changes in:
Trade accounts receivable ................................ (10,614) (6,127) (2,175)
Inventories .............................................. 2,744 (4,481) 10,571
Prepaid expenses and other assets ........................ (688) (404) 288
Accounts payable ......................................... (2,264) 8,513 1,514
Accrued liabilities ...................................... (4,288) 3,903 1,502
-------- -------- --------
Net cash provided by operating activities .......................... 10,080 27,309 34,636
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment ....................... (19,888) (17,704) (14,186)
Proceeds from sale of property, plant and equipment .............. 327 3,626 --
Acquisition, net of cash acquired ................................ (12,122) -- (11,228)
Investment in unconsolidated corporate joint ventures ............ -- (600) --
-------- -------- --------
Net cash used in investing activities .............................. (31,683) (14,678) (25,414)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt ..................................... 49,000 24,800 12,000
Principal payments on long-term debt ............................. (26,839) (25,303) (15,183)
Cash dividends on common stock ................................... (1,311) (1,240) (1,199)
Repurchase of common stock ....................................... (6,688) (3,331) (3,792)
Net issuance of common stock under
stock option plans ............................................. 60 120 35
Other ............................................................. (700) 2 --
-------- -------- --------
Net cash provided by (used in) financing activities ................ 13,522 (4,952) (8,139)
-------- -------- --------
Effect of exchange rate changes on cash ............................ (28) 121 228
-------- -------- --------
Net (decrease) increase in cash and cash equivalents ............... (8,109) 7,800 1,310
Cash and cash equivalents, beginning of year ....................... 12,578 4,778 3,467
-------- -------- --------
Cash and cash equivalents, end of year ............................. $ 4,469 $ 12,578 $ 4,777
======== ======== ========
Supplemental Cash Flow Disclosures:
Cash payments for interest ....................................... $ 7,887 $ 7,005 $ 6,294
Cash payments for taxes .......................................... $ 7,151 $ 9,752 $ 4,532
Supplemental Schedule of Noncash Investing and Financing Activities:
Fair value of assets acquired, net of cash acquired of
$1,228 and $457, respectively .................................... $ 17,914 -- $ 14,810
Liabilities assumed ................................................ 5,792 -- 3,582
-------- -------- --------
Net cash paid ...................................................... $ 12,122 -- $ 11,228
======== ======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of the Business: Steel Technologies Inc. is an
intermediate steel processor engaged in the business of processing
flat rolled steel to specified thickness, width, temper and finish
requirements for customers' manufacturing processes. A majority of
its sales are to industrial customers in North America, manufacturing
component parts for use in the automotive industry. Steel
Technologies Inc. operates in one reportable segment.
Principles of Consolidation: The consolidated financial statements
include the accounts of Steel Technologies Inc. and its
majority-owned subsidiaries (the Company). The Company's investments
in corporate joint ventures are accounted for by the cost or equity
method based on the percentage of common ownership and control. All
significant intercompany transactions have been eliminated.
Cash and Cash Equivalents: Cash and cash equivalents include highly
liquid investments with an original maturity of three months or
less. The carrying value of cash equivalents approximates fair value
due to the short-term maturity of the securities.
Inventories: Inventories are valued at the lower of cost or market.
Cost is determined using the specific identification method for all
inventories.
Depreciation and Amortization: Depreciation is computed using the
straight-line method with the following estimated useful lives:
Buildings and improvements 20-45 years
Machinery and equipment 3-12 years
When properties are retired or otherwise disposed of, the cost and
related accumulated depreciation are removed from the accounts with
any resulting gain or loss reflected in results of operations.
Maintenance and repairs are expensed in the year incurred. The
Company capitalizes interest costs as part of the cost of
constructing major facilities. Interest costs of $481,000, $162,000
and $328,000 were capitalized in 2000, 1999, and 1998, respectively.
Goodwill represents the excess of the purchase price over the fair
value of net assets acquired through acquisitions accounted for using
the purchase method of accounting. Goodwill is being amortized on a
straight-line basis over a 30 year life. Accumulated amortization
approximated $1,498,000 and $874,000 at September 30, 2000 and 1999,
respectively.
In the event that facts and circumstances indicate that the carrying
value of long-lived assets may be impaired, an evaluation of
recoverability would be performed. If an evaluation is required, the
estimated future undiscounted cash flows associated with an asset
would be compared to the asset's carrying value to determine if a
write-down to market value or discounted cash flow value is required.
Revenue Recognition: The Company recognizes revenue when goods are
shipped.
Earnings Per Common Share: Earnings per share for all periods
presented have been calculated and presented in accordance with
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
Per Share". Basic earnings per share excludes dilution and is
computed by dividing income available to common shareholders by the
weighted-average number of common shares outstanding for the period.
Diluted earnings per share reflect the potential dilution that could
occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance
of common stock that then shared in the earnings of the Company.
Foreign Currency Translation: As of January 1, 1999, the Mexican
subsidiary uses the peso as the functional currency and the assets
and liabilities of the Mexican subsidiary are translated into U.S.
dollars at the year-end rate of exchange, and revenues and expenses
are translated at average rates of exchange in effect during the
period. Resulting translation adjustments are reported as a
component of comprehensive income. Foreign currency transaction
gains and losses are included in net income when incurred. Prior to
January 1, 1999, the Mexican economy was considered
hyper-inflationary. Accordingly, the Company used the
monetary/non-monetary method of accounting for foreign currency
translation. Under the monetary/non-monetary method, non-monetary
assets and liabilities were translated at historical rates of
exchange and the functional currency was the U.S. dollars.
Comprehensive Income: Accumulated comprehensive loss approximated
$1,478,000 and $1,798,000 at September 30, 2000 and 1999,
respectively, and is comprised of foreign currency translation
adjustments.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2. ACQUISITIONS:
On January 12, 2000 the Company completed the purchase of Custom
Steel, Inc. and Custom Steel Processing Corp., collectively referred
to as Custom, for approximately $12,122,000 in cash and assumption of
$5,792,000 of liabilities. Additional contingent payments of up to
$3,540,000 may also be made during the next three years.
On July 1, 1998, the Company completed the purchase of Roberts Steel
Company (Roberts) for approximately $11,228,000 in cash, issuing a
$1,200,000 note payable to a former Roberts shareholder and assuming
$2,382,000 in liabilities of Roberts. During 2000 and 1999,
respectively, the Company paid the previous shareholders of Roberts
$500,000 in additional consideration recorded as additional goodwill
in accordance with Emerging Issue Task Force Issue No. 95-8,
"Accounting for Contingent Consideration Paid to the Shareholders of
an Acquired Enterprise in a Purchase Business Combination".
The Company financed the acquisition with existing credit
facilities. The excess of the purchase price over the acquired net
assets has been recorded as goodwill and is being amortized over 30
years. The acquisitions have been recorded under the purchase method
of accounting, with the operating results of Custom and Roberts being
included in the Company's consolidated financial statements since the
date of acquisition.
The pro forma impact of the acquisitions was not material during the
three years ended September 30, 2000, 1999 and 1998.
3. INVENTORIES:
Inventories consist of:
September 30
------------------
(In thousands) 2000 1999
- -------------------------------------------------------
Raw materials .................... $59,951 $64,139
Finished goods and work in process 19,974 16,486
-------- -------
$79,925 $80,625
======== =======
4. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment and related accumulated depreciation at
September 30, 2000 and 1999 consist of the following:
September 30
-------------------
(In thousands) 2000 1999
--------------------------------------------------------------------
Land and improvements ......................... $ 5,960 $ 5,829
Buildings and improvements .................... 54,241 50,418
Machinery and equipment ....................... 126,235 119,148
Construction in progress ...................... 14,005 4,553
-------- --------
200,441 179,948
Less accumulated depreciation ................. 82,227 71,995
-------- --------
$118,214 $107,953
======== ========
5. INVESTMENTS IN UNCONSOLIDATED CORPORATE JOINT VENTURES:
Mi-Tech Steel, Inc. owns and operates two high-volume steel slitting
facilities and one high volume pickling and steel slitting facility
to serve Japanese and domestic automotive and appliance parts
manufacturers in the United States. Summarized condensed financial
information of Mi-Tech Steel, Inc., a fifty percent owned corporate
joint venture accounted for by the equity method follows:
September 30
------------------
BALANCE SHEET (In thousands) 2000 1999
- -------------------------------------------------------
Assets :
Current assets ................. $54,847 $57,468
Other assets ................... 48,722 51,481
Liabilities:
Current liabilities ............ $38,067 $45,735
Long-term liabilities .......... 26,095 25,605
For the Years Ended September 30
----------------------------------
INCOME STATEMENT (In thousands) 2000 1999 1998
- -----------------------------------------------------------------
Net Sales ................. $152,698 $143,728 $131,795
Net Income ................ $ 1,796 $ 2,191 $ 1,074
The Company has various transactions with Mi-Tech Steel, Inc.
Included in operating income of the Company are management,
construction and other fees, interest earned on advances and equity
from the joint venture earnings totaling $1,594,000, $2,102,000, and
$1,463,000 in 2000, 1999 and 1998, respectively. The Company is a
guarantor of up to $8,250,000 of Mi-Tech Steel, Inc. bank
borrowings. The borrowings consist of a term note payable due on
September 15, 2003, and a revolving line of credit due December 31,
2000. The borrowings bear variable rates of interest, which at
September 30, 2000 were 8.87% and 7.85%. The lender has the ability
to call the debt if debt covenants are violated. The Company's
equity in undistributed net income of Mi-Tech Steel, Inc. was
$10,103,000 and $9,205,000 at September 30, 2000 and 1999,
respectively.
The Company maintains an investment of approximately $1,000,000,
principally in preferred stock of Processing Technology, Inc., a
corporate joint venture accounted for by the cost method.
6. LONG-TERM DEBT:
Long-term debt consists of the following:
September 30
------------------
(In thousands) 2000 1999
-------------------------------------------------------------------
Notes payable to bank, unsecured under current
line of credit; interest rates at
September 30, 2000 and 1999 ranged from 7.35%
to 7.46% and 6.15% to 6.19%, respectively ..... $ 86,000 $ 57,000
Note payable to bank, unsecured under current
line of credit; interest rates with various
options none of which are greater than the
bank's prime rate ............................. -- --
Notes payable, unsecured, interest due monthly
at 8.52% ...................................... 28,560 34,280
Variable rate industrial development revenue
bonds payable in annual installments through
November 1, 2014; interest rate at
September 30, 2000 and 1999 was 5.60% and 3.95%,
respectively .................................. 4,100 4,200
Industrial development revenue bonds payable in
semi-annual installments through May 1, 2011;
interest rates ranged from 7.38% to 8.13%
at September 30, 2000 ......................... 2,335 --
Mortgage notes payable in installments through
2002; interest rates averaging 8.15% at
September 30, 2000 and 1999 ................... 533 800
Note payable at 6.50%, unsecured .............. -- 600
Other ......................................... 114 20
-------- --------
121,642 96,900
Less amount due within one year................ 6,248 6,691
-------- --------
$115,394 $ 90,209
======== ========
Steel Technologies has a $100,000,000 line of credit agreement
expiring on December 31, 2001 with various variable options on the
interest rate, none of which are greater than the bank's prime. At
September 30, 2000, there was $86,000,000 outstanding on the credit
facility.
In April 2000, the Company entered into an additional $15,000,000
line of credit agreement expiring on December 31, 2000, with various
variable options on the interest rate, none of which are greater than
the bank's prime. As of September 30, 2000, there were no
borrowings outstanding on this credit facility.
In April 1995, the Company entered into a $40,000,000 private
placement note. Annual principal payments of $5,720,000 began March
1, 1999 and continue through March 1, 2005.
The aggregate amounts of all long-term debt to be repaid for the five
years following September 30, 2000, are: 2001, $6,248,000; 2002,
$92,283,000; 2003, $6,016,000; 2004, $6,000,000; 2005, $5,970,000;
and thereafter $5,125,000. Provisions contained in the Company's
various debt agreements require the Company to maintain specified
levels of net worth, maintain certain financial ratios and limit the
addition of substantial debt. The Company estimates that the fair
value of fixed interest debt instruments approximate $30,275,000 at
September 30, 2000. The fair value of the Company's debt is
estimated based on quoted market rates or current rates offered to
the Company on comparable remaining maturities.
On June 30, 1999, the Company terminated its long-term interest rate
swap agreement, which was entered into to reduce the risk of interest
rate variability. Under the contract, the Company agreed with another
party to exchange quarterly the difference between variable-rate and
fixed-rate amounts calculated on a notional principal amount of
$30,000,000. The termination generated a deferred gain of $958,000,
which is being amortized over a period of 30 months as a reduction of
interest expense beginning in July 1999 and ending December 2001.
7. SHAREHOLDERS' EQUITY:
In April 1998, the Company adopted a shareholder rights plan by
declaring a dividend of one right for each share of Common Stock
outstanding payable to shareholders of record on May 14, 1998. Each
right entitles shareholders to buy one one-hundredth of a share of
series A junior participating preferred stock for $50 per share. The
rights may be exercised only if a person or group acquires 20% or
more of the outstanding shares of common stock or announces a tender
offer or exchange offer that would result in ownership of 20% or more
of the common stock. The rights currently trade with the Company's
common stock and may be redeemed by the Board of Directors for one
cent per right until they become exercisable, and thereafter under
certain circumstances. The rights expire in 2008.
The Company's Articles of Incorporation authorized 500,000 shares of
no par value preferred stock, of which 200,000 shares have been
reserved and designated Series A 1998 junior participating preferred
stock for possible issuance under the Company's shareholder rights
plan. As of September 30, 2000, no preferred shares have been issued.
During 2000, the Company amended its restated articles of
incorporation to increase the number of authorized common shares from
20,000,000 to 50,000,000.
On January 22, 1998, the Board of Directors approved a plan under
which Steel Technologies may repurchase up to 500,000 shares of its
common stock. Subsequently, the Board of Directors authorized
repurchase of an additional 1,000,000 shares on September 30, 1998
and another additional 1,000,000 shares on April 30, 2000 for a total
of 2,500,000 shares. Shares may be purchased from time to time at
prevailing prices in open market transactions, subject to market
conditions, share price and other considerations. The Company has
purchased to date 1,570,000 shares for an aggregate of $13,811,000 as
of September 30, 2000. During fiscal 2000 and 1999, the Company
repurchased approximately 690,000 and 459,000 shares of common stock
for $6,688,000 and $3,331,000, respectively.
8. RETIREMENT PLAN:
The Company maintains a 401(k) defined contribution pension plan.
Annual expense provisions are based upon the level of employee
participation, as the plan requires the Company to match a certain
portion of the employees' contributions. Total retirement plan
expense was $716,000 in 2000, $666,000 in 1999, and $513,000 in
1998. The Company follows the policy of funding retirement plan
contributions as accrued.
9. INCOME TAXES:
The following table represents the components of the provision for
income taxes:
For the Years Ended September 30
--------------------------------
(In thousands) 2000 1999 1998
--------------------------------------------------------------------
Current:
Federal ......................... $ 4,535 $ 7,691 $ 3,775
State, local and foreign ........ (494) 3,155 1,027
------- ------- -------
$ 4,041 10,846 4,802
------- ------- -------
Deferred:
Federal ......................... 105 (555) 649
State, local and foreign ........ 1,819 (630) 1,156
------- ------- -------
1,924 (1,181) 1,805
------- ------- -------
$ 5,965 $ 9,661 $ 6,607
======= ======= =======
Deferred income taxes are recorded at currently enacted rates and
result from temporary differences in the recognition of revenues and
expenses for tax and financial statement purposes. The primary
temporary differences giving rise to the Company's deferred tax
assets and liabilities are as follows:
September 30
------------------
(In thousands) 2000 1999
------------------------------------------------------------------
Deferred tax assets:
Inventory capitalization .................... $ 1,209 $ 1,492
Provision for doubtful accounts ............. 493 408
Non deductible liabilities .................. 877 526
-------- --------
Total deferred tax assets ................. 2,579 2,426
-------- --------
Deferred tax liabilities:
Accelerated depreciation .................... 11,170 10,744
Other, net .................................. 4,070 2,160
-------- --------
Total deferred tax liabilities ............ 15,240 12,904
-------- --------
Net deferred tax liabilities .................. $(12,661) $(10,478)
======== ========
A reconciliation of the provision for income taxes with amounts
computed by applying the federal statutory rate to income before
income taxes follows:
For the Years Ended
September 30
-----------------------
2000 1999 1998
----------------------------------------------------------------
Tax at U.S. federal statutory rate ..... 34.2% 35.0% 34.0%
State and local income taxes, net of ... 3.5 4.6 4.8
Equity in net income of unconsolidated
corporate joint venture ................ (1.9) (1.4) (1.1)
Other, net ............................. 1.1 -- 2.6
------ ----- -----
36.9% 38.2% 40.3%
====== ===== =====
10. STOCK OPTION PLANS:
Under its employee stock option plans, the Company may grant
employees incentive stock options to purchase shares at not less than
100% of market value at date of grant or non-qualified stock options
at a price determined by the Compensation Committee of the Company's
Board of Directors. Generally, options are exercisable at the rate
of 20% a year beginning one year from date of grant and expire ten
years from the date of grant.
The Company applies Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees", and related
interpretations in accounting for its stock option plans. Generally,
the exercise price of options awarded under these plans has been
equal to the fair market value of the underlying common stock on the
date of grant. Accordingly, no compensation expense has been
recognized for its stock-based compensation plans. Had compensation
cost for the Company's stock-based compensation plans been determined
based on the fair value at the grant date for awards under these
plans consistent with the methodology prescribed under SFAS No. 123,
"Accounting for Stock-Based Compensation", net income and earnings per
share would have been reduced to the pro forma amounts indicated in
the table below.
For the Years Ended
September 30
------------------------
(In thousands, except per share results) 2000 1999 1998
- -------------------------------------------------------------------------
Net income - as reported ..................... $10,212 $15,572 $ 9,803
Net income - pro forma ....................... $ 9,912 $15,216 $ 9,533
Diluted net income per share - as reported.. $ 0.94 $ 1.38 $ 0.82
Diluted net income per share - pro forma.... $ 0.91 $ 1.35 $ 0.80
Basic net income per share - as reported..... $ 0.94 $ 1.39 $ 0.82
Basic net income per share - pro forma........ $ 0.92 $ 1.35 $ 0.80
The pro forma effects on net income are not necessarily
representative of the pro forma effect on net income in future
years. The fair value of options granted during 2000, 1999 and 1998
are $2.19, $6.57 and $5.37 per share, respectively.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
assumptions:
For the Years Ended September 30
----------------------------------
2000 1999 1998
- -----------------------------------------------------------------------------
Expected dividend yield ........... 1.3% 1.3% 0.8%
Expected stock price
volatility ........................ 46.0% 44.0% 42.9%
Weighted average risk-free
interest rate ..................... 6.1% 4.8% 5.7%
Expected life of options
(years) ........................... 7.0 7.0 7.0
The summary of the status of all of the Company's stock incentive
plans as of September 30, 2000, 1999 and 1998 and changes during the
years then ended is presented below:
September 30
---------------------------------------------
Range of Weighted
Shares Option Average
Under Prices Per Exercise
Plans Share Price
- -----------------------------------------------------------------------------
Balance, September 30, 1997.. 514,250 $ 6.67 - $12.79 $10.49
Granted...................... 205,000 $11.25 - $12.00 $11.94
Exercised.................... (22,500) $ 6.67 - $11.63 $ 8.49
Canceled..................... (73,750) $10.67 - $11.70 $11.60
------- --------------- ------
Balance, September 30, 1998.. 623,000 $ 6.67 - $12.79 $10.81
Granted...................... 78,000 $ 7.25 - $ 8.73 $ 7.95
Exercised.................... (19,500) $ 6.67 $ 6.67
Canceled..................... (48,000) $10.08 $10.08
------- --------------- ------
Balance, September 30, 1999.. 633,500 $6.67 - $12.79 $10.64
Granted...................... 10,000 $ 11.63 $11.94
Exercised.................... (16,000) $ 6.67 - $10.67 $ 8.79
Canceled..................... -- $ -- $ --
------- --------------- ------
Balance, September 30, 2000.. 627,500 $ 6.67 - $12.79 $10.71
======= =============== ======
The following table summarizes information about stock options
outstanding and exercisable:
September 30, 2000
---------------------------------------------------------------------------------
Options Outstanding: Options Exercisable:
------------------------------------------------- ----------------------------
Number Weighted Average Number
Range of Outstanding Remaining Weighted Average Exercisable Weighted
Exercise Prices at 9/30/00 Contracted Life Exercise Price at 9/30/00 Exercise Price
- -----------------------------------------------------------------------------------------------------
$ 6.67 - $10.00 108,000 6.07 years $ 7.58 46,100 $ 7.11
$10.01 - $12.79 519,500 5.21 years $11.36 375,500 $11.22
- ---------------- ------- ---------- ------ ------- -------
$ 6.67 - $12.79 627,500 5.36 years $10.71 421,600 $10.77
At September 30, 2000, there were 500,000 shares available for
granting of stock options under the Company's stock option plans.
All unexercised options expire not later than the year 2009.
11. NET INCOME PER SHARE COMPUTATIONS:
The following is a reconciliation of the numerator of the basic and
diluted per share computations:
For the Years Ended
September 30
--------------------------
(In thousands, except for share results) 2000 1999 1998
- -------------------------------------------------------------------------------
Net income ................................... $10,212 $15,572 $ 9,803
------- ------- -------
Shares (denominator) used for diluted share
computations:
Weighted average shares of common stock
outstanding ................................... 10,818 11,230 11,942
Plus: dilutive effect of stock options ........ 39 26 47
------- ------- -------
Adjusted weighted average shares .......... 10,857 11,256 11,989
------- ------- -------
Shares (denominator) used for basic per share
computations:
Weighted average shares of common stock
outstanding ................................... 10,818 11,230 11,942
------- ------- -------
Net income per share data:
Basic ..................................... $ 0.94 $ 1.38 $ 0.82
Diluted ................................... $ 0.94 $ 1.39 $ 0.82
Options to purchase 597,500, 310,000, and 363,500 shares for the
years ended September 30, 2000, 1999, and 1998, respectively were
excluded from the calculations above because the exercise prices of
the options were greater than the average market price of the
Company's stock during the periods.
12. IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133"). In
general, SFAS No. 133 as amended requires that all derivatives be
recognized as either assets or liabilities in the balance sheet at
their fair value, and set forth the manner in which gains and losses
thereon are to be recorded. The treatment of such gains or losses is
dependent upon the type of exposure, if any, for which the derivative
is designated as a hedge. This standard is effective for the
Company's financial statements beginning October 1, 2001, with early
adoption permitted. Management of the Company plans to adopt SFAS
No. 133 on October 1, 2001 and anticipates the adoption will not have
a material impact on the Company's results of operations or its
financial position.
In December 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101 (SAB 101), "Revenue
Recognition in Financial Statements". SAB 101 summarizes some of the
staff's interpretations of the application of generally accepted
accounting principles to revenue recognition. The Company is
expected to apply the accounting and disclosure requirements that are
described in SAB 101 no later than July 1, 2001. Management of the
Company is currently analyzing the impact of SAB 101 but anticipates
the adoption of SAB 101 will not have a material impact on the
Company's results of operations or its financial position.
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders
Steel Technologies Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, comprehensive income,
shareholders' equity and cash flows present fairly, in all material
respects, the financial position of Steel Technologies Inc. and its
subsidiaries at September 30, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the
period ended September 30, 2000, in conformity with accounting
principles generally accepted in the United States of America. 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 statements in accordance with auditing standards generally
accepted in the United States of America, 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 our opinion.
Louisville, Kentucky
November 17, 2000
EXHIBIT 21.1
STEEL TECHNOLOGIES INC.
SUBSIDIARIES AND AFFILIATES
BEFORE SEPTEMBER 30, 1999
Percentage of
Voting
Names Under Securities
Jurisdiction of Which Business Owned By
Name Incorporation Transacted Registrant
- --------------------------------------------------------------------------------
Wabash Steel Corporation
(Formerly Southern Strip
Steel-Peru, Inc.) Indiana Wabash Steel Corporation 100%
Steel Technologies
Carolinas, Inc. North Carolina Steel Technologies Carolinas 100%
Steel Technologies
Ohio, Inc. (formerly
Southern Strip Steel-
Columbus, Inc.) Ohio Steel Technologies Ohio 100%
Roberts Steel Company Ohio Roberts Steel 100%
Steel Technologies de
Mexico (formerly
Transformadora y
Commercializdora de
Metales, S.A. de C.V.)Mexico Steel Technologies de Mexico 90%
Mi-Tech Steel, Inc. Delaware Mi-Tech Steel, Inc. 50%
Processing Technology,
Inc. * Delaware Processing Technology, Inc. 5%
* Steel Technologies Inc. also owns shares of Processing Technology,
Inc., non-voting preferred stock. The Company continues to evaluate
the possible conversion of its preferred shares into common shares of
Processing Technology, Inc. If converted, Steel Technologies Inc.,
including the 5% interest currently held, would own 33% of the
outstanding common shares of Processing Technology, Inc.
EXHIBIT 21.1 (CONTINUED)
STEEL TECHNOLOGIES INC.
SUBSIDIARIES AND AFFILIATES
AFTER SEPTEMBER 30, 1999
Percentage of
Voting
Names Under Securities
Jurisdiction of Which Business Owned By
Name Incorporation Transacted Registrant
- --------------------------------------------------------------------------------
Wabash Steel Corporation Steel Technologies, LLC
(Formerly Steel Technologies
Carolinas, Inc.) South Carolina Steel Technologies Carolinas 100%
Steel Technologies, L.P. Delaware Steel Technologies General Partner
Limited partner
is Steel
Technologies,
LLC (SC)
Steel Technologies Corp.
(Formerly Roberts Steel
Company) Ohio Steel Technologies Ohio 100%
Steel Technologies, LLC Ohio Steel Technologies 100% owned by
Steel
Technologies
Corp.
Wabash Steel Corporation
(Formerly Southern Strip
Steel-Peru, Inc.) Indiana Wabash Steel Corporation 100%
Steel Technologies Ohio,
Inc. (formerly
Southern Strip Steel-
Columbus, Inc) Ohio Steel Technologies Ohio 100%
Steel Technologies de
Mexico (formerly
Transformadora y
Commercializadora de
Metales, S.A. de C.V.)Mexico Steel Technologies de Mexico 90%
Custom Steel, Inc. Kentucky Custom Steel 100%
Custom Steel Processing,
Inc. Ohio Custom SteelProcessing 100%
Mi-Tech Steel, Inc. Delaware Mi-Tech Steel, Inc. 50%
Processing Technology,
Inc. * Delaware Processing Technology, Inc. 5%
* Steel Technologies Inc. also owns shares of Processing Technology,
Inc., non-voting preferred stock. The Company continues to evaluate
the possible conversion of its preferred shares into common shares of
Processing Technology, Inc. If converted, Steel Technologies Inc.,
including the 5% interest currently held, would own 33% of the
outstanding common shares of Processing Technology, Inc.
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement of Steel Technologies Inc. and Subsidiaries on
Form S-8 (File Nos. 333-66318, 333-21279 and 333-21359) of our report
dated November 17 2000, relating to the consolidated financial
statements, which appears in the 2000 Annual Report to shareholders
of Steel Technologies Inc. and Subsidiaries, which is incorporated by
reference in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report dated November 17, 2000
relating to the financial statement schedule, which appears in this
Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
Louisville, Kentucky
December 22, 2000